Twin Vee PowerCats, Co. 10-K

Item 8. Financial Statements and Supplementary Data. 66 Twin Vee Powercats Co. and subsidiaries CONSOLIDATED FINANCIAL STATEMENTS Contents Page Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to the Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To The Board of Directors and the Stockholders of Twin Vee Powercats Co. and Subsidiaries Fort Pierce, Florida Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Twin Vee Powercats Co. and Subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. GRASSI & CO., CPAs, P.C . We have served as the Company’s auditor since 2020. Jericho, New York March 20, 2025 606 F- 2 TWIN VEE POWERCATS CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2024 2023 Assets Current Assets Cash and cash equivalents $ 7,491,123 $ 16,497,703 Restricted cash 215,117 257,530 Accounts receivable — 80,160 Marketable securities — 4,462,942 Inventories, net 2,516,760 4,884,761 Prepaid expenses and other current assets 196,141 463,222 Total current assets 10,419,141 26,646,318 Property and equipment, net 15,037,798 12,293,988 Operating lease right of use asset, net 390,686 854,990 Security deposit 40,280 51,417 Total Assets $ 25,887,905 $ 39,846,713 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 2,215,078 $ 2,399,026 Accrued liabilities 794,253 1,075,512 Contract liabilities 80,000 44,195 Finance lease liabilities 221,929 214,715 Operating lease liabilities 436,730 482,897 Total current liabilities 3,747,990 4,216,345 Economic Injury Disaster Loan 499,900 499,900 Finance lease liabilities - noncurrent 2,423,165 2,644,123 Operating lease liabilities - noncurrent — 436,730 Total Liabilities 6,671,055 7,797,098 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock: 10,000,000 authorized; $ 0.001 par value; no shares issued and outstanding — — Common stock: 50,000,000 authorized; $ 0.001 par value; 14,874,480 and 9,520,000 shares issued and outstanding at December 31, 2024 and 2023, respectively 14,874 9,520 Additional paid-in capital 44,594,930 37,848,657 Accumulated deficit ( 25,392,955 ) ( 14,346,984 ) Equity attributed to stockholders of Twin Vee PowerCats Co, Inc. 19,216,849 23,511,193 Equity attributable to noncontrolling interests — 8,538,422 Total stockholders’ equity 19,216,849 32,049,615 Total Liabilities and Stockholders’ Equity $ 25,887,905 $ 39,846,713 The accompanying notes are an integral part of these consolidated financial statements F- 3 TWIN VEE POWERCATS CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2024 2023 Net sales $ 14,388,517 $ 33,425,912 Cost of products sold 15,139,942 30,159,024 Gross (loss) profit ( 751,425 ) 3,266,888 Operating expenses: Selling, general and administrative 3,095,868 3,734,406 Salaries and wages 4,906,819 7,473,441 Professional fees 1,669,474 1,249,388 Impairment of property & equipment 1,674,000 — Loss on disposal of assets 172,684 — Gain on sale of R&D equipment ( 50,097 ) — Depreciation and amortization 1,745,217 1,353,383 Research and development 586,379 1,443,569 Total operating expenses 13,800,344 15,254,187 Loss from operations ( 14,551,769 ) ( 11,987,299 ) Other income (expense): Dividend income 510,099 909,215 Other income 63,391 9,898 Interest expense ( 222,594 ) ( 221,157 ) Interest income 150,553 48,370 Unrealized gain on marketable securities — 87,781 Realized gain on marketable securities 40,414 103,941 Employee Retention Credit income — 1,267,055 Total other income 541,863 2,205,103 Loss before income tax ( 14,009,906 ) ( 9,782,196 ) Income taxes provision — — Net loss ( 14,009,906 ) ( 9,782,196 ) Less: Net loss attributable to noncontrolling interests ( 2,963,935 ) ( 2,590,020 ) Net loss attributed to stockholders of Twin Vee PowerCats Co, Inc. $ ( 11,045,971 ) $ ( 7,192,176 ) Basic and dilutive loss per share of common stock $ ( 1.10 ) $ ( 0.76 ) Weighted average number of shares of common stock outstanding 10,032,040 9,520,000 The accompanying notes are an integral part of these consolidated financial statements F- 4 TWIN VEE POWERCATS CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Additional Preferred Stock Common Stock Paid-in Accumulated Noncontrolling Shares Amount Shares Amount Capital Deficit Interests Total Balance, January 1, 2023 — $ — 9,520,000 $ 9,520 $ 35,581,022 $ ( 7,154,808 ) $ 4,585,155 $ 33,020,889 Subsidiary share issuance — — — — 364,886 — 6,564,666 6,929,552 Stock-based compensation — — — — 1,902,749 — — 1,902,749 Subsidiary stock repurchase — — — — — — ( 21,379 ) ( 21,379 ) Net loss — — — — — ( 7,192,176 ) ( 2,590,020 ) ( 9,782,196 ) Balance, December 31, 2023 — $ — 9,520,000 $ 9,520 $ 37,848,657 $ ( 14,346,984 ) $ 8,538,422 $ 32,049,615 Share Issuance for Forza Equity — — 5,354,480 $ 5,354 $ 5,569,133 $ $ ( 5,574,487 ) $ — Stock-based compensation — — — — 1,177,140 — — 1,177,140 Net loss — — — — — ( 11,045,971 ) ( 2,963,935 ) ( 14,009,906 ) Balance, December 31, 2024 — $ — 14,874,480 $ 14,874 $ 44,594,930 $ ( 25,392,955 ) $ — $ 19,216,849 The accompanying notes are an integral part of these consolidated financial statements F- 5 TWIN VEE POWERCATS CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2024 2023 Cash Flows From Operating Activities Net loss $ ( 14,009,906 ) $ ( 9,782,196 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 1,177,140 1,902,749 Depreciation and amortization 1,745,217 1,353,383 Impairment of property & equipment 1,674,000 — Gain of sale of R&D equipment ( 50,097 ) — Loss on disposal of property & equipment 172,684 — Change of right-of-use asset 464,304 474,630 Net change in fair value of marketable securities — ( 87,781 ) Change in inventory reserve ( 285,584 ) 419,616 Changes in operating assets and liabilities: Accounts receivable 80,160 ( 65,993 ) Inventories 2,703,682 ( 1,296,045 ) Prepaid expenses and other current assets 267,081 419,195 Accounts payable ( 183,947 ) 333,346 Accrued liabilities ( 281,259 ) ( 165,257 ) Operating lease liabilities ( 482,897 ) ( 479,315 ) Contract liabilities 35,805 38,895 Net cash used in operating activities ( 6,973,617 ) ( 6,934,773 ) Cash Flows From Investing Activities Security deposit 11,137 ( 18,900 ) Realized gain on sale of marketable securities, available for sale ( 40,414 ) ( 103,941 ) Net sales (purchases) of investment in marketable securities 4,503,356 ( 1,343,702 ) Proceeds from sale of property and equipment 6,000 — Purchase of property and equipment ( 6,341,711 ) ( 5,162,478 ) Net cash used in investing activities ( 1,861,632 ) ( 6,629,021 ) Cash Flows From Financing Activities Proceeds from Forza Issuance of common stock — 6,996,015 Deferred offering costs — ( 66,463 ) Forza stock repurchase — ( 21,379 ) Finance lease payments ( 213,744 ) ( 90,153 ) Net (used in) cash provided by financing activities ( 213,744 ) 6,818,020 Net change in cash, cash equivalents and restricted cash ( 9,048,993 ) ( 6,745,774 ) Cash at beginning of the year 16,755,233 23,501,007 Cash, cash equivalents and restricted cash at end of the year $ 7,706,240 $ 16,755,233 Supplemental Cash Flow Information Cash paid for income taxes $ — $ — Cash paid for interest $ 435,161 $ 235,519 Reconciliation to the Consolidated Balance Sheet Cash and cash equivalents $ 7,491,123 $ 16,497,703 Restricted cash 215,117 257,530 Total cash, cash equivalents and restricted cash $ 7,706,240 $ 16,755,233 The accompanying notes are an integral part of these consolidated financial statements F- 6 TWIN VEE POWERCATS CO. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 and 2023 1. Organization and Summary of Significant Accounting Policies Organization Twin Vee PowerCats Co. (“Twin Vee” or the “Company”) was incorporated as Twin Vee Catamarans, Inc., in the state of Florida, on December 1, 2009. On April 7, 2021, the Company filed a Certificate of Conversion to register and incorporate in the state of Delaware and changed the company name to Twin Vee PowerCats Co. The Certificate of Incorporation for Twin Vee PowerCats Co. was also filed on April 7, 2021. On September 1, 2021, the Company formed Fix My Boat, Inc., (“Fix My Boat”), a wholly owned subsidiary. Fix My Boat will utilize a franchise model for marine mechanics across the country. Fix My Boat has been inactive for the majority of 2023 and the year ended December 31, 2024. On July 23, 2024, Fix My Boat, Inc. was merged into Twin Vee PowerCats Co. On April 20, 2023, the Company formed AquaSport Co., a wholly owned subsidiary in the state of Florida in connection with the Company’s plan to lease the assets of former AQUASPORT™ boat brand and manufacturing facility in White Bluff, Tennessee. On July 30, 2024, AquaSport Co. was merged into Twin Vee PowerCats Co. Forza X1, Inc. was initially incorporated as Electra Power Sports, Inc. on October 15, 2021, and subsequently changed the name to Forza X1, Inc. (“Forza X1” or “Forza”) on October 29, 2021. Prior to Forza’s incorporation on October 15, 2021, the electric boat business was operated as the Company’s Electra Power Sports™ Division. Following the Company’s initial public offering that closed on July 23, 2021 (the “IPO”), it determined in October 2021 that for several reasons, it would market the Company’s new independent line of electric boats under a new brand name (and new subsidiary) . Forza’s completed the initial public offering of its common stock on August 16, 2022 and a follow-on public offering on June 14, 2023, which together resulted in Forza becoming a majority-owned subsidiary of the Company. In an effort to retain cash and reduce expenditures and as a result of market conditions, on July 11, 2024, Forza’s Board of Directors determined to discontinue and wind down the business related to the development and sale of electric boats utilizing its proprietary outboard electric motor. Forza explored strategic alternatives, including a potential merger with Twin Vee PowerCats Co. On November 11, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders approved the issuance of shares of the Company’s common stock to Forza stockholders pursuant to the terms of the Agreement and Plan of Merger, dated as of August 12, 2024 (the “Merger Agreement”), by and between Forza, the Company and Twin Vee Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”) and an amendment to our Certificate of Incorporation to effect a reverse stock split at a ratio within the range of 1-for-2 to 1-for-20. On November 26, 2024 (the “Closing Date”), pursuant to the terms of the Merger Agreement, 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 (the “Effective Time”), (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 the Effective 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. F- 7 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, 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. Upon her appointment, Ms. Kull was appointed to serve on the Board’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Ms. Kull will participate in the non-employee director compensation arrangements described under the heading “Twin Vee Director Compensation” contained in the Joint Proxy Statement/Prospectus and incorporated by reference herein. Following the Merger, the composition of each class of the board is as follows: The Class I directors are Neil Ross and Marcia Kull, whose terms will expire at the annual meeting of stockholders to be held in 2025. The Class II director is Preston Yarborough, whose term will expire at the annual meeting of stockholders to be held in 2026. The Class III directors are Kevin Schuyler and Joseph Visconti, whose terms will expire at the annual meeting of stockholders to be held in 2027. In connection with the Merger and effective as of the Effective Time, Bard Rockenbach and James Melvin resigned as directors of Twin Vee and any committees thereof. The decision to resign by each of Messrs. Rockenbach and Melvin was not the result, in whole or in part, of any disagreement with Twin Vee, its management team, or the board of directors of Twin Vee, on any matter relating to Twin Vee operations, policies or practices. On May 10, 2024, Twin Vee PowerCats Co. (the “Company”) received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that for the preceding 30 consecutive business days (March 28, 2024 through May 9, 2024), the Company’s common stock did not maintain a minimum closing bid price of $1.00 (“Minimum Bid Price Requirement”) per share as required by Nasdaq Listing Rule 5550(a)(2). The Company was provided 180 calendar days, or until November 6, 2024, to regain compliance. On November 7, 2024, the Company received written notification from The Nasdaq Stock Market LLC (“Nasdaq”) granting the Company’s request for a 180-day extension to regain compliance with Nasdaq Listing Rule 5550(a)(2). Compliance may be achieved automatically and without further action if the closing bid price of the Company’s common stock is at or above $1.00 for a minimum of ten consecutive business days at any time prior to May 5, 2025, Nasdaq will notify the Company when it determines that the Company has regained compliance with the Minimum Bid Price Requirement and the matter will be closed. Principles of Consolidation The consolidated financial statements include the accounts of Twin Vee and its wholly owned subsidiary, Forza X1, collectively referred to as the “Company”. The Company’s net loss excludes losses attributable to noncontrolling interests. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All inter-company balances and transactions are eliminated in consolidation. Basis of Presentation The accompanying consolidated financial statements and the related notes have been prepared in accordance with accounting principles generally accepted in the United State of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). F- 8 During the first quarter of 2024, the Company changed the classification of production labor and related benefit costs to be included as a component of cost of sales rather than operating expenses. The Company has adjusted the statement of operations for the year ended December 31, 2023 to be consistent with the accounting treatment in 2024. This resulted in an increase in cost of products sold of $ 6,456,139 and a corresponding decrease in operating expenses for the year ended December 31, 2024. Revenue Recognition The Company’s revenue is derived primarily from the sale of boats, motors and trailers to its independent dealers. The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a dealer. The Company typically receives payment within five business