As filed with the Securities and Exchange Commission
on October 2, 2024
Registration No. 333-281788
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM
S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TWIN
VEE POWERCATS CO.
(Exact name of registrant as specified in its charter)
| Delaware |
|
2834 |
|
33-0505269 |
(State or other jurisdiction of
incorporation or organization) |
|
(Primary Standard Industrial
Classification Code Number) |
|
(I.R.S. Employer
Identification Number) |
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Joseph C. Visconti
Chief Executive Officer
Twin Vee PowerCats Co.
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
(Name, address, including zip code, and telephone number, including area code, of agent for service)
| Copies
to: |
Leslie
Marlow, Esq.
Hank Gracin, Esq.
Patrick Egan, Esq.
Blank Rome LLP
1271 Avenue of the Americas
New
York, New York 10020
(212) 885-5000 |
Glenn
Sonoda, Esq.
General
Counsel
Forza X1, Inc.
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525 |
Approximate date of commencement of proposed
sale to the public: As soon as practicable after this Registration Statement becomes effective and the satisfaction or waiver of
all other conditions to the closing of the merger of Forza X1, Inc. and the Registrant as described in the Agreement and Plan of Merger
dated as of August 12, 2024.
If
the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. ☐
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated
filer |
☐ |
Accelerated
filer |
☐ |
Non-accelerated
filer ☒ |
|
Smaller reporting
company ☒ |
| |
|
|
|
|
|
Emerging growth company
☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to us ethe extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7 (a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate
the appropriate rule provision relied upon in conducting this transaction:
Exchange Act
Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐
Exchange Act
Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this Joint Proxy
Statement/Prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This Joint Proxy Statement/Prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED
OCTOBER 2, 2024
JOINT PROXY STATEMENT/PROSPECTUS
YOUR VOTE IS VERY IMPORTANT
To the Stockholders of Twin Vee PowerCats Co. and Forza X1, Inc.:
Twin Vee PowerCats Co., a Delaware corporation
(“Twin Vee”), Twin Vee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Twin Vee (“Merger Sub”),
and Forza X1, Inc., a Delaware corporation (“Forza”), have entered into an agreement and plan of merger dated August 12,
2024 (the “Merger Agreement”), which transaction is referred to as the “Merger”, pursuant to which Forza will
merge with and into Merger Sub and become a wholly owned subsidiary of Twin Vee. Forza is a minority-owned subsidiary of Twin Vee. Twin
Vee and Forza believe that the Merger will enhance stockholder value for both Twin Vee and Forza stockholders by (i) providing a method
by which the Twin Vee stockholders can more directly share in the growth of Forza and (ii) generating substantial cost savings and bolstering
business efficiencies, including elimination of duplicate administrative functions. Before the Merger can be completed, the stockholders
of Twin Vee and Forza must provide various approvals. Twin Vee stockholders will vote to, among other things, approve the issuance of
shares of its common stock, par value $0.001 per share (the “Twin Vee Common Stock”) to the Forza stockholders as set forth
in the Merger Agreement at an annual meeting of Twin Vee stockholders to be held on [●], 2024. Forza stockholders will vote to
approve and adopt the Merger Agreement and the other transactions and matters described below at an annual meeting of Forza stockholders
to be held on [●], 2024. Twin Vee, in its capacity as a principal stockholder of Forza, has agreed to vote the shares of common
stock, par value $0.001 per share, of Forza (the “Forza Common Stock”) held by it for the approval and adoption of the Merger
only if a majority of the other stockholders of Forza present in person or by proxy at the Forza Annual Meeting vote to approve and adopt
the Merger.
At the closing of the Merger, the holders of Forza Common Stock will receive
0.611666275 shares of Twin Vee Common Stock (the “Exchange Ratio”) in exchange for each share of Forza Common Stock that they
own on the effective date of the Merger for a maximum of 5,355,000 shares of Twin Vee Common Stock (no fractional shares of Twin Vee Common
Stock will be issued) and the 7,000,000 shares of Forza Common Stock held by Twin Vee will be cancelled. After the Merger, Twin Vee will
have 14,875,000 shares of Twin Vee Common Stock outstanding. The Exchange Ratio was negotiated so that the pre-closing stockholders of
each of Twin Vee and Forza would beneficially own approximately 64% and 36%, respectively of the outstanding shares of Twin Vee Common
Stock following the closing of the Merger and not counting for purposes of the computation any outstanding options to purchase shares
of Forza Common Stock or any outstanding warrants to purchase shares of Forza Common Stock. Accordingly, at the closing of the Merger:
(i) each outstanding share of Forza Common Stock (other than shares held by Twin Vee) will be converted into 0.611666275 of a share
of Twin Vee Common Stock, (ii) each outstanding stock option exercisable for shares of Forza Common Stock that is outstanding at
the effective time of the Merger (the “Effective Time”), whether vested or unvested, will be assumed by Twin Vee and converted
into a stock option to purchase the number of shares of Twin Vee Common Stock that the holder would have received if such holder had exercised
such stock option to purchase shares of Forza Common Stock prior to the Merger and exchanged such shares for shares of Twin Vee Common
Stock in accordance with the Exchange Ratio, (iii) each outstanding warrant to purchase shares of Forza Common Stock will be assumed by
Twin Vee and converted into a warrant to purchase the number of shares of Twin Vee 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 and exchanged such shares for shares
of Twin Vee Common Stock in accordance with the Exchange Ratio, and (iv) the 7,000,000 shares of Forza Common Stock held by Twin Vee will
be cancelled. For a more complete description of the Exchange Ratio, see the section titled “The Merger Agreement—Exchange
Ratio” in this Joint Proxy Statement/Prospectus.
Twin Vee Common Stock is currently listed on the Nasdaq Capital Market (the
“Nasdaq”), under the symbol “VEEE.” Prior to the closing of the Merger, Twin Vee intends to file with Nasdaq a
notification form for the listing of additional shares with respect to the shares of Twin Vee Common Stock to be issued to the Forza stockholders
in the Merger so that these shares will be listed on the Nasdaq following the Merger. After the closing of the Merger, the combined company
is expected to trade on Nasdaq under the symbol “VEEE”. On [●], 2024, the most recent practicable trading day prior
to the printing of this Joint Proxy Statement/Prospectus, the closing price of Twin Vee Common Stock was $[●] per share. The market
price of the Twin Vee Common Stock may fluctuate before the completion of the Merger, therefore, you are urged to obtain current market
quotations for Twin Vee Common Stock. Twin Vee expects to issue a maximum of 5,355,000 shares of Twin Vee Common Stock in the Merger upon
completion of the Merger. No fractional shares of Twin Vee Common Stock will be issued to any stockholder of Forza upon completion of
the Merger. The holder of shares of Forza Common Stock who would otherwise be entitled to a fraction of Twin Vee Common Stock (after aggregating
all fractional shares of Twin Vee Common Stock that otherwise would be received by such holder), will, in lieu of such fraction of a share,
be rounded down to the nearest whole share. We anticipate that the closing of the Merger will occur not later than three business days
following the affirmative vote of Twin Vee stockholders and Forza stockholders.
Forza Common Stock is currently listed on Nasdaq
under the symbol “FRZA.” However, Forza has received a letter from Nasdaq notifying it that due to its failure regain compliance
with the Nasdaq bid price requirement, the Forza Common Stock will be delisted. On [●], 2024, the most recent practicable trading
day prior to the printing of this Joint Proxy Statement/Prospectus, the closing price of Forza Common Stock was $[●] per share.
The market price of the Forza Common Stock may fluctuate before the completion of the Merger, therefore, you are urged to obtain current
market quotations for Forza Common Stock. If the Merger is completed, there will no longer be a trading market for Forza Common Stock
as of such date. In addition, promptly following the closing of the Merger, Forza Common Stock will be deregistered under the Exchange
Act and Forza will no longer file periodic reports with the Securities and Exchange Commission (the “SEC”).
Twin Vee is asking stockholders of Twin Vee to
approve the issuance of the shares of Twin Vee Common Stock to the Forza stockholders as set forth in the Merger Agreement (the “Stock
Issuance Proposal”) at the annual meeting of Twin Vee stockholders to take place on_[●], 2024 (the “Twin Vee Annual
Meeting”), at 10:00 a.m. Eastern Time, at the offices of Twin Vee, 3101 S. U.S. Highway 1, Fort Pierce, Florida. At the Twin Vee
Annual Meeting, Twin Vee stockholders will also be asked to vote on the Twin Vee director nominees, to ratify the appointment of Grassi
& Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for its fiscal year ending on December 31, 2024,
to approve an amendment to Twin Vee’s Certificate of Incorporation, at the discretion of the Board of Directors of Twin Vee (the
“Twin Vee Board of Directors”), to effect a reverse stock split (the “Twin Vee Reverse Stock Split”) with respect
to the issued and outstanding shares of Twin Vee Common Stock (the “Twin Vee Reverse Stock Split Proposal”), to approve an
amendment to the Twin Vee PowerCats Co. Amended and Restated 2021 Stock Incentive Plan (the “Twin Vee 2021 Plan”) to increase
the number of shares of Twin Vee Common Stock available for issuance under the Twin Vee 2021 Plan by 1,000,000 shares to 3,171,800 shares
(the “Plan Increase Proposal”); and approval to adjourn the meeting if necessary to continue to solicit votes in favor of
the Stock Issuance Proposal, Plan Increase Proposal and/or the Twin Vee Reverse Stock Split Proposal.
Forza is asking stockholders of Forza to adopt
and approve the Merger Agreement and the Merger (the “Merger Proposal”) at an annual meeting of Forza stockholders to take
place on _[●] 2024 (the “Forza Annual Meeting”), at 10:30 a.m. Eastern Time, at the offices of Forza, 3101 S. U.S.
Highway 1, Fort Pierce, Florida 34982. At the Forza Annual Meeting, Forza stockholders will also be asked to vote on the Forza director
nominees, to ratify the appointment of Grassi & Co., CPAs, P.C. as Forza’s independent registered public accounting firm for
its fiscal year ending on December 31, 2024, to approve an amendment to Forza’s Amended and Restated Certificate of Incorporation,
at the discretion of the Board of Directors of Forza (the “Forza Board of Directors”), to effect a reverse stock split (the
“Forza Reverse Stock Split”) with respect to the issued and outstanding shares of Forza Common Stock (the “Forza Reverse
Stock Split Proposal”), and approval to adjourn the meeting if necessary to continue to solicit votes in favor of the Merger Proposal
and/or the Forza Reverse Stock Split Proposal. If the Merger is effected, all of the Forza board members, other than Joseph Visconti,
will resign as members of the Forza Board of Directors and the Forza Reverse Stock Split will be abandoned.
After careful consideration, the Twin Vee Board of Directors and Forza Board
of Directors have unanimously approved the Merger Agreement and the respective proposals referred to above, and each of the Twin Vee Board
of Directors and Forza Boards of Directors has determined that it is advisable to enter into the Merger. The Twin Vee Board of Directors
recommends that Twin Vee stockholders vote “FOR” the respective proposals described in the accompanying Joint Proxy
Statement/Prospectus. The Merger cannot be completed unless Twin Vee stockholders approve the issuance of the shares of Twin Vee Common
Stock to the Forza stockholders as set forth in the Merger Agreement (the “Stock Issuance Proposal”) and Forza stockholders
adopt and approve the Merger and the Merger Agreement (the “Merger Proposal”).
PLEASE GIVE ALL OF THE DETAILED INFORMATION ON
TWIN VEE, FORZA AND THE MERGER CONTAINED IN THE JOINT PROXY STATEMENT/PROSPECTUS YOUR CAREFUL ATTENTION, ESPECIALLY THE DISCUSSION IN
THE SECTION ENTITLED “RISK FACTORS” IN THIS JOINT PROXY STATEMENT/PROSPECTUS.
Neither the Securities and Exchange Commission
nor any state securities regulators has approved or disapproved the Twin Vee Common Stock to be issued under this Joint Proxy Statement/Prospectus
or passed upon the adequacy or accuracy of this Joint Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.
This Joint Proxy Statement/Prospectus is not an
offer to sell Twin Vee Common Stock and Twin Vee is not soliciting an offer to buy Forza Common Stock in any state where the offer or
sale is not permitted.
On behalf of the Twin Vee Board of Directors and the
Forza Board of Directors, we thank you for your support.
| Joseph
C. Visconti |
Glenn H.
Sonoda |
| Chief Executive
Officer |
General Counsel |
| Twin Vee PowerCats
Co. |
Forza X1, Inc. |
Joint Proxy Statement/Prospectus dated [●],
2024 and to be mailed on or around [●], 2024.
Please also see “Where You Can Find More Information”.
ADDITIONAL INFORMATION
Stockholders may also consult Twin Vee’s or
Forza’s websites for more information concerning the Merger described in this Joint Proxy Statement/Prospectus and each of the parties
thereto. Twin Vee’s website is www.twinvee.com and Forza’s website is www.forzax1.com. Information included on these websites
is not incorporated by reference into this Joint Proxy Statement/Prospectus.
This Joint Proxy Statement/Prospectus is dated
[●], 2024 and is first being mailed to the stockholders of Forza and the stockholders of Twin Vee on or about [●],
2024.
Twin Vee PowerCats Co.
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
Forza X1, Inc..
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
TWIN VEE POWERCATS CO.
TO BE HELD ON _________, 2024
To the Stockholders of Twin Vee PowerCats Co. (“Twin
Vee”):
The annual meeting of stockholders of Twin Vee (the
“Twin Vee Annual Meeting”), a Delaware corporation, will be held on _________, 2024, at 10:00 a.m., Eastern Time, at the offices
Twin Vee, 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, for the following purposes:
1. To
consider and vote upon a proposal to approve the issuance of shares of Twin Vee Common Stock pursuant to the Agreement and Plan of Merger,
dated as of August 12, 2024, by and between Twin Vee, Twin Vee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Twin Vee, and Forza X1, Inc. (the “Merger Agreement”), which transaction is referred to as the “Merger,” as described
in the attached Joint Proxy Statement/Prospectus, a copy of which is attached as Annex A to the Joint Proxy Statement/Prospectus
(the “Stock Issuance Proposal”);
2. To elect the two (2) nominees
for Class III director named in the accompanying Joint Proxy Statement/Prospectus to the Board of Directors of Twin Vee (the “Twin
Vee Board of Directors”), each to serve a three-year term expiring at the 2027 Annual Meeting of Stockholders and until such director’s
successor is duly elected and qualified (provided, however, that if the Merger is completed, the Twin Vee Board of Directors will be reconstituted
as provided in the Merger Agreement);
3. To ratify the appointment of
Grassi & Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for its fiscal year ending on December
31, 2024;
4. To consider and vote upon a
proposal to approve an amendment to Twin Vee’s Certificate of Incorporation, in substantially the form attached to the accompanying
Joint Proxy Statement/Prospectus as Annex B, at the discretion of the Twin Vee Board of Directors of to effect a reverse stock
split with respect to the issued and outstanding shares of Twin Vee Common Stock, at a ratio of 1-for-2 to 1-for-20, with the ratio within
such range to be determined at the discretion of the Twin Vee Board of Directors and included in a public announcement, subject to the
authority of the Twin Vee Board of Directors to abandon such amendment (the “Twin Vee Reverse Stock Split Proposal”);
5. To consider and vote upon a proposal to approve an amendment to the Twin Vee
PowerCats Co. Amended and Restated 2021 Stock Incentive Plan (the “Twin Vee 2021 Plan”), in substantially the form attached
to the accompanying Joint Proxy Statement/Prospectus as Annex D, to increase the number of shares of Twin Vee Common Stock available
for issuance under the Twin Vee 2021 Plan by 1,000,000 shares to 3,171,800 shares (the “Plan Increase Proposal”);
6. To consider and vote upon a
proposal to adjourn the Twin Vee Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not
sufficient votes in favor of the Stock Issuance Proposal, the Twin Vee Reverse Stock Split Proposal and/or the Plan Increase Proposal;
and
7. To transact such other business
as may properly come before the Twin Vee Annual Meeting or any adjournment or postponement thereof.
The Twin Vee Board of Directors has fixed [●],
2024 as the record date (the “Twin Vee Record Date”) for the determination of stockholders entitled to notice of, and to vote
at, the Twin Vee Annual Meeting and any adjournment or postponement thereof. Only stockholders of record at the close of business on the
Twin Vee Record Date are entitled to notice of, and to vote at, the Twin Vee Annual Meeting. Only stockholders or their proxy holders
and Twin Vee guests may attend the meeting. A list of stockholders entitled to vote will be made available at the Twin Vee Annual Meeting
and will be available at the offices of Twin Vee, 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982 for ten days before the meeting.
At the close of business on the Twin Vee Record Date, there were 9,520,000 shares of Twin Vee Common Stock outstanding and entitled to
vote.
| [●], 2024 |
Joseph C. Visconti, Chief Executive Officer |
Your vote is important.
You are urged to attend the Twin Vee Annual Meeting
in person, but if you are unable to do so, the Twin Vee Board of Directors would appreciate you submitting a proxy to have your shares
votes as promptly as possible by using the internet or by returning by mail the enclosed proxy card, dated and signed.
Twin Vee PowerCats Co.
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
FORZA X1, INC.
TO BE HELD ON _________, 2024
To the Stockholders of Forza X1, Inc. (“Forza”):
The annual meeting of stockholders of Forza (the “Forza
Annual Meeting”), a Delaware corporation, will be held on _________, 2024, at 10:30 a.m., Eastern Time, at the offices of Forza,
3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, for the following purposes:
1. To
consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of August 12, 2024, by and between Twin
Vee PowerCats Co., Twin Vee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Twin Vee, and Forza (the “Merger
Agreement”), which transaction is referred to as the “Merger,” as described in the attached Joint Proxy Statement/Prospectus,
a copy of which is attached as Annex A to the Joint Proxy Statement/Prospectus (the “Merger Proposal”)
2. To elect the one (1) nominee
for Class II director named in the accompanying Joint Proxy Statement/Prospectus to the Board of Directors of Forza (the “Forza
Board of Directors”), to serve a three-year term expiring at the 2027 Annual Meeting of Stockholders and until such director’s
successor is duly elected and qualified (provided, however, if the Merger is effected, all of the Forza board members, other than Joseph
Visconti, will resign as members of the Forza Board of Directors);
3. To ratify the appointment of
Grassi & Co., CPAs, P.C. as Forza’s independent registered public accounting firm for its fiscal year ending on December 31,
2024;
4. To consider and vote upon a
proposal to approve an amendment to Forza’s Amended and Restated Certificate of Incorporation, in substantially the form attached
to the accompanying proxy statement as Annex B-1, at the discretion of the Forza Board of Directors, to effect a reverse stock
split (the “Forza Reverse Stock Split”) with respect to the issued and outstanding shares of Forza Common Stock, including
stock held by Forza as treasury shares, at a ratio of 1-for-2 to 1-for-20, with the ratio within such range to be determined at the discretion
of the Forza Board of Directors and included in a public announcement, subject to the authority of the Forza Board of Directors to abandon
such amendment (the “Forza Reverse Stock Split Proposal”) (If the Merger is effected, the Forza Reverse Stock Split will be
abandoned);
5. To consider and vote upon an
adjournment of the meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor
of the Merger Proposal and/or the Forza Reverse Stock Split Proposal; and
6. To transact such other business
as may properly come before the meeting or any adjournment or postponement thereof.
The Forza Board of Directors has fixed [●],
2024 as the record date (the “Forza Record Date”) for the determination of stockholders entitled to notice of, and to vote
at, the Forza Annual Meeting and any adjournment or postponement thereof. Only stockholders of record at the close of business on the
Forza Record Date are entitled to notice of, and to vote at, the Forza Annual Meeting. Only stockholders or their proxy holders and Forza
guests may attend the meeting. A list of stockholders entitled to vote will be made available at the Forza Annual Meeting and will be
available at the offices of Forza, 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, for ten days before the meeting. At the close of
business on the Forza Record Date, there were 15,754,774 shares of Forza Common Stock outstanding and entitled to vote.
| |
Joseph
Visconti, Interim Chief Executive Officer |
[●], 2024
|
|
Your vote is important.
You are urged to attend the Forza Annual Meeting
in person, but if you are unable to do so, the Forza Board of Directors would appreciate you submitting a proxy to have your shares votes
as promptly as possible by using the internet or the designated toll-free telephone number or by returning by mail the enclosed proxy
card, dated and signed.
Forza X1, Inc.
3101 S. U.S. Highway 1
Fort Pierce, Florida 34982
(772) 429-2525
ABOUT THIS JOINT PROXY
STATEMENT/PROSPECTUS
This Joint Proxy Statement/Prospectus,
which forms part of a registration statement on Form S-4 filed with the SEC by Twin Vee (File No. 333-281788), constitutes a prospectus
of Twin Vee under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares
of Twin Vee Common Stock to be issued pursuant to the Merger Agreement, as described in this Joint Proxy Statement/Prospectus. This document
also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), with respect to the Twin Vee Annual Meeting, at which Twin Vee stockholders will be asked to consider and
vote on, among other matters, a proposal to approve the issuance of shares of Twin Vee Common Stock pursuant to the Merger Agreement.
This document also serves as a notice of meeting and a proxy statement with respect to the Forza Annual Meeting, at which Forza stockholders
will be asked to consider and vote on, among other matters, a proposal to adopt the Merger and Merger Agreement.
No one has been authorized to provide you with information that is different
from that contained in, or incorporated by reference into, this Joint Proxy Statement/Prospectus. This Joint Proxy Statement/Prospectus
is dated [●], 2024. The information contained in this Joint Proxy Statement/Prospectus is accurate only as of that date or, in the
case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates
that another date applies.
This Joint Proxy Statement/Prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction
in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
The information concerning
Twin Vee contained in this Joint Proxy Statement/Prospectus has been provided by Twin Vee, and the information concerning Forza contained
in this Joint Proxy Statement/Prospectus has been provided by Forza.
