What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-20 · 336 added, 219 removed, 118 unchanged (82% of the section changed)

8 unchanged sentences

Company Overview

We are a designer, manufacturer and marketer of recreational

and commercial power catamaran boats.

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

We currently have 19 gas-powered models in production ranging in size from our 22-foot monohull to our newly designed 40-foot

offshore 400 GFX.

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

by reducing drag, increasing fuel efficiency, and offering users a stable riding boat.

Additionally, we have launched the AquaSport line

of monohull boats which are expected to appeal to first-time boat buyers,

the freshwater market, and consumers that prefer a

monohull boat, increasing our potential customer base across the nation and beyond the catamaran market.

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.

We currently employe

approximately 65 employees.

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

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

share and expanding the power catamaran boating market.

We currently primarily sell our boats through a current network of 43 independent

boat dealers in locations across North America and the Caribbean who resell our boats to the end user Twin Vee customers.

recruiting efforts for high quality boat dealers and seek to establish new dealers and distributors domestically and internationally to

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

Our boats are currently outfitted with gas-powered outboard combustion

During the year ended December31, 2024, we experienced

a dramatic decrease in revenue.

Our objectives have been to assist dealers with selling through field inventory, add new models like the

GFX2 model line introduced in 2024, expand our dealer and distribution network, and increase unit production to fulfill our customer and

dealer orders.

The average selling price of our units increased by 19%, for the year ended December 31, 2024, to approximately $167,096.

This is due to the higher proportion of larger Twin Vee models sold versus smaller Aquasport models.

Twin Vee PowerCats Co.

(“Twin Vee” “we”,

“us” or the “Company”) is a designer, manufacturer and marketer of recreational and commercial power boats.

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 of 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 70 people.

Twin Vee products are marketed under two brands:

Vee for our catamarans, or dual hull vessels, and Bahama Boat Works 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 17

independent boat dealers across North America, Hawaii, and Australia who resell our boats to the end user Twin Vee customers.

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 X1, 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 nearly

100% of our net revenue in the third quarter of 2025 and for the fiscal year 2024.

Our boats are manufactured in Fort Pierce, Florida.

We believe our company has been an innovator in the recreational and commercial power boat industry.

We currently have 12 Twin Vee models

in or nearing production ranging in size from 24-foot to 40-foot, and 9 monohull (Bahama) models in or nearing production ranging in size

from 22-foot to 41-foot.

Revenues are also derived from the sale of short-term contracts to provide used boat listing services through

Wizz Banger, Inc., which is recognized into revenues over the life of the contract.

During the 2025 and 2024 fiscal years, we focused

our efforts on increased throughput through our facility, and integrating the new models from our Bahama Boats brand that we acquired

During the year ended December 31, 2025, two individual dealers

each represented over 10% of our total sales and in the aggregate represented 27% of total sales.

During the year ended December 31, 2024, three individual dealers represented over 10% of our total sales, and in the aggregate represented

40% of total sales.

Recent Developments

On November 26, 2024 (the

“Closing Date”), pursuant to the terms of the Merger Agreement, by and between us, Twin Vee Merger Sub, Inc.

and Forza, Merger

Sub was merged with and into Forza (the “Merger”), with Forza surviving the Merger as our wholly-owned subsidiary.

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 for an aggregate of 5,355,000 shares of our common stock (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.

First Amendment to the License and Conditional Sale Agreement with Revver

Effective July 14, 2025,

we and our recently formed, wholly owned subsidiary, Wizz Banger, Inc.

(“Wizz Banger”), entered into a First Amendment (the

“First Amendment”) to that certain license and conditional sale agreement (the “License and Sale Agreement”),

entered into and effective as of February 4, 2025, by and between us and Revver Digital, LLC, providing us with the right to acquire certain

intellectual property of OWM (the “OWM 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 OWM Intellectual Property, the License and Sale Agreement grants us a license to use and

sublicense the OWM 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 in the License

and Sale Agreement) 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 of the sale to us of the OWM Intellectual Property, the

License and Sale Agreement provides that in consideration of the transfer of, and as a 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, 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

The First Amendment was entered

into in order to (i) amend the definition of “Foreground Intellectual Property” (as defined therein), (ii) to clarify the

respective rights of the parties thereunder, (iii) to assign the License and Sale Agreement to Wizz Banger, and (iv) to provide for a

guaranty by us of Wizz Banger’s obligations and liabilities under the License and Sale Agreement, as amended, as provided therein

and effect other amendments to the License and Sale Agreement as set forth therein.