days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. The Company offers dealer incentives that include wholesale rebates, retail rebates and promotions, floor plan reimbursement or cash discounts, and other allowances that are recorded as reductions of revenues in net sales in the consolidated statements of operations. The consideration recognized represents the amount specified in a contract with a customer, net of estimated incentives the Company reasonably expects to pay. The estimated liability and reduction in revenue for dealer incentives is recorded at the time of sale. Subsequent adjustments to incentive estimates are possible because actual results may differ from these estimates if conditions dictate the need to enhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends. Accrued dealer incentives are included in accrued liabilities in the accompanying consolidated balance sheets. Schedule of accounts receivable Total accounts receivable January 1, 2023 $ 14,167 January 1, 2024 $ 80,160 December 31, 2024 $ — Payment received for the future sale of a boat to a customer is recognized as a customer deposit. Customer deposits are recognized as revenue when control over promised goods is transferred to the customer. At December 31, 2024 and 2023, the Company had customer deposits of $ 80,000 and $ 44,195 , respectively, which is recorded as contract liabilities on the consolidated balance sheets. These deposits are refundable and are recognized as revenue when the related boat is delivered, generally within 90 days. Rebates and Discounts Dealers earn wholesale rebates based on purchase volume commitments and achievement of certain performance metrics. The Company estimates the amount of wholesale rebates based on historical achievement, forecasted volume, and assumptions regarding dealer behavior. Rebates that apply to boats already in dealer inventory are referred to as retail rebates. The Company estimates the amount of retail rebates based on historical data for specific boat models adjusted for forecasted sales volume, product mix, dealer and consumer behavior, and assumptions concerning market conditions. The Company also utilizes various programs whereby it offers cash discounts or agrees to reimburse its dealers for certain floor plan interest costs incurred by dealers for limited periods of time, generally ranging up to six months. Other Revenue Recognition Matters Dealers generally have no right to return unsold boats. Occasionally, the Company may accept returns in limited circumstances and at the Company’s discretion under its warranty policy. The Company may be obligated, in the event of default by a dealer, to accept returns of unsold boats under its repurchase commitment to floor financing providers, who are able to obtain such boats through foreclosure. The repurchase commitment is on an individual unit basis with a term from the date it is financed by the lending institution through the payment date by the dealer, generally not exceeding 30 months. F- 9 The Company has excluded sales and other taxes assessed by a governmental authority in connection with revenue-producing activities from the determination of the transaction price for all contracts. The Company has not adjusted net sales for the effects of a significant financing component because the period between the transfer of the promised goods and the customer’s payment is expected to be one year or less. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Concentrations of Credit and Business Risk Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of trade receivables. Credit risk on trade receivables is mitigated as a result of the Company’s use of trade letters of credit, dealer floor plan financing arrangements, and the geographically diversified nature of the Company’s customer base. The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $ 250,000 are at risk. As of December 31, 2024 and 2023, the Company had $ 6,740,623 and $ 15,868,574 , respectively, in excess of FDIC insured limits. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase. On December 31, 2024 and 2023, the Company had cash, cash equivalents, and restricted cash of $ 7,706,240 and $ 16,755,233 , respectively. Restricted cash includes amounts that are collected and are held in connection with assets securing certain of the Company’s financing transactions. Restricted cash is restricted for payment of interest expense and principal on the outstanding borrowings. On December 31,2024 and 2023, included within restricted cash on the Company’s consolidated balance sheets is an irrevocable letter of credit for $ 215,117 and $ 257,530 , respectively. Marketable Securities The Company’s investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities as well as realized gains and losses on available-for-sale debt securities are included in other income. Fair Value of Financial Instruments The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments: F- 10 ● Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments. ● Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace. ● Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation. Financial instruments measured as fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires it to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange. The carrying amounts of cash equivalents approximate their fair value due to their liquid or short-term nature, such as accounts receivable and payable, and other financial instruments in current assets or current liabilities. Accounts Receivable The Company carries its accounts receivables net of an allowance for credit losses. The measurement and recognition of credit losses involves the use of judgment. Management’s assessment of expected credit losses includes consideration of current and expected economic conditions, market and industry factors affecting the Company’s customers (including their financial condition), the aging of account balances, historical credit loss experience, customer concentrations, and customer creditworthiness. Management evaluates its experience with historical losses and then applies this historical loss ratio to financial assets with similar characteristics. The Company’s historical loss ratio or its determination of risk pools may be adjusted for changes in customer, economy, market or other circumstances. The Company may also establish an allowance for credit losses for specific receivables when it is probable that the receivable will not be collected, and the loss can be reasonably estimated. Amounts are written off against the allowance when they are considered to be uncollectible, and reversals of previously reserved amounts are recognized if a specifically reserved item is settled for an amount exceeding the previous estimate. Inventories Inventories are valued at the lower of cost and net realizable value, with cost determined using the weighted average cost method on a first-in first-out basis. 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. At December 31, 2024 and 2023, the provision for excess or obsolete inventories is $134,032 and $419,616, respectively. Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation and amortization, using the straight-line method over the assets’ useful life. Leasehold improvements are amortized over the shorter of the assets’ useful life or the lease term. The estimated useful lives of property and equipment range from three to five years. Upon sale or retirement, the cost and related accumulated depreciation is eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. F- 11 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 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’s warranty liability is included in the accrued liabilities line item of the accompanying consolidated balance sheets. The following table shows the changes in the aggregate product warranty liability for the years ended December 31, 2024 and 2023, respectively: Schedule of product warranty liability 2024 2023 Balance as of January 1 $ 192,894 $ 92,373 Less: Payments made ( 217,609 ) ( 358,129 ) Add: Provision for current years warranty 238,261 458,650 Balance as of December 31 $ 213,546 $ 192,894 Advertising Advertising and marketing costs are expensed as incurred. During the years ended December 31, 2024 and 2023, advertising costs incurred by the Company totaled $ 206,333 and $ 444,231 , respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Research and Development The Company expenses research and development costs relating to new product development as incurred. For the years ended December 31, 2024 and 2023, research and development costs amounted to $ 586,378 and $ 1,443,569 , respectively. Shipping and Handling Costs Shipping and handling costs includes those costs incurred to transport product to customers and internal handling costs, which relate to activities to prepare goods for shipment. The Company has elected to account for shipping and handling costs associated with outbound freight after control over a product has transferred to a customer as a fulfillment cost. The Company includes shipping and handling costs, including cost billed to customers, in cost of products sold in the consolidated statements of operations. All manufactured boats are free on board (FOB), from the Fort Pierce manufacturing plant. Dealers are required to either pick up the boats themselves or contract with a transporter. For the years ended December 31, 2024, and 2023, shipping and handling costs amounted to $ 281,915 and $ 718,635 , respectively. F- 12 Leases The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company calculates the associated lease liability and corresponding ROU asset upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The operating lease ROU asset also includes any lease payments made and is reduced by lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for lease payments is recognized on a straight-line basis over the lease term. Supplier Concentrations The Company is dependent on the ability of its suppliers to provide products on a timely basis and on favorable pricing terms. The loss of certain principal suppliers or a significant reduction in product availability from principal suppliers could have a material adverse effect on the Company. Business risk insurance is in place to mitigate the business risk associated with sole suppliers for sudden disruptions such as those caused by natural disasters. The Company is dependent on third-party equipment manufacturers, distributors, and dealers for certain parts and materials utilized in the manufacturing process. During the year ended December 31, 2024, the Company purchased all engines (Mercury, Suzuki and Yamaha) and certain composite materials for its boats under supplier agreements with five vendors. Total purchases from these vendors were $ 5,324,494 . During the year ended December 31, 2023, the Company purchased all engines from three vendors (Mercury, Suzuki and Yamaha) for its boats under supplier agreements. Total purchases from these vendors were $ 9,252,915 . Employee Retention Credit On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. Accounting Standards Codification 105, “Generally Accepted Accounting Principles,” describes the decision-making framework when no guidance exists in US GAAP for a particular transaction. Specifically, ASC 105-10-05-2 instructs companies to look for guidance for a similar transaction within US GAAP and apply that guidance by analogy. As such, forms of government assistance, such as the ERC, provided to business entities would not be within the scope of ASC 958, but it may be applied by analogy under ASC 105-10-05-2. We accounted for the Employee Retention Credit as a government grant in accordance with Accounting Standards Update 2013-06, Not-for-Profit Entities (Topic 958) (“ASU 2013-06”) by analogy under ASC 105-10-05-2. Under this standard, government grants are recognized when the conditions on which they depend are substantially met. For the years ended December 31, 2024 and 2023, respectively, the Company received $ 0 and $ 1,267,055 , from the Employee Retention Credit (ERC). Stock-Based Compensation The Company recognizes stock-based compensation costs for its restricted stock and restricted stock units, measured at the fair value of each award at the time of grant, as an expense over the period during which an employee is required to provide service. Compensation cost is recognized over the service period for the fair value of awards that vest. F- 13 Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recover or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company files income tax returns in the U.S. federal jurisdiction and various states. Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 requires disclosures of significant expenses that are regularly provided to the chief operating decision maker and included within each reported segment measure of segment profit or loss. The update also required disclosure regarding the chief operating decision maker and expands interim segment disclosure requirements. The adoption did not impact how the Company identifies its one reportable segment. Recently Issued But Not Yet Adopted Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense (“ASU 2027-03”), effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The company is currently evaluating the potential impact the adoption of ASU 2024-03 will have on its future disclosures. 2. Marketable Securities As of December 31, 2024, the Company had no marketable securities. The Company’s investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities as well as realized gains and losses on available-for-sale debt securities are included in net income. F- 14 Schedule of marketable securities As of December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Marketable Securities Corporate Bonds $ 4,473,033 $ 50,878 $ ( 60,969 ) $ 4,462,942 Certificates of Deposits — — — — Total marketable securities $ 4,473,033 $ 50,878 $ ( 60,969 ) $ 4,462,942 3. Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of December 31, 2023 are as follows: Schedule of assets and liabilities measured fair value recurring basis Fair Value Measurements Using Balance as of December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Non observable Inputs (Level 3) Marketable securities: Corporate Bonds $ 4,462,942 $ 4,462,942 $ — $ — Total marketable securities $ 4,462,942 $ 4,462,942 $ — $ — The Company’s investments in corporate bonds are measured based on quotes from market makers for similar items in active markets. 