What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-31 · 408 added, 303 removed, 12 unchanged (98% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion, which focuses on our results of operations, contains forward-looking information and statements.

Actual events

or results may differ materially from those indicated or anticipated, as discussed in the section entitled “Forward Looking Statements.”

The following discussion of our financial condition and results of operations should also be read in conjunction with our financial statements

and notes to financial statements contained elsewhere in this Annual Report on Form 10-K.

are a designer, manufacturer and marketer of recreational and commercial power catamaran boats.

We believe our company has been an innovator

in the recreational and commercial power catamaran industry.

We currently have 10 gas-powered models in production ranging in size from

our 24-foot, dual engine, center console to our newly designed 40-foot offshore 400 GFX.

Our twin-hull catamaran running surface, known

as a symmetrical catamaran hull design, adds to the Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering

users a stable riding boat.

Twin Vee’s home base operations in Fort Pierce Florida is a 7.5-acre facility with several buildings

totaling over 75,000 square feet.

We employed approximately 120 people at December 31, 2021, some of whom have been with our company

for over twenty years.

have organized our business into three operating segments:

(i) our gas-powered boat segment which manufactures and distributes gas-powered

(ii) our electric-powered boat segment which is developing fully electric boats, through our wholly owned subsidiary, Forza X1,

Inc., a Delaware corporation (“Forza”) and (iii) our franchise segment which is developing a standard product offering and

will be selling franchises across the United States through our wholly owned subsidiary, Fix My Boat, Inc., a Delaware corporation.

gas-powered boats allow consumers to use them for a wide range of recreational activities including fishing, diving and water skiing

and commercial activities including transportation, eco tours, fishing and diving expeditions.

We believe that the performance, quality

and value of our boats position us to achieve our goal of increasing our market share and expanding the power catamaran boating market.

We currently primarily sell our boats through a current network of 19 independent boat dealers in 23 locations across North America and

the Caribbean who resell our boats to the end user Twin Vee customers.

We continue recruiting efforts for high quality boat dealers and

seek to establish new dealers and distributors domestically and internationally to distribute our boats as we grow our production and

introduce new models.

Our gas-powered boats are currently outfitted with gas-powered outboard combustion engines.

to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, our

wholly owned subsidiary, Forza X1, Inc., is designing and developing a line of electric-powered catamaran boats ranging in size from

18-feet to 28-feet.

Forza’s initial two models, the FX1 Dual Console and FX1 Center Console, are being designed to be 24-foot in

length, have an 8’ beam or width and utilize a catamaran hull surface to reduce drag and increase run times.

The initial launch

of FX1 will include our proprietary single electric outboard motor.

Both FX1 models are being designed with advanced high-powered, liquid-cooled

battery packs that will be provided by the third-party supplier with whom we have entered into a five year supply agreement and a vehicle

control unit with proprietary control software all integrated into a 22” master control touch screen that will be used to control

most functions of the boat.

We have also filed three design and four utility patent applications with the U.S.

Patent and Trademark Office

relating to, among other things, our propulsion system being developed and boat design.

September of 2021 launched our wholly owned subsidiary, Fix My Boat Inc.

Fix My Boat, will be the first nationally branded, mobile marine

service company utilizing a franchise model for marine mechanics across the country.

the second half of 2021 we shifted our focus from our IPO efforts to expanding our production.

As we moved toward our goal of more than

doubling production from one boat a week during the business slowdown in the first half of 2020 due to the COVID pandemic, to four boats

per week, our operating expenses increased.

More specifically, our headcount increased as we hired additional production employees and

midlevel managers resulting in higher salaries and wages.

We are continuing to employ higher qualified production and administrative

staff to increase our productivity, efficiencies, and quality controls.

We have also invested heavily in facility upgrades, additional

equipment and molds, again in the efforts to increase our production output and quality.

consolidated balance sheet indicates a strong financial position as of December 31, 2021.

We finished the year with revenue up 43% over

the prior year, and we saw our working capital increase by approximately $10.5 million for the year ended 2021, primarily resulting from

our IPO on July 23, 2021.

Our cash, cash equivalents and marketable securities were $13.0 million at December 31, 2021.

Our property,

plant, and equipment along with prepaid expenses went up notably, as we have invested in additional boat molds for new model, equipment

to support our increased production levels, and leasehold improvements to improve the quality of our products.

we have largely return to normal operations, the COVID-19 pandemic continues to cause challenges.

During fiscal 2021, we experienced

supply chain disruptions and an overall increase in the price of raw materials and other components used in our production.

We also incurred

higher labor costs and challenges to fill open positions due to a highly competitive job market.

Additionally, we experienced periodic

operational disruptions as our employees contracted or were potentially exposed to COVID-19 pandemic, we are unable to predict the impact

the pandemic may have on our future results of operations or financial condition.

of Operations

of the Years Ended December 31, 2021 and 2020

following table provides certain selected financial information for the years presented:

of products sold

Management’s Discussion and

Analysis of Financial Condition and Results of Operations.