TABLE OF CONTENTS
| Forum Selection |
|
195 |
| Anti-Takeover
Provisions |
|
196 |
| Limitations
on Liability and Indemnification of Twin Vee’s Officers and Directors |
|
197 |
| Dissenters’
Rights of Appraisal and Payment |
|
197 |
| Stockholders’
Derivative Actions |
|
198 |
| Transfer
Agent and Registrar |
|
198 |
| Trading
Symbol and Market |
|
198 |
| DESCRIPTION
OF FORZA CAPITAL STOCK |
|
199 |
| DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED |
|
199 |
| General |
|
199 |
| Common
Stock |
|
199 |
| Forum
Selection |
|
199 |
| Anti-Takeover
Provisions |
|
200 |
| Limitations
on Liability and Indemnification of Forza’s Officers and Directors |
|
201 |
| Dissenters’
Rights of Appraisal and Payment |
|
201 |
| Stockholders’
Derivative Actions |
|
201 |
| Transfer
Agent and Registrar |
|
202 |
| Trading
Symbol and Market |
|
202 |
| COMPARISON
OF RIGHTS OF HOLDERS OF TWIN VEE COMMON STOCK AND FORZA X1, INC. COMMON STOCK |
|
202 |
| TWIN VEE
ANNUAL MEETING PROPOSALS |
|
213 |
| TWIN VEE
PROPOSAL NO. 1 - APPROVAL OF THE ISSUANCE OF SHARES OF TWIN VEE COMMON STOCK PURSUANT TO THE TERMS OF THE MERGER AGREEMENT |
|
213 |
| TWIN VEE
PROPOSAL NO. 2 - TWIN VEE ELECTION OF DIRECTORS PROPOSAL |
|
214 |
| TWIN VEE
PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
215 |
| TWIN VEE
PROPOSAL NO. 4 - ADOPTION AND APPROVAL OF THE TWIN VEE REVERSE STOCK SPLIT PROPOSAL |
|
218 |
| TWIN VEE
PROPOSAL NO. 5 - AMENDMENT TO THE TWIN VEE POWERCATS CO. 2021 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
THEREUNDER BY 1,000,000 SHARES TO 3,171,800 SHARES |
|
229 |
| TWIN VEE
PROPOSAL NO. 6 - ADJOURNMENT OF THE TWIN VEE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES
IN FAVOR OF TWIN VEE PROPOSAL NO. 1, TWIN VEE PROPOSAL NO. 4 AND/OR TWIN VEE PROPOSAL NO. 5 |
|
239 |
| FORZA
ANNUAL MEETING PROPOSALS |
|
240 |
| FORZA
PROPOSAL NO. 1 - APPROVAL OF THE MERGER AND THE MERGER AGREEMENT |
|
240 |
| FORZA
PROPOSAL NO. 2 - ELECTION OF DIRECTORS |
|
241 |
| FORZA
PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
242 |
| FORZA
PROPOSAL NO. 4 - ADOPTION AND APPROVAL OF THE FORZA REVERSE STOCK SPLIT PROPOSAL |
|
245 |
| FORZA
PROPOSAL NO. 5 - ADJOURNMENT OF THE FORZA ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES
IN FAVOR OF PROPOSAL NO.1 AND/OR PROPOSAL NO. 4 |
|
256 |
| CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS |
|
257 |
| Twin Vee |
|
257 |
| Indemnification |
|
258 |
| Twin Vee’s
Policy Regarding Related Party Transactions |
|
259 |
| Director
Independence |
|
259 |
| Forza |
|
259 |
| Indemnification |
|
260 |
| Assignment
of Assets Agreement; Assignment of Intellectual Property |
|
260 |
| Assignment
of Land Contract |
|
261 |
| Transition
Services Agreement |
|
261 |
| Forza’s
Policy Regarding Related Party Transactions |
|
261 |
| Director
Independence |
|
262 |
| CONFLICTS
OF INTEREST |
|
262 |
| HOUSEHOLDING
OF PROXY MATERIALS |
|
262 |
| OTHER
MATTERS |
|
262 |
| APPRAISAL
RIGHTS |
|
262 |
| FUTURE
TWIN VEE STOCKHOLDER PROPOSALS |
|
263 |
| FUTURE
FORZA STOCKHOLDER PROPOSALS |
|
263 |
| LEGAL
MATTERS |
|
264 |
| EXPERTS |
|
264 |
| INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE |
|
|
PROSPECTUS SUMMARY
This summary highlights
selected information from this Joint Proxy Statement/Prospectus and may not contain all of the information that is important to you. To
better understand the Merger, the proposals being considered at the Twin Vee Annual Meeting and the Forza Annual Meeting, you should read
this entire Joint Proxy Statement/Prospectus carefully, including the Merger Agreement and the other annexes to which you are referred
to herein. For more information, please see the section titled “Where You Can Find More Information.”
The Parties
Twin Vee PowerCats Co.
3101 S. US-1
Ft. Pierce, Florida 34982
Twin Vee is a designer, manufacturer
and marketer of recreational and commercial power boats. Twin Vee believes it has been an innovator in the recreational and commercial
power catamaran industry. Twin Vee currently has 13 gas-powered models in production ranging in size from its 20-foot mono hull, single
engine, center console to its newly designed 40-foot offshore 400 GFX catamaran, quad engines. While Twin Vee’s 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, its new mono hull line addresses the largest portion of the overall market.
Twin
Vee has organized its business into three operating segments: (i) its gas-powered boat segment
which manufactures and distributes gas-powered boats under the Twin Vee and AquaSport names;
(ii) its electric-powered boat segment which was developing fully electric boats, through
its publicly minority owned subsidiary, Forza; and (iii) its franchise segment which is developing
a franchise business model.
Twin Vee’s gas-powered boats allow consumers
to use them for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including
transportation, eco tours, fishing and diving expeditions. Twin Vee believes that the performance, quality and value of its boats positions
it to achieve its goal of increasing Twin Vee’s market share and expanding the power catamaran boating market. Twin Vee currently
primarily sells its boats through a current network of 23 independent boat dealers in 37 locations across North America and the Caribbean
who resell Twin Vee’s boats to the end user Twin Vee and AquaSport customers. Twin Vee continues recruiting efforts for high quality
boat dealers and seek to establish new dealers and distributors domestically and internationally to distribute its boats as it grows its
production and introduce new models. Twin Vee’s gas-powered boats are currently outfitted with gas-powered outboard combustion engines.
During
the second quarter of 2024, Twin Vee experienced a significant reduction in demand for its
products, as has been experienced throughout the boating industry. Total units sold in the
quarter were 24 compared to 75 in the second quarter of 2023, a 47% reduction over the same
period. This difference is due to the average selling price per unit in each quarter. Sales
for the second quarter of 2024 included 2 40’ boats with an average selling price of
$630,000 each while the second quarter of 2023 had 0 40’ foot boats. Twin Vee’s
objectives have been to add new, larger boat models including a new line of GFX2 models,
expand its dealers and distribution network, and increase unit production to fulfill its
customer and dealer orders.
Due to the growing demand for sustainable, environmentally
friendly electric and alternative fuel commercial and recreational vehicles, Forza, commenced designing and developing a line of electric-powered
boats in 2021. Forza’s electric boats were being designed as fully integrated electric boats including the hull, outboard motor
and control system. Notably, the global shift towards electric vehicle adoption has been much slower than initially anticipated. Several
leading automotive manufacturers have adjusted their strategies, accordingly, including halting the construction of dedicated electric
vehicle factories. The slower-than-expected adoption rates have led to cautious consumer spending and investment in electric vehicle
technology, directly impacting Forza’s market. Specifically, the electric boat segment has experienced even more sluggish growth
than the automotive sector. In addition, many of the larger players in the boat industry, such as Mercury Marine, have completed their
development efforts and have brought their electric outboard motors to market. In an effort to retain cash and reduce expenditures and
as a result of current market conditions, on July 11, 2024, the Forza’s Board of Directors determined to discontinue and wind down
Forza’s business related to the development and sale of electric boats utilizing its proprietary outboard electric motor.
Twin Vee is a Delaware corporation headquartered
in Fort Pierce, Florida. Twin Vee Common Stock is traded on the Nasdaq Capital Market under the symbol “VEEE.”
For additional information regarding Twin Vee, please refer to its Annual
Report on Form 10-K for the year ended December 31, 2023 (the “Twin Vee 2023 Annual Report”), as filed with
the SEC, as well as Twin Vee’s other filings with the SEC. For more information, please see the section titled “Where You
Can Find More Information.”
Forza X1, Inc.
3101 S. US-1
Ft. Pierce, Florida 34982
Forza was founded with a
mission to inspire the adoption of sustainable recreational boating by producing stylish electric sport boats designed
to offer a cleaner, quieter, and more efficient alternative to traditional gasoline-powered boats. Forza has been focused on the
creation, implementation and sale of electric boats utilizing its electric vehicle (“EV”) technology to control and power
its boats and proprietary outboard electric motor.
Forza has not completed the
development of its electric boats or electric outboard motor. Three different protypes of the electric boat have been built. Forza has
completed the design phase of its outboard motor and it is now in the prototype phase.
Approximately 44.4% of
the outstanding Forza Common Stock is owned by Twin Vee.
Industry Trends
The past year has seen a marked deceleration in the
global demand for recreational marine vehicles, influenced heavily by economic uncertainties and shifting consumer priorities. This slowdown
reflects broader trends affecting the recreational vehicle industries at large, including electric vehicles (EVs). Notably, the global
shift towards EV adoption has been much slower than initially anticipated. Several leading automotive manufacturers have adjusted their
strategies, accordingly, including halting the construction of dedicated EV factories.
The slower-than-expected adoption rates have led
to cautious consumer spending and investment in EV technology, directly impacting the electric boat market. Specifically, the electric
boat segment has experienced even more sluggish growth than the automotive sector. In addition, while Forza’s electric boats are
still in the development stage, many of the larger players in the boat industry, such as Mercury Marine, have completed their development
efforts and have brought their electric outboard motors to market. In an effort to retain cash and reduce expenditures and as a result
of current market conditions, on July 11, 2024, the Forza’s Board of Directors determined to discontinue and wind down Forza’s
business related to the development and sale of electric boats utilizing its proprietary outboard electric motor
Twin Vee Merger Sub, Inc.
3101 S. US-1
Ft. Pierce, Florida 34982
Twin Vee Merger Sub, Inc., a Delaware corporation
(“Merger Sub”), is a wholly owned subsidiary of Twin Vee and was formed on August 12, 2024 solely for the purposes of carrying
out the Merger.
Overview of the Merger Agreement and Agreements
Related to the Merger Agreement
The Merger Agreement
If the Merger is consummated,
Merger Sub will merge with and into Forza with Forza surviving the Merger as a wholly owned subsidiary of the combined company. A copy
of the Merger Agreement is attached as Annex A to this Joint Proxy Statement/Prospectus and is incorporated herein by reference.
Twin Vee and Forza encourage you to read the entire merger agreement carefully because it is the principal document governing the merger.
We currently expect that the Merger will be completed during the fourth quarter of 2024. However, we cannot predict the actual timing
of the completion of the Merger.
Merger Consideration
Subject to the terms and conditions of the Merger Agreement, if the Merger is completed,
at the Effective Time (i) each outstanding share of Forza Common Stock (other than shares held by Twin Vee) will be converted into
the right to receive 0.611666275 shares of Twin Vee Common Stock (the “Exchange Ratio”), (ii) each outstanding stock
option exercisable for shares of Forza Common Stock that is outstanding at the Effective Time, whether vested or unvested, will be assumed
by Twin Vee and converted into a stock option to purchase the number of shares of Twin Vee Common Stock that the holder would have received
if such holder had exercised such stock option for shares of Forza Common Stock prior to the Merger and exchanged such shares for Twin
Vee Common Stock in accordance with the Exchange Ratio, (iii) each outstanding warrant to purchase shares of Forza Common Stock will be
assumed by Twin Vee and converted into a warrant to purchase the number of shares of Twin Vee Common Stock that the holder would have
received if such holder had exercised such warrant for shares of Forza Common Stock prior to the Merger and exchanged such shares for
Twin Vee Common Stock in accordance with the Exchange Ratio, subject to adjustment for any reverse stock split, and (iv) the 7,000,000
shares of Forza Common Stock held by Twin Vee will be cancelled.
Under the Exchange Ratio formula in the Merger Agreement, as of immediately after
the Merger as provided for in the Merger Agreement, the pre-closing Forza stockholders (other than Twin Vee) are expected to own approximately
36% of the Post-Closing Shares, and the stockholders of Twin Vee as of immediately prior to the Merger are expected to own approximately
64% of the aggregate number of Post-Closing Shares, as defined below. The 7,000,000 shares of Forza Common Stock held by Twin Vee will
be cancelled. The Exchange Ratio formula in the Merger Agreement was negotiated so that the pre-closing stockholders of each
of Twin Vee and Forza (excluding Twin Vee as a Forza stockholder) would beneficially own approximately 64% and 36% of the aggregate number
of shares of common stock of the combined company outstanding immediately following the Effective Time (the “Post-Closing Shares”),
subject to (i) not counting for purposes of the computation any outstanding options to purchase shares of Twin Vee Common Stock or
any outstanding options to purchase shares of Forza Common Stock or (ii) any warrants to purchase Twin Vee Common Stock or any warrants
to purchase Forza Common Stock. Accordingly, any outstanding options or warrants to purchase shares of Twin Vee Common Stock and Forza
Common Stock were not reflected in the computation of the Exchange Ratio. On a fully diluted basis, taking into all outstanding warrants
and options the pre-closing Forza stockholders are expected to own approximately 34.3% of the outstanding securities of Twin Vee after
the Merger, and the stockholders of Twin Vee are expected to own approximately 65.3% of the aggregate number of the outstanding securities
of Twin Vee after the Merger. The Exchange Ratio has been fixed. For a more complete description of the Exchange Ratio, see the section
titled “The Merger Agreement—Exchange Ratio” in this Joint Proxy Statement/Prospectus.
The Merger Agreement does
not include a price-based termination right, and there will be no adjustment to the total number of shares of Twin Vee Common Stock that
Forza securityholders will be entitled to receive for changes in the market price of Twin Vee Common Stock or Forza Common Stock. Accordingly,
the market value of the shares of Twin Vee Common Stock issued pursuant to the Merger Agreement will depend on the market value of the
shares of Twin Vee Common Stock at the time the Merger closes and could vary significantly from the market value on the date of this Joint
Proxy Statement/Prospectus. On [●], 2024, the last trading day before the date of this Joint Proxy Statement/Prospectus, the closing
sale price of Twin Vee Common Stock was $[●] per share and the closing price of Forza Common Stock was $[●] per share.
Treatment of Twin Vee Stock Options
All options to purchase shares
of Twin Vee Common Stock will remain outstanding immediately after the Effective Time in accordance with their terms. The number of shares
of Twin Vee Common Stock underlying such options and the exercise prices for such options will be appropriately adjusted to reflect the
Twin Vee Reverse Stock Split, assuming the approval of the Twin Vee Reverse Stock Split Proposal by Twin Vee’s stockholders at the
Twin Vee Annual Meeting and if thereafter consummated at the discretion of Twin Vee Board of Directors. The terms governing options to
purchase shares of Twin Vee Common Stock will remain in full force and effect following the closing of the Merger.
Treatment of Forza Stock Options
At the Effective Time, each option
to purchase shares of Forza Common Stock that are outstanding and unexercised immediately prior to the Effective Time, whether or not
vested, issued under the Forza 2022 Plan shall be assumed by Twin Vee and converted into an option to purchase shares of Twin Vee Common
Stock. Twin Vee will assume the Forza 2022 Plan and each such option in accordance with the terms of the Forza 2022 Plan and the terms
of the stock option agreement by which such option is evidenced. From and after the Effective Time, each option to purchase shares of
Forza Common Stock assumed by Twin Vee may be exercised for such number of shares of Twin Vee Common Stock as is determined by multiplying
the number of shares of Forza Common Stock that were subject to such option by the Exchange Ratio, and rounding the resulting number down
to the nearest whole number of shares of Twin Vee Common Stock. The per share exercise price of the converted option to purchase shares
of Twin Vee Common Stock will be determined by dividing the existing per share exercise price of the option to purchase shares of Forza
Common Stock by the Exchange Ratio, and rounding to the resulting exercise price up to the nearest whole cent. Any restrictions on the
exercise of any option to purchase shares of Forza Common Stock assumed by Twin Vee will continue following the conversion, and the term,
exercisability, vesting schedule and other provisions of such option will generally remain unchanged; provided, that any options to purchase
shares of Forza Common Stock assumed by Twin Vee may be subject to adjustment to reflect changes in Twin Vee’s capitalization after
the Effective Time and that the Twin Vee Board of Directors or a committee thereof will succeed to the authority and responsibility of
the Forza Board of Directors or a committee thereof with respect to each assumed option to purchase shares of Forza Common Stock.
Treatment of Twin Vee Warrants
All warrants to purchase
shares of Twin Vee Common Swill remain outstanding and unexercised immediately after the Effective Time in accordance with their terms.
The number of shares of Twin Vee Common Stock underlying such warrants and the exercise prices for such warrants will be appropriately
adjusted to reflect the Twin Vee Reverse Stock Split, assuming the approval of the Twin Vee Reverse Stock Split Proposal by Twin Vee’s
stockholders at the Twin Vee Annual Meeting and if thereafter consummated at the discretion of Twin Vee Board of Directors. The terms
governing warrants to purchase shares of Twin Vee Common Stock will remain in full force and effect following the closing of the Merger.
Treatment of Forza
Warrants
At the Effective Time, each warrant
to purchase shares of Forza Common Stock that is outstanding and unexercised immediately prior to the Effective Time, shall be assumed
by Twin Vee and converted into a warrant to purchase shares of Twin Vee Common Stock. Twin Vee will assume the warrants in accordance
with the terms of the warrant agreement by which such warrant is evidenced. From and after the Effective Time, each warrant to purchase
shares of Forza Common Stock assumed by Twin Vee may be exercised for such number of shares of Twin Vee Common Stock as is determined
by multiplying the number of shares of Forza Common Stock that were subject to such warrant by the Exchange Ratio, and rounding the resulting
number down to the nearest whole number of shares of Twin Vee Common Stock. The per share exercise price of the converted warrant will
be determined by dividing the existing per share exercise price of the warrant to purchase shares of Forza Common Stock by the Exchange
Ratio, and rounding to the resulting exercise price up to the nearest whole cent. Any restrictions on the exercise of any warrant to purchase
shares of Forza Common stock assumed by Twin Vee will continue following the conversion, and the term, exercisability, and other provisions
of such warrant will generally remain unchanged.
The closing of the Merger
will occur no later than the second business day after the last of the conditions to the Merger has been satisfied or waived, or at another
time as Twin Vee and Forza agree. Twin Vee and Forza anticipate that the closing of the Merger will occur promptly after the Twin Vee
Annual Meeting and Forza Annual Meeting. However, because the Merger is subject to a number of conditions, neither Twin Vee nor Forza
can predict exactly when the closing will occur or if it will occur at all.
Risks Relating to the Merger
In evaluating the adoption of the Merger Agreement
or the issuance of shares of Twin Vee Common Stock in the Merger, you should carefully read this Joint Proxy Statement/Prospectus and
especially consider the factors discussed in the section titled “Risk Factors,” for a description of risks relating to the
Merger, the combined company’s businesses, and Twin Vee Common Stock.
Both Twin Vee and Forza are
subject to various risks associated with their businesses and their industries. In addition, the Merger, including the possibility that
the Merger may not be completed, poses a number of risks to each company and its respective stockholders, including the following risks:
| |
● |
All
of Forza’s executive officers and all but one of its directors serve on both the Twin Vee Board of Directors and Forza Board of
Directors and therefore have conflicts of interest that may influence them to support or approve the Merger without regard to your interests.
In addition, the one director who does not sit on both the Twin Vee Board of Directors and Forza Board of Directors is expected to serve
as a director of the combined company and therefore may also have a conflict of interest. |
| |
● |
The Exchange
Ratio is not adjustable based on the market price of Twin Vee Common Stock or the Forza Common Stock so the Merger consideration at the
closing may have a greater or lesser value than it had at the time the Merger Agreement was signed. |
| |
● |
The combined
company’s stock price is expected to be volatile, and the market price of its common stock may drop following the Merger. |
| |
● |
The market
price of the combined company’s common stock may decline as a result of the Merger. |
| |
● |
The combined
company may not experience the anticipated strategic benefits of the Merger. |
| |
● |
If the
conditions to the Merger are not met, the Merger will not occur. |
| |
● |
Twin
Vee and Forza will incur substantial expenses related to this transaction whether or not the Merger is completed. |
| |
● |
Twin
Vee will assume all of Forza’s outstanding liabilities if the Merger is completed. |
| |
● |
The pro
forma financial statements are presented for illustrative purposes only and may not be an indication of the combined company’s
financial condition or results of operations following the Merger. |
| |
● |
Although
Houlihan’s opinion was given to Twin Vee’s Board of Directors on August 6, 2024, it does not reflect any changes in market
and economic circumstances after August 6, 2024. |
| |
● |
Although
InteleK’s opinion was given to Forza’s Board of Directors on August 9, 2024, it does not reflect any changes in market and
economic circumstances after August 9, 2024. |
| |
● |
The issuance
of the Merger consideration is subject to approval by the stockholders of Twin Vee and the Merger and Merger Agreement are subject to
approval by the Forza stockholders, including a majority of the stockholders excluding Twin Vee. |
| |
● |
Twin
Vee’s business and stock price may be adversely affected if the acquisition of Forza is not completed. |
These risks and other risks are discussed in greater
detail under the section titled “Risk Factors” in this Joint Proxy Statement/Prospectus.
Twin Vee and Forza both encourage you to read and consider all of these risks carefully.
Reasons for the Merger
Twin Vee and Forza are proposing
the Merger because, among other things, it is believed that the Merger will enhance stockholder value for both Twin Vee and Forza stockholders
(i) by providing a method by which the Twin Vee stockholders can more directly share in the growth of Forza and (ii) due to the cost savings
expected to be realized. For a discussion of Twin Vee’s reasons for the Merger, please see the sections entitled “The Merger
Transaction—Recommendation of the Twin Vee Board of Directors and its Reasons for the Merger” and “The Merger
Transaction—Recommendation of the Forza Board of Directors and its Reasons for the Merger”.