4. Inventories At December 31, 2024 and 2023 inventories consisted of the following: Schedule of inventories December 31, December 31, 2024 2023 Raw Materials $ 2,573,553 $ 5,001,512 Work in Process — 96,721 Finished Product 77,239 206,144 Total Inventory $ 2,650,792 $ 5,304,377 Reserve for Excess and Obsolete ( 134,032 ) ( 419,616 ) Net inventory $ 2,516,760 $ 4,884,761 F- 15 5. Property and Equipment At December 31, 2024 and 2023, property and equipment consisted of the following: Schedule of property and equipment December 31, December 31, 2024 2023 Machinery and equipment $ 2,610,977 $ 2,692,473 Furniture and fixtures 36,816 40,299 Land 1,119,758 1,119,758 Leasehold improvements 1,228,860 1,228,860 Software and website development 300,935 300,935 Computer hardware and software 120,245 159,342 Boat molds 7,270,411 5,871,373 Vehicles 143,360 143,360 Electric prototypes and tooling 142,526 142,526 Assets under construction 6,130,786 2,977,894 19,104,674 14,676,820 Less accumulated depreciation and amortization ( 4,066,876 ) ( 2,382,832 ) $ 15,037,798 $ 12,293,988 During the year, the Company obtained an appraisal of its partially constructed facility in Monroe, NC and evaluated the carrying costs of its assets, primarily its inventory and fixed assets. Based on this analysis, the company recorded an impairment charge of $ 1,674,000 against the carrying cost of its partially constructed building at June 30, 2024. The Company has evaluated any material liabilities resulting from this action and has determined that there are no additional material liabilities to be recorded. Depreciation and amortization expense of property and equipment for the year ended December 31, 2024 and 2023 is $ 1,745,217 and $ 1,353,383 , respectively. 6. Leases Operating right of use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent our right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. The Company’s office lease contains rent escalations over the lease term. The Company recognizes expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. The Company leases its office and warehouse facilities, and the land which are located at 3101 S US-1, Fort Pierce, Florida (the “Property”) from Visconti Holdings, LLC. Visconti Holdings, LLC is a single member LLC that holds the ownership of the property, and its sole member is Joseph C. Visconti, the CEO of the Company and the CEO and majority shareholder of the Company’s parent company. The Company entered into the lease on January 1, 2020, and as amended January 1, 2021, the lease has a term of five years. The current base rent payment is $ 36,465 per month including property taxes and the lease required a $ 25,000 security deposit. The base rent increases five percent (5%) on the anniversary of each annual term. F- 16 The Company leased a warehouse facility which is located at 150 Commerce Street, Old Fort, North Carolina (the “Property”) from NC Limited Liability Company. The Company entered into the lease on October 7, 2022, the lease has a term of two years. The current base rent payment was $7,517 per month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The lease ended on October 15, 2024. At December 31, 2024 and 2023, supplemental balance sheet information related to leases were as follows: Schedule of leases supplemental balance sheet information December 31, December 31, 2024 2023 Operating lease ROU asset $ 390,686 $ 854,990 December 31, December 31, 2024 2023 Operating lease liabilities: Current portion $ 436,730 $ 482,897 Non-current portion — 436,730 Total $ 436,730 $ 919,627 At December 31, 2024, future minimum lease payments under the non-cancelable operating leases are as follows: Schedule of future minimum lease payments under the non-cancelable Year Ending December 31, 2025 $ 437,580 Total lease payment Less imputed interest ( 850 ) Total $ 436,730 The following summarizes other supplemental information about the Company’s operating lease: Schedule of operating lease cost December 31, 2024 Weighted average discount rate 0.36 % Weighted average remaining lease term (years) 1.92 7. Finance Leases Vehicle and Equipment Lease The Company has various finance leases for two vehicles, two forklifts, and a copy machine. All leases were for 60 -month terms at rates ranging from 3 % to 7.5 %. No new leases were entered into in 2024. Finance lease are recorded in property and equipment, net on the consolidated balance sheet. Schedule of Finance lease December 31, December 31, 2024 2023 Cost $ 220,332 $ 222,447 Accumulated Depreciation ( 85,558 ) ( 45,211 ) Net Book Value $ 134,774 $ 177,236 F- 17 AquaSport Lease On May 5, 2023, Twin Vee and AquaSport Co. entered into an agreement with Ebbtide Corporation (“Ebbtide”) providing AquaSport Co. with the right to acquire assets, AQUASPORT™ boat brand, trademarks, 150,000-square-foot manufacturing facility situated on 18.5 acres in White Bluff Tennessee, related tooling, molds, and equipment to build five Aquasport models ranging in size from 21- to 25-foot boats (the “AquaSport Assets”). Under the Agreement, the Company has the right to purchase the AquaSport Assets from Ebbtide for $ 3,100,000 during the five-year term of the Agreement (or extension period), less credit for a $ 300,000 security deposit paid by the Company and $ 16,000 a month for any rent paid under the Agreement by AquaSport Co. to Ebbtide. AquaSport Co. leases the AquaSport Assets from Ebbtide under the Agreement at a monthly rent of $ 22,000 with the option to acquire the AquaSport Assets. The lease is for a term of five years, commencing June 1, 2023 at a 2.93 % interest rate, with one option to renew the lease for an additional five years. In the event AquaSport Co. commits three payment Events of Default (as defined in the Agreement) within any consecutive two-year period or commits any other material Event of Default that is not cured timely and remains uncured, Ebbtide may terminate AquaSport’s rights under the Agreement to acquire the AquaSport Assets. In addition, Ebbtide has the right to terminate the Agreement if an Event of Default occurs. AquaSport’s obligations under the Agreement have been guaranteed by the Company. Finance leases on the AquaSport lease are recorded in property and equipment, net on the consolidated balance sheet. Schedule of finance lease in property and equipment December 31, December 31, 2024 2023 Land $ 1,000,000 $ 1,000,000 Building 100,000 100,000 Molds 2,000,000 2,000,000 3,100,000 3,100,000 Accumulated depreciation ( 438,138 ) ( 149,086 ) Total $ 2,661,862 $ 2,950,914 At December 31, 2024 and 2023, supplemental balance sheet information related to finance leases were as follows: Schedule of supplemental balance sheet of finance lease December 31, December 31, 2024 2023 Finance lease liabilities: Current portion $ 221,929 $ 214,715 Non-current portion 2,423,165 2,644,123 Total $ 2,645,094 $ 2,858,838 At December 31, 2024, future minimum lease payments under the non-cancelable finance leases are as follows: Schedule of future minimum lease payments of finance lease Year Ending December 31, 2025 $ 298,249 2026 296,033 