Item 1. Business
Item 1. Business.
General
Twin Vee PowerCats Co. (“Twin Vee” “we”,
“us” or the “Company”) is a designer, manufacturer and marketer of recreational and commercial power boats. We
believe our company, founded in 1996, has been an innovator in the recreational and commercial power catamaran industry. 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 approximately 100,000 square feet, including a nearly complete 30,000 square foot expansion which began
in mid-2024. We currently employ approximately 65 people.
Twin Vee products are marketed under two brands: Twin
Vee for our catamarans, or dual hull vessels, and Aquasport for our “V”-hull boats. Consumers can use our boats 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-boat market. We currently primarily sell our boats through a network of 22 independent boat dealers
across North America, the Caribbean and Central America who resell our boats to the end user Twin Vee customers. We continue efforts to
recruit high quality boat dealers to join our network 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 boats are currently outfitted with gas-powered outboard
combustion engines. During 2024, Forza X1, Inc., our minority owned electric boat subsidiary determined to cease production of electric
boats and on November 26, 2024, Forza Xi, Inc.(“Forza”), was merged into Twin Vee Merger Sub, Inc., a wholly-owned subsidiary
of Twin Vee (“Merger Sub”) and became a wholly owned subsidiary.
Revenue from the sale of our boats accounted for 100%
of our net revenue in fiscal years 2024 and 2023. In 2024, our boats were manufactured in Fort Pierce, Florida. We believe our company
has been an innovator in the recreational and commercial power boat industry. We currently have 15 models in production ranging in size
from our 22-foot, single engine, monohull (Aquasport) to our 40-foot offshore 400 GFX. In 2023 we added eight mono hull models to our
line-up.
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During the 2023 and 2024 fiscal years, we focused
our efforts on increased throughput through our facility, and fully integrating the new models from our Aquasport brand that we acquired
in 2023. In February 2023, we announced our launch of our new AquaSport brand, a new-monohull boat brand that included a 22-foot center
console monohull; a 25-foot dual console, single-engine day boat; a 22-foot dual console monohull; and a 25-foot deck boat, single engine.
We delivered our first monohull boats in January of 2023. In May of 2023, we entered into a finance lease, securing the rights to the
AquaSport brand and facility in White Bluff, Tennessee. The AquaSport brand appeals to first-time boat buyers, the freshwater market,
and consumers that prefer a monohull boat[, all of which represent markets in which we are expanding our footprint and dealer representation.
During the year ended December 31, 2024, three individual dealer
each represented over 10% of our total sales and in the aggregate represented 40% of total
sales. During the year ended December 31, 2023, one individual dealer represented over 10% of our total sales, and one customer represented
10.3% of total sales.
Recent
Developments
Merger
On November 26, 2024 (the “Closing
Date”), pursuant to the terms of the Agreement and Plan of Merger, dated as of August 12, 2024 (the “Merger Agreement”),
by and between Twin Vee, Twin Vee Merger Sub, Inc. and Forza, Merger Sub was merged with and into Forza (the “Merger”), with
Forza surviving the Merger as a wholly-owned subsidiary of Twin Vee. At the effective time of the Merger, (a) each outstanding share of
common stock of Forza , par value $0.001 per share of Forza (the “Forza Common Stock”) (other than any shares held by Twin
Vee) was converted into the right to receive 0.611666275 shares of Twin Vee common stock, par value $0.001 per share (the “Twin
Vee Common Stock”), (b) each outstanding Forza stock option, whether vested or unvested, that had not previously been exercised
prior to such time was converted into an option to purchase 0.611666275 shares of Twin Vee Common Stock for each share of Forza Common
Stock covered by such option, (c) each outstanding warrant to purchase shares of Forza Common Stock was assumed by Twin Vee and converted
into a warrant to purchase 0.611666275 shares of Twin Vee Common Stock for each share of Forza Common Stock for which such warrant was
exercisable for prior to the Effective Time, and (d) the 7,000,000 shares of Forza Common Stock held by Twin Vee were cancelled.