Twin Vee Reasons for the Merger
In reaching its unanimous
decision to approve the Merger Agreement and the transactions contemplated thereby, the Twin Vee Board of Directors considered a
number of factors, including, among others, the following:
| |
● |
the
belief that the combination of the businesses of Twin Vee and Forza would create more value for Twin Vee stockholders in the long term
due to cost reductions of a combined company than as separate companies |
| |
|
|
| |
● |
the potential
cost savings synergies derived from the Merger, including the reduced fees resulting from Forza no longer being a stand-alone public
company which reduction is estimated to be approximately $700,000 and includes reduced legal and accounting fees and proxy
solicitation fees as well as the reduced Nasdaq listing fees; |
| |
● |
the
historical and current information concerning Twin Vee’s and Forza’s business,
financial performance, financial condition, including Twin Vee’s and Forza’s
cash position, operations, management and competitive position, the prospects of Twin Vee
and Forza separately and combined, and the nature of the boating industry generally, including
the projected burn rate of Twin Vee and Forza and their short-and long-term strategic
objectives; |
| |
|
|
| |
● |
the opinion of Twin Vee’s financial advisor, dated August 6, 2024, to the special committee of the Twin Vee Board of Directors (the “Twin Vee Special Committee”) that, as of such date and based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.611666275 shares of Twin Vee Common Stock to be issued in exchange for each share of Forza Common Stock pursuant to the Merger Agreement was fair to Twin Vee stockholders from a financial point of view; |
| |
|
|
| |
● |
current financial market conditions and historical market prices, volatility and trading information with respect to Forza Common Stock and Twin Vee Common Stock; |
| |
|
|
| |
● |
that
the Merger would provide existing Twin Vee stockholders a significant opportunity to directly participate in the potential growth of
the combined company following the Merger; |
| |
|
|
| |
● |
the terms and conditions of the Merger Agreement and associated transactions, including the relative percentage ownership of Twin Vee securityholders and Forza securityholders immediately following the closing of the Merger, the reasonableness of the fees and expenses related to the Merger and the likelihood that the Merger will be completed; |
| |
|
|
| |
● |
the fact that the Exchange Ratio, as defined in the Merger Agreement, is fixed and will not fluctuate based upon changes in the stock prices of Twin Vee or Forza prior to the completion of the Merger; and |
| |
|
|
| |
● |
the belief that the terms and conditions of the Merger Agreement, including the parties’ mutual representations and warranties, covenants, deal protection provisions and closing conditions, are reasonable for a transaction of this nature. |
The Twin Vee Board of Directors considered the potential
risks of the Merger, including, but not limited to, the following:
| |
● |
the
risks, challenges and costs inherent in combining the two companies and the expenses to be incurred in connection with the Merger,
including the possibility that delays or difficulties in completing the integration could adversely affect the combined company’s
operating results and preclude the achievement of some benefits anticipated from the Merger; |
| |
● |
the
possible volatility, at least in the short term, of the trading price of Twin Vee Common Stock resulting from the Merger announcement; |
| |
● |
the
risk of diverting management’s attention from other strategic priorities to implement Merger integration efforts; |
| |
● |
the
risk that the Merger might not be consummated in a timely manner, or that the Merger might not be consummated at all; |
| |
● |
the
fact that certain of the directors and executive officers of Twin Vee may have conflicts of interest in connection with the Merger,
as they may receive certain benefits that are different from, and in addition to, those of the other stockholders of Twin Vee; |
| |
● |
that,
while the Merger is expected to be completed, there can be no assurance that all conditions to the parties’
obligations to complete the Merger will be satisfied, and as a result, it is possible that the Merger may
not be completed, even if the issuance of the Merger consideration is approved by the stockholders of Twin
Vee;
|
| |
|
|
| |
● |
the
risk to Twin Vee’s business, operations and financial results in the event that the Merger is not consummated; and |
| |
● |
various
other applicable risks associated with the combined company and the Merger, including those described in the
section of this Joint Proxy Statement/Prospectus entitled “Risk Factors”.
|
Forza Reasons for the
Merger
In reaching its unanimous
decision to approve the Merger Agreement and the transactions contemplated thereby, the Forza Board of Directors considered a number
of factors, including, among others, the following:
| |
● |
the strategic rationale for the Merger and the potential benefits of the contemplated transaction; |
| |
● |
that the Merger was superior to the strategic alternatives available to Forza, including continuing as a stand-alone company or attempting to sell Forza to a third-party acquirer, or liquidating, each of which the Forza Board of Directors viewed as less favorable to Forza stockholders than the Merger; |
| |
|
|
| |
● |
the potential business, operational and financial synergies that may be realized over time by the combined company following the Merger; |
| |
|
|
| |
● |
the lack of a viable market for Forza’s designed product for the foreseeable future; |
| |
|
|
| |
● |
the opinion of Forza’s financial advisor, dated August 7, 2024, to the special committee of the Forza Board of Directors (the “Forza Special Committee”) that, as of such date and based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.611666275 shares of Twin Vee Common Stock to be issued in exchange for each share of Forza Common Stock pursuant to the Merger Agreement was fair to Forza stockholders from a financial point of view; |
| |
|
|
| |
● |
current and historical information concerning Forza’s and Twin Vee’s respective businesses, business plans, operations, management, financial performance and conditions, technology, operations, prospects and competitive position, before and after giving effect to the merger and the merger’s potential effect on stockholder value; |
| |
● |
its knowledge of the business, operations, financial condition and earnings of Twin Vee; |
| |
|
|
| |
● |
the ability to be a stockholder of a company generating revenue, given that Forza, to date, has not yet generated revenue from the sale of its boats; |
| |
● |
the likelihood that the Merger will be completed; |
| |
● |
current financial market conditions and historical market prices, volatility and trading information with respect to Forza Common Stock and Twin Vee Common Stock; |
| |
● |
the terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations; |
| |
|
|
| |
● |
the consideration to be received by Forza stockholders in the Merger, including the form of such consideration, which enables Forza’s stockholders to continue to have a substantial equity interest in the combined company following the Merger, as well as the fact that the shares of Twin Vee Common Stock to be received by Forza’s stockholders are intended to be received in a tax-free exchange; and |
| |
|
|
| |
● |
that the Merger should qualify as a reorganization within the meaning of Section 368(a) of the Code and that Forza’s stockholders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of Forza Common Stock for shares of Twin Vee Common Stock in connection with the Merger. |
The Forza Board of Directors considered the potential
risks of the Merger, including, but not limited to, the following:
| |
● |
the possibility that the Merger might not be completed whether as a result of the failure to satisfy conditions to the closing of the Merger, including the failure to secure the required approvals from Forza and Twin Vee stockholders, or as a result of the termination of the merger agreement by Forza or Twin Vee in certain specified circumstances and the potential effects of the public announcement and pendency of the Merger on management attention; |
| |
|
|
| |
● |
the effect of a public announcement of the transactions on Forza’s operations, stock price and employees, the potential disruption to Forza and Twin Vee and their businesses as a result of the announcement and pendency of the Merger and the potential adverse effects on the financial results of Forza and Twin Vee as a result of that disruption and the continued operations of the core business of Forza and Twin Vee during the period between the signing of the Merger Agreement and the completion of the Merger; |
| |
● |
the fact that the executive officers and all but one of Forza’s directors may have interests in the Merger that are different from, or in addition to, those of Forza’s other stockholders, including the matters described under the section entitled “Chapter One—The Merger—The Merger Transaction—Interests of Forza Directors and Executive Officers in the Merger”, and the risk that these different interests might influence their decisions with respect to the Merger; |
| |
● |
that, while the Merger is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the Merger will be satisfied, and as a result, it is possible that the Merger may not be completed, even if the issuance of the shares of Twin Vee Common Stock to Forza stockholders pursuant to the Merger Agreement is approved by the stockholders of Twin Vee; |
| |
● |
the risk of not realizing all of the anticipated strategic benefits between Forza and Twin Vee and the risk that other anticipated benefits might not be realized;
|
| |
|
|
| |
● |
the risk that the Merger may not be consummated in a timely manner or that the Merger may not be consummated at all, including the impact on Forza’s ability to effect the Forza Reverse Stock split if necessary in time to maintain compliance with the Nasdaq continued listing requirements; |
| |
|
|
| |
● |
Forza’s inability to solicit competing acquisition proposals; |
| |
● |
the substantial costs to be incurred in connection with the Merger, including the costs of integrating the operations of Forza and Twin Vee and the transaction expenses arising from the Merger; and various other applicable risks associated with the combined company and the Merger, including the risks described in the section titled “Risk Factors;” and |
| |
|
|
| |
● |
the other risks of the type and nature described under “Risk Factors” of this Joint Proxy Statement/Prospectus |
For more information on the Twin Vee Board of Directors’
reasons for the transaction, see the section titled “The Merger Transaction— Recommendation of the Twin Vee Board of Directors
and its Reasons for the Merger.”
For more information on the Forza Board of Directors’
reasons for the transaction, see the section titled “The Merger Transaction—Recommendation of the Forza Board of Directors
and its Reasons for the Merger.”
Opinion of the Financial Advisor to the
Twin Vee Board of Directors
The Twin Vee Board of Directors
engaged Houlihan Capital, LLC (“Houlihan”) to provide financial advisory and investment banking services in connection with
the Twin Vee Board of Directors’ consideration and evaluation of certain potential strategic alternatives. On August 6, 2024, Houlihan
delivered its oral opinion to the Twin Vee Board of Directors, which opinion was confirmed in writing on the same date, that, as of the
date of such opinion, and based upon and subject to the assumptions made, procedures followed, matters considered, limitations of the
review undertaken, qualifications contained and other matters set forth in its written opinion, as of July 31, 2024, the Exchange Ratio
to be paid by Twin Vee in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to Twin Vee’s stockholders.
The full text of Houlihan’s
written opinion, which sets forth the assumptions made, procedures followed, matters considered, limitations of the review undertaken,
qualifications contained and other matters set forth therein, is attached as Annex C-1 to this joint proxy statement/prospectus
and is incorporated herein by reference. Twin Vee urges you to carefully read the Houlihan opinion, together with the description of such
opinion included elsewhere in this Joint Proxy Statement/Prospectus, in its entirety, under the heading ”The Merger Transaction—Opinion
of the Financial Advisor to the Twin Vee Board of Directors” starting on page 47] of this Joint Proxy Statement/Prospectus.
Houlihan provided its opinion to the Twin Vee Board of Directors (in their capacity as such) for its information and assistance in connection
with its consideration of the financial terms of the Merger and it may not be used for any other purpose. Houlihan’s opinion addressed
solely the fairness, from a financial point of view, of the Exchange Ratio to be paid by Twin Vee in the Merger pursuant to the Merger
Agreement, to Forza’s stockholders. Houlihan’s opinion does not compare the relative merits of the Merger with any other alternative
transactions or business strategies which may have been available to Twin Vee and does not address the underlying business decision of
the Twin Vee Board of Directors or Twin Vee to proceed with or effect the Merger. Houlihan’s opinion does not constitute a recommendation
to the Twin Vee Board of Directors as to how the Twin Vee Board of Directors should vote on the issuance of the Twin Vee Common Stock
to Forza stockholders pursuant to the Merger Agreement or to any stockholder of Twin Vee or Forza as to how any such stockholder should
vote at any stockholders’ meeting at which the any of the transactions contemplated by the Merger Agreement, or the Merger Agreement
itself, is considered, or whether or not any stockholder of Twin Vee or Forza should enter into a voting, shareholders’, or affiliates’
agreement with respect to the Merger, or take any other actions in connection with the Merger or otherwise. For a more complete discussion
of Houlihan’s opinion, see the section titled “The Merger Transaction—Opinion of the Financial Advisor to the Twin
Vee Board of Directors.”
Opinion of the Financial
Advisor to the Forza Board of Directors
Forza
engaged InteleK Business Valuations & Advisory (“InteleK”), to provide financial advisory and investment banking services
in connection with the Forza Special Committee’s and Forza Board of Directors’ consideration and evaluation of certain potential
strategic alternatives. On August 9, 2024, InteleK delivered its oral opinion to the Forza Board of Directors, which opinion was confirmed
in writing on the same date, that, as of the date of such opinion, and based upon and subject to the assumptions made, procedures followed,
matters considered, limitations of the review undertaken, qualifications contained and other matters set forth in its written opinion,
as of August 7, 2024, the Exchange Ratio to be paid by Twin Vee in the Merger pursuant to the Merger Agreement was fair, from a financial
point of view, to Forza’s stockholders.
The full text of InteleK’s written opinion, which sets forth the assumptions
made, procedures followed, matters considered, limitations of the review undertaken, qualifications contained and other matters set forth
therein, is attached as Annex C-2 to this Joint Proxy Statement/Prospectus and is incorporated herein by reference.
Forza urges you to carefully read the InteleK opinion, together with the description of such opinion included elsewhere in this joint
proxy statement/prospectus, in its entirety, under the heading ”The Merger Transaction—Opinion of the Financial Advisor
to the Forza Board of Directors” starting on page [52] of this Joint Proxy Statement/Prospectus. InteleK provided its opinion
to the Forza Board of Directors (in their capacity as such) for its information and assistance in connection with its consideration of
the financial terms of the Merger and it may not be used for any other purpose. InteleK’s opinion addressed solely the fairness,
from a financial point of view, of the Exchange Ratio to be paid by Twin Vee in the Merger pursuant to the Merger Agreement, to Forza.
InteleK’s opinion does not compare the relative merits of the Merger with any other alternative transactions or business strategies
which may have been available to Forza and does not address the underlying business decision of the Forza Special Committee, the Forza
Board of Directors or Forza to proceed with or effect the Merger. InteleK’s opinion does not constitute a recommendation to the
Forza Board of Directors as to how the Forza Board of Directors should vote on the Merger or to any stockholder of Twin Vee or Forza as
to how any such stockholder should vote at any stockholders’ meeting at which the Merger is considered. For a more complete discussion
of InteleK’s opinion, see the section titled “The Merger Transaction—Opinion of the Financial Advisor to the Forza
Board of Directors.”
Conditions to the Closing of the Merger
Twin Vee and Forza are required to complete the Merger
only if certain customary conditions are satisfied or waived, including, but not limited to:
|
● |
approval
of the Merger and the Merger Agreement by stockholders holding a majority of the outstanding shares of Forza Common Stock at the
Forza Annual Meeting (which approval shall include a majority of the shares present in person or by proxy at the Forza Annual Meeting
excluding shares held by Twin Vee); |
| |
● |
approval
of the issuance by Twin Vee of the shares of common stock pursuant to the Merger Agreement to the Forza stockholders by stockholders
holding a majority of the shares present in person or by proxy at the Twin Vee Annual Meeting; |
| |
● |
no
court, administrative agency, commission, governmental or regulatory authority, has enacted, enforced or entered
any statute, rule, regulation, or other order which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting the consummation of the Merger;
|
| |
|
|
| |
● |
the
registration statement on Form S-4, of which this Joint Proxy Statement/Prospectus is a part, must have been declared effective by
the SEC in accordance with the Securities Act and must not be subject to any stop order suspending the effectiveness of the registration
statement on Form S-4 and no similar proceeding in respect to the Joint Proxy Statement/Prospectus will have been initiated or threatened
in writing by the SEC. All other filings will have been approved or declared effective and no stop order will have been issued and
no proceeding will have been initiated to revoke any such approval or effectiveness; |
| |
|
|
| |
● |
the
respective representations and warranties of Twin Vee and Forza, shall be true and correct in all material respects as of the date
of the Merger Agreement and the closing; |
| |
● |
the
shares of Twin Vee Common Stock to be issued pursuant to the Merger Agreement shall have been approved for listing on Nasdaq; |
| |
● |
no
material adverse effect with respect to Twin Vee or Forza or their respective subsidiaries shall have occurred since the date of
the Merger Agreement and the closing of the Merger; |
| |
● |
performance or compliance in all material respects by Twin Vee and Forza with their respective covenants and obligations in the Merger Agreement; and |
| |
● |
Forza shall have obtained any consents or waivers of approvals required in connection with the Merger. |
Termination of the Merger Agreement
The Merger Agreement may be terminated at any time
before the completion of the Merger, whether before or after the required stockholder approval to complete the Merger has been obtained,
as set forth below:
| ● | by mutual written consent of Twin Vee and Forza, duly authorized by their respective boards of directors; |
| ● | by either Twin Vee or Forza if the Merger is not consummated by December
1, 2024 (the “End Date”); provided, however, that this right to terminate is not available to any party whose action
or failure to act has been a principal cause of the failure of the merger to occur on or before such date and such action or failure is
a breach of the Merger Agreement; provided, further, that, in the event that the SEC has not declared effective under the Securities
Act this Joint Proxy Statement/Prospectus by the date which is sixty days prior to the End Date, then Twin Vee shall be entitled to extend
the End Date for an additional thirty days; |
| ● | by either Twin Vee or the Forza if a court, administrative agency, commission, governmental or regulatory
authority issues a final and non-appealable order, decree or ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; |
| ● | by Twin Vee if the requisite approval of the stockholders of Forza is not obtained by reason of the failure
to obtain the requisite vote at a meeting of the stockholders of Forza, duly convened therefor or at any adjournment or postponement thereof; |
| ● | by either Forza or Twin Vee if the requisite approval of the stockholders of Twin Vee is not obtained by
reason of the failure to obtain the requisite vote at a meeting of the stockholders of Twin Vee, duly convened therefor or at any adjournment
or postponement thereof; provided, however, that this right to terminate is available to Twin Vee if the failure to obtain the
requisite vote shall have been caused by Twin Vee’s action or failure to act and such action or failure to act constitutes a material
breach by Twin Vee of the Merger Agreement; |
| ● | by Twin Vee if a “Forza triggering event” has occurred, which
is defined as an event where (i) the Forza Board of Directors shall have failed to recommend that Forza’s stockholders vote to approve
the Merger Agreement and Merger (the “Forza Board Recommendation”) or shall for any reason have withdrawn or modified in a
manner adverse to Twin Vee the Forza Board Recommendation; (ii) Forza shall have failed to include in this Joint Proxy Statement/Prospectus
the Forza Board Recommendation; (iii) Forza shall have failed to hold the its stockholders’ meeting within sixty (60) days after
the Form S-4 Registration Statement relating to this Joint Proxy Statement/Prospectus is declared effective under the Securities Act (other
than to the extent that the Form S-4 Registration Statement is subject to any stop order or proceeding (or threatened proceeding by the
SEC) seeking a stop order with respect to the Form S-4 Registration Statement, in which case such sixty (60) day period shall be tolled
for so long as such stop order remains in effect or proceeding or threatened proceeding remains pending); provided that Forza may
adjourn the meeting in order to obtain a quorum of its stockholders or as reasonably determined by it to comply with applicable law; (iv)
the Forza Board of Directors shall have publicly approved, endorsed or recommended any other acquisition proposal; (v) the Forza Board
of Directors shall have failed to publicly reaffirm the Forza Board Recommendation within ten (10) days after Twin Vee so requests in
writing; (vi) Forza or its representatives shall have breached the non-solicitation provisions of the Merger Agreement; |
| ● | by Forza if a “Company triggering event” has occurred, which is
defined as an event where (i) the Twin Vee Board of Directors shall have failed to recommend that Twin Vee’s stockholders vote to
approve the issuance of Twin Vee common stock in the Merger (the “Twin Vee Board Recommendation”) or shall for any reason
have withdrawn or modified in a manner adverse to Forza the Twin Vee Board Recommendation; (ii) Twin Vee shall have failed to include
in this Joint Proxy Statement/Prospectus the Twin Vee Board Recommendation; (iii) Twin Vee shall have failed to hold the its stockholders’
meeting within sixty (60) days after the Form S-4 Registration Statement relating to this Joint Proxy Statement/Prospectus is declared
effective under the Securities Act (other than to the extent that the Form S-4 Registration Statement is subject to any stop order or
proceeding (or threatened proceeding by the SEC) seeking a stop order with respect to the Form S-4 Registration Statement, in which case
such sixty (60) day period shall be tolled for so long as such stop order remains in effect or proceeding or threatened proceeding remains
pending); provided that Twin Vee may adjourn the meeting in order to obtain a quorum of its stockholders or as reasonably determined
by it to comply with applicable law; (iv) the Twin Vee Board of Directors shall have publicly approved, endorsed or recommended any other
acquisition proposal; (v) the Twin Vee Board of Directors shall have failed to publicly reaffirm the Twin Vee Board Recommendation within
ten (10) days after Forza so requests in writing; (vi) Twin Vee or its representatives shall have breached the non-solicitation provisions
of the Merger Agreement; |
| |
● |
by Forza, upon a breach of any representation, warranty, covenant or agreement on the part of Twin Vee or Merger Sub set forth in the Merger Agreement, or if any representation or warranty of Twin Vee becomes untrue, such that the conditions to the Merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided that Forza is not in material breach of any representation, warranty, covenant or agreement so as to cause conditions in the Merger Agreement not to be satisfied; provided, however, that if such inaccuracy in Twin Vee’s representations and warranties or breach by Twin Vee is curable by Twin Vee through the exercise of its commercially reasonable efforts, then Forza may not terminate the merger agreement for thirty (30) calendar days following the delivery of written notice from Forza to Twin Vee of such breach, provided Twin Vee continues to exercise commercially reasonable efforts to cure such breach (it being understood that Forza may not terminate the Merger Agreement if such breach by Twin Vee is cured during such thirty (30) calendar day period); or |
| |
|
|
| |
● |
by Twin Vee, upon a breach of any representation, warranty, covenant or agreement on the part of Forza set forth in the Merger agreement, or if any representation or warranty of Forza becomes untrue, such that the conditions to the Merger would not be satisfied as of the time of such breach or as of the time such representation or warranty becomes untrue; provided that Twin Vee is not in material breach of any representation, warranty, covenant or agreement so as to cause conditions in the Merger Agreement not to be satisfied; provided, however, that if such inaccuracy in Forza’s representations and warranties or breach by Forza is curable by Forza through the exercise of its commercially reasonable efforts, then Twin Vee may not terminate the merger agreement for thirty (30) calendar days following the delivery of written notice from Twin Vee to Forza of such breach, provided Forza continues to exercise commercially reasonable efforts to cure such breach (it being understood that Twin Vee may not terminate the Merger Agreement if such breach by Forza is cured during such thirty (30) calendar day period). |
| |
|
|
| |
● |
by Twin Vee, if any time prior to the requisite approval of the stockholders of Twin Vee being obtained Twin Vee has received an acquisition proposal that the Twin Vee Board of Directors deems is a Superior Offer (as defined in the Merger Agreement), Twin Vee has complied with its obligations under the Merger Agreement in order to accept such Superior Offer, Twin Vee both concurrently terminates the Merger and enters into a definitive agreement that provides for the consummation of such Superior Offer; or |
| |
|
|
| |
● |
by Forza if any time prior to the requisite approval of the stockholders of Forza being obtained Forza has received an acquisition proposal that the Forza Board of Directors deems is a Superior Offer (as defined in the Merger Agreement), Forza has complied with its obligations under the Merger Agreement in order to accept such Superior Offer, Forza both concurrently terminates the Merger and enters into a definitive agreement that provides for the consummation of such Superior Offer. |
Non-Solicitation
Each of Twin Vee and Forza
have agreed that, subject to certain exceptions, until the earlier to occur of the termination of the Merger Agreement and the Effective
Time, neither they nor any of their respective subsidiaries will authorize or permit any of their or their subsidiaries’ directors,
officers, employees, agents, attorneys, accountants, investment bankers, advisors and representatives to, directly or indirectly:
| ● | solicit, initiate, knowingly encourage, induce or knowingly facilitate the communication, the making,
submission or announcement of any acquisition transaction (as defined below); |
| ● | furnish any nonpublic information regarding such party to any person in connection with or in response
to an acquisition proposal or inquiry; |
| ● | engage in discussions or negotiations with any person with respect to any acquisition transaction, except
as to the existence of the non-solicitation provisions in the Merger Agreement; |
| |
● |
approve, endorse or recommend any acquisition transaction, except as permitted by the
Merger Agreement in respect of a bona fide acquisition proposal (which acquisition proposal did not arise out of a material breach
of the non-solicitation provisions of the Merger Agreement) that is determined, in good faith to be a superior offer (as defined in
the Merger Agreement); or |
| ● | execute or enter into any letter of intent or any contract agreement contemplating
or relating to an acquisition transaction (other than a confidentiality agreement as permitted). |
However, before obtaining
the Twin Vee stockholder approval or Forza stockholder approval, respectively, required to consummate the Merger, each of Forza and Twin
Vee may furnish nonpublic information regarding such party to, and may enter into discussions or negotiations with, any person in response
to a bona fide written acquisition proposal, which the Twin Vee Board of Directors or the Forza Board of Directors, respectively, determines
in good faith, after consultation with their respective financial advisors and outside legal counsel, constitutes or is reasonably likely
to result in a “superior offer,” as defined in the Merger Agreement and as defined in the section titled “The Merger Agreement—Non-Solicitation”
below, and is not withdrawn, if:
| |
● |
neither
party nor any of its directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors and representatives
has breached the non-solicitation provisions of the Merger Agreement described above; |
| |
● |
the
Twin Vee Board of Directors or Forza Board of Directors, respectively, concludes in good faith based on the advice of outside legal
counsel, that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the Twin Vee or
Forza board of directors, respectively, under applicable law; |
| |
● |
Twin
Vee or Forza, respectively receives from the third-party an executed confidentiality agreement containing provisions (including nondisclosure
provisions, use restrictions, non-solicitation provisions and no hire provisions) at least as favorable to such party as
those contained in the confidentiality agreement between Twin Vee and Forza; and |
| |
● |
at least two business days prior to furnishing such nonpublic information to a third-party, Twin Vee or Forza furnishes the same information to the other party to the extent not previously furnished. |
If either Twin Vee or Forza
receives an acquisition proposal or acquisition inquiry at any time during the period between the date of the Merger Agreement, August
12, 2024, and the earlier to occur of (a) the Effective Time and (b) termination of the Merger Agreement, then such party must
promptly, and in no event later than one business day after becoming aware of such acquisition proposal or acquisition inquiry, advise
the other party orally and in writing of such acquisition proposal or acquisition inquiry, including the identity of the person making
or submitting the acquisition proposal or acquisition inquiry and the material terms thereof. Each of Twin Vee and Forza must keep the
other reasonably informed with respect to the status and material terms of any such acquisition proposal or acquisition inquiry and any
material modification or proposed material modification thereto.
Management Following
the Merger
Effective as of the closing of the Merger, the combined company will have a five
member Board of Directors, consisting of Joseph Visconti (a current board member of both Twin Vee and Forza), Preston Yarborough (a current
board member of Twin Vee), Marcia Kull (a current board member of Forza), Neil Ross (a current board member of both Twin Vee and Forza)
and Kevin Schuyler (a current board member of both Twin Vee and Forza). In addition, effective as of the closing of the Merger, the combined
company’s executive officers will consist of Twin Vee’s current executive officers, Joseph Visconti, Preston Yarborough, Karl
Zimmer and Michael Dickerson, and Joseph Visconti will be appointed as the Chief Executive Officer and President of Forza, which will
be a wholly owned subsidiary of Twin Vee after the Merger.
Effective as of the closing of the Merger, the
combined company’s executive officers are expected to be composed of the following members of the current Forza and Twin Vee management
teams:
| |
|
|
|
|
| Name |
|
Combined Company Position(s) |
|
Current Position(s) |
| Joseph Visconti |
|
Chief Executive Officer |
|
Chief Executive Officer of Twin Vee |
| |
|
|
|
|
| Karl Zimmer |
|
President |
|
President of Twin Vee |
| |
|
|
|
|
| Michael Dickerson |
|
Chief Financial & Administrative Officer |
|
Chief Financial & Administrative Officer of Twin Vee and Interim Chief Financial & Administrative Officer of Forza |
| Preston Yarborough |
|
Vice President |
|
Vice President |
Interests of Certain Persons in the Merger
In considering the recommendation of the Forza Board
of Directors with respect to approving the Merger, Forza stockholders should be aware that certain members of the Forza Board of Directors
and executive officers of Forza have interests in the Merger that may be different from, or in addition to, interests they have as Forza
stockholders. For example, following the consummation of the Merger, certain directors and executive officers of Forza will continue to
serve on the Board of Directors and management, respectively, of the combined company. In considering the recommendation of the Twin Vee
Board of Directors with respect to approving the issuance of the shares of Twin Vee Common Stock to Forza stockholders pursuant to the
Merger Agreement, Twin Vee stockholders should be aware that certain members of the Twin Vee Board of Directors and executive officers
of Twin Vee have interests in the Merger that may be different from, or in addition to, interests they have as Twin Vee stockholders.
For example, following the consummation of the Merger, certain directors and executive officers of Twin Vee will continue to serve on
the Twin Vee Board of Directors and as management, respectively, of the combined company and will receive direct ownership of shares of
Twin Vee Common Stock issued in the Merger.
The following table sets forth the beneficial ownership
interest of the principal stockholders in Forza, Twin Vee and the combined company:
| | |
Twin Vee Prior to Merger | |
Forza Prior to Merger | |
Combined Company After Merger |
| | |
Number of | |
Percentage | |
Number of | |
Percentage | |
Number of | |
Percentage |
| Name | |
shares | |
** | |
shares | |
*** | |
shares | |
**** |
| Joseph
Visconti (1) | |
| 2,857,595 | | |
| 30.02 | % | |
| 2,261,939 | | |
| 14.36 | % | |
| 3,232,954 | | |
| 21.73 | % |
| Karl
Zimmer (2) | |
| 85,138 | | |
| 0.89 | % | |
| — | | |
| — | | |
| 85,138 | | |
| 0.57 | % |
| Preston
Yarborough (3) | |
| 209,763 | | |
| 2.20 | % | |
| 45,138 | | |
| 0.29 | | |
| 237,372 | | |
| 1.60 | % |
| Michael
Dickerson (4) | |
| 79,167 | | |
| 0.83 | | |
| 50,000 | | |
| 0.32 | | |
| 109,750 | | |
| 0.74 | % |
| James
Melvin (5) | |
| 16,500 | | |
| 0.17 | | |
| — | | |
| — | | |
| 16,500 | | |
| 0.11 | % |
| Bard
Rockenbach (6) | |
| 15,583 | | |
| 0.16 | | |
| — | | |
| — | | |
| 15,583 | | |
| 0.10 | % |
| Neil
Ross (7) | |
| 16,500 | | |
| 0.17 | | |
| 36,617 | | |
| 0.23 | | |
| 38,897 | | |
| 0.26 | % |
| Kevin
Schuyler (8) | |
| 12,363 | | |
| 0.13 | | |
| 105,500 | | |
| 0.67 | | |
| 76,894 | | |
| 0.52 | % |
| Marcia
Kull (9) | |
| — | | |
| — | | |
| 10,105 | | |
| 0.06 | | |
| 6,181 | | |
| 0.04 | % |
| 5% Stockholders | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Marathon
Micro Fund, L.P. (10) | |
| 950,000 | | |
| 9.98 | % | |
| — | | |
| — | | |
| 950,000 | | |
| 6.39 | % |
AWM
Investment
Company, Inc. and Affiliates (11) | |
| 939,176 | | |
| 9.98 | % | |
| — | | |
| — | | |
| 939,176 | | |
| 6.31 | % |
| Twin
Vee PowerCats Co.(1) | |
| | | |
| | | |
| 7,000,000 | | |
| 44.43 | % | |
| | | |
| | |
* Less than one percent (1%)
** Percentage of Twin Vee is based upon 9,520,000
shares of Twin Vee Common Stock outstanding as of [●], 2024.
***Percentage of Forza is based upon 15,754,774 shares
of Forza Common Stock outstanding as of [●], 2024.
****Percentage of common stock of the combined company
is based on 14,875,000 shares of common stock of the combined company outstanding upon the consummation of the Merger and assumes that
the 5,355,000 shares of Twin Vee Common Stock are issued upon consummation of the Merger to the stockholders of Forza and that the 7,000,000
shares of Forza Common Stock held by Twin Vee are cancelled.
| (1) |
Joseph
Visconti is the Chairman of the Board and Chief Executive Officer of Twin Vee and the Interim CEO of Forza.
Prior to the consummation of the Merger, Twin Vee is the owner of 7,000,000 shares of Forza Common Stock.
As a controlling shareholder of Twin Vee, Mr. Visconti is deemed to have control over the shares of Forza
Common Stock owned by Twin Vee. Mr. Visconti owns 98,442 shares of Forza Common Stock and was granted an option
to purchase 644,000 shares of Forza Common Stock, of which 451,667 shares of Forza Common Stock will vest
and be exercisable within 60 days of [●], 2024, and are included in and are included in the number of
shares of Forza Common Stock beneficially owned by Mr. Visconti. Mr. Visconti currently disclaims beneficial
ownership of these securities.
Mr.
Visconti was issued 2,328,144 shares of our common stock upon the consummation of the Merger between Twin Vee and Twin Vee Powercats,
Inc. in 2022. Additionally, Mr. Visconti purchased 40,785 shares of Twin Vee Common Stock in September 2024. Mr. Visconti was granted
an option to purchase 822,000 shares of Twin Vee Common Stock, of which 527,554 shares of Twin Vee Common Stock will vest and be
exercisable within 60 days of [●], 2024, and are included in the number of shares of Twin Vee Common Stock beneficially owned
by Mr. Visconti. |
| (2) |
Mr.
Zimmer was granted an option to purchase 500,000 shares of Twin Vee Common Stock, of which
0 shares of Twin Vee Common Stock will vest and be exercisable within 60 days of [●],
2024 and are included in the number of shares of Twin Vee Common Stock beneficially owned
by Mr. Zimmer. Mr. Zimmer owns 85,138 shares of Twin Vee Common Stock. |
| |
|
| (3) |
Mr. Yarborough
was issued 38,357 shares of our common stock upon the consummation of the Merger between
Twin Vee and Twin Vee Powercats, Inc. in 2022. Mr. Yarborough was granted an option to purchase
261,000 shares of Twin Vee Common Stock, of which 171,406 shares of Twin Vee Common Stock
will vest and be exercisable within 60 days of [●], 2024 and are included in the number
of shares of Twin Vee Common Stock beneficially owned by Mr. Yarborough. Mr. Yarborough was
granted an option to purchase 75,000 shares of Forza Common Stock, of which 45,138 shares
of Forza Common Stock will vest and be exercisable within 60 days of [●], 2024 and
are included in the number of shares of Forza Common Stock beneficially owned by Mr. Yarborough. |
| |
|
| (4) |
Mr.
Dickerson was granted an option to purchase 300,000 shares of Twin Vee Common Stock, of which 29,167 shares of Twin Vee Common Stock
will vest and be exercisable within 60 days of [●], 2024 and are included in the number of shares of Twin Vee Common Stock beneficially
owned by Mr. Dickerson. Mr. Dickerson owns 50,000 shares of Twin Vee Common Stock and 50,000 shares of Forza Common Stock. |
| |
|
| (5) |
Mr. Melvin was granted an option to purchase 5,500 shares of Twin Vee Common Stock upon the consummation of the Twin Vee initial public offering, of which 5,500 shares of Twin Vee Common Stock. Additionally, Mr. Melvin was granted an option to purchase an additional 5,500 shares of Twin Vee Common stock in 2022 and another 5,500 shares of Twin Vee Common stock in 2024. The options to purchase a total of 16,500 shares of Twin Vee Common Stock have vested, are exercisable within 60 days of [●], 2024, and are included in the number of shares of Twin Vee Common Stock beneficially owned by Mr. Melvin. |
| |
|
| (6) |
In connection with his appointment, effective November 7, 2021, Mr. Rockenbach was awarded an option to purchase 5,500 shares of Twin Vee Common Stock at an exercise price of $3.87 per share, vesting pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten years from the date of grant. Additionally, Mr. Rockenbach was granted an option to purchase an additional 4,583 shares of Twin Vee Common stock in 2022 and another 5,500 shares of Twin Vee Common stock in 2024. All 15,583 shares of Twin Vee Common Stock have vested and be exercisable within 60 days of [●], 2024, and are included in the number of shares of Twin Vee Common Stock beneficially owned by Mr. Rockenbach. |
| |
|
| (7) |
Neil
Ross was granted an option to purchase 5,500 shares of Twin Vee Common Stock upon the consummation of the Twin Vee initial public offering,
of which 5,500 shares of Twin Vee Common Stock. Additionally, Mr. Ross was granted an option to purchase an additional 5,500 shares of
Twin Vee Common stock in 2022 and another 5,500 shares of Twin Vee Common stock in 2024. The options to purchase a total of 16,500 shares
of Twin Vee Common Stock have vested, are exercisable within 60 days of [●], 2024, and are included in the number of shares of
Twin Vee Common Stock beneficially owned by each of Mr. Ross. In connection with his appointment on the Forza Board of Directors, effective
August 11, 2022, Mr. Ross was awarded an option to purchase 5,500 shares of the Forza Common Stock at an exercise price of $5 per share,
vesting pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten years from the date of grant. All
5,500 shares of Forza Common Stock have vested, are exercisable within 60 days of [●], 2024, and are included in the number of
shares of Forza Common Stock beneficially owned by Mr. Ross. Mr. Ross owns 31,117 shares of Forza Common Stock. |
| |
|
| (8) |
In connection
with his appointment, effective July 6, 2022, Mr. Schuyler was awarded an option to purchase
5,500 shares of the Twin Vee Common Stock at an exercise price of $2.62 per share, vesting
pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten
years from the date of grant. Additionally, Mr. Schuyler was granted an option to purchase
5,500 shares of Twin Vee Common stock in 2024. All 11,000 shares of Twin Vee Common Stock
have vested, are exercisable within 60 days of [●], 2024, and are included in the number
of shares of Twin Vee Common Stock beneficially owned by Mr. Schuyler. He also
owns 1,363 shares of Twin Vee Common Stock. In connection with his appointment, effective
August 11, 2022, Mr. Schuyler was awarded an option to purchase 5,500 shares of the Forza
Common Stock at an exercise price of $5 per share, vesting pro rata on a monthly basis over
a twelve-month period and exercisable for a period of ten years from the date of grant. All
5,500 shares of Forza Common Stock have vested, are exercisable within 60 days of [●],
2024, and are included in the number of shares of Forza Common Stock beneficially owned by
Mr. Schuyler. Mr. Schuyler owns 100,000 shares of Forza Common Stock. |
| |
|
(9) |
In connection
with her appointment on the Forza Board of Directors, effective August 11, 2022, Ms. Kull was awarded
an option to purchase 5,500 shares of the Forza Common Stock at an exercise price of $5 per share, vesting
pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten years from
the date of grant. All 5,500 shares of Forza Common Stock have vested, are exercisable within 60 days
of [●], 2024, and are included in the number of shares of Forza Common Stock beneficially owned
by Ms. Kull. Ms. Kull owns 4,605 shares of Forza Common Stock. |
| |
|
| (10) |
Information is based upon a Schedule 13G/A filed with the SEC on January 30, 2023 by James G. Kennedy, the partner of Marathon Micro Fund, L.P. The address of Marathon Micro Fund, L.P. is 4 North Park Drive, Suite 106, Hunt Valley, Maryland 4982. |
| |
|
| (11) |
Information is based upon a Schedule 13G/A filed with the SEC on February 14, 2024 by Adam Stettner, Executive Vice President of AWM Investment Company, Inc. The address of AWM Investment Company, Inc. is c/o Special Situations Funds, 527 Madison Avenue, Suite 2600, New York, NY 10022. |
Considerations with Respect to U.S. Federal
Income Tax Consequences of the Merger
Each of Twin Vee and Forza
intends that the Merger qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the “Code”). In general, and subject to the qualifications and limitations set forth in the section titled “The
Merger Transaction—Certain Material U.S. Federal Income Tax Consequences of the Merger,” the material tax consequences
to U.S. Holders (as defined herein) of Forza Common Stock are expected to be as follows:
| |
● |
A Forza stockholder should not recognize gain or loss upon the exchange of Forza Common Stock for Twin Vee Common Stock pursuant to the Merger, except to the extent of cash received in lieu of a fractional share of Twin Vee Common Stock as described below; |
| |
● |
A Forza stockholder’s aggregate tax basis for the shares of Twin Vee Common Stock actually received in the Merger should equal the stockholder’s aggregate tax basis in the shares of Forza Common Stock surrendered upon the closing of the Merger, decreased by the amount of any tax basis allocable to a fractional share for which cash is received; and |
| |
● |
the holding period of the shares of Twin Vee Common Stock received by a Forza stockholder in the Merger should include the holding period of the shares of Forza Common Stock surrendered in exchange therefor provided the surrendered Forza Common Stock is held as a capital asset (generally, property held for investment) at the time of the Merger. |
Tax matters are very complicated,
and the tax consequences of the Merger to a particular Forza stockholder will depend on such stockholder’s circumstances. Accordingly,
you should consult your tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability
and effect of federal, state, local and foreign income and other tax laws. For more information, please see the section titled “The
Merger—Certain Material U.S. Federal Income Tax Consequences of the Merger.”
Regulatory Approvals
In the United States, Twin Vee must comply with
applicable federal and state securities laws and the rules and regulations of Nasdaq, in connection with the issuance of shares of Twin
Vee Common Stock pursuant to the Merger Agreement and the filing of this Joint Proxy Statement/Prospectus with the SEC.
Nasdaq Stock Market Listing
Twin Vee has agreed to use
commercially reasonable efforts to (a) prepare and submit to the Nasdaq (or such other Nasdaq market on which the shares of Twin
Vee Common Stock may then be listed) a notification form for the listing of additional shares with respect to the shares of Twin Vee Common
Stock to be issued in connection with the Merger and to cause such shares to be approved for listing or (b) to the extent required
by Nasdaq pursuant to its “reverse merger” rules, file an initial listing application for the Twin Vee Common Stock on Nasdaq
and to cause such application to be conditionally approved prior to the Effective Time of the Merger. Forza has agreed to cooperate with
Twin Vee as reasonably requested by Twin Vee with respect to such application and to promptly furnish to Twin Vee all information concerning
Forza and its stockholders that may be required or reasonably requested in connection with the application.
In addition, each of Twin Vee’s and Forza’s
obligation to complete the Merger is subject to the condition that the shares of Twin Vee Common Stock to be issued in the Merger be approved
for listing (subject to official notice of issuance) on Nasdaq as of the closing of the Merger.
Anticipated Accounting Treatment
The Merger is expected to
be treated as an asset acquisition by Twin Vee. To determine the accounting for this transaction under U.S. GAAP, a company must
assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition.
The guidance requires an initial screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated
in a single asset or group of similar assets. If that screen is met, the set is not a business. In connection with the acquisition of
Forza, substantially all the fair value is included in cash and cash equivalents and , as such, the acquisition is expected to be
treated as an asset acquisition.
Appraisal Rights and Dissenters’ Rights
No appraisal rights are available
to holders of Twin Vee Common Stock or Forza Common Stock in connection with the Merger in accordance with Section 262 of the Delaware
General Corporation Law (the “DGCL”).
Comparison of Stockholder
Rights
Both Twin Vee and Forza are
incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will
continue to be, governed by the DGCL. If the Merger is completed, Forza stockholders will become stockholders of Twin Vee, and their rights
will be governed by the DGCL, the Bylaws of Twin Vee and, the Certificate of Incorporation of Twin Vee. The rights of Twin Vee stockholders
contained in the Certificate of Incorporation and Bylaws of Twin Vee differ from the rights of Forza stockholders under the Amended and
Restated Certificate of Incorporation and Bylaws of Forza, as more fully described under the section titled “Comparison of Rights
of Holders of Twin Vee Common Stock and Forza X1, Inc. Common Stock.”
The Twin Vee Annual Meeting
The Twin Vee Annual Meeting will be held on [●]
at 10:00 a.m. local time, at the [●], for the following purposes:
| |
●
|
to consider and vote upon a proposal to approve the issuance of shares
of Twin Vee Common Stock in connection with Merger, pursuant to the Merger Agreement (the “Stock Issuance Proposal”);
|
| |
|
|
| |
● |
to consider and vote upon the election of the two
nominees for Class III directors named in this joint proxy statement/prospectus to the Twin Vee Board of Directors for a term of
three years (provided, however, that if the Merger is completed, the Twin Vee Board of Directors will be reconstituted as provided in
the Merger Agreement) (the “Twin Vee Election of Directors Proposal”); |
| |
● |
to consider and vote upon the ratification of the appointment of Grassi & Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for its fiscal year ending on December 31, 2024 (the “Twin Vee Auditor Proposal”) |
| |
● |
to consider and approve an amendment to Twin Vee’s
Certificate of Incorporation, in substantially the form attached to the accompanying proxy statement as Annex B, at the discretion
of the Twin Vee Board of Directors, to effect a reverse stock split with respect to the issued and outstanding shares of Twin Vee Common
Stock, at a ratio of 1-for-2 to 1-for-20 (the “Twin Vee Reverse Stock Split Ratio Range”), with the ratio within such range
to be determined at the discretion of the Twin Vee Board of Directors and included in a public announcement, subject to the authority
of the Twin Vee Board of Directors to abandon such amendment (the “Twin Vee Reverse Stock Split Proposal”);
|
| |
|
|
| |
● |
to consider and approve an amendment to the Twin
Vee PowerCats Co. Amended and Restated 2021 Stock Incentive Plan (the “Twin Vee 2021 Plan”) to increase the number of shares
of Twin Vee Common Stock available for issuance under the Twin Vee 2021 Plan by 1,000,000 shares to 3,171,800 shares (the “Plan
Increase Proposal”);
|
| |
|
|
| |
● |
to consider and vote upon an adjournment of the Twin Vee Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Stock Issuance Proposal, the Twin Vee Reverse Stock Split Proposal and/or the Plan Increase Proposal (the “Twin Vee Adjournment Proposal”); and |
| |
● |
to transact such other business as may properly come before the Twin Vee Annual Meeting or any adjournment or postponement thereof. |
Collectively the proposals
above are referred to as the “Twin Vee Proposals”. On each matter to be voted upon, Twin Vee stockholders have one vote for
each share of Twin Vee Common Stock owned as of the Twin Vee Record Date. Votes will be counted by the inspector of election. The following
table summarizes vote requirements and the effect of abstentions and broker non-votes.
|
Proposal
Number |
|
Proposal Description |
|
Vote Required for Approval |
|
Abstentions |
|
Effect of
Broker
Non-Votes |
|
1
|
|
Stock Issuance Proposal
|
|
FOR votes from the holders of a majority of voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
Counts as a vote “AGAINST” this proposal. |
|
None
|
| |
|
|
|
|
|
|
|
|
| 2 |
|
Twin Vee Election of Directors Proposal |
|
The nominee receiving the most FOR votes from the holders
of Forza Common Stock present and entitled to vote
|
|
Withheld votes will have no effect |
|
None
|
| |
|
|
|
|
|
|
|
|
| 3 |
|
Twin Vee Auditor Proposal
|
|
FOR votes from the holders of a majority of voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable
|
| |
|
|
|
|
|
|
|
|
|
4
|
|
Twin Vee Reverse Stock Split Proposal
|
|
FOR votes cast must exceed votes cast against the Twin Vee
Reverse Stock Split
|
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable
|
| |
|
|
|
|
|
|
|
|
|
5
|
|
Plan Increase Proposal
|
|
FOR votes from the holders of a majority of the voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable |
| |
|
|
|
|
|
|
|
|
|
6
|
|
Twin Vee Adjournment Proposal
|
|
FOR votes from the holders of a majority of the voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable
|
The information in the preceding
table with respect to the effect of broker non-votes may be incorrect or change before the Twin Vee Annual Meeting. Therefore,
if you are a beneficial owner and want to ensure that shares you beneficially own are voted in favor or against any or all of the Twin
Vee Proposals, the only way you can do so is to give your broker or nominee specific instructions as to how the shares are to be voted.
No Twin Vee Proposal is contingent
upon any other Twin Vee Proposal. Therefore, assuming all other closing conditions have been either satisfied or waived, the Merger will
be consummated even if the Twin Vee Reverse Stock Split Proposal is not approved by Twin Vee’s stockholders.