Bahama Boat Works Acquisition

On June 5, 2025, we entered

into an Asset Purchase Agreement (the “Asset Purchase Agreement”), with Bahama Boat Works, LLC (“Bahama Boat Works”),

pursuant to which we acquired various tangible and intangible assets (the “Assets”) from Bahama Boat Works’ relating

to the Bahama boat brand (the “Bahama Boat Brand”).

In accordance with the Asset Purchase Agreement, in consideration of the

transferred Assets we paid Bahama Boat Works $100,000 and agreed to pay up to $2,900,000 in additional contingent consideration based

upon a percentage of the revenues we receive from future sales to customers of new Bahama Boat Brand 31’, 35’, 37’,

and 41’ boat models (the “Bahama Boat Revenues”).

The Asset Purchase Agreement provides that Bahama Boat Works will

receive 20% of the first $7,500,000 of Bahama Boat Revenues we receive and 10% of the Bahama Boat Revenues we receive in excess of $7,500,000

(but not exceeding $21,500,000) until such time as Bahama Boat Works has been paid an aggregate of $3,000,000 by us from such sales.

The Asset Purchase Agreement

may be terminated by mutual written consent of the parties or by us, in our sole discretion, if we decide to discontinue further development,

production, or commercialization of the Bahama Boat Brand product line before the balance of the contingent consideration due to Bahama

Boat Works is paid.

Upon any such termination, the parties may either seek to sell the Bahama Boat Brand and associated assets pursuant

to a mechanism set forth in the Asset Purchase Agreement or we, in our sole discretion, may elect to return the Assets to Bahama Boat

Underwritten Public Offering

On May 8, 2025, we entered into an underwriting agreement

(the “Underwriting Agreement”) with ThinkEquity LLC, as representative of the several underwriters named therein (the “Representative”),

pursuant to which we agreed to sell to the Representative in a firm commitment underwritten public offering (the “May 2025 Offering”)

an aggregate of 750,000 shares (the “Shares”) of our common stock at the public offering price of $4.00 per share, resulting

in gross proceeds of $3.0 million, before deducting underwriting discounts, commissions and offering expenses.

The Shares were sold pursuant

to an effective shelf registration statement on Form S-3 (File No.

333-266858) filed with the SEC under the Securities Act and declared

effective by the Commission on August 24, 2022, a base prospectus, dated August 24, 2022, included in the Registration Statement at the

time it originally became effective, and a prospectus supplement, dated May 8, 2025, filed with the Commission pursuant to Rule 424(b)

under the Securities Act.

Pursuant to the Underwriting Agreement, we also issued to designees of the Representative unregistered warrants

to purchase up to 37,500 shares of our common stock, which equals 5% of the shares of common stock purchased in the May 2025 Offering.

The May 2025 Offering closed on May 12, 2025.

The net proceeds to us from the May 2025 Offering, after deducting the underwriting discount,

the Representative’s fees and expenses and our estimated offering expenses, were $2,555,101.

Repurchase Request

On April 21, 2025, Northpoint Commercial Finance LLC

(“Northpoint”) came into possession of certain Twin Vee and AquaSport inventory of United Marine and Storage LLC, a former

dealer of our products.

Northpoint requested that we take possession of and repurchase the inventory in accordance with the Repurchase

Agreement that we previously entered into with Northpoint.

During the second quarter, we sold five of the six repossessed boats, resulting

in a net loss on the sale of approximately $14,875 after transportation, refurbishment, and commissions for the second quarter.

the third quarter, we paid our obligation to Northpoint for the one remaining repurchase obligation of $58,984 and are currently marketing

this boat for sale.

We expect to fully recover the amount of the repurchase obligation.

Nasdaq Compliance

On November 7, 2024, we received written notification

from The Nasdaq Stock Market LLC (“Nasdaq”) granting our 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 our 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 us when it determines

that we have regained compliance with the Minimum Bid Price Requirement and the matter will be closed.

On November 11, 2024, we held the 2024 Annual Meeting.

At the 2024 Annual Meeting, our stockholders approved the issuance of shares of common stock to Forza stockholders pursuant to the terms

of the Merger Agreement 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.

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;

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”).