The issuance of shares of Twin Vee
Common Stock to the former shareholders of Forza was registered under the Securities Act of 1933, as amended, pursuant to a registration
statement on Form S-4 (File No. 333-281788), as amended, filed by Twin Vee with the Securities and Exchange Commission (the “SEC”)
and declared effective on October 10, 2024 (the “Registration Statement”).
At the effective time of the Merger,
in accordance with the terms of the Merger Agreement, the size of Twin Vee’s board of directors (the “Board”) was set
at five, Joseph Visconti, Preston Yarborough, Neil Ross and Kevin Schuyler remained as directors of Twin Vee and Marcia Kull was appointed
as a director of Twin Vee. Effective as of the effective time of the Merger, Bard Rockenbach and James Melvin resigned as directors of
Twin Vee and any committees thereof
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Sale
Agreement with Revver Digital, LLC
On February 4, 2025, we entered into an agreement
(the “Sale Agreement”), effective February 4, 2025 (the “Effective Date”), with Revver Digital, LLC, a Delaware
limited liability company and wholly owned subsidiary of One Water Marine Inc. (“OWM”), providing us with the right to acquire
certain intellectual property of OWM (the “OWN Intellectual Property”) related to (a) the online marketplace, advertisement,
marketing, and sale services of yachts, boats, and yacht and boat accessories and (b) arranging of loans, insurance, and warranty services
related to yachts and boats under the brands “Yachts for Sale” and “Boats for Sale” through the websites available
at the domains (the “Domains”) “yachtsforsale.com” and “boatsforsale.com” (the “Business”).
Pending the closing of the sale to us of the OWN Intellectual Property, the Sale Agreement grants us a license to use and sublicense the
OWN Intellectual Property to conduct the Business in consideration of: (a) the payment to OWM of a monthly revenue-sharing royalty (the
“Revenue-Sharing Royalty”) of six percent (6%) of the Aggregate Subscription Revenue (as defined) of the Business; and (b)
a credit to OWM of $500 per OWM dealer who lists boats or yachts on the Domains during such period (the “Dealer Storefront Credit”).
On the date of the closing (the “Closing”) of the sale to us of the OWN Intellectual Property, the Sale Agreement provides
that in consideration of the transfer of, and as a purchase price (the “Purchase Price”) for, the OWM Intellectual Property,
we will assume certain liabilities of OWM related to the Business and pay to OWM $5,000,000 (the “Minimum Purchase Price”),
less the aggregate amount of all Revenue-Sharing Royalties paid to OWM through such date and the aggregate amount of all Dealer Storefront
Credits accrued for the benefit of OWM through such date (the “Remaining Purchase Price”).
Twin Vee’s
Twin-Hull Shape
Twin Vee catamaran boats are designed for a dry and
smooth ride. As a Twin Vee moves through the water, the boat’s symmetrical catamaran hull has lifting strakes on the side of each
hull. Lifting strakes are known to produce lift at the bow of a boat by displacing water, allowing the
boat to, in essence, glide above the water rather than lumber through it. Twin Vee’s lifting strakes work to not only create lift,
but also to make the ride smoother. The forward motion of a catamaran boat lifts water up towards the top of the tunnel while
pushing the water inward to form two counter-flowing vortexes. As these vortexes are being formed, the Twin Vee hull design aerates these
vortexes with small air bubbles, which are then compressed at an increasing rate as the vortexes move down the tunnel. It is the kinetic
energy stored in these compressed air bubbles, which creates a smooth and stable ride. As speed increases, the kinetic energy increases
at a non-linear rate as more and more air is induced into the increasingly faster flowing vortexes. The trailing surfaces of the Twin
Vee hulls are specifically designed to facilitate propulsion efficiency by discharging the kinetic energy and air bubbles from the counter-flowing
vortexes upon exiting astern, thus providing the propellers with a steady flow of super clean and highly ordered water.