The Forza Annual Meeting
The Forza Annual Meeting
will be held on [●] at 10:30 a.m. local time, at the [●], for the following purposes:
| |
● |
to consider and vote upon a proposal to approve
the Merger, the Merger Agreement and related transactions (the “Merger Proposal”);
|
| |
|
|
| |
● |
to consider and vote upon the election of the one nominee for Class II directors named in this Joint Proxy Statement/Prospectus to the Forza Board of Directors for a term of three years (provided, however, that if the Merger is completed, all of the Forza board members, other than Joseph Visconti, will resign as members of the Forza Board of Directors (the “Forza Election of Director Proposal”); |
| |
● |
to consider and vote upon the ratification of the appointment of Grassi & Co., CPAs, P.C. as our independent registered public accounting firm for our fiscal year ending on December 31, 2024 (the “Forza Auditor Proposal”) |
| |
● |
to consider and approve an amendment to the Forza Amended and Restated Certificate of Incorporation, in substantially the form attached to the accompanying proxy statement as Annex B-1, at the discretion of the Forza Board of Directors, to effect a reverse stock split with respect to the issued and outstanding shares of Forza Common Stock, including stock held by the Forza as treasury shares, at a ratio of 1-for-2 to 1-for-20 (the “Forza Reverse Stock Split Ratio Range”), with the ratio within such range to be determined at the discretion of the Forza Board of Directors and included in a public announcement, subject to the authority of the Forza Board of Directors to abandon such amendment (the Forza Reverse Stock Split Proposal) (provided, however, if the Merger is effected, the Forza Reverse Stock Split will be abandoned); |
| |
● |
to consider and vote upon an adjournment of the Forza Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Merger Proposal and/or the Forza Reverse Stock Split Proposal (the “Forza Adjournment Proposal”); and |
| |
● |
to transact such other business as may properly come before the Forza Annual Meeting or any adjournment or postponement thereof. |
Collectively the proposals above are referred
to as the “Forza Proposals.” On each matter to be voted upon, stockholders have one vote for each share of Forza Common Stock
owned as of the Forza Record Date. Votes will be counted by the inspector of election. The following table summarizes vote requirements
and the effect of abstentions and broker non-votes.
|
Proposal
Number |
|
Proposal Description |
|
Vote Required for Approval |
|
Effect of
Abstentions |
|
Effect of
Broker
Non-Votes |
| 1 |
|
Merger Proposal |
|
FOR votes from the holders of a majority of outstanding voting power of Forza Common Stock, which vote shall include FOR votes from the holders of a majority of shares present in person or represented by proxy shares excluding shares held by Twin Vee |
|
Counts as a vote “AGAINST” this proposal. |
|
Counts as a vote “AGAINST” this proposal. |
| |
|
|
|
|
|
|
|
|
|
2
|
|
Forza Election of Director Proposal |
|
The nominee receiving the most FOR votes from the holders
of Forza Common Stock present and entitled to vote
|
|
Withheld votes will have no effect |
|
None
|
| |
|
|
|
|
|
|
|
|
| 3 |
|
Forza Auditor Proposal
|
|
FOR votes from the holders of a majority of voting power of Forza Common Stock present in person or represented by proxy shares |
|
None |
|
Not applicable |
| |
|
|
|
|
|
|
|
|
| 4 |
|
Forza Reverse Stock Split Proposal
|
|
FOR votes cast on the Forza Reverse Stock Split must exceed votes cast against the Forza Reverse Stock Split |
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable
|
| |
|
|
|
|
|
|
|
|
| 5 |
|
Forza Adjournment Proposal |
|
FOR votes from the holders of a majority of the voting power of Forza Common Stock present in person or represented by proxy shares |
|
Counts as a vote “AGAINST” this proposal. |
|
Not applicable |
The information in the preceding
table with respect to the effect of broker non-votes may be incorrect or change before the
Forza Annual Meeting. Therefore,
if you are a beneficial owner and want to ensure that shares you beneficially own are voted in favor or against any or all of the Forza
Proposals, the only way you can do so is to give your broker or nominee specific instructions as to how the shares are to be voted.
No Forza Proposal is contingent
upon any other Forza Proposal except that if the Merger is effected, Forza will not implement the Forza Reverse Stock Split and all of
the Forza directors, other than Joseph Visconti, will resign as directors of Forza however, certain Forza directors will serve as directors
of the combined company. Therefore, assuming all other closing conditions have been either satisfied or waived, the Merger will be consummated
even if the other Forza Proposals are not approved by Forza’s stockholders.
In addition to the requirement
of obtaining such stockholder approval and appropriate regulatory approvals, each of the other closing conditions set forth in the Merger
Agreement must be satisfied or waived.
THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What is the Merger?
A: Twin Vee, Merger Sub and Forza have entered into
the Merger Agreement. The Merger Agreement contains the terms and conditions of the proposed business combination of Twin Vee and Forza.
Pursuant to the terms of the Merger Agreement, Forza will merge with a wholly owned subsidiary of Twin Vee (the Merger). At the Effective
Time of the Merger, the holders of Forza Common Stock will receive in the Merger 0.611666275 shares of Twin Vee Common Stock in exchange
for each share of Forza Common Stock they own, which is referred to as the Exchange Ratio, for a maximum of 5,355,000 shares of Twin Vee
Common Stock (no fractional shares of Twin Vee Common Stock will be issued) and the 7,000,000 shares of Forza Common Stock held by Twin
Vee pre-Merger will be cancelled. In addition, at the Effective Time of the Merger, (i) each outstanding stock option exercisable for
shares of Forza Common Stock that is outstanding at the Effective Time of the Merger, whether vested or unvested, will be assumed by Twin
Vee and converted into a stock option to purchase the number of shares of Twin Vee Common Stock that the holder would have received if
such holder had exercised such stock option for shares of Forza Common Stock prior to the Merger and exchanged such shares for Twin Vee
Common Stock in accordance with the Exchange Ratio and (ii) each outstanding warrant to purchase shares of Forza Common Stock will be
assumed by Twin Vee and converted into a warrant to purchase the number of shares of Twin Vee Common Stock that the holder would have
received if such holder had exercised such warrant for shares of Forza Common Stock prior to the Merger and exchanged such shares for
Twin Vee Common Stock in accordance with the Exchange Ratio. For a more complete description of the Exchange Ratio, see the section titled
“The Merger Agreement—Exchange Ratio” in this Joint Proxy Statement/Prospectus.
Q: Why are the two companies proposing to merge?
A: Twin Vee and Forza are proposing the Merger because,
among other things, it is believed that the Merger will enhance stockholders value for both Twin Vee and Forza stockholders (i) by providing
a method by which the Twin Vee stockholders can more directly share in the growth of Forza and (ii) due to the cost savings expected to
be realized. For a discussion of Twin Vee’s reasons for the Merger, please see the sections entitled “The Merger Transaction—Recommendation
of the Twin Vee Board of Directors and its Reasons for the Merger” and “The Merger Transaction—Recommendation
of the Forza Board of Directors and its Reasons for the Merger”.
Q: What will happen in the Merger?
A: In the Merger, Forza will be merged into Twin Vee
and will cease to exist. Immediately after the Merger the outstanding number of shares of Twin Vee Common Stock will increase by 5,355,000
which is the number of shares of Twin Vee Common Stock issued in the Merger. Based solely upon the outstanding shares of Twin Vee Common
Stock on August 12, 2024, and the outstanding shares of Forza Common Stock on August 12, 2024, immediately following the completion of
the Merger, Forza stockholders, excluding Twin Vee, will own approximately 36% of the combined company’s outstanding common stock.
Q: Why am I receiving this Joint Proxy Statement/Prospectus?
A: You are receiving this Joint Proxy Statement/Prospectus
because you have been identified as a stockholder of Twin Vee or Forza as of [●], 2024, as the applicable record date for
the determination of stockholders entitled to notice of, and to vote at, the Twin Vee Annual Meeting, or the Forza Annual Meeting. This
document serves as a proxy statement of Twin Vee used to solicit proxies for the Twin Vee Annual Meeting, as a prospectus of Twin Vee
used to offer shares of Twin Vee Common Stock in exchange for shares of Forza Common Stock in the Merger and as proxy statement of Forza
used to solicit proxies for the Forza Annual Meeting. This Joint Proxy Statement/Prospectus contains important information about the Merger
and the stockholder meetings of Twin Vee and Forza and you should read it carefully.
Q: What is required to consummate the Merger?
A: The companies have agreed to combine the two companies
upon the terms and conditions of the Merger Agreement that is described in this Joint Proxy Statement/Prospectus. If you are a Twin Vee
stockholder or a Forza stockholder you are receiving these proxy materials to help you decide, among other matters, how to vote your shares
with respect to the proposed Merger.
The Merger cannot be completed unless, among other
things, the stockholders of Twin Vee approve the issuance of the Twin Vee Common Stock to the Forza stockholders pursuant to the terms
of the Merger Agreement, and the Forza stockholders, including a majority of the stockholders other than Twin Vee present and entitled
to vote at the Forza Annual Meeting, approve the Merger Agreement and the Merger and the transactions contemplated thereby. Your vote
is important. Twin Vee and Forza encourage Twin Vee stockholders and Forza stockholders to vote as soon as possible.
Q: On what matters are Twin Vee stockholders being
asked to vote?
A: Twin Vee stockholders are asked to vote on the
following Twin Vee Proposals:
| |
● |
The approval of the issuance of shares of Twin Vee Common Stock in connection with Merger, pursuant to the Merger Agreement (the “Stock Issuance Proposal”); |
| |
|
|
| |
● |
The election of two Class III nominees named herein to the Twin Vee Board of Directors (the “Twin Vee Election of Directors Proposal”); |
| |
|
|
| |
● |
The ratification of the appointment of Grassi & Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for its fiscal year ending on December 31, 2024 (the “Twin Vee Auditor Proposal”); |
| |
|
|
| |
● |
The approval of an amendment to Twin Vee’s Certificate of Incorporation,
in substantially the form attached to this Joint Proxy Statement/Prospectus as Annex B, at the discretion of the Board of Directors
of Twin Vee, to effect the Twin Vee Reverse Stock Split within the Twin Vee Reverse Stock Split Ratio Range (the “Twin Vee Reverse
Stock Split Proposal”); |
| |
|
|
| |
● |
The approval of an amendment to the Twin Vee PowerCats Co. Amended and Restated 2021 Stock Incentive Plan (the “Twin Vee 2021 Plan”) to increase the number of shares of Twin Vee Common Stock available for issuance under the Twin Vee 2021 Plan by 1,000,000 shares to 3,171,800 shares (the “Plan Increase Proposal”); |
| |
|
|
| |
● |
The approval of an adjournment of the Twin Vee Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of the Stock Issuance Proposal and/or the Twin Vee Reverse Stock Split Proposal (the “Twin Vee Adjournment Proposal”); |
| |
|
|
| |
● |
To transact such other business as may properly come before the Twin Vee Annual Meeting or any adjournment or postponement thereof. |
| |
|
|
Q: What vote of Twin Vee stockholders is required
to approve the Twin Vee Proposals?
A: The vote required of Twin Vee stockholders is set
forth below.
Proposal
Number |
|
Proposal Description |
|
Vote Required for Approval |
|
Effect of
Abstentions |
|
Effect of
Broker
Non-Votes |
| 1 |
|
Stock Issuance Proposal
|
|
FOR votes from
the holders of a majority of voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
None |
|
Broker
Non-Votes will have the effect of a vote Against |
| |
|
|
|
|
|
|
|
|
2
|
|
Twin Vee Election of Directors
Proposal |
|
Two
nominees receiving the most FOR votes from the holders of shares of Twin Vee Common
Stock present and entitled to vote
|
|
Withheld
votes will have no effect |
|
None |
| |
|
|
|
|
|
|
|
|
| 3 |
|
Twin
Vee Auditor Proposal
|
|
FOR votes from
the holders of a majority of voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares |
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
| 4 |
|
Twin Vee Reverse Stock
Split Proposal |
|
FOR votes
from the holders of a majority of the voting power of shares of Twin Vee Common Stock present in
person or represented by proxy shares
|
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
| 5 |
|
Plan Increase Proposal |
|
FOR votes
from the holders of a majority of the voting power of shares of Twin Vee Common Stock present in
person or represented by proxy shares
|
|
None |
|
Broker
Non-Votes will have the effect of a vote Against |
| |
|
|
|
|
|
|
|
|
| 6 |
|
Twin Vee Adjournment Proposal |
|
FOR votes from
the holders of a majority of the voting power of shares of Twin Vee Common Stock present in person or represented by proxy shares
|
|
None |
|
None |
Q: What constitutes a quorum for the Twin Vee Annual
Meeting?
A: A majority of the issued and outstanding shares
of Twin Vee Common Stock entitled to vote being present in person or represented by proxy constitutes a quorum for the Twin Vee Annual
Meeting. If a quorum is not present, the chairperson of the meeting or stockholders entitled to vote at the Twin Vee Annual Meeting present,
in person or by proxy, may adjourn the meeting, without notice other than announced at the meeting, to another place, if any, date or
time.
Q: On what matters are Forza stockholders being
asked to vote?
A: Forza stockholders are asked to vote on the following
Forza Proposals:
| |
● |
to consider and vote upon a proposal to approve the
Merger, the Merger Agreement and related transactions (the Merger Proposal);
|
| |
|
|
| |
● |
the election of the one nominee for Class II directors named in this Joint Proxy Statement/Prospectus to the Forza Board of Directors for a term of three years (provided, however, that if the Merger is completed, all of the Forza board members, other than Joseph Visconti, will resign as members of the Forza Board of Directors) (the “Forza Election of Directors Proposal”); |
| |
● |
the ratification of the appointment of Grassi & Co., CPAs, P.C. as Forza’s independent registered public accounting firm for its fiscal year ending on December 31, 2024 (the “Forza Auditor Proposal”) |
| |
● |
The approval of an amendment to the Forza Amended and Restated Certificate of Incorporation, in substantially the form attached to this Joint Proxy Statement as Annex B-1, at the discretion of the Board of Directors of Forza, to effect the Forza Reverse Stock Split within the Forza Reverse Stock Split Ratio Range (the “Forza Reverse Stock Split Proposal”); |
| |
● |
The approval of an adjournment of the Forza Annual Meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the Merger Proposal and/or the Forza Reverse Stock Split Proposal (the “Forza Adjournment Proposal”); and |
Q: What vote of Forza stockholders is required
to approve the Forza Proposals?
A: The vote required of Forza stockholders is set
forth below
Proposal
Number |
|
Proposal Description |
|
Vote Required for Approval |
|
Effect of
Abstentions |
|
Effect of
Broker
Non-Votes |
1
|
|
Merger
Proposal
|
|
FOR votes
from the holders of a majority of outstanding voting power of shares of Forza Common Stock, which vote shall include FOR votes
from the holders of a majority of shares of Forza Common Stock present in person or represented by proxy shares excluding shares
held by Twin Vee |
|
Withheld
votes will have the effect of vote Against |
|
Broker
Non-Votes will have the effect of a vote Against |
| 2 |
|
Forza Election of
Director Proposal |
|
The
nominee receiving the most FOR votes from the holders of shares of Forza Common
Stock present and entitled to vote
|
|
Withheld
votes will have no effect |
|
None |
| |
|
|
|
|
|
|
|
|
| 3 |
|
Forza
Auditor Proposal
|
|
FOR votes from the holders of a majority
of voting power of shares of Forza Common Stock present in person or represented by proxy shares |
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
| 4 |
|
Forza Reverse Stock Split Proposal |
FOR votes from the holders of a majority
of the voting power of shares of Forza Common Stock present in person or represented by proxy shares |
|
|
None |
|
None |
| |
|
|
|
|
|
|
|
|
| 5 |
|
Forza Adjournment Proposal |
FOR votes from the holders of a majority
of the voting power of shares of Forza Common Stock present in person or represented by proxy shares |
|
|
None |
|
None |
Q: What constitutes a quorum for the Forza Annual
Meeting?
A: A majority of the issued and outstanding shares
of Forza Common Stock entitled to vote being present in person or represented by proxy constitutes a quorum for the Forza Annual Meeting.
If a quorum is not present, the chairperson of the meeting or stockholders entitled to vote at the meeting present, in person or by proxy,
may adjourn the meeting, without notice other than announced at the meeting, to another place, if any, date or time.
Q: When and where are the stockholder meetings?
A: The Twin Vee Annual Meeting will take place on
_________, 2024 at 10:00 a.m., Eastern Time, at the offices of Twin Vee, 3101 S. U.S. Highway 1, Florida 34982. The Forza Annual Meeting
will take place on _________, 2024 at 11:00 a.m., Eastern Time, at the offices of Forza, 3101 S. U.S. Highway 1, Fort Pierce, Florida
34982.
Q: Who is entitled to vote at the Twin Vee Annual
Meeting?
A: Each outstanding share of Twin Vee Common Stock
entitles its holder to cast one vote on each matter to be voted upon at the annual meeting. Only stockholders of record at the close of
business on the Twin Vee Record Date, [●], 2024, are entitled to receive notice of the Twin Vee Annual Meeting and to vote the shares
of Twin Vee Common Stock that they held on that date at the meeting, or any adjournment or postponement of the meeting. If your shares
are held for you as a beneficial holder in “street name,” please refer to the information forwarded to you by your bank, broker
or other holder of record to see what you must do to vote your shares.
A complete list of stockholders entitled to vote at
the Twin Vee Annual Meeting will be available for examination by any stockholder at Twin Vee’s corporate headquarters, 3101 S. U.S.
Highway 1, Fort Pierce, Florida 34982, during normal business hours for a period of ten days before the Twin Vee Annual Meeting and at
the time and place of the meeting.
Q: Who is entitled to vote at the Forza Annual
Meeting?
A: Each outstanding share of Forza Common Stock entitles
its holder to cast one vote on each matter to be voted upon at the annual meeting. Only stockholders of record at the close of business
on the Forza Record Date, [●], 2024, are entitled to receive notice of the Forza Annual Meeting and to vote the shares of Forza
Common Stock that they held on that date at the meeting, or any adjournment or postponement of the meeting. If your shares are held for
you as a beneficial holder in “street name,” please refer to the information forwarded to you by your bank, broker or other
holder of record to see what you must do to vote your shares.
A complete list of stockholders entitled to vote at
the Forza Annual Meeting will be available for examination by any stockholder at Forza’s corporate headquarters, 3101 S. U.S. Highway
1, Fort Pierce, Florida 34982, during normal business hours for a period of ten days before the Forza Annual Meeting and at the time and
place of the meeting.
Q: How do the Board of Directors of Twin Vee and
Forza recommend I vote?
A: The Twin Vee Board of Directors and the Forza Board
of Directors have recommended that stockholders vote “FOR” each proposal.
After careful consideration, the Twin Vee Board of
Directors has determined by unanimous vote the Merger to be fair to Twin Vee stockholders and in their best interests, and declared the
Merger advisable. The Twin Vee Board of Directors approved the Merger Agreement and recommends that Twin Vee stockholders adopt and approve
the issuance of the Twin Vee Common Stock to the Forza stockholders pursuant to the terms of the Merger Agreement.
After careful consideration, the Forza Board of Directors
has determined by unanimous vote the Merger to be fair to Forza stockholders and in their best interests, and declared the Merger advisable.
The Forza Board of Directors approved the Merger and the Merger Agreement and recommends that Forza stockholders adopt and approve the
Merger and the Merger Agreement and related transactions.
In considering the recommendation of the Twin Vee
Board of Directors and the Forza Board of Directors with respect to the proposals, Forza and Twin Vee stockholders should be aware that
certain directors and officers of Twin Vee and Forza have certain interests in the merger that are different from, or are in addition
to, the interests of stockholders generally. We encourage you to read the sections titled “Interests of Twin Vee Directors and Executive
Officers in the Merger” and “Interests of Forza Directors and Executive Officers in the Merger” for a discussion of
these interests.
Q: How do I vote?
A: You may vote by mail by completing, signing and
dating your proxy card and returning it in the enclosed, postage-paid and addressed envelope. If you mark your voting instructions on
the proxy card, your shares will be voted:
If you return a signed card, but do not provide voting
instructions, your shares will be voted:
| |
● |
if you are a Twin Vee stockholder, FOR approval of the issuance of shares of Twin Vee Common Stock pursuant to the Merger Agreement and the Merger; FOR the election of the two Class III nominees; FOR the ratification of the appointment of Grassi & Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for its fiscal year ending on December 31, 2024; FOR the Twin Vee Reverse Stock Split Proposal; FOR the Plan Increase Proposal, FOR the Twin Vee Adjournment Proposal; |
| |
● |
if you are a Forza stockholder, FOR approval of the Merger and the Merger Agreement, FOR the election of the one Class II nominee; FOR the ratification of the appointment of Grassi & Co., CPAs, P.C. as Forza’s independent registered public accounting firm for its fiscal year ending on December 31, 2024; FOR the Forza Reverse Stock Split Proposal; FOR the Forza Adjournment Proposal; |
| |
|
|
| |
● |
if you are a stockholder of record of Twin Vee, you may also vote on the Internet at _______________; |
| |
|
|
| |
● |
if you are a stockholder of record of Forza, you may also vote on the Internet at _______________. |
| |
● |
if your shares of Twin Vee Common Stock or Forza Common Stock are registered directly in your name with the transfer agent, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by either Twin Vee or Forza. If you are a Twin Vee stockholder of record, you may attend the Twin Vee Annual Meeting and vote your shares in person. Even if you plan to attend the Twin Vee Annual Meeting in person, Twin Vee requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Twin Vee Annual Meeting if you are unable to attend. If you are a Forza stockholder of record, you may attend the Forza Annual Meeting and vote your shares in person. Even if you plan to attend the Forza Annual Meeting in person, Forza requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the Forza Annual Meeting if you are unable to attend. If your shares of Twin Vee Common Stock or Forza Common Stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the beneficial owner, you are also invited to attend the applicable meeting. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the applicable annual meeting unless you obtain a proxy from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the meeting. |
Q: What do I do if I want to change my vote?
A: You may send in a later-dated, signed proxy or
proxy card to your company’s Secretary before your meeting or you can attend your meeting in person and vote. You may also revoke
your proxy by sending a notice of revocation to your company’s Secretary at 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982.
If you voted by the Internet, you can submit a later vote using such method.
Q: If my shares are held in “street name”
by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?
A: If you do not provide your broker, bank or nominee
with instructions on how to vote your “street name” shares, your broker, bank or nominee will not be permitted to vote them
on the “non-routine” matters that are to be considered by the Twin Vee stockholders relating to the issuance of Twin Vee Common
Stock pursuant to the Merger Agreement and by the Forza stockholders relating to the approval of the Merger, Merger Agreement and related
transactions. You should therefore be sure to provide your broker with instructions on how to vote your shares.
If you wish to vote your shares in person, you must
bring to the meeting a letter from the broker, bank or nominee confirming your beneficial ownership in the shares to be voted.
Q: What is the effect of abstentions and broker
non-votes?
A: Abstentions with respect to Twin Vee Proposal No.
1, 3, 4 and 5, will have the same effect as an AGAINST vote. Abstentions with respect to all other proposals will have no effect on the
outcome of the vote. Abstentions will be counted for the purpose of determining a quorum at the stockholder meetings.
Matters subject to stockholder vote are classified
as “routine” or “non-routine.” In the case of non-routine matters, brokers may not vote shares held in “street
name” for which they have not received voting instructions from the beneficial owner (“Broker Non-Votes”), whereas they
may vote those shares in their discretion in the case of any routine matter. Broker Non-Votes will be counted for purposes of calculating
whether a quorum is present at the stockholder meetings, but will not be counted for purposes of determining the numbers of votes present
in person or represented by proxy and entitled to vote with respect to a particular proposal. Broker Non-Votes for Twin Vee Proposal No.
1, Twin Vee Proposal No. 5, Forza Proposal No. 1, will have the same effect as an AGAINST vote. Twin Vee Proposals No. 1, 2 and 5 and
Forza Proposals No. 1 and No. 2 are non-routine matters and Twin Vee Proposals No. 3, 4 and 6 and Forza Proposals No. 3, 4 and 5 are routine
matters. Broker non-votes for these other routine matters are not expected to exist in connection with such proposals since they are routine
matters for which brokers that vote at the annual meeting may vote in their discretion if beneficial owners do not provide voting instructions
to the brokers) will have no effect on the proposals. Therefore, it is important that you complete and return your proxy early so that
your vote may be recorded.