On May 10, 2024, we received written notice from the

Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that for the preceding 30 consecutive

business days (March 28, 2024 through May 9, 2024), our common stock did not maintain a minimum closing bid price of $1.00 per share as

required by Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

We were provided 180 calendar days, or until

November 6, 2024, to regain compliance.

On November 7, 2024, we received written notification from Nasdaq granting our request for a 180-day

extension to regain compliance with the Minimum Bid Price Requirement.

Compliance would be achieved if the closing bid price of our common

stock is at or above $1.00 for a minimum of ten consecutive business days at any time prior to May 5, 2025.

On April 4, 2025, we filed an amendment (the “Amendment”)

to our Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split at a ratio

of 1-for-10, effective as of 11:59 p.m.

Eastern Time, on April 7, 2025 (the “Effective Time”), in order to regain compliance

with the Minimum Bid Price Requirement.

Our common stock began trading on a reverse split-adjusted basis on April 8, 2025 under the existing

ticker symbol “VEEE.” Any share amounts and exercise or conversion prices in this report have been adjusted retrospectively

for the Reverse Stock Split.

On April 28, 2025, we received a letter from Nasdaq stating that Nasdaq

had determined that we now comply with the Minimum Bid Price Requirement.

Establishment of Strategic Steering Committee

On January 6, 2026, we announced the formation of

a strategic steering committee to focus on advancing autonomous marine technologies to address key challenges in unmanned maritime systems

and help bridge gaps exposed in current defense and commercial autonomy efforts.

The executive-level steering committee includes members

of our board of directors and management team.

Its primary focus is to explore, evaluate, and identify potential technology partners in

the autonomous and AI space whose capabilities may complement Twin Vee’s marine design and manufacturing platform and to present

such opportunities to our board of directors and management, as appropriate.

Formation of Black Line Defense

On January 22, 2026, we formed Black Line Defense,

a wholly owned subsidiary focused on the design and manufacture of manned and autonomous maritime platforms for defense, security, and

surveillance missions.

Black Line Defense is seeking to pursue opportunities with the U.S.

Department of Defense, Homeland Security, and

allied agencies, targeting government programs allocating billions of dollars toward small-craft fleets over the coming years.

The subsidiary

aims to leverage Twin Vee’s existing vertically integrated manufacturing footprint, including in-house design, composite lamination,

CNC tooling, wire-harness fabrication, rigging, quality control, and scalable production capacity.

Black Line Defense is structured to

enter the government market with limited incremental capital investment while offering cost-competitive, rapidly deployable vessel solutions

for patrol, interdiction, logistics, and unmanned operations.

Appointment of Certain Officers

On September 17, 2025, our

board of directors appointed Scott Searles to serve as Interim Chief Financial Officer, effective immediately, while we undertake a search

to identify a permanent successor.

Searles terminated his employment as our Interim Chief Financial Officer in January 2026.

9, 2026, Joseph Visconti was appointed as Interim Chief Financial Officer, effective immediately, while we undertake a search to identify

a permanent successor.

Sale of North Carolina

On September 26, 2025, we

entered into a purchase and sale agreement with Highland Myco Holdings, LLC for the sale of our property located at 100 College Drive,

Marion, North Carolina, which was completed on October 31, 2025.

We received $500,000 as a closing payment, with an additional $3,750,000

payable in installments of $500,000 plus accrued interest at a rate of 5% on October 31, 2026, $500,000 plus accrued interest on April

30, 2027, and a balloon payment of $2,750,000 plus accrued interest on October 31, 2027.

February 2026 Offering

On February 19, 2026, we entered into a placement

agency agreement (the “Placement Agency Agreement”) with ThinkEquity LLC, as sole placement agent (the “Placement Agent”),

pursuant to which we agreed to issue and sell directly to various investors in a best efforts public offering (the “February 2026

Offering”) an aggregate of 6,383,000 shares (the “Shares”) of our common stock at a public offering price of $0.47 per

The Shares were sold pursuant to a registration statement on Form S-1 (File No.

333-292661) relating to the securities filed with

the Securities and Exchange Commission (“SEC”) and became effective on February 13, 2026, and a prospectus, dated February

The February 2026 Offering closed on February 23, 2026.

The net proceeds to us from the February 2026 Offering, after deducting

the underwriting discount, the Representative’s fees and expenses and our estimated offering expenses, were approximately $2,540,109.

Financial Condition

We finished the year with revenue down 57% compared

to the prior year.