The following discussion, which focuses on our results

of operations, contains forward-looking information and statements.

Actual events or results may differ materially from those indicated

or anticipated, as discussed in the section entitled “Forward Looking Statements.” The following discussion of our financial

condition and results of operations should also be read in conjunction with our financial statements and notes to financial statements

contained elsewhere in this Annual Report.

Company Overview

We are a designer, manufacturer and marketer of recreational

and commercial power catamaran boats.

We believe our company has been an innovator in the recreational and commercial power catamaran

We currently have 16 gas-powered models in production ranging in size from our 24-foot, dual engine, center console to our newly

designed 40-foot offshore 400 GFX.

Our twin-hull catamaran running surface, known as a symmetrical catamaran hull design, adds to the

Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering users a stable riding boat.

We have additionally, launched

the LFG Marine line of monohull boats which are expected to appeal to first-time boat buyers, the freshwater market, and consumers that

prefer a monohull boat, increasing our potential customer base significantly across the nation and moving us outside on the niche catamaran

Twin Vee’s home base operations in Fort Pierce Florida is a 7.5-acre facility with several buildings totaling over 75,000

We currently employe approximately 170 employees, 2022, some of whom have been with our company for over twenty years.

We have organized our business into three operating

(i) our gas-powered boat segment which manufactures and distributes gas-powered boats;

(ii) our electric-powered boat segment

which is developing fully electric boats, through our majority held subsidiary, Forza and (iii) our franchise segment which is developing

a standard product offering and will be selling franchises across the United States through our wholly owned subsidiary, Fix My Boat,

Inc., a Delaware corporation.

Our gas-powered boats allow consumers to use them

for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including transportation,

eco tours, fishing and diving expeditions.

We believe that the performance, quality and value of our boats position us to achieve our

goal of increasing our market share and expanding the power catamaran boating market.

We currently primarily sell our boats through a

current network of 20 independent boat dealers in 27 locations across North America and the Caribbean who resell our boats to the end

user Twin Vee customers.

We continue recruiting efforts for high quality boat dealers and seek to establish new dealers and distributors

domestically and internationally to distribute our boats as we grow our production and introduce new models.

Our gas-powered boats are

currently outfitted with gas-powered outboard combustion engines.

We believe that the boating industry will follow in

the footsteps of the electrification of the automotive industry by creating electric boats that meet or exceed the traditional boating

consumer’s expectations of price, value and run times.

In other words, electric boats must offer a similar experience when compared

to traditional gas-powered boats in terms of size, capability, and price point.

To date, we have completed the design of the 25-foot

FX dual console model, including hull, deck and small parts.

This design has gone from an intellectual concept in CAD to fiberglass and

foam plugs, fiberglass molds and, finally, working boat parts in just over one year.

On October 28, 2022, the running surface of the boat

and all major components were tested successfully for several hours on the Indian River Lagoon in Fort Pierce, Florida.

While the motor

and control systems have been successfully trialed previously, this was the first voyage including all major components, production batteries,

fully functioning “alpha” engine design, control system - including 22” Garmin screen, and Osmosis telematics unit.

The performance of the boat exceeded all expectations and will provide a great baseline for improvements, iterations, and design enhancements.

We ultimately reached over thirty miles per hour.

Subsequent to the initial prototype boat, we have

built four more prototypes:

two more FX-style catamarans, one deck boat and one 22-foot center console monohull.

The engine design and

lower units and the control system cabling have been revamped and improved in each iteration.

The monohull will feature a single battery

and the deck boat will, like the FX, utilize a two-battery system.

The batteries and engines are liquid-cooled and unique improvements

to the heat exchanges have improved performance.

We have now completed our telematics unit design and we have a beta app on the Apple

This will allow for remote monitoring of all of the parameters of the battery and engine for both the end user and the factory.

Additionally, we have improved our user interface through the Garmin control screen to provide well-designed pages showing operating characteristics

and conformance to control parameters.

We continue to anticipate revenues from the sale of

these fully integrated electric boats and motors to commence in late 2023.

Forza will continue to build prototype engines and boats for

the next six to nine months.

In September of 2021 launched our wholly owned subsidiary,

Fix My Boat Inc.

Fix My Boat, will be the first nationally branded, mobile marine service company utilizing a franchise model for marine

mechanics across the country.

We have not experienced material adverse effects on

our business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand for

our products, foreign exchange rates or employee wages.

Inflation rates, particularly in the United States, have increased recently

to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced

liquidity and limits on our ability to access credit or otherwise raise capital.

In addition, the Federal Reserve has raised, and may

again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in

financial markets may have the effect of further increasing economic uncertainty may impact consumer spending for products like our.

Financial Condition

Our consolidated balance sheet indicates a strong

financial position as of December 31, 2022.

We finished the year with revenue up 103% over the prior year.

Our cash, cash equivalents

and marketable securities were $26.4 million at December 31, 2022.

Our property, plant, and equipment along with prepaid expenses went

up notably, as we have invested in additional boat molds for new model, equipment to support our increased production levels, and leasehold

improvements to improve the quality of our products.