We believe that these features, combined with a catamaran’s
soft ride, results in Twin Vee’s renowned efficiency and smooth, seaworthy safety. At speed, the Twin Vee’s displacement hull
slices through the water, traveling with the shape of the seas rather than flying over them and experiencing reentry shock. This is intended
to result in a stable and smooth ride. The following are some benefits of the catamaran, or Twin Vee’s, hull shape.
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Power Catamaran
Hull Benefits
●
Catamaran stability. Catamarans have parallel hulls on the outer edges of the boat rather than in the middle, providing superior stability. A Twin Vee hull is designed to travel with the wave shapes because its buoyancy is to the outside, reducing the snap roll pendulum motion of deep vee monohulls. A Twin Vee’s wider footprint mitigates the effects of rolling seas, making them less likely to capsize and reducing seasickness.
●
Shallow draft for travelling in “skinny” waters . The weight of the boat is distributed to two hulls for a shallower draft than a monohull vessel of the same weight might have. The shallow draft of the Twin Vee design provides access to areas that conventional hulls cannot reach.
●
More usable deck space . The relatively rectangular design of the Twin Vee expanded deck area allows for more usable deck space than monohulls. Twin Vee boats are wider in the bows providing more open-area in open models and bigger berths in cabins.
●
Maintains a plane at lower speed for fuel efficiency, enabling single engine operation . Twin Vee catamaran hulls do not need planing speed power to travel rapidly. Further, a Twin Vee’s deck remains closer to being parallel with the water than a monohull vessel would at the same speed, allowing customers to take advantage of the greater fuel efficiency that lower speeds allow without compromising visibility as much as they might in a monohull vessel.
●
Docking and maneuverability . With the extra separation between the motors compared to most mono hull boats, you can cross-clutch the motors and turn or spin the boat up to its own length.
●
Greater stability provides more options for fishing . Monohull vessels can list significantly when weight on the boat is not balanced. The stability of Twin Vee’s catamaran design allows fishing from one side without the extreme listing of a monohull.
Twin Vee’s
Monohull
We expect our new monohull line to appeal to first-time
boat buyers, the freshwater market and consumers that prefer a monohull boat. These categories represent larger segments of the market
for boat buyers than that of power catamarans. By appealing to these segments, we believe our new monohull line has the potential to drive
significant growth for our company. In 2024, we introduced our all new 28-foot dual engine “Superboat.” We expect to follow
that introduction with updated 22-foot and 24-foot designs in 2025.
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Pro Direct Platform
At its core, Pro Direct will be designed to provide a comprehensive, customer-centric
approach to the boat buying process. Much like Toyota’s Smart Path, which allows users to shop, customize, and price vehicles, Twin
Vee’s Pro Direct will enable consumers to navigate their boat purchase journey from the comfort of their own homes. The platform
will empower users to explore a wide range of options, including the ability to customize their boats, compare prices, check nearby inventory,
apply for financing, evaluate trade-in values, and even arrange delivery—all through a user-friendly interface. The primary goal
of Pro Direct is to create a cohesive experience that bridges the gap between original equipment manufacturers (OEMs), dealers, and consumers.
By leveraging technology and data analytics, Twin Vee aims to streamline the sales process, ensuring that each stakeholder can engage
more effectively and transparently.
What the Platform Will Offer :
● Design Your Boat : Customers can choose models, colors, and accessories online.
● Real-Time Inventory : See available boats at nearby dealers.
● Easy Financing : Apply for loans and compare rates through the site.
● Trade-In Tools : Customers can get fair trade-in estimates for their current boats.
● Delivery Coordination : Buyers can schedule delivery through the platform.
Why It Matters :
● This platform will streamline the buying process for customers.
● Dealers can benefit from more sales and a better experience.
● Twin Vee aims to reduce costs and grow the marine marketplace with this technology.
As Twin Vee moves forward with the Pro Direct platform, the ultimate ambition is to support Twin Vee dealers with this innovative solution.
By doing so, Twin Vee plans to create a more-integrated marine marketplace, benefiting consumers and dealers alike. By modernizing the
boat buying experience, Pro Direct aims to reduce costs, increase accessibility, and provide maximum value for customers’ investments
in these recreational vehicles.