Our cash, cash equivalents, restricted cash and marketable securities were $7.7 million at December 31, 2024.

Our property,

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

and leasehold improvements to improve the quality of our products and new and expanded production facilities

We finished the year with revenue up 3% compared to

the prior year.

Our cash, cash equivalents, and restricted cash were $1.6 million at December 31, 2025.

Our property, plant, and equipment

decreased as a result of the sale of the North Carolina building, sale and disposition of research and development assets related to the

former electric boat development activities, and the termination of a long term building and equipment lease, partially offset by investments

in additional boat molds for new models, equipment to support our increased production levels, and leasehold improvements to improve the

quality of our products and new and expanded production facilities.

Results of Operations

2 unchanged sentences

the years presented:

Cost of products sold

Cost of products sold (excluding depreciation & amortization)

$ (1,577,917 )

Gross income (loss)

Operating expenses

$ (3,761,940 )

Loss from operations

Other expense

Basic and dilutive income per share of common stock

$ (8,781,299 )

$ (14,551,769 )

$ (8,607,273 )

$ (14,009,906 )

Basic and dilutive loss per share of common stock

Weighted average number of shares of common stock outstanding

Net Sales and Cost Sales

Our net sales decreased $19,037,395, or 57% to $14,388,517

Our net sales increased $430,613, or 3% to $14,819,130

for the year ended December 31, 2025 from $14,388,517 for the year ended December 31, 2024.

The number of boats sold during fiscal year

ended December 31, 2024 decreased 63% compared to the number of our boats sold during the fiscal year ended December 31, 2023.

our average cost per unit increased approximately $27,000.

The increase in average price per boat was due to the higher percentage of

Twin Vee boats compared to Aquasport boats, which have generally lower prices than Twin Vee boats.

Gross profits decreased by $4,018,313, or 123% to

a negative $751,425 for the year ended December 31, 2024 from $3,266,888 for the year ended December 31, 2023.

Gross profit as a percentage

of sales, for the year ended December 31, 2024 and 2023 was negative 5% and positive 10% respectively.

We attribute the decline in gross

profit percentage to inefficiencies in production resulting from a significant drop in demand in the marine sector.

The Company sold 93 boats during fiscal year

ended December 31, 2025, an increase of 7% compared to the 87 boats sold during the fiscal year ended December 31, 2024.

The average price

per unit decreased approximately $7,800 or 5%.

The decrease in average price per boat was due primarily to the introduction of the 22’

BayCat in early 2025, which sold 15 units at an average selling price of below $100,000, and an overall lower average price per large

boat sold during the year.

Gross profits increased by $2,008,530, or 267% to

$1,257,105 in 2025 compared to a negative $751,425 for the year ended December 31, 2024.

Gross profit as a percentage of sales for the

year ended December 31, 2025 was 8.5% compared to a negative 5.2% for the year ended December 31, 2024.

The increase in gross profit reflects

our ongoing efforts to reduce our cost structure, such as bringing certain manufacturing operations in-house, better utilization of our

ERP system and direct labor leveraged against higher volumes.

Total Operating Expenses

1 unchanged sentence

2025 and 2024 were $10,038,404 and $13,800,344, respectively, a decrease of $3,761,940 or 27%.

As a percentage of revenues operating expenses

were 96% compared to 46% in the prior year, largely due to the high fixed cost nature of our business on a 57% reduction in revenues partially

offset by the benefit of significantly reduced spending at Forza throughout 2024.

Operating expenses for the year ended December 31, 2024

included an impairment charge of $1,674,000 related to the impairment of the partially constructed Forza building based on an appraisal

prior to the merger of Twin Vee and Forza.

Before the impact of this charge, operating expenses for the year ended December 31, 2024 and

2023 were $12,126,344 and $15,254,187, respectively, a decrease of $3,127,843 or 21%.

As a percentage of revenues, before the impact of

the impairment charge, operating expenses were 84% compared to 46% in the prior year, largely due to the high fixed cost nature of our

business on a 57% reduction in revenues partially offset by the benefit of significantly reduced spending at Forza throughout 2024.

Operating expenses for the years ended

December 31, 2025 and 2024 included an impairment charge of $418,416 and 1,674,000, respectively, related to the impairment of the partially

constructed Forza building based on an appraisal prior to the merger of Twin Vee and Forza.

Before the impact of this charge, operating

expenses for the year ended December 31, 2025 and 2024 were $9,619,988 and $12,126,344, respectively, a decrease of $2,506,356 or 21%.