While we have largely returned to normal operations,

the COVID-19 pandemic continues to cause challenges.

During fiscal 2022, we experienced supply chain disruptions and an overall increase

in the price of raw materials and other components used in our production.

We also incurred higher labor costs and challenges to fill

open positions due to a highly competitive job market.

Additionally, we experienced periodic operational disruptions as our employees

contracted or were potentially exposed to COVID-19 pandemic, we are unable to predict the impact the pandemic may have on our future results

of operations or financial condition.

Results of Operations

Comparison of the Years Ended December 31, 2022 and 2021

The following table provides certain selected financial information for

the years presented:

Cost of products sold

Operating expenses

Loss from operations

$ (6,021,708 )

$ (1,630,721 )

income from operations

$ (4,390,987 )

$ (5,793,414 )

(loss) income

$ (1,011,009 )

$ (4,782,405 )

and dilutive (loss) income per share of common stock

average number of shares of common stock outstanding

Sales and Cost Sales

net sales increased $4,710,551, or 43% to $15,774,170 for the year ended December 31, 2021 from $11,063,619 for the year ended December

We attribute the large increase in net sales to a strengthening economy during 2021 compared to 2020.

During the first half

of 2020, we were impacted significantly by COVID-19, during the 3 rd quarter of 2020 we started to see a rebound in sales as

the economy started to strengthen.

The number of boats sold during fiscal year ended December 31, 2021 increased 27% over the number

of our boats sold during the fiscal year ended December 31, 2020, due not only to the strengthening economy over 2020, but also our increased

production plan that we focused on during the second half of 2021.

Additionally, we have increased our sale prices to help offset the

increases in operating expenses, which includes increased labor cost, described below, in addition to increased costs of production supplies

to protect against supply chain shortages.

Our average revenue per unit for the year ended December 31, 2021 is up approximately 12%

over revenue per unit for the year ended December 31, 2020.

The average revenue per unit increase, is not only due to our increase in

sales prices, we also attribute this increase to a shift in our model mix.

Early in 2021, we discontinued our 19-foot model, which equaled

approximately 5% of our sales in the previous year.

We further saw a decrease in our 24-foot model over the prior year, while our larger

models all saw increases.

profits increased by $1,501,483, or 31% to $6,275,786 for the year ended December 31,2021 from $4,774,303 for the year ended December

Gross profit as a percentage of sales, for the year ended December 31, 2021 and 2020 was 40% and 43% respectively.

the 3% decline in gross profit percentage to increased cost of raw materials and purchased components.

We anticipate continued pressure

on our gross profit percentage due to price increases on raw materials and purchased components.

Operating Expenses

total operating expenses for the year ended December 31, 2021 and 2020 were $7,906,507 and $4,053,469 respectively.

Operating expenses

as a percentage of sales were 50% compared to 37% in the prior year.

general and administrative expenses increased by approximately 98%, or $853,676 to $1,726,345 for the year ended December 31, 2021, compared

to $872,669 for the year ended December 31, 2020.

The large portion of the increase resulted from expenses totaling $332,910 incurred

from being publicly traded company, which we did not incur in the prior year including, directors and officers insurance, filing fees,

legal expenses and investor relations costs.

Our repairs and maintenance increased $168,047 or 168%, primarily due to equipment repairs

and increased garbage disposal for our increased production levels.

We also incurred significant increases our liability insurance and

workers compensation insurance totaling $89,761, an increase of 76%, due to our increased revenue levels and increased wages.

other items make up the remaining $262,958 of increased selling, general and administrative expense increase.

and wages increased by approximately 88%, or $2,531,826 to $5,389,599 for the year ended December 31, 2021, compared to $2,857,773 for

the year ended December 31, 2020.

The increase in salaries and wages of $2,531,826 was the result of aggressively ramping up of production,

which required increasing our production and adding mid-level staff.

Included in salaries and wages for the year ended December 31, 2021

was a charge for non-cash stock-based compensation expense of $309,832 due to the issuance of options to employees.

We have also incurred

production and executive bonus expense of $560,299 for the year ended December 31, 2021 compared to $168,304 for the year ended December

31, 2020, an increase of $391,995, as a result of meeting our 2021 production objectives.

The remaining increase of salaries and wages

during the year ended December 31, 2021 was associated with payroll taxes and benefits.

fees increased by 128%, or $213,630 to $380,929 for the year ended December 31, 2021, compared to $167,299 for the year ended 2020.

increase was primarily due to the additional costs we incurred associated with being a public company and included an increase in audit,

legal and related consulting fees in order to fulfill our public company SEC reporting obligations.

expense for the year ended December 31, 2021 increased by 27%, or $42,795 to $198,523 for the year ended December 31, compared to $155,728

in December 31, 2020.

During the year ended December 31, 2021 we made significant investments in equipment, leasehold improvements and

boat molds that resulted in an increased our depreciation expense.

and design expenses for the year ended December 31, 2021, was $211,111 compared to $0, for the year ended December 31,2020.