In summary, we believe that Twin Vee PowerCats’ Pro Direct platform
represents a paradigm shift in the marine industry. With its commitment to customer-centricity, technological innovation, and strategic
partnerships, we are positioning Pro Direct to redefine how boats are bought and sold.
Our Strategy
Overall Strategy
We intend to capitalize on the thriving broader marine
industry through the following strategies:
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Develop New and Innovative Products in Our Core
Market. As an innovator, designer, manufacturer, and marketer of catamaran powerboats, we strive to design new and inventive
products that appeal to a broad customer base. We intend to launch a number of new products and features with best-in-class quality, with
the goal of increasing sales and significant margin expansion. For example, w e currently have fifteen
(15) 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. We designed our first monohull boat, a 22-foot, available in both center and dual consoles. This is the first boat in a line
of boats that will be sold under our new AquaSport brand. Our product development process enables us to renew our product portfolio
with innovative offerings at a rate that we believe will be difficult for our competitors to match without significant additional capital
investments. We intend to release new products and features multiple times during the year, which we believe enhances our reputation as
a cutting-edge boat manufacturer and will drive consumer interest in our products.
Increase the Power Boat Category Segment. Our
near-term product development strategy is to develop a new product line to reach underserved segments of the catamaran and monohull powerboat
category that are distinct from our traditional customer base. Our existing supplier relationships, material agreements, and manufacturing
processes should allow us to offer this product line at an attractive price point for the consumer while sustaining our gross margins
and the product attributes critical to the Twin Vee brand.
Capture Additional Market Share from Adjacent
Boating Categories. Another strategy for growing our market share is to introduce new products with increased versatility,
functionality, and performance that can appeal to a more expansive customer base that values boats for both water sports and general recreational
boating purposes. In 2024 we launched several marketing campaigns that focused on new product launches and help to educate the market
on our value proposition to customers.
Effectively Manage Dealer Inventory and Further
Strengthen Our Dealer Network . We view our dealers as our partners and product champions. Therefore, we will continue to devote
significant time and resources to finding high quality dealers and developing and improving their performance over time. We believe the
quality and trust in our dealer relationships are more beneficial to our long-term success than the quantity of dealers. We currently
have a network of 20 independent boat dealers in 34 locations across North America, the Caribbean and Central America. By expanding our
network of qualified dealers, we expect to reduce the risk inherent in having three dealers representing 40% of overall revenues.
Design and Introduce a First of a Kind in the Marine Market Pro-Direct
Platform. As consumer expectations change, Twin Vee PowerCats hopes to revolutionize the marine industry with its innovative web-based
platform, “Pro Direct.” Inspired by successful automotive models like Toyota’s “Smart Path,” this platform
is designed to offer customers a seamless, interactive buying experience.
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Increase Our Sales in International Markets . We believe
we have a brand that will have natural growth in international markets. Catamaran powerboats have already been accepted as the norm in
many international markets. For example, t he global catamaran market was expected to expand at a compound
annual growth rate (CAGR) of 5.8% from 2022 to 2030. The U.S. catamaran market was worth $342.5 million in 2021 and was expected to expand
at a CAGR of 5.4% from 2022 to 2030. Based on our brand and product offering, as well as out potential distribution strengths,
we believe we are well positioned to leverage our reputation and capture
additional international sales. We believe that we will increase our international sales by promoting our products in developed markets
where we have a dealer base and in international markets where rising consumer incomes are expected to increase demand for recreational
products, such as Australia, Europe, Israel, Dubai and Brazil. We are also developing new product offerings that will specifically target
certain product demand from our international consumers and that we believe will drive further sales growth in international markets.
Our Strengths and Competitive Advantages
We believe that the following are the key investment attributes of our
company:
Recognized Brands. We believe the Twin
Vee and AquaSport brands are well-known among boating enthusiasts for performance, quality, and value, and that the market recognizes
both Twin Vee and AquaSport as brands that deliver a proposition.