Selling, general and administrative expenses decreased

2 unchanged sentences

12%, or $581,471 to $4,325,348 for the year ended December 31, 2025, compared to $4,906,819 for the year ended December 31, 2024.

decline is primarily related to significant reductions in headcount at Forza, partially offset by $310,000 in special bonuses paid to

certain executives upon the successful merger of Twin Vee and Forza.

Included in salaries and wages for the year ended December 31, 2024

was a non-cash stock-based compensation expense of $1,202,474, which represented a decrease of $700,275 from the prior year, due primarily

to the forfeiture of options following the departure of certain senior executives at both Twin Vee and Forza during 2024 partially offset

by the addition of a new executive officer at Twin Vee and further issuances of options to existing employees.

Also resulting from the

reduction in headcount year over year were related reductions in the cost of benefits, primarily health insurance, holiday pay and 401K.

Professional fees increased by 34%, or $420,086 to

decline is primarily related to significant reductions in headcount at Forza, including a $759,765 decline in stock-based compensation

partially offset by $422,844 in combined salaries and wages and stock-based compensation related to the development of Wizz Banger.

resulting from the reduction in headcount year over year were related reductions in the cost of benefits, primarily health insurance,

holiday pay and 401K.

Professional fees decreased by 48%, or $802,384 to

$867,090 for the year ended December 31, 2025, compared to $1,669,474 for the year ended 2024.

The increase in professional fees related

primarily to the merger between Twin Vee and Forza.

Costs incurred were for legal representation, auditor consents, fairness opinions,

appraisals, filings and the like.

Depreciation and amortization expense for the year

ended December 31, 2024 increased by 29%, or $391,834 to $1,745,217 for the year ended December 31, 2024 compared to $1,353,383 for the

year ended December 31, 2023.

This increase is due to significant investments in equipment, leasehold improvements and boat molds that

resulted in an increased depreciation expense.

The decrease in professional fees related

primarily to the merger between Twin Vee and Forza during 2024.

Costs incurred were for legal representation, auditor consents, fairness

opinions, appraisals, filings and other similar costs.

Depreciation and amortization expense for the year ended December 31, 2025

decreased by less than 1%, or $10,987 to $1,734,230 for the year ended December 31, 2025 compared to $1,745,217 for the year ended December

This decrease is due to significant investments in equipment, leasehold improvements and boat molds more than offset by the

sale of Forza R&D equipment and the termination of a significant lease agreement for building and equipment.

Research and development expenses for the year ended

December 31, 2025, was $0 compared to $586,379, for the year ended December 31, 2025.

This reduction was due to the discontinuance

of the development of our electric propulsion system for Forza.

This reduction was due to the discontinuance of

the development of our electric propulsion system for Forza.

Other income decreased by 68%, or $367,839 to $174,026

1 unchanged sentence

The decrease in other income is primarily the result

of $1,267,055 in Employee Retention Credit income received in 2023, which is not recurring in 2024, and lower overall dividends and interest

on investments resulting from the liquidation of investments to fund operations and capital investments.

of lower dividends and interest on investments resulting from the liquidation of investments to fund operations and capital investments.

Net loss for the year ended December 31, 2025, was

$14,009,906, compared to $9,782,196 for the year ended December 31, 2023.

2024 was a challenging year with overall boat production down

63%, which worsened throughout the year.

We managed both variable and fixed operating costs, including reducing then shutting down the

$8,607,273, compared to $14,009,906 for the year ended December 31, 2024, an improvement of 39%.

Both 2025 and 2024 were challenging years

with overall boat production down from previous periods.

We reduced both variable and fixed operating costs, including shutting down the

Forza research and development operation.

The deleveraging of our fixed costs on such a low revenue base in 2024 led to significant losses.

We have decreased our head count significantly and continue to right-size the business for the current state of the economy, while keep

our core strengths intact.

Basic and dilutive loss per share of common stock increased for the year ended December 31, 2024 to ($1.10)

compared to ($0.76) for the year ended December 31, 2023.

The deleveraging of our fixed costs on such a low revenue base led to continued losses.

reduced our head count to match current production levels and continue to right-size the business for the current state of the economy,

while keeping our core strengths intact.

Basic and dilutive loss per share of common stock improved for the year ended December 31, 2025

to ($4.37) compared to ($11.01) for the year ended December 31, 2024.