These expenses

are associated with our development of our electric propulsion system for Forza X1.

income increased by 38%, or $169,469 to $619,712 for the year ended December 31, 2021, compared to income of $450,243 for the year ended,

The increase in other income is primarily the result of $608,224 in government grant income associated with our PPP loan that was

recognized in 2021, lower interest expense, and a gain from insurance recovery net of loss on disposal of assets of $434,724.

offset by a loss on the disposal of assets of $254,600 in 2021 and the forgiveness of our PPP loan in 2020.

loss for the year ended December 31, 2021 was $1,011,009, compared to net income of $1,171,077 for the year ended December 31, 2020.

We have spent much of 2021 assembling the tools and people necessary to increase production levels.

While our revenue levels increased,

our expenses also increased.

That coupled with the additional expenses associated with being a public company and our research and development

efforts for our electric boat division, resulted in a net loss for 2021.

With these investments, we are building the foundation for our

future, not only for our gas powered boats, but also for our electric boat division.

We continue to deal with the fallout of the global

pandemic, as well as the impact of additional costs of growth, but are encouraged by our continued increase in revenue.

Basic and dilutive

loss per share of common stock for the year ended December 31, 2021, ($0.19) compared to basic and dilutive income per share of common

stock for the year ended December 31, 2020, $0.29.

and Capital Resources

primary source of funds for the year ended December 31, 2021 was net cash received from our initial public offering.

Our primary use

of cash was related to funding the expansion of our operations through capital improvements, adding staff and increasing inventory levels

to meet the increase in demand for our products.

With uncertainty on component availability, prolonged lead time and rising prices, we

have been adding to our inventory far earlier than previous years.

following table provide selected financial data about us as of December 31, 2021 and December 31,2020.

and cash equivalents

of December 31, 2021, we had sufficient cash and cash equivalents to meet ongoing expenses for at least twelve months from the date of

the filing of this Annual Report on Form 10-K.

As of December 31, 2021, we had $13,039,399 of cash, cash equivalents and marketable securities,

total current assets of $13,073,346, and total assets of $20,599,184.

Our total liabilities were $3,899,484.

Our total liabilities were

comprised of current liabilities of $2,155,420 which included accounts payable and accrued liabilities of $1,657,675, contract liability

of $14,100 due to affiliated companies of $115,043 and current portion of operating lease right of use liability of $368,602, and long-term

liabilities of $1,744,064.

As of December 31, 2020, we had $891,816 of cash and cash equivalents, total current assets of $1,834,942

and total assets of $4,504,566.

Our total current liabilities were $1,440,067 and total liabilities of $2,955,726 which included long-term

operating lease liabilities for the lease of our facility.

believe that our cash and cash equivalents will provide sufficient resources to finance operations for the next 12 months.

to cash, cash equivalents and marketable securities, we anticipate that we will be able to rely, in part, on cash flows from operations

in order to meet our liquidity and capital expenditure needs in the next year.

(used in) provided by operating activities

Basic and dilutive loss per share of common stock

Weighted average number of shares of common stock outstanding

Net Sales and Cost Sales

Our net sales increased $16,213,554, or 103% to $31,987,724

for the year ended December 31, 2022 from $15,774,170 for the year ended December 31, 2021.

We attribute the large increase in net sales

to a continued strong economy during 2022, along with our investment in the growth of our sales and marketing assets throughout 2022.

That paired with our ability to increase our production capacity by over 100% year over year.

The number of boats sold during fiscal year

ended December 31, 2022 increased 59% over the number of our boats sold during the fiscal year ended December 31, 2021.

Additionally,

we have increased our sale prices to help offset the increases in operating expenses, which includes increased labor cost, in addition

to increased inventory levels due to the additional models we now produce and to protect against supply chain shortages.

Our average revenue

per unit for the year ended December 31, 2022 is up approximately 31% over revenue per unit for the year ended December 31, 2021.

average revenue per unit increase, is not only due to our increase in sales prices, but we also attribute this increase to a shift in

our model mix.

In 2021 our sales were spread evenly across our 26 and 31 Classics and our 24 and 28 GFX models.

In 2022, we discontinued

the remaining Twin Vee Classic lines and made the 260 and 340 GFX models available.

We saw sales across all models increase in 2022.

did see a shift back to sales on our smallest unit, the 240 GFX, which accounted for approximately 40% of our total sales, compared to

The 260 GFX, went from approximately 27% of our total sales, down to 18% in 2022.

The 280 GFX remained consistent with 2021,

while the 340 GFX increased from 3% in 2021 to 12% in 2022.

Gross profits increased by $4,381,020, or 70% to $10,656,806

for the year ended December 31, 2022 from $6,275,786 for the year ended December 31, 2021.

Gross profit as a percentage of sales, for

the year ended December 31, 2022 and 2021 was 33% and 40% respectively.

We attribute the 7% decline in gross profit percentage to increased

cost of raw materials and purchased components, as well as a onetime cycle count adjustment in the fourth quarter of 2022.