2027 292,926 2028 1,988,409 Thereafter — Total lease payment 2,875,617 Less imputed interest ( 230,523 ) Total $ 2,645,094 F- 18 The following summarizes other supplemental information about the Company’s finance lease: Schedule of summarize other supplemental information of finance lease December 31, 2024 Weighted average discount rate 3.01 % Weighted average remaining lease term (years) 3.32 8. Accrued Liabilities At December 31, 2024 and 2023, accrued liabilities consisted of the following: Schedule of accrued liabilities December 31, December 31, 2024 2023 Accrued wages and benefits $ 206,041 $ 343,511 Accrued interest 96,793 33,245 Accrued operating expense 277,873 115,037 Accrued construction expense — 390,825 Warranty reserve 213,546 192,894 Total $ 794,253 $ 1,075,512 9. Short-term Debt On December 31, 2024 and 2023, the Company had a line of credit with Wells Fargo and Yamaha Motor Finance for $ 1,250,000 and $ 1,000,000 , respectively. Interest on our Wells Fargo line is calculated in two ways, the average daily balance is prime +5%, with a minimum prime at 5.5%, there is also a monthly flat charge of 0.2%, which, is 2.4% annualized. After the 150-day due in full period, the average daily balance rate goes up to prime +8.5% with no monthly flat charge. On December 31, 2024 and 2023, the interest rate on the line of credit was 11.13% and 11.6%. Interest on our Yamaha line is calculated on the average daily balance +4%, with a minimum prime at 8.0%. On December 31, 2024 and 2023, our interest rate was 11.75 % and 16.8 %, respectively. On December 31, 2024 and 2023, the outstanding balance with Wells Fargo was $ 130,690 and $ 231,736 , respectively. On December 31, 2024 and 2023, the outstanding balance with Yamaha Motor Finance was $ 255,649 and $ 210,674 , respectively. The outstanding balances are included in account payable on the consolidated balance sheets. 10. Notes Payable – SBA EIDL Loan On April 22, 2020, the Company received an SBA Economic Injury Disaster Loan (“EIDL”) in the amount of $ 499,900 . The loan is in response to the COVID - 19 pandemic. The loan is a 30 -year loan with an interest rate of 3.75 %, monthly payments of $ 2,437 to begin October 22, 2022, under the EIDL program, which is administered through the SBA. The EIDL loan has an initial deferment period wherein no payments are due for thirty months from the date of disbursement. The EIDL loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The proceeds from this loan were used solely as working capital to alleviate economic injury caused by the COVID-19 pandemic. As part of the EIDL loan, the Company granted the SBA a continuing security interest in and to any and all collateral to secure payment and performance of all debts, liabilities and obligations of the Company to the SBA under the EIDL loan. The collateral includes substantially all tangible and intangible personal property of the Company. F- 19 A summary of the minimum maturities of term debt follows for the years set forth below. Schedule of minimum maturities Year Ending December 31, 2025 $ — 2026 — 2027 6,611 2028 10,932 2029 and thereafter 482,357 Total $ 499,900 11. Related Party Transactions As discussed in note 6, the Company leases its facilities from a company owned by its CEO. During the years ended December 31, 2024 and 2023, respectively, the Company recorded $ 0 and $ 36,000 of professional fees, for consulting work for Twin Vee performed by Jim Leffew, the former Chief Executive Officer of Forza. Additionally, during the years ended December 31, 2024 and 2023, respectively, Aqua Sport recorded expense of $ 0 and $ 50,000 , for compensation for his work to start up the Tennessee facility. During the year ended December 31, 2024, the Company received a variable monthly fee averaging $ 41,593 , to provide management services to Forza. This income for the Company, and expense for Forza, has been eliminated in the condensed consolidated financial statements. No management fees have been recorded in the period after the date of the merger of November 26, 2024. During the years ended December 31, 2023 the Company received a monthly fee of $ 6,800 , to provide management services and facility utilization to Forza. This income for the Company, and expense for Forza, has been eliminated in the consolidated financial statements. In August of 2022, Forza signed a six-month lease for a duplex on a property in Black Mountain, NC, to be used by its traveling employees during the construction of its new manufacturing facility, for $ 2,500 per month. After the initial term of the lease, it was extended on a month-to-month basis. In August of 2023, the then president of Forza, James Leffew, purchased the property, and Forza executed a new lease agreement with Mr. Leffew on the same month-to-month terms. For the years ended December 31, 2024 and 2023, the lease expense was $ 7,500 and $ 20,000 , respectively. The lease was canceled in March 2024. 12. Commitments and Contingencies Repurchase Obligations Under certain conditions, the Company is obligated to repurchase new inventory repossessed from dealerships by financial institutions that provide credit to the Company’s dealers. The maximum obligation of the Company under such floor plan agreements totaled $ 10,265,229 or 60 units, and $ 10,510,252 or 69 units, as of December 31, 2024, and December 31, 2023, respectively. The Company incurred no impact from repurchase events during the years ended December 31, 2024 and December 31, 2023. F- 20 Litigation The Company is currently involved in various civil litigation in the normal course of business none of which is considered material. 13. Stockholders’ Equity Twin Vee Common Stock Issuance On October 3, 2022, the Company issued and sold to ThinkEquity LLC, as the underwriter in a firm commitment underwritten public offering (the “ Offering ”) pursuant to the term of an underwriting agreement that the Company entered into with ThinkEquity LLC on September 28, 2022 (the “Underwriting Agreement”),an aggregate of 2,500,000 shares of the Company’s common stock, par value $ 0.001 per share, at a public offering price of $ 2.75 per share, for gross proceeds of $ 6,875,000 , before deducting underwriting discounts, commissions and offering expenses. Pursuant to the Underwriting Agreement, the Company also issued to the underwriter, warrants to purchase up to 143,750 shares of common stock. The warrants will be exercisable at a per share exercise price of $ 3.4375 . On November 26, 2024, pursuant to the terms of the Merger Agreement with Forza and Merger Sub, Forza merged with and into Merger Sub, with Forza surviving the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of Forza common stock (other than any shares held by us), were converted into the right to receive 0.61166627 shares (the “Exchange Ratio”) of our common stock, any fractional shares to be rounded down to the nearest whole share of common stock, for an aggregate of 5,354,480 shares of our common stock. No cash proceeds were received related to this share issuance. Common Stock Warrants As of December 31, 2024, the Company had outstanding warrants to purchase an aggregate of 562,373 shares of common stock: ● warrants to purchase 150,000 shares of common stock at an exercise price of $ 7.50 per share that were issued to the representative of the underwriters on July 23, 2021, in connection with the Company’s IPO. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on July 20, 2026. ● warrants to purchase 143,750 shares of common stock at an exercise price of $ 3.4375 were issued to the representative of the underwriters on October 3, 2022, in connection with an underwritten public offering. These representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on September 28, 2027. ● warrants to purchase 105,501 shares of common stock at an exercise price of $ 10.22 . These warrants were assumed by the Company on November 26, 2024 in connection with the Merger and were converted into a warrant to purchase the number of shares of Company common stock that the holder would have received if such holder had exercised such warrant to purchase shares of Forza common stock prior to the Merger . These representative’s warrants were originally issued in connection with Forza X1, Inc.’s initial public offering that closed on August 16, 2022, and are exercisable at any time and from time to time, in whole or in part, and expire on August 11, 2027. F- 21 ● warrants to purchase 163,122 shares of common stock at an exercise price of $ 3.07 . These warrants were assumed by the Company on November 26, 2024 in connection with the Merger and were converted into a warrant to purchase the number of shares of Company common stock that the holder would have received if such holder had exercised such warrant to purchase shares of Forza common stock prior to the Merger These representative’s warrants were originally issued in connection with Forza X1, Inc.’s public offering that closed on June 14, 2023, and are exercisable at any time and from time to time, in whole or in part, and expire on June 12, 2028. There was no warrant activity during the year ended December 31, 2024. Equity Compensation Plan The Company maintains an equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the Plan. The number of awards under the Plan automatically increased on January 1, 2022. As of December 31, 2024, there were 948,089 shares remaining available for grant under this Plan. Accounting for Stock-Based Compensation Stock Compensation Expense For the year ended December 31, 2024 and 2023, the Company recorded $ 417,375 and $ 557,479 , respectively, of stock-based compensation expense, which is included in salaries and wages on the accompanying consolidated statement of operations. Stock Options Under the Company’s 2021 Stock Incentive Plan the Company has issued stock options. A stock option grant gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. The Company typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years. The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the years ended December 31, 2024 and 2023: Schedule of assumptions Year Ended December 31 Year Ended December 31, 2024 2023 Expected term 1.42 - 6.5 years 5 years Expected average volatility 39.1 – 49.6 % 35.9 - 51 % Expected dividend yield — — Risk-free interest rate 3.77 – 4.55 % 0.72 – 1.5 - 4.72 % The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0 % F- 22 Schedule of option activity Options Outstanding Number of Weighted Average Weighted Average Remaining life Fair value Options Exercise Price (years) of options Outstanding, December 31, 2022 1,283,571 $ 4.14 8.95 $ 2,324,581 Granted 75,000 1.35 10.00 39,960 Exercised — — — Forfeited/canceled ( 87,555 ) ( 3.65 ) ( 151,394 ) Outstanding, December 31, 2023 1,271,016 $ 3.99 8.04 $ 2,213,147 Granted 1,352,458 2.19 5.16 266,500 Exercised — — — Forfeited/canceled ( 484,303 ) ( 3.63 ) ( 770,996 ) Outstanding, December 31, 2024 2.139,171 $ 2.93 5.04 $ 1,708,651 Exercisable options, December 31, 2024 1,177,766 $ 4.32 7.31 At December 31, 2024, 961,405 share of Twin Vee options are unvested and expected to vest over the next four years. Restricted Stock Units Under the Company’s 2021 Stock Incentive Plan the Company has issued restricted stock units (“RSUs”). RSUs are granted with a fair value equal to the closing market price of our common stock on the business day of the grant date. An award may vest completely at a point in time (cliff-vest) or in increments over time (graded-vest). Generally, RSUs vest over three years. Schedule of restricted stock options Restricted Stock Units Outstanding Number of Weighted Average Grant – Date Weighted Average Remaining life Aggregate Intrinsic Units Fair Value Price (years) Value Outstanding, December 31, 2022 — $ — — $ — Granted 91,875 2.25 3.00 71,955 Exercised — — — Forfeited/canceled ( 24,625 ) ( 2.25 ) ( 34,968 ) Outstanding, December 31, 2023 67,250 $ 2.25 2.07 $ 36,987 Granted 87,300 0.84 2.56 48,015 Exercised — — — Forfeited/canceled ( 70,010 ) ( 1.32 ) ( 38,505 ) Outstanding, December 31, 2024 84,540 $ 1.56 1.57 $ 46,497 Forza On November 26, 2024, we consummated the Merger contemplated by the Merger Agreement. Each outstanding share of Forza Common Stock (other than any shares held by the Company), were converted into the right to receive 0.61166627 shares (the “Exchange Ratio”) of Twin Vee Common Stock, any fractional shares to be rounded down to the nearest whole share of common stock, for an aggregate of 5,354,480 shares of Twin Vee Common Stock. No cash proceeds were received related to this share issuance. F- 23 The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the year ended December 31, 2023: Schedule of assumptions Year Ended December 31 2023 Expected term 5 years Expected average volatility 108 - 113 % Expected dividend yield — Risk-free interest rate 2.98 – 4.72 % The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0 % Schedule of options activity Options Outstanding Weighted Average Number of Weighted Average Remaining life Options Exercise Price (years) Fair value of option Outstanding, December 31, 2022 1,441,500 $ 3.41 0.05 $ 4,009,913 Granted 518,000 0.70 9.76 287,835 Exercised — — Forfeited/canceled ( 69,583 ) 1.24 9.62 ( 40,248 ) Outstanding, December 31, 2023 1,889,917 $ 2.75 9.36 $ 4,257,500 Exercisable options, December 31, 2023 611,250 $ 2.79 2.79 Accounting for Stock -Based Compensation Stock Compensation Expense - For the year-to-date period until the date of merger on November 26, 2024, the Company recorded $ 759,765 of stock-based compensation expense which is included in salaries and wages on the accompanying condensed statement of operations. Forza’s 2022 Stock Incentive Plan (the “Plan”) - Forza has issued stock options. A stock option grant gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. Forza typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years. 14. Customer and Supplier Concentration Significant dealers and suppliers are those that account for greater than 10% of the Company’s revenues and purchases. During the year ended December 31, 2024, three individual customers had sales of over 10 % of our total sales and represented 40 % of total sales. During the year ended December 31, 2023, one individual dealer had sales of over 10 % of our total sales and represented 10 % of total sales. F- 24 The Company is dependent on third-party equipment manufacturers, distributors, and dealers for certain parts and materials utilized in the manufacturing process. During the year ended December 31, 2024, the Company purchased a substantial portion of engines and other materials from five vendors. Total purchases from these vendors were $ 5,324,494 . During the year ended December 31, 2023, the Company purchased all engines from three vendors for its boats under supplier agreements. Total purchases from these vendors were $ 9,252,915 . The Company believes there are other suppliers that could be substituted should the supplier become unavailable or non-competitive. 15. Income Tax Due to operating losses and the recognition of valuation allowances, the Company has no provision for current and deferred federal or state income taxes in 2024. In 2021, the Company reversed valuation allowances against previously reserved deferred tax assets, accordingly, there was no provision for current and deferred federal or state income taxes. Deferred income taxes reflect the net tax effects of temporary and permanent differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows as of: Schedule of deferred tax assets and deferred tax liabilities December 31, December 31, 2024 2023 Non-operating loss carryforward $ 16,700,000 $ 8,600,000 Valuation allowance ( 16,700,000 ) ( 8,600,000 ) Net deferred tax asset $ — $ — The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. During the years ended December 31, 2024 and 2023, the valuation allowance increased by approximately $ 8,100,000 and $ 3,092,000 , respectively. The Company has net operating and economic loss carry-forwards of approximately $ 8.6 million available to offset future federal and state taxable income. A reconciliation between expected income taxes, computed at the federal income tax rate of 21% applied to the pretax accounting loss, and our blended state income tax rate of 2%, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2023 and 2022 is as follows: Schedule of income tax rate December 31, December 31, 2024 2023 Tax at federal statutory rate 21.0 % 21.0 % Tax at state rate net of federal benefit 2.0 % 2.0 % Change in valuation allowance ( 23.0 )% ( 23.0 )% Provision for taxes 0.0 % 0.0 % The Company’s tax positions for 2020 to 2022 have been analyzed and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years. Tax returns for the years 2021 to 2023, are subject to review by the tax authorities. F- 25 16. Net Loss Per Share Basic net loss per share has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted net loss per share of common stock has been computed on the basis of the weighted average number of shares outstanding plus equivalent shares of common stock assuming exercise of stock options. Potential shares of common stock that have an anti-dilutive effect (i.e., those that share or decrease loss per share) are excluded from the calculation of diluted net loss per share of common stock. Basic and diluted loss per common share have been computed based on the following as of years ending December 31, 2024 and 2023: Schedule of earning per share December 31, December 31, 2024 2023 Numerator for basic and diluted net loss per share: Net loss $ ( 11,045,971 ) $ ( 7,192,176 ) Denominator: For basic net loss per share - weighted average common shares outstanding 10,032,040 9,520,000 Effect of dilutive stock options — — For diluted net loss per share - weighted average common shares outstanding 10,032,040 9,520,000 Net loss per share -Basic: Net loss per share $ ( 1.10 ) $ ( 0.76 ) Net loss per share - Diluted: Net loss per share $ ( 1.10 ) $ ( 0.76 ) For the years ended December 31, 2024 and 2023, all potentially dilutive securities were antidilutive. 17. Segment Information Effective with the beginning of the fourth quarter of 2024, the company began operating in a single segment following the reorganization of its operations from three operating and reportable segments to one operating and reportable segment. The primary business activities include design, manufacture, marketing and sales of power boats. The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. The Company’s Chief Operating Decision Maker is its President and Chief Executive Officer. The CDOM regularly reviews consolidated net sales, consolidated operating expenses and consolidated operating income. 18. Subsequent Events The Company has evaluated all events or transactions that occurred after December 31, 2024 through March 20, 2025, which is the date that the consolidated financial statements were available to be issued. During this period, there were no material subsequent events requiring recognition or disclosure, other than the ones described below. On January 1, 2024, our 2021 Stock Incentive Plan automatically increased, and will continue to increase on January 1 of each calendar year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031, in a number of shares of common stock equal to 4.5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As of January 1, 2025, the maximum number of common stock shares available for issuance was 3,841,152 . F- 26 In January 2025, the company obtained a waiver of liens and the delivery of certain equipment from the general contractor of the Marion North Carolina facility which will allow the company to move forward with a plan of disposal. The land and building are currently listed for sale while the company searches for a broker for the property. We expect this property to be sold withing the next 12 months. On February 4, 2025, Twin Vee PowerCats Co. (the “Company”) 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 the Company 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 of the OWN Intellectual Property to the Company, the Sale Agreement grants the Company 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 of the OWN Intellectual Property to the Company, the Sale Agreement provides that in consideration of the transfer of, and as a purchase price (the “Purchase Price”) for, the OWM Intellectual Property, the Company 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”). On March 10, 2025, shareholders Nabeel Youseph and Marisa Hardyal-Youseph (“Plaintiffs”), who are former holders of common stock of Forza X1, Inc. (“Forza”), commenced an action in the Chancery Court of the State of Delaware, captioned Youseph, et al. v. Visconti, et al., Case No. 2025-0262, by filing a putative class action complaint (the “Complaint”) against Defendants Joseph Visconti, Kevin Schuyler, Neil Ross, Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc. (collectively, “Defendants”), related to Forza’s merger with us seeking an unspecified award of damages, plus interest, costs, and attorneys’ fees. Plaintiffs’ Complaint asserts claims (1) against Defendants for breach of fiduciary duty in their capacities as controlling shareholders of Forza, (2) against Messrs. Visconti, Schuyler, and Ross for breach of fiduciary duty in their capacities as directors of Forza, and (3) against Mr. Visconti for breach of fiduciary duty in his capacity as an officer of Forza. Defendants intend to vigorously defending against the claims. At this time, the Company is unable to estimate the ultimate outcome of this matter. F- 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.