Diverse Product Offering . We
are able to attract consumers across multiple categories within the recreational powerboat industry. We currently have fifteen (15) different
models in production that range from 22-feet monohull to our newly designed 40-foot offshore 400GFX, offered at retail prices that start
at approximately $75,000 and go up to $900,000. We will further diversify our offerings in 2025, with new models to our line including
a redesigned Aquasport 22-foot and 24-foot boats and a 22-foot Twin Vee BayCat.
Focus on Innovative Product Offerings. We
are currently designing numerous new boat models to meet market demand and grow our business, and our current focus is on bring a full
line of monohull boats to the market under the AquaSport brand.
Price Point. Twin Vee has also made
investments in infrastructure and engineering. These investments have resulted in lower material waste, reduced labor hours per boat,
reduced re-work, and increased production efficiencies. Therefore, we are able to offer favorable pricing while increasing margins by
controlling costs through disciplined engineering and manufacturing processes.
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Our Markets
According to SSI data (Statistical Surveys Incorporated), 179,168 new watercraft
were sold in the U.S. in 2024, a decline of 9.59% across the entire industry compared to 2023. Our core market corresponds most directly
with the saltwater outboard market defined by SSI and is further categorized by the power catamaran segment. The saltwater outboard market
experienced a decline of 9.26% in 2024 compared to 2023, with a total of 18,684 new units sold in the United States during 2024.
Outboard Motor Market
An outboard motor is a propulsion system for boats,
consisting of a self-contained unit that includes engine, gearbox and propeller or jet drive, designed to be affixed to the outside of
the boat. As well as providing propulsion, outboards provide steering control, as they are designed to pivot over their mountings and
thus control the direction of thrust. Outboard motors tend to be found on smaller watercraft as it is more efficient for larger boats
to have an inboard system. Although outboard engines powered by fossil fuels have traditionally dominated this market and continue to
do so, electric outboard motors are a relatively new phenomenon that have been growing in step with the growth in the electric boat market.
The boats that we sell and manufacture all have outboard motors.
According to the NMMA, sales of outboard engines.
in the United States (which includes outboard motors) were $3.8 billion in 2023. Consumer demand for higher-performance engines hit an
all-time high in 2020. The market saw a decline of 1.6% in 2023, over 2022.
Although many recreational boats can be powered by
outboard or inboard motors, many consumers prefer outboard motors. Among the reasons for their preference are that, unlike inboard motors,
outboard motors can be easily removed for storage or repairs, they provide more room in the boat as they are attached to the transom outside
of the boat, they tend to have a shallower draft and they can be more easily replaced in the event the motor no longer works or a desire
to upgrade to a higher horsepower.
Our Dealer Network
We primarily sell our gas-powered boats through a
network of 22 independent dealers across North America, the Caribbean (one in the Bahamas, Puerto Rico and Cayman Islands) and Central
America (Panama City, Panama). We are always seeking to recruit and establish new dealers and distributors domestically and are striving
to develop international distribution.
We establish performance criteria that our dealers
must meet in order to be part of our network to ensure our dealer network remains strong, which include minimum annual purchase orders.
As a member of our network, dealers in North America may qualify for floor plan financing programs, rebates, seasonal discounts, promotional
co-op payments and other allowances. We expect this will strengthen our dealers’ ability to sell our products.
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For the year ended December 31, 2024, our top three
dealers on a consolidated basis accounted for approximately 40% of our consolidated revenues. Each of these three dealers accounted for
more than 10% of our consolidated revenues for the year ended December 31, 2024.
For the year ended December 31, 2023, our top five
dealers on a consolidated basis accounted for approximately 35% of our consolidated revenues. During the year ended December 31, 2023,
one individual dealer represented 10% of our total sales.
We consistently review our distribution network to
identify opportunities to expand our geographic footprint and improve our coverage of the market. We believe that our diverse product
offering and strong market position in the United States helped us capitalize on growth opportunities as our industry recovered from the
economic downturn. We have the ability to opportunistically add new dealers and new dealer locations to previously underserved markets
and use data and performance metrics to monitor dealer performance. We believe our outstanding dealer network allows us to distribute
our products more efficiently than our smaller competitors.