As we prepared

to go live on our new ERP system, we have been reviewing on hand inventory, and making corrections.

As we have brought all new models

to the market over the last 2 years, we had been left with noncurrent inventory.

The cycle count adjustment for the year ended December

31,2022 was approximately $1,459,650, compared to $608,728 for the prior year, accounting for 3% of the overall decline.

We anticipate

continued pressure on our gross profit percentage due to price increases on raw materials and purchased components.

Total Operating Expenses

Our total operating expenses for the year ended December

31, 2022 and 2021 were $16,678,514 and $7,906,507 respectively.

Operating expenses as a percentage of sales were 52% compared to 50% in

the prior year.

Selling, general and administrative expenses increased

by approximately 60%, or $1,033,279 to $2,759,624 for the year ended December 31, 2022, compared to $1,726,345 for the year ended December

The large portion of the increase resulted from expenses totaling $422,776, incurred from being publicly traded company, which

Twin Vee only incurred for a portion of 2021, and we did not incur in 2021 for Forza, directors and officers insurance, filing fees, legal

expenses and investor relations costs.

We also incurred significant increases to our liability insurance and workers compensation insurance

totaling $275,416, due to our increased revenue levels and increased wages.

Travel and meals expense increased $115,277, many of Forza’s

employees work remotely and those employees needed to be on site to build our prototypes.

Our Delaware state tax attributed to $95,122

of the increase.

Numerous other items make up the remaining $124,689 of increased selling, general and administrative expense increase.

Salaries and wage related expenses increased by approximately

113%, or $6,067,970 to $11,457,569 for the year ended December 31, 2022, compared to $5,389,599 for the year ended December 31, 2021.

The increase in salaries and wages of $4,263,341 was the result of aggressively ramping up of production, which required increasing our

production and adding mid-level staff.

Included in salaries and wages for the year ended December 31, 2022 was a non-cash stock-based

compensation expense of $1,448,751, which was an increase of $1,138,920 from the prior year, due to the issuance of options to employees.

We have also incurred production and executive bonus expense increase of $39,083 for the year ended December 31, 2022.

Our cost of benefits,

primarily health insurance and 401K, increased by approximately $235,144, due to our increase in headcount.

Expenses for board fees increased

by $95,792 in 2022, during the year ended December 31, 2021 we only incurred board fees for a portion of the year for Twin Vee, and we

did not incur any board fees for Forza.

The remaining increase of salaries and wages during the year ended December 31, 2021 was associated

with payroll taxes and benefits.

Professional fees increased by 154%, or $585,108

to $966,037 for the year ended December 31, 2022, compared to $380,928 for the year ended December 31, 2021.

This increase was

primarily due to the additional costs we incurred associated with being a public company and included an increase in audit, legal

and related consulting fees to fulfill our public company SEC reporting obligations, as well as preparation for our merger with Twin

Vee PowerCats, Inc.

Depreciation expense for the year ended December 31,

2022 increased by 179%, or $355,227 to $553,750 for the year ended December 31, 2022 compared to $198,523 in December 31, 2021.

our IPO in 2021 we have made significant investments in equipment, leasehold improvements and boat molds that resulted in an increased

our depreciation expense.

Research and design expenses for the year ended December

31, 2022, was $941,533 compared to $211,111, for the year ended December 31, 2021.

These expenses are associated with our development

of our electric propulsion system for Forza.

We anticipate further increases in our research and design expense in 2023.

Other income decreased by 63%, or $391,418 to $228,294 for the year ended December

31, 2022, compared to $619,712 for the year ended December 31, 2021.

The decrease in other income is primarily the result of $608,224

in government grant income associated with our PPP loan that was recognized in 2021, this was partially offset in 2022, by the ERC credit

of $355,987 we received.

In 2021 we recorded a net gain from insurance recovery of $180,124, which we did not have in 2022.

an increase in net loss in fair value of our marketable securities of $133,988, due to the poor financial market.

For the year ended December

31, 2022 we received $165,877 in dividend income, compared to $0 in 2021, and we received interest income of $85,939 compared to $146

in 2021, and increase of $85,793 as a result of increased interest rates on our cash and marketable securities.

For the year ended December

31, 2022 we did see an increase in interest expense of $27,446.

Our interest expense also includes finance fees, that we pay third-party

finance companies on behalf of our dealers, increase sales to dealers that utilize finance companies naturally drove these fees up during

Net loss for the year ended December 31, 2022, was

$5,793,414, compared to $1,011,009 for the year ended December 31, 2021.

We have spent much of the last two years assembling the tools

and people necessary to increase production levels.

While our revenue levels increased, our expenses also increased.

That coupled with

the additional expenses associated with being a public company and our research and development efforts for our electric boat division,

resulted in a net loss for 2022.

With these investments, we are building the foundation for our future, not only for our gas powered boats,

but also for our electric boat division.

