Twin Vee PowerCats (US:VEEE)2022-05-12 20:47Financial Performance - Net sales for the three months ended March 31, 2022, were $5,886,000, representing a 83.3% increase from $3,207,643 in the same period of 2021[21] - Gross profit for the three months ended March 31, 2022, was $2,434,354, compared to $1,487,906 for the same period in 2021, indicating a 63.5% increase[21] - The net loss for the three months ended March 31, 2022, was $1,191,317, compared to a net income of $131,949 in the same period of 2021[21] - For the three months ended March 31, 2022, net sales reached $5,886,000, an increase of 83% compared to $3,207,643 for the same period in 2021[71] - The company recorded a net loss of $1,191,317 for the three months ended March 31, 2022, compared to a net income of $131,949 for the same period in 2021[71] - Net loss for the three months ended March 31, 2022, was $1,191,317, compared to net income of $131,949 for the same period in 2021, resulting in a basic and dilutive loss per share of $0.17[93] Operating Expenses - Total operating expenses increased to $3,482,507 for the three months ended March 31, 2022, from $1,333,144 in the same period of 2021, reflecting a 61.9% rise[21] - Total operating expenses increased by $2,149,363, or 161%, to $3,482,507, with operating expenses as a percentage of sales rising to 59% from 42%[86] - The company incurred stock-based compensation of $224,832 during the three months ended March 31, 2022[25] - The company has recorded $320,505 in stock-based compensation expense for the three months ended March 31, 2022, compared to $0 for the same period in 2021[63] - Professional fees increased by 315%, or $185,713, to $244,739, primarily due to costs associated with being a public company[89] Cash and Liquidity - Cash and cash equivalents decreased to $5,061,380 as of March 31, 2022, down from $6,975,302 at the end of 2021[32] - Cash used in operating activities was $1,149,673, a significant decrease from cash provided by operating activities of $189,898 in the prior year[101] Assets and Liabilities - Total current liabilities increased to $3,122,630 as of March 31, 2022, compared to $2,155,420 at the end of 2021, marking a 45% increase[19] - The accumulated deficit as of March 31, 2022, was $(3,208,873), up from $(2,017,556) at the end of 2021[19] - As of March 31, 2022, total marketable securities amounted to $9,827,969, a decrease from $13,039,399 as of December 31, 2021[42] - Accrued liabilities totaled $660,038 as of March 31, 2022, up from $456,814 at December 31, 2021, representing a 44.4% increase[52] - The company recognized operating lease liabilities totaling $1,523,885 as of March 31, 2022, down from $1,612,766 at December 31, 2021[50] Inventory and Production - Total inventory rose to $3,213,182 as of March 31, 2022, compared to $1,799,769 at December 31, 2021, reflecting a 78.8% increase[45] - The company increased its manufacturing throughput to an average of 4 boats per week during the first quarter of 2022[80] - The company plans to increase production to 5 boats per week, which has led to higher operating expenses due to increased headcount and salaries[81] - The number of boats sold increased by 48% year-over-year, contributing to the rise in net sales[84] Strategic Initiatives - The company formed a wholly-owned subsidiary, Fix My Boat, Inc., to utilize a franchise model for marine mechanics across the country[27] - The company is developing a line of electric-powered catamaran boats through its subsidiary Forza X1, with production expected to begin in the second quarter of 2023[79] - The company decided to discontinue the design of electric motors for retrofitting gas-powered boats due to consumer preference shifting towards fully integrated electric boats, reallocating those funds for working capital needs[144] Internal Controls and Compliance - The company has identified weaknesses in its internal controls and cannot assure that these weaknesses will be effectively remediated[134] - The company expects that compliance with the Sarbanes-Oxley Act will increase legal, accounting, and financial compliance costs[121] - The company is actively recruiting to retain a full-time controller to address material weaknesses in internal controls[124] - The company faces challenges in maintaining effective internal controls over financial reporting, which could adversely affect operating results and investor confidence[139] - The independent registered public accounting firm will not audit the effectiveness of internal controls until the company is no longer classified as an "emerging growth company" under the JOBS Act[140] - Any failure to maintain effective internal controls could result in a restatement of financial statements and negatively impact the market price of the company's common stock[140] Shareholder Information - The company reported a weighted average number of shares of common stock outstanding of 7,000,000 for the three months ended March 31, 2022, compared to 4,000,000 in the same period of 2021[21] - As of March 31, 2022, the company has outstanding warrants to purchase 3,000,000 shares of common stock at a weighted-average exercise price of $7.50 per share[61] - The company closed its initial public offering on July 22, 2021, selling 3,000,000 shares at an offering price of $6.00 per share, resulting in gross proceeds of $18,000,000[142] - After deducting underwriting discounts and commissions of approximately $1,260,000 and other offering expenses of approximately $1,567,150, the net proceeds received were approximately $15,849,037[142] - The primary use of net proceeds includes approximately $1,500,000 for production and marketing of larger fully equipped boats, $2,500,000 for the design and development of a new line of electric boats, and $6,000,000 for the electric propulsion system[143]