We do not have written agreements with our dealers.
Prior to the beginning of each year, we establish a minimum number of units that each dealer must acquire based upon indications of interest
from the dealers. Payment for the units is made by the dealer or a third-party lender once the boat is manufactured and delivered to the
dealer. Dealers are not contractually obligated to purchase any boats. Although to date most dealers have purchased boats for which they
have provided indications of interest, we could experience excess inventory and costs if a dealer should choose not to purchase a boat
for which it has provided an indication of interest. Beginning in early 2025, as a condition to participate in various programs, we are
requiring new dealers to sign a dealer agreement, provide a non-binding APT (Annual Purchase Target), register new boat owners’
warranty information and meet various other requirements. There can be no assurances that these efforts will result in any specific level
of participation or adherence to the annual APT.
Demand for our products is typically seasonal, with
sales generally highest in the second quarter of the calendar year, although market turmoil over the last couple of years overshadowed
normal seasonal patterns.
Floor Plan Financing
Our North American dealers often purchase boats through
floor plan financing programs with third-party floor plan financing providers. During the year ended December 31, 2024, a majority of
our North American shipments were made pursuant to floor plan financing programs through which our dealers participate. These programs
allow dealers across our brands to establish lines of credit with third-party lenders to purchase inventory. Under these programs, a dealer
draws on the floor plan facility upon purchasing a boat from us and the lender pays us the invoice price of the boat. As is typical in
our industry, we have entered into repurchase agreements with certain floor plan financing providers to our dealers. Under the terms of
these arrangements, in the event a lender repossesses a boat from a dealer that has defaulted on its floor financing arrangement and is
able to deliver the repossessed boat to us, we are obligated to repurchase the boat from the lender. Our obligation to repurchase such
repossessed products for the unpaid balance of our original invoice price for the boat is subject to reduction or limitation based on
the age and condition of the boat at the time of repurchase, and in certain cases by an aggregate cap on repurchase obligations associated
with a particular floor financing program.
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Our exposure under repurchase agreements with third-party
lenders is mitigated by our ability to resell repurchased inventory to a new dealer. The primary cost to us of a repurchase event is any
margin loss on the resale of a repurchased unit. To date, we have not been required to repurchase any boats under repurchase agreements.
Competition
The powerboat industry, including the performance
sport boat category, is highly competitive for consumers and dealers. Competition affects our ability to succeed in the markets we currently
serve and new markets that we may enter in the future. We compete with several large manufacturers that may have greater financial, marketing
and other resources than we do. We compete with large manufacturers who are represented by dealers in the markets in which we now operate
and into which we plan to expand. We also compete with a wide variety of small, independent manufactures. Competition in our industry
is based primarily on brand name, price and product performance.
We also face competition for employees. Competition
for individuals with experience designing, manufacturing and servicing electric boats is intense, and we may not be able to attract, assimilate,
train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these
additional employees could seriously harm our business and prospects.
Raw Materials, Principal Suppliers, and Customers
We purchase a number of our
product parts and components from third-party suppliers, including the fiberglass we use to manufacture parts of our boats, hydrocarbon
feedstocks and steel, as well as product parts and components, such as engines and electronic controls, through a sales order process.
The most significant component used in manufacturing a gas-powered boat, based on cost, is the engine. We maintain a strong and long-standing
relationship with our main supplier of engines, Suzuki Motor of America, Inc.
We do not maintain long-term
contracts with preferred suppliers but instead rely on informal arrangements and off-the-shelf purchases. We purchase motors from three
different manufacturers. We have not experienced any material shortages in any of our product parts, or components. Temporary shortages,
when they do occur, usually involve manufacturers of these products adjusting model mix, introducing new product lines, or limiting production
in response to an industry-wide reduction in boat demand.