We continue to deal with the fallout of the global pandemic, as well as the impact of additional

costs of growth, but are encouraged by our continued increase in revenue.

Basic and dilutive loss per share of common stock increased

for the year ended December 31, 2022,to ($0.76) compared to ($0.19) for the year ended December 31, 2021.

Liquidity and Capital Resources

A primary source of funds for the year ended December

31, 2022 was net cash received from our secondary offering, as well as Forza’s initial public offering and revenue generated from

Our primary use of cash was related to funding the expansion of our operations through capital improvements, adding staff

and increasing inventory levels to meet the increase in demand for our products.

With uncertainty on component availability, prolonged

lead time and rising prices, we have been adding to our inventory far earlier than previous years.

The following table provide selected financial data

about us as of December 31, 2022 and December 31, 2021.

Cash and cash equivalents

Marketable securities

Current assets

Current liabilities

Working capital

As of December 31, 2022, we had sufficient cash and cash equivalents to meet

ongoing expenses for at least twelve months from the date of the filing of this Annual Report.

As of December 31, 2022, we had $26,428,525

of cash, cash equivalents and marketable securities, total current assets of $29,887,529, and total assets of $38,231,480.

Our total liabilities

were $5,210,591.

Our total liabilities were comprised of current liabilities of $3,791,063 which included accounts payable of $2,065,680

and accrued liabilities of $1,240,769, contract liability of $5,300 due to affiliated companies of $0 and current portion of operating

lease right of use liability of $479,314, and long-term liabilities of $1,419,528.

As of December 31, 2021, we had $6,975,302 of cash

and cash equivalents, marketable securities of $6,064,097, total current assets of $13,073,346 and total assets of $20,599,184.

current liabilities were $2,155,420 and total liabilities of $3,899,484 which included long-term operating lease liabilities for the lease

of our facility.

We believe that our cash and cash equivalents

will provide sufficient resources to finance operations for the next 12 months.

In addition to cash, cash equivalents and marketable

securities, we anticipate that we will be able to rely, in part, on cash flows from operations in order to meet our liquidity and

capital expenditure needs in the next year.

We do anticipate Forza’s expenses to increase during the next two years as it

constructs its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be paid for through the

proceeds of Forza’s initial public offering, and certain grant funding, provided the conditions to receipt of the grant

funding are met, of which there can be no assurance.

Cash used in operating activities

$ (4,146,030 )

$ (1,947,539 )

used in investing activities

$ (2,198,491 )

provided by financing activities

at end of year

Flow from Operating Activities

the year ended December 31, 2021, net cash flows used in operating activities was $1,947,539 compared to $364,648 in cash flow provided

from operating activities during the year ended December 31, 2020.

We have increased inventory levels by $913,510, due to supply chain

delays that continue to impact lead time and parts availability.

Prepaid expenses and other current assets increased by $903,406, primarily

due to Directors and Officers Insurance being paid upfront.

Our net loss from operation was $1,011,009, was decreased by non-cash expenses

of approximately $1,200,065, primarily due government grant income of $608,224, stock-based compensation of $309,832, change of right-of-use

asset and lease liabilities of $384,791, gain on disposal of assets of $224,037 and depreciation of $198,523.

Flow from Investing Activities

the year ended December 31, 2021, we used $8,037,264 for investment activities, compared to $200,452 used during the year ended December

Approximately, $6,096,562 was invested in marketable securities and $1,940,702 was used to purchase property and equipment.

The majority of the investment for property and equipment included $652,229 for new boat model molds, $557,324 for building roof repairs

and ventilation system improvements, $357,935 for new production equipment, $164,000 for electric boat tooling and $101,984 for production

Flows from Financing Activities

the year ended December 31, 2021, net cash provided by financing activities was $16,068,289, compared to $512,046 during the year ended

December 31, 2020, primarily consisting of net proceeds from our IPO of $15,852,037, proceeds from PPP loan of $608,224 and $44,628 from

the repayment of advances from related parties, offset by repayments to related parties of approximately $331,100 and deferred financing

costs of $105,500.

ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

believe that several accounting policies are important to understanding our historical and future performance.

We refer to these policies

as “critical” because these specific areas generally require us to make judgments and estimates about matters that are uncertain

at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used, which

would have resulted in different financial results.

management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements,

which have been prepared in accordance with U.S.

The preparation of our consolidated financial statements requires us to make estimates

and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets

and liabilities.

On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management

believes to be reasonable under the circumstances, which form the basis for judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Cash used in investing activities

$ (8,037,264 )

Cash provided by financing activities

Cash at end of year

Cash Flow from Operating Activities

For the year ended December 31, 2022, net cash flows used in operating activities

was $4,146,030 compared to $1,947,539 during the year ended December 31, 2021.

We have increased inventory levels by $2,208,563, due to

supply chain delays that continue to impact lead time and parts availability, and due to our increased product offerings.

from operation was $5,793,414, was decreased by non-cash expenses of approximately $2,593,713, primarily due to stock-based compensation

of $1,448,751, depreciation of $553,750, change of right-of-use asset and lease liabilities of $397,136, net change in fair value of marketable

securities of $133,988 and a loss on the disposal of assets of $60,088.