Liquidity and Capital Resources

A primary source of funds for the year ended December

31, 2024 was net cash received from sales of our equity securities and those of Forza during prior fiscal years and revenue generated

from operations.

Our primary use of cash was related to funding the low-level revenue related cash losses from operations and capital

improvements.

Our priority over the next year is to grow our revenue base while managing working capital including improving inventory

31, 2025 was net cash received from sales of our equity securities and revenue generated from operations.

Our primary use of cash was

related to funding the low-level revenue related cash-losses from operations and capital improvements.

Our priority over the next year

is to grow our revenue base while managing working capital, including improving inventory turns.

The following table provides selected financial data

1 unchanged sentence

Cash and cash equivalents

$ (6,059,545 )

Restricted cash

Current assets

$ (5,521,924 )

Current liabilities

$ (1,503,477 )

Working capital

As of December 31, 2024, we had sufficient cash and

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

As of December

31, 2024, we had $7,706,240 of cash, cash equivalents, restricted cash and marketable securities, total current assets of $10,419,141,

and total assets of $25,887,905.

$ (4,018,447 )

We do not have sufficient cash and cash equivalents

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

As of December 31, 2025, we had

$1,646,695 of cash, cash equivalents, restricted cash and marketable securities, total current assets of $4,897,217, and total assets

of $16,234,369.

Our total liabilities were $2,766,558.

Our total liabilities were comprised of current liabilities of

$3,747,990, which included accounts payable and accrued liabilities of $3,009,331, contract liability of $80,000, finance lease liability

of $221,929 and current portion of operating lease right of use liability of $436,730, and long-term liabilities of $2,923,065.

December 31, 2023, we had $16,755,233 of cash, cash equivalents, restricted cash, $4,462,942 of marketable securities, total current assets

of $26,646,318 and total assets of $39,846,713.

Our total current liabilities were $4,216,345 and total liabilities of $7,797,098 which

included long-term operating lease liabilities for the lease of our facility.

We believe that our cash and cash equivalents will

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

In addition to cash, cash equivalents, restricted cash and

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

and capital expenditure needs in the next year.

We also anticipate the sale of our partially constructed McDowell, North Carolina facility

to generate cash.

Our total liabilities were comprised of current liabilities of $2,244,513, which

included accounts payable and accrued liabilities of $1,829,083, contract liability of $395,932, and finance lease liability of $19,498,

and long-term liabilities of $522,045.

As of December 31, 2024, we had $7,706,240 of cash, cash equivalents, restricted cash, and total

current assets of $10,419,141 and total assets of $25,887,905.

Our total current liabilities were $3,747,990 and total liabilities of

$6,671,055 which included long-term operating lease liabilities for the lease of our facility.

Going Concern

For the year ended December 31, 2025, we incurred

a loss from operations of $8,781,299 and a net loss of $8,607,273.

As of December 31, 2025, we had accumulated deficits of $34,000,228.

To address these conditions:

We have demonstrated improving recent recovery trends, with revenues and gross margins increasing compared to the prior year, however not to a level that yet supports a positive cash flow.

As of December 31, 2025, we maintain a cash, cash equivalents and restricted cash balance exceeding $1.6 million.

During the fourth quarter of 2025, we completed

the sale of our Marion, North Carolina facility, generating $500,000 in cash in the fourth quarter of 2025, and expected cash payments

of $500,000 in 2026 and $3,250,000 in 2027, plus interest at 5%.

On February 19, 2026, the Company announced the

pricing of a best-efforts public offering of 6,383,000 shares of common stock.

Each share of common is being sold at a public offering

price of $0.47 per share.

Total gross proceeds from the offering, before deducting placement agent fees and other offering expenses,

were approximately $3 million.

The offering closed on February 23, 2026.

Management continues to implement cost controls, operational improvements, and revenue initiatives to further strengthen our financial position.

Despite our ongoing efforts to mitigate these conditions,

there can be no assurance that our expenses will not increase in future periods or that the cash generated from operations in future periods

will be sufficient to satisfy our operating needs.

If we need to raise additional capital to fund our continued operations, there can

be no assurance that funding will be available on acceptable terms on a timely basis, or at all.

The various ways that we could raise

capital carry potential risks.

Any additional sources of financing will likely involve the issuance of our equity securities, which will

have a dilutive effect on our stockholders.

Any debt financing, if available, may involve restrictive covenants that may impact our ability

to conduct our business.

