Twin Vee PowerCats (VEEE) - 2023 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended March 31, 2023, increased to $8,877,215, a 50.7% increase from $5,886,000 in the same period of 2022[19] - Gross profit for the same period was $3,221,830, compared to $2,434,354 in 2022, reflecting a gross margin improvement[19] - Total operating expenses rose to $5,591,353, up 60.5% from $3,482,507 in the prior year, driven by increased salaries and research and development costs[19] - The net loss attributed to stockholders for Q1 2023 was $1,166,772, slightly lower than the net loss of $1,191,317 in Q1 2022[19] - The company recorded a net loss of $1,828,465 for the three months ended March 31, 2023, compared to a net loss of $1,191,317 for the same period in 2022[113] - The company experienced a net loss of $1,828,465 in Q1 2023, compared to a net loss of $1,191,317 in Q1 2022, reflecting a 53% increase in losses[130] Cash and Liquidity - Cash, cash equivalents, and restricted cash at the end of Q1 2023 were $21,022,515, down from $23,501,007 at the end of 2022[23] - The company reported a net cash used in operating activities of $2,232,650 for Q1 2023, compared to $1,149,673 in Q1 2022[23] - Cash at the end of the period increased by 315% to $21,022,515 for the three months ended March 31, 2023, compared to $5,061,380 for the same period in 2022[149] - Working capital decreased by $1,395,589 to $24,700,877 as of March 31, 2023, compared to $26,096,466 on December 31, 2022[147] - Total current assets as of March 31, 2023, were $28,555,019, a decrease of 4.5% from $29,887,529 as of December 31, 2022[145] Research and Development - Research and development expenses increased to $702,648 in Q1 2023, significantly higher than $221,545 in the same quarter of 2022, indicating a focus on new product development[19] - Research and development expenses surged by 217% to $702,648 in Q1 2023, up from $221,545 in Q1 2022, as part of efforts to develop electric boats and motors[137] Subsidiary and Market Expansion - The company formed a new subsidiary, AquaSport Co., on April 20, 2023, to lease assets of the former AQUASPORT™ brand, indicating market expansion efforts[27] - The company has entered into an agreement to lease the AQUASPORT™ boat brand and manufacturing facility, with the right to purchase the assets for $3,100,000 over five years[117] - AquaSport Co. will lease the AquaSport assets at a monthly rent of $22,000, with the lease commencing on June 1, 2023[117] Inventory and Assets - Total inventory increased to $4,796,787 as of March 31, 2023, compared to $4,008,332 as of December 31, 2022, reflecting a rise of approximately 19.6%[68] - Property and equipment totaled $6,154,039 as of March 31, 2023, up from $5,535,902 as of December 31, 2022, indicating an increase of about 11.1%[69] Internal Controls and Compliance - The company has developed a remediation plan to address material weaknesses in internal controls, including hiring a full-time Controller and a Staff Accountant[172] - The company has identified weaknesses in internal controls and cannot assure that these will be effectively remediated[201] - The effectiveness of internal controls will be audited only after Forza is no longer classified as an "emerging growth company" under the JOBS Act[208] Future Plans and Risks - The company is currently negotiating for a new site to build a manufacturing plant in North Carolina, with no assurance of success[200] - The company faces risks from rising interest rates and energy prices, which could adversely affect product sales and operating expenses[182] - The company is actively monitoring the effects of inflation and supply chain disruptions on its operations[191] Other Financial Metrics - The company recorded stock-based compensation expense of $341,163 for the three months ended March 31, 2023, compared to $0 for the same period in 2022[103] - The company recognized income related to the employee retention credit of $329,573 for the three months ended March 31, 2023, reflecting compliance with the CARES Act[59] - The electric segment incurred a loss of $2,005,132 for the three months ended March 31, 2023, related to research and development, while the gas-powered segment had income of $181,849[142]