For the year ended December 31, 2022, our accounts payable and

accrued liabilities increased $1,648,774, due to our increase in inventory.

For the year ended December 31, 2022, our operating lease

liabilities decreased $390,050.

Prepaid expenses decreased by $21,339 and contract liabilities decreased by $8,800.

Accounts receivable

increased by $9,030.

Cash Flow from Investing Activities

During the year ended December 31, 2022, we used $195,605

for investment activities, compared to $8,037,264 used during the year ended December 31, 2021.

We increased our property and equipment

by $3,365,679, this was funded through the sales of investments of $3,002,591.

The majority of the property and equipment purchased were

molds for our boat production, for both Forza and Twin Vee, investing an additional $2,229,674.

We also spent approximately $531,858 on

machinery and equipment, these improvements include a new CNC machine, infusion equipment, cranes, hoists, production carts and other

We spend an additional $193,350 to complete the upgrade the wiring in the building so it would support our new production levels,

we installed new lighting and ventilation to improve the overall quality of our product and we built of breakroom for our employees.

additionally spent approximately $284,509 on computer hardware and software.

We sold a thermoform machine for $175,000, in order to free

up space for our manufacturing processes.

Cash Flows from Financing Activities

For the year ended December 31, 2022, net cash provided by financing activities

was $20,867,340, compared to $16,068,289 during the year ended December 31, 2021.

Net cash provided by financing activities primarily

came from net proceeds from Forza’s initial public offering of $14,934,989 which included the noncontrolling interest of $5,241,317

and net proceeds from our secondary offering of $6,001,836.

We had repayments of debt and advancements from Twin Vee Inc., which was a

$69,485 net payment associated with.

CRITICAL ACCOUNTING ESTIMATES

We believe that several accounting policies are important

to understanding our historical and future performance.

We refer to these policies as “critical” because these specific areas

generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different

estimates—which also would have been reasonable—could have been used, which would have resulted in different financial results.

Our management’s discussion and analysis of

financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported

amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities.

On an ongoing basis,

we evaluate our estimates based on historical experience and make various assumptions, which management believes to be reasonable under

the circumstances, which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

notes to our consolidated financial statements contained herein contain a summary of our significant accounting policies.

the following accounting policies critical to the understanding of the results of our operations:

Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

(“ASC”) Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method.

did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial.

received for the future sale of a boat to a customer is recognized as a customer deposit, which is included in contract liabilities on

the balance sheet.

Customer deposits are recognized as revenue when control over promised goods is transferred to the customer.

preparation of financial statements in conformity with accounting principles generally accepted in the United States “U.S.

requires management to make estimates and assumptions that affect the amounts reported in the financial statements.

Actual results could

differ from those estimates.

Included in those estimates are assumptions about allowances for inventory obsolescence, useful life of

fixed assets, warranty reserves and bad-debt reserves.

are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method.

Net realizable value is defined

as sales price less cost of completion, disposable and transportation and a normal profit margin.

Production costs, consisting of labor

and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity.

Excess production costs

are charged to cost of products sold.

Provisions have been made to reduce excess or obsolete inventories to their net realizable value.

of Long-Lived Assets

assesses the recoverability of its long-lived assets when indicators of impairment are present.

If such indicators are present, recoverability

of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life

to the assets’ net carrying amounts.

If the estimated undiscounted net cash flows are less than the net carrying amount, the assets

would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows.

Warranty Costs

required by FASB ASC Topic 460, Guarantees , the Company is including the following disclosure applicable to its product warranties.

Company accrues for warranty costs based on the expected material and labor costs to provide warranty replacement products.

The methodology

used in determining the liability for warranty cost is based upon historical information and experience.

The Company’s warranty

reserve is calculated as the gross sales multiplied by the historical warranty expense return rate.

Company adopted FASB Accounting Standards Update (“ASU”) No.

2016-02, Leases (“Topic 842”),

using the modified retrospective adoption method with an effective date of January 1, 2019.

This standard requires all lessees to recognize

a right-of-use asset and a lease liability, initially measured at the present value of the lease payments.

Topic 842, the Company applied a dual approach to all leases whereby the Company is a lessee and classifies leases as either finance

or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company.

Lease classification

is evaluated at the inception of the lease agreement.

Protection Program

GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for-profit entity.

Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows

for the selection of accounting policies amongst acceptable alternatives.

Based on the facts and circumstances, the Company determined

it most appropriate to account for the Paycheck Protection Program (“PPP”) loan proceeds as an in-substance government grant

by analogy to International Accounting Standards 20 “(IAS 20)”, Accounting for Government Grants and Disclosure of

Government Assistance .

Under the provisions of IAS 20, “a forgivable loan from government is treated as a government grant

when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable

however, based on certain interpretations, it is analogous to “probable” as defined in FASB ASC Subtopic

450-20-20 under U.S.