If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to fill new

orders and develop new products.

As such, we cannot conclude that such plans will be effectively implemented within one year after the

date that the financial statements included in this Report are filed with the SEC, and there is uncertainty regarding our ability to maintain

liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern.

If we are unable to generate sufficient revenue from operations and/or raise capital when needed or on attractive terms, we be forced

to delay, reduce or eliminate efforts to expand our dealer network or develop new models and may be forced to cease operations or liquidate

Cash used in operating activities

$ (6,878,557 )

$ (6,973,617 )

Cash used in investing activities

Cash (used in) provided by financing activities

Cash at end of year

$ (1,590,634 )

$ (1,861,632 )

Cash provided by (used in) financing activities

Cash Flow from Operating Activities

For the year ended December 31, 2024, net cash flows

used in operating activities was $6,973,617 compared to $6,934,773 during the year ended December 31, 2023.

We have decreased net inventory

levels by $2,418,098, due to managing inventory as well as other working capital items to align with the significant reduction in revenues

and production in 2024.

Our net loss was $14,009,906, decreased by non-cash expenses, primarily due to stock-based compensation of $1,177,140,

depreciation and amortization of $1,745,217, impairment of property & equipment of $1,674,000, change of right-of-use asset and lease

liabilities of $464,304, and loss on disposal of property & equipment of $172,684.

For the year ended December 31, 2024, our accounts

payable decreased $183,947 due to our decrease in inventory and production.

For the year ended December 31, 2024, our operating lease

liabilities decreased $482,897 and our accrued liabilities decreased by $281,259.

For the year ended December 31, 2025, net cash flows used in operating activities

was $6,878,557 compared to $6,973,617 during the year ended December 31, 2024.

We have decreased net inventory levels by $24,019 and reduced

our outstanding obligations to suppliers by $1,100,243.

Our net loss was $8,607,273, decreased by non-cash expenses, primarily due to

stock-based compensation of $303,133, depreciation and amortization of $1,734,230, impairment of property & equipment of $418,416,

change of right-of-use asset and lease liabilities of $390,686, and loss on disposal of property & equipment and lease terminations of $190,918.

Cash Flow from Investing Activities

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We increased our property and equipment

by $6,341,675, we sold marketable securities of $4,462,942.

The majority of the property and equipment purchased were molds for our boat

production, for Twin Vee, and additions to facilities in both North Carolina and Ft.

by $2,157,199 and sold certain property and equipment generating cash proceeds of $552,478.

The majority of the property and equipment

purchased were molds for our boat production, for Twin Vee, and additions to facilities in Ft.

Pierce Florida.

Cash Flows from Financing Activities

For the year ended December 31, 2024, net cash used

by financing activities was approximately $213,744 compared to net cash provided by financing activities of $6,818,020 for the year ended

December 31, 2023.

The cash flow from financing activities for the year ended December 31, 2024 included only finance lease payments

while for the year ended December 31, 2023, cash provided by finance activities was primarily from proceeds of $6,996,015 and deferred

offering cost of $66,463 from a follow-on underwritten public offering for Forza in June 2023.

CRITICAL ACCOUNTING ESTIMATES

For the year ended December 31, 2025, net cash provided

by financing activities was $2,409,646 compared to net cash used in financing activities of $213,744 for the year ended December 31, 2024.

cash flow from financing activities for the year ended December 31, 2025 was primarily from the proceeds from a follow-on underwritten

public offering of Twin Vee common stock.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe that several accounting policies are important

8 unchanged sentences

On an ongoing basis,

we evaluate our estimates based on historical experience and make various assumptions,

which management believes to be reasonable under the

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

other sources.

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

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

from other sources.

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

19 unchanged sentences

Included in those estimates

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

Inventories are stated at the lower of cost or net

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

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

disposable and transportation and a normal profit margin.

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

goods inventories at a rate based on estimated production capacity.

Excess production costs are charged to cost of products sold.

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

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

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.

Impairment of Long-Lived Assets

14 unchanged sentences

by the historical warranty expense return rate.

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

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

of January 1, 2019.

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

the present value of the lease payments.

Under Topic 842, the Company applied a dual approach

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

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

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

Deferred Income Taxes and Valuation Allowance

14 unchanged sentences

Disclosures About Market Risk.

Not applicable because we

are a smaller reporting company.

The Company is a smaller

reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis