Twin Vee PowerCats (US:VEEE)2025-05-08 20:16markdown [PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Unaudited Q1 2025 financial statements show a reduced net loss, decreased assets, and highlight going concern uncertainty [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$23.55 million** as of March 31, 2025, primarily due to reduced cash and reclassified assets held for sale Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,910 | $7,491 | | Assets held for sale | $4,307 | $0 | | **Total Assets** | **$23,550** | **$25,888** | | Total current liabilities | $3,021 | $3,748 | | **Total Liabilities** | **$5,888** | **$6,671** | | Accumulated deficit | $(27,003) | $(25,393) | | **Total Stockholders' Equity** | **$17,663** | **$19,217** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss for Q1 2025 decreased to **$1.61 million** despite lower sales, due to improved gross profit and reduced operating expenses Statement of Operations Summary (Unaudited) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $3,612,291 | $5,276,343 | | Gross profit | $537,114 | $277,313 | | Total operating expenses | $2,216,208 | $2,820,520 | | Loss from operations | $(1,679,094) | $(2,543,207) | | Net loss | $(1,610,240) | $(2,335,195) | | Basic and diluted loss per share | $(1.08) | $(1.77) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$1.74 million** in Q1 2025, with total cash decreasing by **$2.58 million** due to investing activities Cash Flow Summary (Unaudited) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,736,276) | $(1,749,920) | | Net cash (used in) provided by investing activities | $(789,774) | $1,476,448 | | Net cash used in financing activities | $(54,806) | $(83,735) | | **Net change in cash** | **$(2,580,856)** | **$(357,207)** | | **Cash at end of period** | **$5,125,384** | **$16,398,026** | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Notes detail accounting policies, the Forza X1 merger, a reverse stock split, and a substantial doubt about the company's going concern ability - The company's financial statements were prepared under the assumption of being a going concern, but significant operating losses raise substantial doubt about this ability for the next year[30](index=30&type=chunk)[117](index=117&type=chunk) - On November 26, 2024, Twin Vee completed its merger with Forza X1, Inc., which is now a wholly-owned subsidiary[28](index=28&type=chunk) - A 1-for-10 reverse stock split was effected on April 7, 2025, to regain compliance with Nasdaq's minimum bid price requirement. All share and per-share amounts have been retrospectively adjusted[34](index=34&type=chunk)[106](index=106&type=chunk) - Subsequent to the quarter end, on April 21, 2025, the company was requested to repurchase inventory from a former dealer, with an expected obligation of approximately **$546,000**[91](index=91&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 32% sales decrease in Q1 2025, offset by improved gross margin and reduced operating loss, addressing going concern risk via cost controls and asset sales [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net sales decreased by 32% in Q1 2025 due to lower boat volume, but gross profit increased by 94% and operating expenses decreased by 21% Financial Performance Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $3,612,291 | $5,276,343 | (32%) | | Gross profit | $537,114 | $277,313 | 94% | | Gross Margin | 14.9% | 5.3% | +9.6 pts | | Operating expenses | $2,216,208 | $2,820,520 | (21%) | | Loss from operations | $(1,679,094) | $(2,543,207) | (34%) | - The decrease in net sales was due to selling fewer boats (24 vs. 32) and a change in product mix, with a lower average selling price (**$150k** vs. **$165k**)[126](index=126&type=chunk) - Operating expenses were significantly reduced due to lower marketing, cancellation of rent for the former Forza facility, reduced staffing levels at Forza, and the cessation of R&D for electric boats[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is under pressure due to ongoing losses, with management addressing going concern risk by listing a **$4.3 million** asset for sale and implementing cost controls - The company has classified a building and land in Marion, NC, as an asset held for sale for **$4,306,896**, which is expected to be sold within one year to fund future operations[136](index=136&type=chunk)[140](index=140&type=chunk) - Management has concluded there is substantial doubt about the company's ability to continue as a going concern due to significant historical and ongoing operating losses[138](index=138&type=chunk)[178](index=178&type=chunk) Selected Balance Sheet Data | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,910,267 | $7,491,123 | | Working capital | $9,179,586 | $6,671,151 | | Accumulated deficit | $(27,003,195) | $(25,392,955) | [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, the company is not required to provide quantitative and qualitative disclosures about market risk[163](index=163&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of March 31, 2025, due to material weaknesses in internal control over financial reporting, with a remediation plan underway - As of March 31, 2025, management concluded that the company's disclosure controls and procedures were not effective[164](index=164&type=chunk) - The ineffectiveness is due to material weaknesses related to insufficient staffing with appropriate experience in GAAP presentation[164](index=164&type=chunk)[187](index=187&type=chunk) - A remediation plan is in progress, including hiring a Staff Accountant and controller and implementing a robust operating system[165](index=165&type=chunk) [PART II—OTHER INFORMATION](index=32&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company faces a new putative class action lawsuit filed by former Forza X1 shareholders alleging breach of fiduciary duty related to the merger - On March 10, 2025, a putative class action complaint (Youseph, et al. v. Visconti, et al.) was filed by former Forza shareholders alleging breach of fiduciary duty in connection with the Forza merger[191](index=191&type=chunk) - The company intends to vigorously defend against the claims but is currently unable to estimate the ultimate outcome or potential loss[191](index=191&type=chunk)[192](index=192&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks including Nasdaq listing compliance, going concern uncertainty, significant dealer concentration, and persistent material weaknesses in internal controls - There is a risk of failing to meet Nasdaq's continued listing requirements. Although the company regained compliance with the minimum bid price rule via a 1-for-10 reverse stock split on April 7, 2025, there is no assurance it can maintain compliance[171](index=171&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - A substantial doubt exists about the company's ability to continue as a going concern due to a history of significant operating losses[178](index=178&type=chunk)[179](index=179&type=chunk) - The company has significant dealer concentration risk. In Q1 2025, two dealers accounted for **54%** of total sales[180](index=180&type=chunk)[181](index=181&type=chunk) - Material weaknesses in internal controls have been identified due to inadequate staffing, and there is no assurance they will be effectively remediated[183](index=183&type=chunk)[185](index=185&type=chunk)[187](index=187&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered sales or issuer purchases of equity securities during Q1 2025 - The company did not sell any unregistered equity securities during the three months ended March 31, 2025[193](index=193&type=chunk) - There were no issuer purchases of its equity securities in Q1 2025[194](index=194&type=chunk) [Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company - Not Applicable[195](index=195&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[196](index=196&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[199](index=199&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed as part of the Quarterly Report on Form 10-Q - The Exhibit Index lists all exhibits filed with the Form 10-Q[200](index=200&type=chunk)