Votes cast by proxy or in person at the stockholder
meetings will be tabulated by the inspectors of election appointed for the stockholder meetings, who also will determine whether a quorum
is present.
Q: What appraisal rights do stockholders have in
connection with the Merger?
A: No appraisal rights are available to holders of
Twin Vee Common Stock or Forza Common Stock in connection with the Merger in accordance with Section 262 of the DGCL.
Q: What happens if I do not return a proxy card
or otherwise provide proxy instructions?
A: If you are a Twin Vee stockholder, the failure
to return your proxy card or otherwise provide proxy instructions could be a factor in establishing a quorum for the annual meeting of
Twin Vee stockholders for purposes of approving the issuance of shares pursuant to the merger agreement or other actions sought to be
taken, which is required to transact business at the meeting. If you are a Forza stockholder, the failure to return your proxy card or
otherwise provide proxy instructions could be a factor in establishing a quorum for the annual meeting of Forza stockholders for purposes
of approving the Merger Agreement or other actions sought to be taken, which is required to transact business at the meeting.
Q: Should I send in my stock certificates now?
A: No. If the Merger is completed, Twin Vee will send
Forza stockholders written instructions for exchanging their stock certificates. Twin Vee stockholders will keep their existing certificates.
Q: When do you expect the Merger to be completed?
A: Both Twin Vee and Forza are working towards completing
the Merger as quickly as possible. We hope to complete the Merger by the end of the fourth quarter of 2024. However, the exact timing
of completion of the Merger cannot be determined yet because completion of the Merger is subject to a number of conditions.
Q: How many outstanding shares of Twin Vee Common
Stock will exist immediately after the closing of the Merger?
A: Immediately Following the closing of the Merger,
we anticipate that there will be approximately 14,875,000 shares of authorized but unissued Twin Vee Common Stock. In addition to the
number of issued and outstanding shares of Twin Vee Common Stock after the closing of the Merger, Twin Vee has reserved approximately
2,170,000 shares for future issuance as a result of outstanding stock options and warrants of Twin Vee and 868,000 shares
for future issuance as a result of outstanding stock options and warrants of Forza, which upon the closing of the Merger will be exercisable
for shares of Twin Vee Common Stock.
Q: What are the federal income tax consequences
of the Merger?
A: Neither Twin Vee nor Forza has requested or received
a ruling from the Internal Revenue Service that the Merger should qualify as a reorganization. The Merger should qualify as a reorganization
pursuant to Section 368(a) of the Code. Assuming that the Merger qualifies as a reorganization, Forza stockholders should not recognize
any gain or loss for U.S. federal income tax purposes if they exchange their shares of Forza Common Stock solely for shares of Twin Vee
Common Stock.
Tax matters are very complicated, and the tax consequences
of the Merger to each Forza stockholder will depend on the facts of that stockholder’s particular situation. You are urged to consult
your own tax advisors regarding the specific tax consequences of the Merger, including tax return reporting requirements, the applicability
of federal, state, local and foreign tax laws and the effect of any proposed changes in the tax laws. See “The Merger Transaction—Certain
U.S. Federal Income Tax Consequences of the Merger”.
Q: Whom do I call if I have questions about the
meetings or the Merger?
A: Twin Vee stockholders may call Twin Vee Investor
Relations at (561) 283-4412. Forza stockholders may call Forza Investor Relations at (561) 283-4412.
Summary Risk Factors
The following is a summary of the key risks relating
to the merger and each company. A more detailed description of each of the risks can be found under the section “Risk Factors.”
RISKS RELATED TO THE MERGER
| |
● |
All of Forza’s executive officers and all but one of its directors serve on both the Twin Vee and Forza Board of Directors and therefore have conflicts of interest that may influence them to support or approve the merger without regard to your interests. In addition, the one director that does not sit on both the Twin Vee and Forza Board of Directors is expected to serve as a director of the combined company and therefore may also have a conflict of interest. |
| |
● |
The exchange ratio is not adjustable based on the market price of Twin Vee Common Stock so the Merger consideration at the closing may have a greater or lesser value than it had at the time the Merger Agreement was signed. |
| |
● |
The combined company’s stock price is expected to be volatile, and the market price of its common stock may drop following the Merger. |
| |
● |
The market price of the combined company’s common stock may decline as a result of the Merger. |
| |
● |
The combined company may not experience the anticipated strategic benefits of the Merger. |
| |
● |
If the conditions to the Merger are not met, the Merger will not occur. |
| |
● |
Twin Vee and Forza will incur substantial expenses related to this transaction whether or not the Merger is completed. |
| |
● |
Twin Vee will assume all of Forza’s outstanding liabilities if the Merger is completed. |
| |
● |
The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations following the Merger. |
| |
● |
Although Houlihan’s opinion was given to the Twin Vee Board of Directors on August 6, 2024, it does not reflect any changes in market and economic circumstances after August 6, 2024. |
| |
● |
Although InteleK’s opinion was given to Forza’s Board of Directors on August 9, 2024, it does not reflect any changes in market and economic circumstances after August 9, 2024. |
| |
● |
The issuance of the Merger consideration is subject to approval by the stockholders of Twin Vee and the Merger and Merger Agreement are subject to approval by the Forza stockholders, including a majority of the stockholders excluding Twin Vee.. |
| |
● |
Twin Vee’s business and stock price may be adversely affected if the acquisition of Forza is not completed. |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement/Prospectus contains “forward-looking
statements.” Twin Vee and Forza use words such as “could,” “may,” “might,” “will,”
“expect,” “likely,” “believe,” “continue,” “anticipate,” “estimate,”
“intend,” “plan,” “project,” and other similar expressions to identify some forward-looking statements,
but not all forward-looking statements include these words. All of their forward-looking statements involve estimates and uncertainties
that could cause actual results to differ materially from those expressed in the forward-looking statements. Accordingly, any such statements
are qualified in their entirety by reference to the information described under the caption “Risk Factors” and elsewhere in
this Joint Proxy Statement/Prospectus.
The forward-looking statements contained in this Joint
Proxy Statement/Prospectus are based on assumptions that Twin Vee and/or Forza have made in light of their industry experience and their
perceptions of historical trends, current conditions, expected future developments, and other factors they believe are appropriate under
the circumstances. As you read and consider this Joint Proxy Statement/Prospectus, you should understand that these statements are not
guarantees of performance or results. They involve risks, uncertainties (many of which are beyond Twin Vee and Forza’s control),
and assumptions. Although Twin Vee and Forza believe that these forward-looking statements are based on reasonable assumptions, you should
be aware that many factors could affect their actual operating and financial performance and cause their performance to differ materially
from the performance anticipated in the forward-looking statements. Twin Vee and Forza believe these factors include, but are not limited
to, those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove
incorrect, their actual operating and financial performance may vary in material respects from the performance projected in these forward-looking
statements.
Further, any forward-looking statement speaks only
as of the date on which it is made, and except as required by law, Twin Vee and Forza undertake no obligation to update any forward-looking
statement contained in this Joint Proxy Statement/Prospectus to reflect events or circumstances after the date on which it is made or
to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors that could cause Twin Vee’s and/or
Forza’s business not to develop as they expect emerge from time to time, and it is not possible for them to predict all of them.
Further, they cannot assess the impact of each currently known or new factor on their results of operations or the extent to which any
factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
SELECTED HISTORICAL FINANCIAL DATA
The following tables present summary historical data for Twin Vee and Forza,
summary unaudited pro forma condensed combined financial data for Twin Vee and Forza and comparative historical and unaudited pro forma
per share data for Twin Vee and Forza.
SELECTED HISTORICAL FINANCIAL DATA OF TWIN VEE
The following table sets forth the selected consolidated
financial data of Twin Vee. The selected consolidated statements of operations and consolidated balance sheets as of and for the year
ended December 31, 2023 and 2022 are derived from Twin Vee’s audited consolidated financial statements for the years ended December
31, 2023 and 2022, which are included in this Joint Proxy Statement/Prospectus. The selected consolidated statements of operations and
consolidated balance sheets as of June 30, 2024 and the six months ended June 30, 2024 and 2023 are derived from Twin Vee’s unaudited
consolidated financial statements for the quarter ended June 30, 2024, which are included in this Joint Proxy Statement/Prospectus. You
should read this information in conjunction with Twin Vee’s consolidated financial statements and related notes included inthis
Joint Proxy Statement/Prospectus . Historical results are not necessarily indicative of the results to be expected in the future.
| | |
Six Months Ended June 30, | |
Years Ended December 31, |
| | |
2024 | |
2023 | |
2023 | |
2022 |
| Selected Consolidated Statements of Operations Data: | |
| | | |
| | | |
| | | |
| | |
| Net Sales | |
$ | 9,603,164 | | |
$ | 17,001,847 | | |
$ | 33,425,912 | | |
$ | 31,987,724 | |
| Total operating expenses | |
$ | 7,681,934 | | |
$ | 7,959,023 | | |
$ | 21,710,326 | | |
$ | 21,330,918 | |
| Net loss | |
$ | (6,854,390 | ) | |
$ | (3,732,208 | ) | |
$ | (9,782,196 | ) | |
$ | (5,793,414 | ) |
| Net loss per share-basic and diluted | |
$ | (0.49 | ) | |
$ | (0.26 | ) | |
$ | (0.76 | ) | |
$ | (0.67 | ) |
| Weighted-average common shares used to compute basic and diluted net loss per share | |
| 9,520,000 | | |
| 9,520,000 | | |
| 9,520,000 | | |
| 7,624,938 | |
| |
|
As of June 30, |
|
As of December 31, |
| |
|
2024 |
|
2023 |
|
2022 |
| Selected Consolidated Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
13,927,460 |
|
|
$ |
16,497,703 |
|
|
$ |
23,501,007 |
|
| Total assets |
|
$ |
33,753,304 |
|
|
$ |
39,846,713 |
|
|
$ |
38,231,480 |
|
| Total liabilities |
|
$ |
7,814,052 |
|
|
$ |
7,797,098 |
|
|
$ |
5,210,591 |
|
| Total stockholders’ equity |
|
$ |
25,929,252 |
|
|
$ |
32,049,615 |
|
|
$ |
33,020,889 |
|
SELECTED HISTORICAL FINANCIAL
DATA OF FORZA
The following table sets forth the selected consolidated
financial data of Forza. The selected consolidated statements of operations and consolidated balance sheets as of and for the year ended
December 31, 2023 and 2022 are derived from Forza’s audited consolidated financial statements for the years ended December 31,
2023 and 2022, which are included in this Joint Proxy Statement/Prospectus. The selected consolidated statements of operations and consolidated
balance sheets as of June 30, 2024 and the six months ended June 30, 2024 and 2023 are derived from Forza’s unaudited consolidated
financial statements for the quarter ended June 30, 2024, which are included in this Joint Proxy Statement/Prospectus. You should read
this information in conjunction with Forza’s consolidated financial statements and related notes included in this Joint Proxy Statement/Prospectus.
Historical results are not necessarily indicative of the results to be expected in the future.
| | |
Six Months Ended June 30, | |
Years Ended December 31, |
| | |
2024 | |
2023 | |
2023 | |
2022 |
| Selected Consolidated Statements of Operations Data: | |
| | | |
| | | |
| | | |
| | |
| Net Sales, related party | |
$ | — | | |
$ | — | | |
$ | 37,118 | | |
$ | — | |
| Total Operating Expenses | |
$ | 4,202,330 | | |
$ | 3,658,533 | | |
$ | 6,472,914 | | |
$ | 3,420,515 | |
| Net loss | |
$ | (3,999,391 | ) | |
$ | (3,488,786 | ) | |
$ | (5,933,113 | ) | |
$ | (3,630,081 | ) |
| Net loss per share-basic and diluted | |
$ | (0.25 | ) | |
$ | (0.32 | ) | |
$ | (0.44 | ) | |
$ | (0.44 | ) |
| Weighted-average common shares used to compute basic and diluted net loss per share | |
| 15,754,774 | | |
| 10,950,000 | | |
| 13,365,613 | | |
| 8,332,735 | |
| | |
As of June 30, | |
As of December 31, |
| | |
2024 | |
2023 | |
2022 |
| Selected Consolidated Balance Sheet Data: | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 8,188,879 | | |
$ | 9,821,531 | | |
$ | 12,767,199 | |
| Total assets | |
$ | 13,156,741 | | |
$ | 16,921,844 | | |
$ | 14,221,926 | |
| Total liabilities | |
$ | 658,643 | | |
$ | 901,311 | | |
$ | 521,723 | |
| Total stockholders’ equity | |
$ | 12,498,098 | | |
$ | 16,020,533 | | |
$ | 13,700,203 | |
UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL
INFORMATION OF TWIN VEE AND FORZA
The following information does not give effect
to the proposed Twin Vee Reverse Stock Split or the Forza Reverse Stock Split described in the Twin Vee Reverse Stock Split Proposal and
the Forza Reverse Stock Split Proposal.
The following unaudited pro forma combined consolidated
financial information assumes that each share of Forza Common Stock will be exchanged for 0.611666275 shares of Twin Vee Common Stock.
Utilizing the Exchange Ratio of 64/36, it is anticipated that Forza Common Stockholders will own approximately 36% of the voting stock
of the combined company after the Merger.
The unaudited pro forma combined consolidated financial
information is based upon the assumption that the total number of shares of Forza Common Stock outstanding immediately prior to the completion
of the Merger will be 15,754,774 and utilizes the Exchange Ratio of 64/36, which will result in 5,355,000 shares of Twin Vee Common Stock
being issued in the transaction.
The unaudited pro forma condensed combined
balance sheet as of June 30, 2024 assumes that the transaction took place at the beginning of the year and combines the historical balance
sheets of Twin Vee and Forza as of such date. The unaudited pro forma condensed combined statements of operations for the three months
ended June 30, 2024 and the year ended December 31, 2023 assume that the transaction took place as of January 1, 2023, and combine
the historical results of Twin Vee and Forza for each period. The historical financial statements of Twin Vee and Forza have been adjusted
to give pro forma effect to events that are (i) directly attributable to the transaction, (ii) factually supportable, and (iii) with
respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the combined results.
The notes to the unaudited pro forma combined consolidated
financial statements describe the pro forma amounts and adjustments presented below. This pro forma data is not necessarily indicative
of the operating results that Twin Vee would have achieved had it completed the merger as of the beginning of the period presented and
should not be considered as representative of future operations.
The unaudited pro forma combined consolidated financial
information presented below is based on, and should be read together with, the historical financial information and their respective
management’s discussion and analysis of financial condition and results of operations. Twin Vee’s historical audited consolidated
financial statements for the years ended December 31, 2023 and 2022 and unaudited consolidated financial statements for the six
months ended June 30, 2024 and 2023 have been derived from the Twin Vee financial statements included in this Joint Proxy Statement/Prospectus.
Forza’s historical audited consolidated financial statements for the years ended December 31, 2023 and 2022 and unaudited
consolidated financial statements for the six months ended June 30, 2024 and 2023 have been derived from the Forza financial statements
included in this Joint Proxy Statement/Prospectus.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
| | |
Twin Vee Powercats Co. Inc. | |
Forza X1, Inc. | |
Eliminations & Merger |
|
|
Powercats Co. Inc. Pro Forma |
| | |
June 30, 2024 | |
June 30, 2024 | |
Adjustments |
|
|
June 30, 2024 |
| Assets | |
| | | |
| | | |
| | |
| |
| | |
| Current Assets | |
| | | |
| | | |
| | |
| |
| | |
| Cash and cash equivalents | |
$ | 13,927,460 | | |
$ | 8,188,879 | | |
| (8,188,879 | ) |
A | |
$ | 13,927,460 | |
| Restricted cash | |
| 210,876 | | |
| — | | |
| — | |
| |
| 210,876 | |
| Accounts receivable | |
| 115,793 | | |
| — | | |
| — | |
| |
| 115,793 | |
| Marketable securities | |
| 995,208 | | |
| — | | |
| — | |
| |
| 995,208 | |
| Inventories, net | |
| 4,147,507 | | |
| 273,076 | | |
| (273,076 | ) |
A | |
| 4,147,507 | |
| Due from affiliates, net | |
| — | | |
| 18,384 | | |
| (18,384 | ) |
| |
| — | |
| Prepaid expenses and other current assets | |
| 185,263 | | |
| 73,513 | | |
| (73,513 | ) |
A | |
| 185,263 | |
| Total current assets | |
| 19,582,107 | | |
| 8,553,852 | | |
| (8,553,852 | ) |
| |
| 19,582,107 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| | |
| | | |
| | | |
| | |
| |
| | |
| Property and equipment, net | |
| 13,506,672 | | |
| 4,565,008 | | |
| (4,565,008 | ) |
A | |
| 13,506,672 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| Operating lease right of use asset | |
| 615,815 | | |
| 30,364 | | |
| (30,364 | ) |
A | |
| 615,815 | |
| Security deposit | |
| 48,709 | | |
| 7,517 | | |
| (7,517 | ) |
A | |
| 48,710 | |
| Total Assets | |
$ | 33,753,304 | | |
$ | 13,156,741 | | |
$ | (13,156,741 | ) |
| |
$ | 33,753,304 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| Liabilities and Stockholders' Equity | |
| | | |
| | | |
| | |
| |
| | |
| Current Liabilities: | |
| | | |
| | | |
| | |
| |
| | |
| Accounts payable | |
$ | 2,779,814 | | |
$ | 503,646 | | |
| (503,646 | ) |
A | |
$ | 2,779,814 | |
| Accrued liabilities | |
| 1,107,611 | | |
| 27,814 | | |
| (27,814 | ) |
A | |
| 1,107,611 | |
| Due to affiliated companies | |
| — | | |
| — | | |
| — | |
| |
| — | |
| Contract liabilities | |
| 6,175 | | |
| 6,175 | | |
| (6,175 | ) |
A | |
| 6,175 | |
| Finance lease liability | |
| 218,348 | | |
| 24,535 | | |
| (24,535 | ) |
A | |
| 218,348 | |
| Operating lease right of use liability | |
| 448,611 | | |
| 23,073 | | |
| (23,073 | ) |
A | |
| 448,611 | |
| Total current liabilities | |
| 4,560,559 | | |
| 585,243 | | |
| (585,243 | ) |
| |
| 4,560,559 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| Economic Injury Disaster Loan | |
| 499,900 | | |
| — | | |
| — | |
| |
| 499,900 | |
| Finance lease liability - noncurrent | |
| 2,535,033 | | |
| 73,400 | | |
| (73,400 | ) |
A | |
| 2,535,033 | |
| Operating lease liability - noncurrent | |
| 218,560 | | |
| — | | |
| — | |
| |
| 218,560 | |
| Total Liabilities | |
| 7,814,052 | | |
| 658,643 | | |
| (658,643 | ) |
| |
| 7,814,052 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| 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 | |
| 9,520 | | |
| 15,784 | | |
| (10,429 | ) |
B/C | |
| 14,875 | |
| Treasury Stock | |
| — | | |
| (21,379 | ) | |
| 21,379 | |
B | |
| — | |
| Additional paid-in capital | |
| 38,592,684 | | |
| 26,523,829 | | |
| (20,213,224 | ) |
B/C | |
| 44,903,289 | |
| Accumulated deficit | |
| (18,978,912 | ) | |
| (14,020,136 | ) | |
| 14,020,136 | |
B | |
| (18,978,912 | ) |
| Equity attributed to stockholders of Twin Vee PowerCats Co, Inc. | |
| 19,623,292 | | |
| 12,498,098 | | |
| (6,182,138 | ) |
| |
| 25,939,252 | |
| Equity attributable to noncontrolling interests | |
| 6,315,960 | | |
| — | | |
| (6,315,960 | ) |
| |
| — | |
| Total stockholders’ equity | |
| 25,939,252 | | |
| 12,498,098 | | |
| (12,498,098 | ) |
| |
| 25,939,252 | |
| | |
| | | |
| | | |
| | |
| |
| | |
| Total Liabilities and Stockholders' Equity | |
$ | 33,753,304 | | |
$ | 13,156,741 | | |
$ | (13,156,741 | ) |
| |
$ | 33,753,304 | |
A - Represents elimination of Forza balances included in Twin
Vee consolidated balance sheet
B - Represents elimination of Forza equity and accumulated deficit and non-controlling interest no longer eliminated post-merger
C - Represents issuance of Twin Vee common stock to non-Twin Vee shareholders of Forza stock and the offset to the elimination of the
Forza non-controlling interest previously eliminated from the Twin Vee balance sheet.
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
|
Twin
Vee Powercats Co. |
|
Forza
X1, Inc. Six Months Ended |
|
Eliminations
and |
|
|
Twin
Vee Powercats Co. Inc. Six Months Ended June |
| |
|
Inc.