GAAP, which is the definition the Company has applied to its expectations of PPP loan forgiveness.

Under IAS 20,

government grants are recognized in earnings on a systematic basis over the periods in which the Company recognizes costs for which the

grant is intended to compensate (i.e., qualified expenses).

Further, IAS 20 permits for the recognition in earnings either (1) separately

under a general heading such as other income, or (2) as a reduction of the related expenses.

The Company has elected to recognize government

grant income separately within other income to present a clearer distinction in its financial statements between its operating income

and the amount of net income resulting from the PPP loan and forgiveness.

Income Taxes and Valuation Allowance

Company accounts for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements

carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured

using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment

A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize

tax assets through future operations .

SHEET ARRANGEMENTS

did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under Securities

and Exchange Commission rules.

and Qualitative Disclosures About Market Risk

The notes to our consolidated financial statements

contained herein contain a summary of our significant accounting policies.

We consider the following accounting policies critical to the

understanding of the results of our operations:

Revenue Recognition

The Company accounts for revenue in accordance with

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 which was adopted

at the beginning of fiscal year 2018 using the modified retrospective method.

The Company did not recognize any cumulative-effect adjustment

to retained earnings upon adoption as the effect was immaterial.

Payment received for the future sale of a boat to

a customer is recognized as a customer deposit, which is included in contract liabilities on the balance sheet.

Customer deposits are

recognized as revenue when control over promised goods is transferred to the customer.

Use of Estimates

The preparation of financial statements in conformity

with accounting principles generally accepted in the United States “U.S.

GAAP” requires management to make estimates and assumptions

that affect the amounts reported in the financial statements.

Actual results could differ from those estimates.

Included in those estimates

are assumptions about allowances for inventory obsolescence, useful life of fixed assets, warranty reserves and bad-debt reserves.

Inventories are stated at the lower of cost or net

realizable value using the first-in, first-out (FIFO) method.

Net realizable value is defined as sales price less cost of completion,

disposable and transportation and a normal profit margin.

Production costs, consisting of labor and overhead, are applied to ending finished

goods inventories at a rate based on estimated production capacity.

Excess production costs are charged to cost of products sold.

have been made to reduce excess or obsolete inventories to their net realizable value.

Impairment of Long-Lived Assets

Management assesses the recoverability of its long-lived

assets when indicators of impairment are present.

If such indicators are present, recoverability of these assets is determined by comparing

the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets’ net carrying amounts.

If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value,

based on appraisal or the present value of the undiscounted net cash flows.

Product Warranty Costs

As required by FASB ASC Topic 460, Guarantees ,

the Company is including the following disclosure applicable to its product warranties.

The Company accrues for warranty costs based on the

expected material and labor costs to provide warranty replacement products.

The methodology used in determining the liability for warranty

cost is based upon historical information and experience.

The Company’s warranty reserve is calculated as the gross sales multiplied

by the historical warranty expense return rate.

The Company adopted FASB Accounting Standards Update (“ASU”)

2016-02, Leases (“Topic 842”), using the modified retrospective adoption method with an effective date

of January 1, 2019.

This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at

the present value of the lease payments.

Under Topic 842, the Company applied a dual approach

to all leases whereby the Company is a lessee and classifies leases as either finance or operating leases based on the principle of whether

or not the lease is effectively a financed purchase by the Company.

Lease classification is evaluated at the inception of the lease agreement.

Paycheck Protection Program

GAAP does not contain authoritative accounting

standards for forgivable loans provided by governmental entities to a for-profit entity.

Absent authoritative accounting standards, interpretative

guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable

alternatives.

Based on the facts and circumstances, the Company determined it most appropriate to account for the Paycheck Protection

Program (“PPP”) loan proceeds as an in-substance government grant by analogy to International Accounting Standards 20 “(IAS

20)”, Accounting for Government Grants and Disclosure of Government Assistance .

Under the provisions of IAS 20, “a

forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms

for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”;

however, based on certain interpretations,

it is analogous to “probable” as defined in FASB ASC Subtopic 450-20-20 under U.S.

GAAP, which is the definition the Company

has applied to its expectations of PPP loan forgiveness.

Under IAS 20, government grants are recognized in earnings on a systematic basis

over the periods in which the Company recognizes costs for which the grant is intended to compensate (i.e., qualified expenses).

IAS 20 permits for the recognition in earnings either (1) separately under a general heading such as other income, or (2) as a reduction

of the related expenses.

The Company has elected to recognize government grant income separately within other income to present a clearer

distinction in its financial statements between its operating income and the amount of net income resulting from the PPP loan and forgiveness.

Deferred Income Taxes and Valuation Allowance

The Company accounts for income taxes under ASC 740

“Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the

future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities

and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates is recognized in income in the period the enactment occurs.

A valuation allowance is provided for

certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations .

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the periods presented, and

we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Quantitative and Qualitative

Disclosures About Market Risk.

Not applicable because we

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What changed 10-K

Item 7. Management’s Discussion and Analysis