A few customers have in the past, and may in the future,
account for a significant portion of our revenues in any one year or over a period of several consecutive years. For example, during the
year end December 31, 2024 three dealers represented 40% of our sales, while during the year end December 31, 2023, five dealers represented
35% of our sales. The loss of business from a significant customer could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
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Intellectual Property
We have not protected our
intellectual property rights for our gas-powered motor products through patents or formal copyright registration, and we do not currently
have any patent applications pending related to our gas-powered boats. Instead, we rely on trade secrets, know-how and technology to protect
our current products, which are not protected by patents, to protect the intellectual property behind our boats. We utilize confidentiality
agreements with our collaborators, employees, consultants, outside collaborators and other advisors to protect our proprietary technology
and processes. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy
in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and
proprietary information, and in such cases, we could not assert any trade-secret rights against such party. Costly and time-consuming
litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret
protection could adversely affect our competitive business position. See “Risk Factors-Intellectual Property Risks.” Although
we do have patents to protect our intellectual property rights for electric powered motor products; we are no longer developing electric
powered boats.
Insurance and Product Warranties
We carry various insurance
policies, including policies to cover general products liability, directors and officers, workers’ compensation and other casualty
and property risks, to protect against certain risks of loss consistent with the exposures associated with the nature and scope of our
operations. Our policies are generally based on our safety record as well as market trends in the insurance industry and are subject to
certain deductibles, limits and policy terms and conditions.
We provide limited product warranties, generally covering
periods of ten years for the hull, and the motors are under warranty by their manufacturer.
In addition, we provide a three-year limited fiberglass
small parts warranty on some parts and components, such as consoles. Gelcoat is covered up to one year. We pass all warranties included
with third party components (e.g., stereos, pumps, electrical devices) directly on to the consumer. Where there is no separate OEM warranty, we
provide a one-year basic limited systems warranty for repair or replacement of the defective part.
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Environmental, Safety and Regulatory Matters
Certain materials used in
our manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive or reactive and are classified
by the federal and state governments as “hazardous materials.” Control of these substances is regulated by the Environmental
Protection Agency (the “EPA”) and state pollution control agencies. The United States Clean Air Act (the “CAA”)
and corresponding state and provincial rules regulate emissions of air pollutants. The Occupational Safety and Health Administration (“OSHA”)
standards limit the emissions to which an employee may be exposed without the need for respiratory protection or upgraded plant ventilation.
Our facilities are regularly inspected by OSHA and by state and local inspection agencies and departments. We believe that our facility
complies in all material aspects with these regulations. Although capital expenditures related to compliance with environmental laws are
expected to increase, we do not currently anticipate any material expenditure will be required to continue to comply with existing environmental
or safety regulations in connection with our existing manufacturing facilities.
Powerboats sold in the United
States must be manufactured to meet the standards of certification required by the United States Coast Guard. In addition, boats manufactured
for sale in the European Community must be certified to meet the European Community’s imported manufactured products standards.
These certifications specify standards for the design and construction of powerboats. We believe that all of our boats meet these standards.
In addition, safety of recreational boats is subject to federal regulation under the Boat Safety Act of 1971, which requires boat manufacturers
to recall products for replacement of parts or components that have demonstrated defects affecting safety. We have instituted recalls
for defective component parts produced by certain of our third-party suppliers. None of the recalls has had a material adverse effect
on our company.
In addition to the regulation of our manufacturing
operations, the EPA has adopted regulations stipulating that many marine propulsion engines meet certain air emission standards. The engines
used in our products, all of which are manufactured by third parties, are warranted by the manufacturers to be in compliance with the
EPA’s emission standards. Furthermore, the engines used in our products must comply with the applicable emission standards under
the Center for European Policy Analysis (“CEPA”) and corresponding provincial legislation. The additional cost of complying
with these regulations has increased our cost to purchase the engines and, accordingly, has increased the cost to manufacture our products.
If we are not able to pass these additional costs
along to our dealers, it may have a negative impact on our business and financial condition.
Employees/Human Capital
We currently employ approximately
65 employees, which includes about 45 hands-on boat builders, all of whom are full-time employees. None of our employees are represented
by a labor union.