Six June 30, 2024 |
|
June
30, 2024 |
|
Merger
Adjustments |
|
|
30,
2024
Pro Forma |
| Net
sales |
|
$ |
9,603,164 |
|
|
$ |
— |
|
|
|
— |
|
|
|
$ |
9,603,164 |
|
| Cost
of products sold |
|
|
9,123,511 |
|
|
|
56,413 |
|
|
|
(56,413 |
) |
A |
|
|
9,123,511 |
|
| Gross
profit (loss) |
|
|
479,653 |
|
|
|
(56,413 |
) |
|
|
56,413 |
|
|
|
|
479,653 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling,
general and administrative |
|
|
1,449,912 |
|
|
|
524,516 |
|
|
|
(920,143 |
) |
A/B |
|
|
1,054,285 |
|
| Salaries
and wages |
|
|
2,495,616 |
|
|
|
1,122,851 |
|
|
|
(1,122,851 |
) |
A |
|
|
2,495,616 |
|
| Professional
fees |
|
|
707,692 |
|
|
|
251,106 |
|
|
|
(387,739 |
) |
A/B |
|
|
571,059 |
|
| Impairment
of property & equipment |
|
|
1,674,000 |
|
|
|
1,674,000 |
|
|
|
(1,674,000 |
) |
A |
|
|
1,674,000 |
|
| Depreciation
and amortization |
|
|
860,239 |
|
|
|
119,752 |
|
|
|
(119,752 |
) |
A |
|
|
860,239 |
|
| Research
and development |
|
|
494,475 |
|
|
|
510,105 |
|
|
|
(510,105 |
) |
A |
|
|
494,475 |
|
| Total
operating expenses |
|
|
7,681,934 |
|
|
|
4,202,330 |
|
|
|
(4,734,590 |
) |
|
|
|
7,149,674 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss
from operations |
|
|
(7,202,281 |
) |
|
|
(4,258,743 |
) |
|
|
4,791,003 |
|
|
|
|
(6,670,021 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend
income |
|
|
396,671 |
|
|
|
245,010 |
|
|
|
(245,010 |
) |
A |
|
|
396,671 |
|
| Other
income |
|
|
32,962 |
|
|
|
— |
|
|
|
— |
|
|
|
|
32,962 |
|
| Interest
expense |
|
|
(121,887 |
) |
|
|
(3,938 |
) |
|
|
3,938 |
|
A |
|
|
(121,887 |
) |
| Interest
income |
|
|
7,879 |
|
|
|
— |
|
|
|
— |
|
|
|
|
7,879 |
|
| Unrealized
gain on marketable securities |
|
|
32,266 |
|
|
|
18,280 |
|
|
|
(18,280 |
) |
A |
|
|
32,266 |
|
| Total
other income |
|
|
347,891 |
|
|
|
259,352 |
|
|
|
(259,352 |
) |
|
|
|
347,891 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income
before income tax |
|
|
(6,854,390 |
) |
|
|
(3,999,391 |
) |
|
|
4,531,651 |
|
|
|
|
(6,322,130 |
) |
| Income
taxes provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
| Net
loss |
|
|
(6,854,390 |
) |
|
|
(3,999,391 |
) |
|
|
4,531,651 |
|
|
|
|
(6,322,130 |
) |
| Less:
Net loss attributable to noncontrolling interests |
|
|
(2,222,462 |
) |
|
|
|
|
|
|
2,222,462 |
|
A |
|
|
— |
|
| Net
loss attributed to stockholders of Twin Vee PowerCats Co, Inc |
|
|
(4,631,928 |
) |
|
|
(3,999,391 |
) |
|
|
2,309,189 |
|
|
|
|
(6,322,130 |
) |
A
- Represents elimination of intercompany revenues and cost of sales, and non-controlling interests, and Forza amounts included in
Twin Vee consolidated results
B - Represents adjustment for public company costs no longer borne by Forza related to the
merger
UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| |
|
Twin Vee Powercats Co. Inc. Year Ended December 31, 2023 |
|
Forza X1, Inc. Year Ended December 31, 2023 |
|
Eliminations and Merger Adjustments |
|
|
Twin Vee Powercats Co. Inc. Year Ended December 31, 2023 Pro Forma |
| Net sales |
|
$ |
33,425,912 |
|
|
$ |
37,118 |
|
|
|
(37,118 |
) |
A |
|
$ |
33,425,912 |
|
| Cost of products sold |
|
|
23,702,885 |
|
|
|
157,637 |
|
|
|
(157,637 |
) |
A |
|
|
23,702,885 |
|
| Gross profit |
|
|
9,723,027 |
|
|
|
(120,519 |
) |
|
|
120,519 |
|
|
|
|
9,723,027 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative |
|
|
3,734,406 |
|
|
|
1,112,920 |
|
|
|
(1,614,657 |
) |
A/B |
|
|
3,232,669 |
|
| Salaries and wages |
|
|
13,929,580 |
|
|
|
3,279,195 |
|
|
|
(3,279,195 |
) |
A |
|
|
13,929,580 |
|
| Professional fees |
|
|
1,249,388 |
|
|
|
353,996 |
|
|
|
(634,905 |
) |
A/B |
|
|
968,479 |
|
| Depreciation and amortization |
|
|
1,353,383 |
|
|
|
185,900 |
|
|
|
(185,900 |
) |
A |
|
|
1,353,383 |
|
| Research and development |
|
|
1,443,569 |
|
|
|
1,540,903 |
|
|
|
(1,540,903 |
) |
A |
|
|
1,443,569 |
|
| Total operating expenses |
|
|
21,710,326 |
|
|
|
6,472,914 |
|
|
|
(7,255,560 |
) |
|
|
|
20,927,680 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
|
(11,987,299 |
) |
|
|
(6,593,433 |
) |
|
|
7,376,079 |
|
|
|
|
(11,204,653 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend income |
|
|
909,215 |
|
|
|
507,794 |
|
|
|
(507,794 |
) |
A |
|
|
909,215 |
|
| Other income |
|
|
9,898 |
|
|
|
— |
|
|
|
— |
|
|
|
|
9,898 |
|
| Interest expense |
|
|
(221,157 |
) |
|
|
(3,694 |
) |
|
|
3,694 |
|
A |
|
|
(221,157 |
) |
| Interest income |
|
|
48,370 |
|
|
|
1,401 |
|
|
|
(1,401 |
) |
A |
|
|
48,370 |
|
| Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
| Unrealized gain on marketable securities |
|
|
87,781 |
|
|
|
50,878 |
|
|
|
(50,878 |
) |
A |
|
|
87,781 |
|
| Realized gain on marketable securities |
|
|
103,941 |
|
|
|
103,941 |
|
|
|
(103,941 |
) |
A |
|
|
103,941 |
|
| Employee Retention Credit income |
|
|
1,267,055 |
|
|
|
— |
|
|
|
— |
|
|
|
|
1,267,055 |
|
| Total other income |
|
|
2,205,103 |
|
|
|
660,320 |
|
|
|
(660,320 |
) |
|
|
|
2,205,103 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income tax |
|
|
(9,782,196 |
) |
|
|
(5,933,113 |
) |
|
|
6,715,759 |
|
|
|
|
(8,999,550 |
) |
| Income taxes provision |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
— |
|
| Net loss |
|
|
(9,782,196 |
) |
|
|
(5,933,113 |
) |
|
|
6,715,759 |
|
|
|
|
(8,999,550 |
) |
| Less: Net loss attributable to noncontrolling interests |
|
|
(2,590,020 |
) |
|
|
— |
|
|
|
2,590,020 |
|
A |
|
|
— |
|
| Net loss attributed to stockholders of Twin Vee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| PowerCats Co, Inc. |
|
|
(7,192,176 |
) |
|
|
(5,933,113 |
) |
|
|
4,125,739 |
|
|
|
|
(8,999,550 |
) |
A - Represents elimination of intercompany revenues
and cost of sales, non-controlling interests and Forza amounts included in Twin Vee consolidated results
B - Represents adjustment for public company costs no longer borne by Forza related to the merger
Comparative Historical and Unaudited Pro Forma
Per Share Data
The information below reflects
the historical net loss and book value per share of Twin Vee Common Stock and the historical net loss and book value per share of Forza
Common Stock in comparison with the unaudited pro forma net loss and book value per share after giving effect to the proposed Merger
of Twin Vee with Forza on a pro forma basis. The unaudited pro forma net loss and book value per share does not give effect to the proposed
reverse stock split of Twin Vee Common Stock described in the Twin Vee Reverse Stock Split Proposal.
You
should read the tables below in conjunction with the audited consolidated financial statements
of Twin Vee for the years ended December 31, 2023 and 2022 and unaudited consolidated financial
statements of Twin Vee for the six months ended June 30, 2024 and 2023, which are included
elsewhere in this Joint Proxy Statement/Prospectus; the audited financial statements of Forza
for the years ended December 31, 2023 and 2022 and unaudited condensed financial statements
of Forza for the six months ended June 30, 2024 and 2023, which are included elsewhere in
this Joint Proxy Statement/Prospectus; and the unaudited pro forma condensed combined financial
information and notes related to such financial information which are included elsewhere
in this Joint Proxy Statement/Prospectus.
| |
|
Twin Vee Historical |
|
Forza Historical |
|
Twin Vee Unaudited Pro Forma Combined Data |
|
Forza Pro Forma Equivalent Data (i) |
| |
|
|
|
|
|
|
|
|
| Net Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the year ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
$ |
(0.76 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.61 |
) |
|
$ |
(0.22 |
) |
| For the six months ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted |
|
$ |
(0.49 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.15 |
) |
| Book value per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2023 |
|
$ |
3.37 |
|
|
$ |
1.13 |
|
|
$ |
2.15 |
|
|
$ |
0.78 |
|
| As of June 30, 2024 |
|
$ |
2.72 |
|
|
$ |
0.79 |
|
|
$ |
1.74 |
|
|
$ |
0.63 |
|
(i)
The Forza unaudited pro forma equivalent data was calculated by multiplying the pro forma condensed combined results by the estimated
Exchange Ratio of 64/36
MARKET PRICE AND DIVIDEND INFORMATION
Twin Vee Common Stock is traded on the Nasdaq Capital
Market under the symbol “VEEE”. As of [●], 2024, Twin Vee had approximately [●] holders of record of Twin Vee
Common Stock.
Forza Common Stock is traded on the Nasdaq Capital
Market under the symbol “FRZA”. As of [●], 2024, Forza had approximately [●] holders of record of Forza Common
Stock.
Market Value of Securities
On [●], 2024, the last trading day before the public announcement of the signing of the
Merger Agreement, the last sale prices per share of Twin Vee Common Stock on Nasdaq and Forza Common Stock on Nasdaq were $0.49 and $0.30,
respectively. On [●], 2024, the latest practicable date before the date of this Joint Proxy Statement/Prospectus, the closing prices
per share of Twin Vee Common Stock on Nasdaq and Forza Common Stock on OTC Markets were $[●] and $[●], respectively. Forza
and Twin Vee stockholders are encouraged to obtain current market quotations for Twin Vee Common Stock and Forza Common Stock and to review
carefully the other information contained, or incorporated by reference, in this Joint Proxy Statement/Prospectus. See “Additional
Information for Stockholders—Where You Can Find More Information,” of this Joint Proxy Statement/Prospectus. Following
the Merger, Twin Vee Common Stock will continue to be listed on Nasdaq, and there will be no further market for Forza Common Stock.
Dividend Policy
Twin Vee has never declared or paid any cash dividends
on Twin Vee Common Stock. Twin Vee currently intends to retain future earnings, if any, to finance the expansion of its business. As a
result, Twin Vee does not anticipate paying any cash dividends in the foreseeable future.
Forza has never declared or paid any cash dividends
on Forza Common Stock.
RISK FACTORS
In addition to the other information included
in and incorporated by reference into this Joint Proxy Statement/Prospectus including as discussed under the section entitled “Risk
Factors” below , Forza’s stockholders should consider carefully the matters described below in determining whether to
approve the Merger, and the transactions contemplated thereby, and Twin Vee’s stockholders should consider carefully the matters
described below in determining whether to approve the issuance of Twin Vee Common Stock to Forza stockholders pursuant to the Merger
Agreement.
RISKS RELATED TO THE MERGER
All of Forza’s executive officers and
most of its directors have conflicts of interest that may influence them to support or approve the merger without regard to your interests.
All of the Twin Vee and Forza officers will be employed
by the combined company and several of each of their directors will continue to serve on the Board of Directors of the combined company
following the consummation of the Merger. In addition, all of the Twin Vee and Forza officers and most of their directors have a direct
or indirect financial interest in both Forza and Twin Vee. These interests, among others, may influence such executive officers and directors
of Twin Vee and Forza to support or approve the Merger. For a more information concerning the interests of Forza’s executive officers
and directors, see the sections entitled “The Merger—Interests of Forza’s Directors and Executive Officers in the Merger”
in this Joint Proxy Statement/Prospectus.
The Exchange Ratio is not adjustable based on
the market price of Twin Vee Common Stock so the Merger consideration at the closing may have a greater or lesser value than it had at
the time the Merger Agreement was signed.
The parties to the Merger Agreement have set the Exchange
Ratio for the Forza Common Stock and the Exchange Ratio is not adjustable. Any changes in the market price of Twin Vee Common Stock or
Forza Common Stock will not affect the number of shares holders of Forza Common Stock will be entitled to receive upon consummation of
the Merger. Therefore, if the market price of Twin Vee Common Stock declines from the market price on the date of the Merger Agreement
prior to the consummation of the Merger, Forza stockholders could receive Merger consideration with considerably less value. Similarly,
if the market price of Twin Vee Common Stock increases from the market price on the date of the Merger Agreement prior to the consummation
of the Merger, Forza stockholders could receive Merger consideration with considerably more value than their shares of Forza Common Stock
and the Twin Vee stockholders immediately prior to the Merger will not be compensated for the increased market value of the Twin Vee Common
Stock. If the market price of Forza Common Stock declines from the market price on the date of the Merger Agreement prior to the consummation
of the Merger, Forza stockholders could receive Merger consideration with considerably more value. Similarly, if the market price of Forza
Common Stock increases from the market price on the date of the Merger Agreement prior to the consummation of the Merger, Forza stockholders
could receive Merger consideration with considerably less value than their shares of Forza Common Stock and the Forza stockholders immediately
prior to the Merger will not be compensated for the increased market value of the Forza Common Stock. The Merger Agreement does not include
a price-based termination right. Because the Exchange Ratio does not adjust as a result of changes in the value of Twin Vee Common Stock.
The Merger may be completed even though
material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.
In general, either Twin Vee
or Forza can refuse to complete the Merger if there is a material adverse change affecting the other party between August 12, 2024, the
date of the Merger Agreement, and the closing. However, certain types of changes do not permit either party to refuse to complete the
Merger, even if such change could be said to have a material adverse effect on Twin Vee or Forza, including:
| |
● |
general business or economic conditions affecting the industries in which Twin Vee or Forza operate; |
| |
● |
acts of war, armed hostilities or terrorism; |
| |
● |
changes in financial, banking or securities markets; |
| |
● |
the taking of any action required to be taken by the Merger Agreement; |
| |
● |
with respect either party, the announcement or pendency of the Merger Agreement or any related transactions; or |
| |
● |
with respect to either party, any change in their or the other party’s stock price or trading volume stock. |
If adverse changes occur and Twin Vee and Forza
still complete the Merger, the combined company stock price may suffer. This in turn may reduce the value of the Merger to the stockholders
of Twin Vee and Forza.
The combined company’s stock price is
expected to be volatile, and the market price of its common stock may drop following the Merger.
The market price of the combined company’s common
stock could be subject to significant fluctuations following the Merger especially when the shareholder base is increased. Moreover, the
stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual
companies. These broad market fluctuations may also adversely affect the trading price of the combined company’s common stock.
In the past, following periods of volatility in the
market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies.
Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly
harm the combined company’s profitability and reputation.
The market price of the combined company’s
common stock may decline as a result of the Merger.
The market price of the combined company’s common
stock may decline as a result of the Merger if the combined company does not achieve the perceived benefits of the Merger as rapidly or
to the extent anticipated by Twin Vee or Forza or investors, financial or industry analysts.
The combined company may not experience the
anticipated strategic benefits of the Merger.
The respective managements of Twin Vee and Forza believe
that the Merger would provide certain strategic benefits that may not be realized by each of the companies operating as standalones. Specifically,
Twin Vee believes the Merger would enable the combined companies to take advantage of approximately $700,000 in annual cost savings .
There can be no assurance that these anticipated benefits of the Merger will materialize or that if they materialize will result in increased
stockholder value or revenue stream to the combined company.
Twin Vee and Forza stockholders may
not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.
If the combined company is unable to realize the
full strategic and financial benefits currently anticipated from the Merger, Twin Vee and Forza securityholders will have experienced
substantial dilution of their ownership interests in their respective companies without receiving any commensurate benefit, or only receiving
part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits
currently anticipated from the Merger.
If the conditions to the Merger are not met,
the Merger will not occur.
Even if the Merger is approved by the stockholders
of Twin Vee and Forza, specified conditions must be satisfied or waived in order to complete the Merger, including, among others:
| |
● |
the filing and effectiveness of a registration statement under the Securities Act in connection with the issuance of Twin Vee Common Stock in the Merger; |
| |
● |
the respective representations and warranties of Twin Vee and Forza, shall be true and correct in all material respects as of the date of the Merger Agreement and the closing; |
| |
● |
no material adverse effect with respect to Twin Vee or Forza or its subsidiaries shall have occurred since the date of the Merger Agreement and the closing of the Merger; |
| |
● |
performance or compliance in all material respects by Twin Vee and Forza with their respective covenants and obligations in the Merger Agreement; |
| |
● |
Forza and Twin Vee shall have obtained any consents and waivers of approvals required in connection with the Merger, including for Twin Vee approval of its stockholders of the issuance of the Twin Vee Common Stock pursuant to the terms of the Merger Agreement and for Forza approval of its stockholders of the Merger and the Merger Agreement; and |
| |
● |
no material adverse effect with respect to Twin Vee or Forza or its subsidiaries shall have occurred since the date of the Merger Agreement. |
These and other conditions are described in detail
in the Merger Agreement, a copy of which is attached as Annex A to this Joint Proxy Statement/Prospectus. Twin Vee and Forza
cannot assure you that all of the conditions to the Merger will be satisfied. If the conditions to the Merger are not satisfied or waived,
the Merger will not occur or will be delayed, and Twin Vee and Forza each may lose some or all of the intended benefits of the Merger.
Twin Vee and Forza will incur substantial expenses
whether or not the Merger is completed.
Twin Vee and Forza will incur substantial expenses
related to the Merger whether or not the Merger is completed. Twin Vee currently expects to incur approximately $400,000 in transactional
expenses and Forza currently expects to incur approximately $100,000 in transactional expenses. See the section entitled “The Merger—The
Merger Agreement—Termination”.
Twin Vee will assume all of Forza’s outstanding
liabilities if the Merger is completed.
By operation of law, Twin Vee will assume all of Forza’s
outstanding liabilities if the Merger is completed. As of June 30, 2024, Forza had $658,643 of total liabilities, of which $585,243 were
total current liabilities.
During the pendency of the Merger, Twin Vee
and Forza may not be able to enter into a business combination with another party at a favorable price because of restrictions in the
Merger Agreement, which could adversely affect their respective businesses.
Covenants in the Merger Agreement
impede the ability of Twin Vee and Forza to make acquisitions, subject to certain exceptions relating to fiduciary duties, or complete
other transactions that are not in the ordinary course of business pending the closing of the merger. As a result, if the Merger is not
completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect,
each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such
as a merger, sale of assets or other business combination outside the ordinary course of business, with any third-party, subject to certain
exceptions. Any such transactions could be favorable to such party’s stockholders.
Certain provisions
of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior
to the arrangements contemplated by the Merger Agreement.
The terms of the Merger Agreement
prohibit each of Twin Vee and Forza from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover
proposals, except in certain circumstances where the Twin Vee Board of Directors or Forza Board of Directors, as applicable, determines
in good faith, after consultation with its financial advisor and outside legal counsel, that an unsolicited alternative takeover proposal
constitutes or is reasonably likely to result in a superior takeover proposal and that failure to take such action would be reasonably
likely to result in a breach of the fiduciary duties of the Forza Board of Directors.
The pro forma financial statements are presented
for illustrative purposes only and may not be an indication of the combined company’s financial condition or results of operations
following the Merger.
The pro forma financial statements contained in this
Joint Proxy Statement/Prospectus are presented for illustrative purposes only and may not be an indication of the combined company’s
financial condition or results of operations following the Merger for several reasons. For example, the pro forma financial statements
have been derived from the historical financial statements of Twin Vee and Forza and certain adjustments and assumptions have been made
regarding the combined company after giving effect to the Merger. The information upon which these adjustments and assumptions have been
made is preliminary, and such adjustments and assumptions are difficult to make with complete accuracy. Moreover, the pro forma financial
statements do not reflect all costs that are expected to be incurred by the combined company in connection with the Merger. For example,
the impact of any incremental costs incurred in integrating the two companies is not reflected in the pro forma financial statements.
As a result, the actual financial condition and results of operations of the combined company following the Merger may not be consistent
with, or evident from, these pro forma financial statements.
In addition, the assumptions used in preparing the
pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition
or results of operations following the Merger. Any potential decline in the combined company’s financial condition or results of
operations may cause significant variations in the stock price of the combined company. See the section entitled “The Merger—Selected
Historical Financial Data—Unaudited Pro Forma Condensed Combined Consolidated Financial Information”.
Although InteleK’s opinion was given to
the Forza Board of Directors on August 9, it does not reflect any changes in market and economic circumstances after August 9, 2024.
To the extent there may have been any changes in the
operations and prospects of Twin Vee or Forza and/or changes in general market and economic conditions subsequent to August 9, 2024, which
could make Twin Vee or Forza’s value now greater or less than its value as of August 9, 2024 (the date of the analysis conducted
by InteleK), any such developments will have no effect whatsoever on InteleK’s opinion or the Exchange Ratio, which was been fixed
under the Merger Agreement. InteleK’s opinion was based on financial, economic, monetary, market and other conditions and circumstances
as in effect on, and the information made available to them on August 9, 2024. While neither the Forza Board of Directors nor Twin Vee
Board of Directors is aware of any changes in the operations and prospects of Twin Vee or Forza and/or changes in general market and economic
conditions subsequent to August 9, 2024, which could make Twin Vee or Forza’s value greater or less than its value as of August
9, 2024 (the date of the Merger Agreement and the analysis conducted by InteleK), or lead to the conclusion that the consideration to
be received in the Merger by Forza’s shareholders is not fair to Forza or Twin Vee, there can be no assurance given that changes
in the operations and prospects of Twin Vee or Forza and/or changes in general market and economic conditions subsequent to August 9,
2024, could make Twin Vee or Forza’s value, on the effective date of the Merger greater or less than its value as of August 9, 2024.
InteleK has undertaken no obligation to update its opinion delivered to Forza for changes subsequent to August 9, 2024. For a description
of the opinion that the Forza Board of Directors received from InteleK and a summary of the material financial analyses it provided to
the Forza Board of Directors in connection with rendering such opinion, please refer to the section entitled “The Merger Transaction—Opinion
of the Financial Advisor to the Forza Board of Directors”.
Although Houlihan’s opinion was
given to the Twin Vee Board of Directors on August 6, 2024, it does not reflect any changes in market and economic circumstances after
August 6, 2024.
To the extent there may have been any changes in the
operations and prospects of Twin Vee or Forza and/or changes in general market and economic conditions subsequent to August 6, 2024, which
could make Twin Vee or Forza’s value now greater or less than its value as of August 6, 2024 (the date of the Merger Agreement and
of the analysis conducted by Houlihan), any such developments will have no effect whatsoever on Houlihan’s opinion or the Exchange
Ratio, which was been fixed under the Merger Agreement Houlihan’s opinion was based on financial, economic, monetary, market and
other conditions and circumstances as in effect on, and the information made available to them on August 6, 2024. While neither the Forza
Board of Directors nor Twin Vee Board of Directors is aware of any changes in the operations and prospects of Twin Vee or Forza and/or
changes in general market and economic conditions subsequent to August 6, 2024, which could make Twin Vee or Forza’s value greater
or less than its value as of August 6, 2024 (the date of the analysis conducted by Houlihan), or lead to the conclusion that the consideration
to be received in the Merger by Forza’s shareholders is not fair to Forza or Twin Vee, there can be no assurance given that changes
in the operations and prospects of Twin Vee or Forza and/or changes in general market and economic conditions subsequent to August 6,
2024, could make Twin Vee or Forza’s value, on the effective date of the Merger greater or less than its value as of August 6, 2024.
Houlihan has undertaken no obligation to update its opinion delivered to Twin Vee for changes subsequent to August 6, 2024. For a description
of the opinion that the Twin Vee Board of Directors received from Houlihan and a summary of the material financial analyses it provided
to the Twin Vee Board of Directors in connection with rendering such opinion, please refer to the section entitled “The Merger
Transaction— Opinion of the Financial Advisor to the Twin Vee Board of Directors”.
The Merger and related transactions are subject
to approval by the stockholders of both Twin Vee and Forza.
In order for the Merger to be completed, under applicable
Nasdaq rules Twin Vee’s stockholders must approve the issuance of the shares of Twin Vee Common Stock pursuant to the terms of the
Merger Agreement, which requires the affirmative vote of the holders of at least a majority of the Twin Vee Common Stock present in person
or by proxy at the Twin Vee Annual Meeting and entitled to vote. Forza’s stockholders must also approve the Merger and the Merger
Agreement, which requires the affirmative vote of the holders of at least a majority of the outstanding shares of Forza Common Stock entitled
to vote and a majority of the Forza Common Stock present in person or by proxy at the Forza Annual Meeting excluding Twin Vee.
Twin Vee’s business and stock price may
be adversely affected if the acquisition of Forza is not completed.
Twin Vee’s acquisition of Forza is subject to
several customary conditions, including the effectiveness of this Joint Proxy Statement/Prospectus and the approvals of the transaction
by the stockholders of Forza and Twin Vee.