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Competitive Pay and Benefits
Our compensation programs
are designed to align the compensation of our employees with our performance and to provide the proper incentives to attract, retain and
motivate employees to achieve superior results. The structure of our compensation programs balances incentive earnings for both short-term
and long-term performance. Specifically:
●
we provide employee wages and benefits that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location;
●
we align our executives’ long-term equity compensation with our shareholders’ interests by linking realizable pay with stock performance; and
●
all employees are eligible for health insurance, paid and unpaid leaves, a retirement plan and life and disability/accident coverage.
Health and Safety
The health and safety of
our employees is our highest priority, and this is consistent with our operating philosophy. Accordingly, with the global spread of the
ongoing novel coronavirus pandemic, we have implemented plans designed to address and mitigate the impact of pandemics on the safety of
our employees and our business, which include:
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adding work from home flexibility;
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adjusting attendance policies to encourage those who are sick to stay home;
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increasing cleaning protocols across all locations; and
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initiating regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures.
Corporate Information
Our principal executive office is located at 3101
S. US-1, Ft. Pierce, Florida 34982 and our telephone number is (772) 429-2525. We maintain our corporate website at www.twinvee.com. The
reference to our website is an inactive textual reference only, the information that can be accessed through our website is not part of
this Annual Report, and investors should not rely on any such information in deciding whether to purchase our common stock.
We were incorporated in the State of Florida as Twin
Vee Catamarans, Inc. on December 1, 2009 and reincorporated in Delaware on April 7, 2021 under the name to Twin Vee PowerCats Co. ValueRich,
Inc. was incorporated under the laws of the state of Florida on July 11, 2003 and reincorporated in Delaware on March 3, 2006. On February
17, 2015 ValueRich, Inc. consummated the acquisition of Twin Vee Catamarans, Inc. On April 26, 2016, ValueRich, Inc. changed its name
and began operating under the name Twin Vee PowerCats, Inc. On December 5, 2022, Twin Vee PowerCats, Inc. was merged into our company.
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Forza X1, Inc. was initially incorporated as Electra
Power Sports, Inc. on October 15, 2021, which name was subsequently changed to Forza X1, Inc. on October 29, 2021. Prior to Forza’s
incorporation on October 15, 2021, the electric boat business was operated as our Electra Power Sports™ Division. Following our
initial public offering that closed on July 23, 2021 (the “IPO”), we determined in October 2021 that for several reasons,
that we would market our new independent line of electric boats under a new brand name (and new subsidiary). and we engaged in a public
offering of the shares of common stock of Forza. During 2024, Forza determined to cease production of its planned electric boat, and on
November 26, 2024, Forza was merged into Twin Vee Powercats. Co. and became a wholly -owed subsidiary of Twin Vee Powercats. Co.
We are subject to the reporting requirements of the
Exchange Act. The Exchange Act requires us to file periodic reports, proxy statements and other information with the Securities and Exchange
Commission (“SEC”). The SEC maintains a website that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website
at http://www.sec.gov .
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as
defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and therefore we intend to take advantage of
certain exemptions from various public company reporting requirements, including not being required to have our internal controls over
financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and
proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute
payments. We may take advantage of these exemptions until we are no longer an “emerging growth company.” In addition, the
JOBS Act provides that an “emerging growth company” can delay adopting new or revised accounting standards until such time
as those standards apply to private companies. We have elected to use the extended transition period for complying with new or revised
accounting standards under the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have
different effective dates for public and private companies until those standards apply to private companies. As a result of this election,
our financial statements may not be comparable to companies that comply with public company effective dates. We will remain an “emerging
growth company” until the earlier of (1) the last day of the fiscal year: (a) following the fifth anniversary of the completion
of our initial public offering; (b) in which we have total annual gross revenue of at least $1.235 billion; or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeded $700.0 million
as of the prior June 30 th , and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the
prior three-year period. References herein to “emerging growth company” have the meaning associated with that term in the
JOBS Act.
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