If Twin Vee’s acquisition of Forza is not completed,
Twin Vee could be subject to a number of risks that may adversely affect Twin Vee’s business and stock price, including:
| ● | the current market price of shares of Twin Vee Common Stock reflects a market assumption that the acquisition
will be completed; |
| ● | Twin Vee must pay costs related to the Merger; and |
| ● | Twin Vee would not realize the benefits it expects from acquiring Forza. |
If Twin Vee’s acquisition of Forza is not completed,
Forza could be subject to a number of risks that may adversely affect Twin Vee’s business and stock price, including:
| ● | the current market price of shares of Forza Common Stock reflects a market assumption that the acquisition
will be completed; |
| ● | Forza must pay costs related to the Merger; |
| ● | Forza Common Stock is no longer
listed on the Nasdaq; and |
| ● | Forza would not realize the benefits it expects from being acquired by Twin Vee. |
Should the Merger not qualify as a tax-free
reorganization, Forza stockholders may recognize capital gain or loss with respect to the shares of Twin vee common stock received in
the Merger.
The Merger is expected to be treated as a reorganization
within the meaning of Section 368 of the Code, however, neither Twin Vee nor Forza has received an Internal Revenue Services ruling to
that effect. The failure of the Merger to qualify as a reorganization within the meaning of Section 368 of the Code would result in a
Forza stockholder recognizing capital gain or loss with respect to the shares of Forza Common Stock surrendered for Twin Vee Common Stock
received in the Merger.
RISKS RELATED TO TWIN VEE
Risks Related to
Twin Vee’s Business
There is limited
public information on Twin Vee’s operating history.
Twin Vee’s limited
public operating history makes evaluating Twin Vee’s business and prospects difficult. Although Twin Vee was formed in 2003, Twin
Vee did not provide public reports on the results of operations until Twin Vee’s 2020 fiscal year. Twin Vee only has a few years
of audited financial statements. Any investment decision will not be made with the same data as would be available as if Twin Vee had
a longer history of public reporting.
Twin Vee have incurred losses for the six months ended June 30,
2024 and the year ended December 31, 2023, and could continue to incur losses in the future.
For the year ended December 31, 2023, Twin Vee
incurred a loss from operations of $11,987,299 and a net loss of $9,782,196. For the six months ended June 30, 2024, Twin Vee incurred
a loss from operations of $6,854,390 and a net loss of $5,137,294. As of June 30, 2024, Twin Vee had an accumulated deficit of approximately
$18,975,713. There can be no assurance that expenses will not continue to increase in future periods or that the cash generated from
operations in future periods will be sufficient to satisfy Twin Vee’s operating needs and to generate income from operations and
net income.
Twin Vee’s
ability to meet Twin Vee’s manufacturing workforce needs is crucial to Twin Vee’s results of operations and future sales
and profitability.
Twin Vee relies on the
existence of an available hourly workforce to manufacture Twin Vee’s products. In addition, Forza relies upon engineers that are
specialist in electric engineering. Twin Vee cannot assure you that Twin Vee or Twin Vee’s subsidiaries, will be able to attract
and retain qualified employees to meet current or future manufacturing needs at a reasonable cost, or at all. For instance, the demand
for skilled employees has increased recently with the low unemployment rates in Florida where Twin Vee have manufacturing facilities
and in North Carolina where Forza is building a manufacturing facility. Also, although none of Twin Vee’s employees are currently
covered by collective bargaining agreements, Twin Vee cannot assure you that Twin Vee’s employees will not elect to be represented
by labor unions in the future. Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient
number of employees. Significant increases in manufacturing workforce costs could materially adversely affect Twin Vee’s business,
financial condition or results of operations. Forza intends to continue to hire a number of additional personnel, including design and
manufacturing personnel and service technicians for its electric boats and powertrains. Competition for individuals with experience designing,
manufacturing and servicing electric boats is intense, and Forza may not be able to attract, assimilate, train or retain additional highly
qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously
harm Forza’s business and prospects.
Twin Vee has a
large, fixed cost base that will affect Twin Vee’s profitability if Twin Vee’s sales decrease.
The fixed cost levels
of operating a powerboat manufacturer can put pressure on profit margins when sales and production decline. Twin Vee’s profitability
depends, in part, on Twin Vee’s ability to spread fixed costs over a sufficiently large number of products sold and shipped, and
if Twin Vee makes a decision to reduce Twin Vee’s rate of production, gross or net margins could be negatively affected. Consequently,
decreased demand or the need to reduce production can lower Twin Vee’s ability to absorb fixed costs and materially impact Twin
Vee’s financial condition or results of operations.
Interest rates
and energy prices affect product sales.
Twin Vee’s gas-powered
products are often financed by Twin Vee’s dealers and retail powerboat consumers, Twin Vee envisions this continuing as Twin Vee
expands Twin Vee’s operations and grows Twin Vee’s network of distributors. This may not occur if interest rates meaningfully
rise because higher rates increase the borrowing costs and, accordingly, the cost of doing business for dealers and the cost of powerboat
purchases for consumers. Higher energy costs result in increases in operating expenses at Twin Vee’s manufacturing facility and
in the expense of shipping products to Twin Vee’s dealers. In addition, inflation and increases in energy costs may adversely affect
the pricing and availability of petroleum-based raw materials, such as resins and foams that are used in Twin Vee’s products. Also,
higher fuel prices may have an adverse effect on demand for Twin Vee’s gas-powered boats, as they increase the cost of ownership
and operation and the pries at which Twin Vee sells the boats. Therefore, higher interest rates and fuel costs can adversely affect consumers’
decisions relating to recreational powerboating purchases.
The capacity of the manufacturing facility
that Twin Vee and Forza utilize will not be sufficient to support Twin Vee’s future growth and business plans.
Twin Vee is currently operating close to full
capacity at Twin Vee’s current manufacturing facility in Fort Pierce. Forza had planned to manufacture electric boats at a new
state of the art carbon neutral factory that to be built in McDowell County, North Carolina. However, those plans have been curtailed
in light of Forza’s recent decision to discontinue its operations. Until Twin Vee is able to expand Twin Vee’s manufacturing
capacity, Twin Vee will continue to useTwin Vee’s current manufacturing facility, which has a limited capacity and may not be able
to satisfy Twin Vee’s manufacturing needs. Any facility that Twin Vee builds will require a significant capital investment and
is expected to take at least one to two years to build and become fully operational. .
Changes in general economic conditions,
geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond Twin Vee’s control may
adversely impact Twin Vee’s business and operating results.
Twin Vee’s operations and performance depend
on global, regional and U.S. economic and geopolitical conditions. General worldwide economic conditions have experienced significant
instability in recent years including the recent global economic uncertainty and financial market conditions. The circumstances relating
to the COVID-19 pandemic, the Russian invasion of Ukraine, the war in the Middle East, as well as other global conditions, have caused
significant shortages in the supply chain. Twin Vee is continuously evaluating alternative and secondary source suppliers in order to
ensure that Twin Vee is able to source sufficient materials.
The uncertain financial markets, disruptions in
supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact Twin Vee’s business in
the future. The COVID-19 outbreak and government measures taken in response to the pandemic have also had a significant impact, both
direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and
production have been suspended; and demand for certain goods and services, such as medical services and supplies, have spiked, while
demand for other goods and services, such as travel, have fallen. The future progression of the pandemic and its effects on Twin Vee’s
business and operations are uncertain. In addition, the outbreak of a pandemic could disrupt Twin Vee’s operations due to
absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees
who elect not to come to work due to the illness affecting others in Twin Vee’s office or laboratory facilities, or due to quarantines.
Pandemics could also impact members of Twin Vee’s Board of Directors resulting in absenteeism from meetings of the directors or
committees of directors, and making it more difficult to convene the quorums of the full Board of Directors or its committees needed
to conduct meetings for the management of Twin Vee’s affairs.
Further, due to increasing inflation, operating
costs for many businesses including ours have increased and, in the future, could impact demand or pricing manufacturing of Twin Vee’s
boats or employee wages. Inflation rates, particularly in the United States, have increased recently to levels not seen in years,
and increased inflation may result in increases in Twin Vee’s operating costs (including Twin Vee’s labor costs), reduced
liquidity and limits on Twin Vee’s ability to access credit or otherwise raise capital. In addition, the Federal Reserve has raised,
and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility
in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.
Actual events involving reduced or limited liquidity,
defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services
industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may
in the future lead to market-wide liquidity problems.
Twin Vee is actively monitoring the effects these
disruptions and increasing inflation could have on Twin Vee’s operations.
These conditions make it extremely difficult for
Twin Vee to accurately forecast and plan future business activities.
Twin Vee’s
annual and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond
Twin Vee’s control.
Twin Vee’s sales
and operating results can vary significantly from quarter to quarter and year to year depending on various factors, many of which are
beyond Twin Vee’s control. These factors include, but are not limited to:
| |
● |
Seasonal
consumer demand for Twin Vee’s products; |
| |
● |
Discretionary
spending habits; |
| |
● |
Changes
in pricing in, or the availability of supply in, the powerboat market; |
| |
● |
Failure
to maintain a premium brand image; |
| |
● |
Disruption
in the operation of Twin Vee’s manufacturing facilities; |
| |
● |
Variations
in the timing and volume of Twin Vee’s sales; |
| |
● |
The
timing of Twin Vee’s expenditures in anticipation of future sales; |
| |
● |
Sales
promotions by us and Twin Vee’s competitors; |
| |
● |
Changes
in competitive and economic conditions generally; |
| |
● |
Consumer
preferences and competition for consumers’ leisure time; |
| |
● |
Impact
of unfavorable weather conditions; |
| |
● |
Changes
in the cost or availability of Twin Vee’s labor; and |
| |
● |
Increased
fuel prices. |
Due to these and other
factors, Twin Vee’s results of operations may decline quickly and significantly in response to changes in order patterns or rapid
decreases in demand for Twin Vee’s products. Twin Vee anticipates that fluctuations in operating results will continue in the future.
Unfavorable weather
conditions may have a material adverse effect on Twin Vee’s business, financial condition, and results of operations, especially
during the peak boating season.
Adverse weather conditions
in any year in any particular geographic region may adversely affect sales in that region, especially during the peak boating season.
Sales of Twin Vee’s products are generally stronger just before and during spring and summer, which represent the peak boating
months, and favorable weather during these months generally has a positive effect on consumer demand. Conversely, unseasonably cool weather,
excessive rainfall, reduced rainfall levels, or drought conditions during these periods may close area boating locations or render boating
dangerous or inconvenient, thereby generally reducing consumer demand for Twin Vee’s products. Twin Vee’s annual results
would be materially and adversely affected if Twin Vee’s net sales were to fall below expected seasonal levels during these periods.
Twin Vee may also experience more pronounced seasonal fluctuation in net sales in the future as Twin Vee expands Twin Vee’s businesses.
There can be no assurance that weather conditions will not have a material effect on the sales of any of Twin Vee’s products.
A natural disaster,
the effects of climate change, or other disruptions at Twin Vee’s manufacturing facility could adversely affect Twin Vee’s
business, financial condition, and results of operations.
Twin Vee relies on the
continuous operation of Twin Vee’s only manufacturing facility in Stuart, Florida for the production of Twin Vee’s products.
Any natural disaster or other serious disruption to Twin Vee’s facility due to fire, flood, earthquake, or any other unforeseen
circumstance would adversely affect Twin Vee’s business, financial condition, and results of operations. Changes in climate could
adversely affect Twin Vee’s operations by limiting or increasing the costs associated with equipment or fuel supplies. In addition,
adverse weather conditions, such as increased frequency and/or severity of storms, or floods could impair Twin Vee’s ability to
operate by damaging Twin Vee’s facilities and equipment or restricting product delivery to customers. The occurrence of any disruption
at Twin Vee’s manufacturing facility, even for a short period of time, may have an adverse effect on Twin Vee’s productivity
and profitability, during and after the period of the disruption. These disruptions may also cause personal injury and loss of life,
severe damage to or destruction of property and equipment, and environmental damage. Although Twin Vee maintain property, casualty, and
business interruption insurance of the types and in the amounts that Twin Vee believes are customary for the industry, Twin Vee is not
fully insured against all potential natural disasters or other disruptions to Twin Vee’s manufacturing facility.
If Twin Vee fails
to manage its manufacturing levels while still addressing the seasonal retail pattern for Twin Vee’s products, Twin Vee’s
business and margins may suffer.
The seasonality of retail
demand for Twin Vee’s products, together with Twin Vee’s goal of balancing production throughout the year, requires Twin
Vee to manage Twin Vee’s manufacturing and allocate Twin Vee’s gas-powered products to Twin Vee’s dealer network to
address anticipated retail demand. Twin Vee’s dealers must manage seasonal changes in consumer demand and inventory. If Twin Vee’s
dealers reduce their inventories in response to weakness in retail demand, Twin Vee could be required to reduce Twin Vee’s production,
resulting in lower rates of absorption of fixed costs in Twin Vee’s manufacturing and, therefore, lower margins. As a result, Twin
Vee must balance the economies of level production with the seasonal retail sales pattern experienced by Twin Vee’s dealers. Failure
to adjust manufacturing levels adequately may have a material adverse effect on Twin Vee’s financial condition and results of operations.
Twin Vee depends
on Twin Vee’s network of independent dealers for Twin Vee’s gas-powered boats, face increasing competition for dealers, and
has little control over their activities.
A significant portion of Twin Vee’s sales
of Twin Vee’s gas-powered boats are derived from Twin Vee’s network of independent dealers. Twin Vee typically manufactures
Twin Vee’s gas-powered boats based upon indications of interest received from dealers who are not contractually obligated to purchase
any boats. While Twin Vee’s dealers typically have purchased all of the boats for which they have provided Twin Vee with indications
of interest, it is possible that a dealer could choose not to purchase boats for which it has provided an indication of interest (e.g.,
if it were to have reached the credit limit on its floor plan), and as a result Twin Vee once experienced, and in the future could experience,
excess inventory and costs. For the six months ended June 30, 2024, three individual dealers represented over 10%
of Twin Vee’s total sales, or 38% in total. For the six months ended June 30, 2023, one individual dealer represented over 10%
of Twin Vee’s sales, and that dealer represented 20% of total sales. The loss of a significant dealer could have a material adverse
effect on Twin Vee’s financial condition and results of operations. The number of dealers supporting Twin Vee’s products
and the quality of their marketing and servicing efforts are essential to Twin Vee’s ability to generate sales. Competition for
dealers among other boat manufacturers continues to increase based on the quality, price, value, and availability of the manufacturers’
products, the manufacturers’ attention to customer service, and the marketing support that the manufacturer provides to the dealers.
Twin Vee faces intense competition from other boat manufacturers in attracting and retaining dealers, affecting Twin Vee’s ability
to attract or retain relationships with qualified and successful dealers. Although Twin Vee’s management believes that the quality
of Twin Vee’s products in the performance sport boat industry should permit it to maintain Twin Vee’s relationships with
Twin Vee’s dealers and Twin Vee’s market share position, there can be no assurance that Twin Vee will be able to maintain
or improve Twin Vee’s relationships with Twin Vee’s dealers or Twin Vee’s market share position. In addition, independent
dealers in the boating industry have experienced significant consolidation in recent years, which could result in the loss of one or
more of Twin Vee’s dealers in the future if the surviving entity in any such consolidation purchases similar products from a competitor.
A substantial deterioration in the number of dealers or the quality of Twin Vee’s network of dealers would have a material adverse
effect on Twin Vee’s business, financial condition, and results of operations.
The loss of one or
a few dealers could have a material adverse effect on Twin Vee.
A few dealers have in the past, and may in the
future, account for a significant portion of Twin Vee’s revenues in any one year or over a period of several consecutive
years. For the six months ended June 30, 2024, three individual dealers represented over 10% of the Company’s total sales, that
dealer representing 38% of total sales. The loss of business from a significant dealer could have a material adverse effect on Twin Vee’s
business, financial condition, results of operations and cash flows.
Twin Vee’s
success depends, in part, upon the financial health of Twin Vee’s dealers and their continued access to financing.
Because Twin Vee sells
nearly all of Twin Vee’s gas-powered products through dealers, their financial health is critical to Twin Vee’s success.
Twin Vee’s business, financial condition, and results of operations may be adversely affected if the financial health of the dealers
that sell Twin Vee’s products suffers. Their financial health may suffer for a variety of reasons, including a downturn in general
economic conditions, rising interest rates, higher rents, increased labor costs and taxes, compliance with regulations, and personal
financial issues.
In addition, Twin Vee’s
dealers require adequate liquidity to finance their operations, including purchases of Twin Vee’s products. Dealers are subject
to numerous risks and uncertainties that could unfavorably affect their liquidity positions, including, among other things, continued
access to adequate financing sources on a timely basis on reasonable terms. These sources of financing are vital to Twin Vee’s
ability to sell products through Twin Vee’s distribution network. Access to financing generally facilitates Twin Vee’s dealers’
ability to purchase boats from us, and their financed purchases reduce Twin Vee’s working capital requirements. If financing were
not available to Twin Vee’s dealers, Twin Vee’s sales and Twin Vee’s working capital levels would be adversely affected.
Twin Vee may be required to repurchase
inventory of certain dealers.
Many of Twin Vee’s
dealers have floor plan financing arrangements with third-party finance companies that enable the dealers to purchase Twin Vee’s
products. In connection with these agreements, Twin Vee may have an obligation to repurchase Twin Vee’s products from a finance
company under certain circumstances, and Twin Vee may not have any control over the timing or amount of any repurchase obligation nor
have access to capital on terms acceptable to us to satisfy any repurchase obligation. This obligation is triggered if a dealer defaults
on its debt obligations to a finance company, the finance company repossesses the boat, and the boat is returned to Twin Vee. Twin Vee’s
obligation to repurchase a repossessed boat for the unpaid balance of Twin Vee’s original invoice price for the boat is subject
to reduction or limitation based on the age and condition of the boat at the time of repurchase, and in certain cases by an aggregate
cap on repurchase obligations associated with a particular floor plan financing program. To date, Twin Vee has not been obligated to
repurchase any boats under Twin Vee’s dealers’ floor plan financing arrangements, and Twin Vee is not aware of any applicable
laws regulating dealer relations which govern Twin Vee’s relations with the dealers or would require us to repurchase any boats.
However, there is no assurance that a dealer will not default on the terms of a credit line in the future. In addition, applicable laws
regulating dealer relations may also require Twin Vee to repurchase Twin Vee’s products from Twin Vee’s dealers under certain
circumstances, and Twin Vee may not have any control over the timing or amount of any repurchase obligation nor have access to capital
on terms acceptable to Twin Vee to satisfy any repurchase obligation. If Twin Vee were obligated to repurchase a significant number of
units under any repurchase agreement or under applicable dealer laws, Twin Vee’s business, operating results and financial condition
could be adversely affected.
Twin Vee rely on
third-party suppliers in the manufacturing of Twin Vee’s boats.
Twin Vee depends on third-party
suppliers to provide components and raw materials essential to the construction of Twin Vee’s boats. During the year ended December
31, 2023, Twin Vee purchased all engines for its boats under supplier agreements with three vendors. During the year ended December 31,
2022, Twin Vee purchased all engines for its boats under supplier agreements with one vendor. During the six months ended June 30, 2024,
Twin Vee purchased all engines and certain composite materials for its boats under supplier agreements with five vendors. During the
six months ended June 30, 2023, Twin Vee purchased all engines for its boats under supplier agreements with two vendors While Twin Vee
believe that Twin Vee’s relationships with Twin Vee’s current suppliers are sufficient to provide the materials necessary
to meet present production demand, Twin Vee cannot assure investors that these relationships will continue or that the quantity or quality
of materials available from these suppliers will be sufficient to meet Twin Vee’s future needs, irrespective of whether Twin Vee
successfully implements Twin Vee’s growth strategy. Twin Vee expects that Twin Vee’s need for raw materials and supplies
will increase. Twin Vee’s suppliers must be prepared to ramp up operations and, in many cases, hire additional workers and/or expand
capacity in order to fulfill the orders placed by Twin Vee and other customers. Operational and financial difficulties that Twin Vee’s
suppliers may face in the future could adversely affect their ability to supply Twin Vee with the parts and components Twin Vee needs,
which could significantly disrupt Twin Vee’s operations.
Termination or
interruption of informal supply arrangements could have a material adverse effect on Twin Vee’s business or results of operations.
Although Twin Vee has
long-term relationships with many of Twin Vee’s suppliers, Twin Vee does not have any formal agreements with any suppliers for
the purchase of parts needed and Twin Vee’s purchases are made on a purchase order basis. Twin Vee has no binding commitment from
Twin Vee’s suppliers to supply any specified quantity of materials needed within any specified time period. In the event that Twin
Vee’s suppliers receive a large number of orders from other customers, there is a possibility that they will not be able to support
Twin Vee’s needs. If any of Twin Vee’s current suppliers were to be unable to provide needed products to Twin Vee, there
can be no assurance that alternate supply arrangements will be made on satisfactory terms. If Twin Vee needs to enter into supply arrangements
on unsatisfactory terms, or if there are any delays to Twin Vee’s supply arrangements, it could adversely affect Twin Vee’s
business and operating results.
Significant product repair and/or replacement
due to product warranty claims or product recalls could have a material adverse impact on Twin Vee’s results of operations.
Twin Vee provides a hull warranty for structural
damage of up to ten years for its gas-powered boats. In addition, Twin Vee provides a three-year limited fiberglass small parts warranty
on all or some small fiberglass parts and components such as consoles. Gelcoat is covered up to one year. Additionally, fiberglass lids,
plastic lids, electrical panels, bilge pumps, aerator pumps or other electrical devices (excluding stereos, depth finders, radar, chart
plotters except for installation if installed by us.), steering systems, electrical panels, and pumps are covered under a one-year basic
limited systems warranty. Some materials, components or parts of the boat that are not covered by Twin Vee’s limited product warranties
are separately warranted by their manufacturers or suppliers. These other warranties include warranties covering engines purchased from
suppliers and other components.
Twin Vee’s standard warranties require Twin
Vee or Twin Vee’s dealers to repair or replace defective products during such warranty periods at no cost to the consumer. Although
Twin Vee employs quality control procedures, sometimes a product is distributed that needs repair or replacement. The repair and replacement
costs Twin Vee could incur in connection with a recall could adversely affect its business. In addition, product recalls could harm Twin
Vee’s reputation and cause Twin Vee to lose customers, particularly if recalls cause consumers to question the safety or reliability
of its products.
The nature of Twin
Vee’s business exposes us to workers’ compensation claims and other workplace liabilities.
Certain materials Twin
Vee uses require Twin Vee’s employees to handle potentially hazardous or toxic substances. While Twin Vee’s employees who
handle these and other potentially hazardous or toxic materials receive specialized training and wear protective clothing, there is still
a risk that they, or others, may be exposed to these substances. Exposure to these substances could result in significant injury to Twin
Vee’s employees and damage to Twin Vee’s property or the property of others, including natural resource damage. Twin Vee’s
personnel are also at risk for other workplace-related injuries, including slips and falls. Twin Vee may in the future be subject to
fines, penalties, and other liabilities in connection with any such injury or damage. Although Twin Vee currently maintains what Twin
Vee believes to be suitable and adequate insurance in excess of Twin Vee’s self-insured amounts, Twin Vee may be unable to maintain
such insurance on acceptable terms or such insurance may not provide adequate protection against potential liabilities.
If Twin Vee is unable to comply with
environmental and other regulatory requirements, Twin Vee’s business may be exposed to material liability and/or fines.
Twin Vee’s operations
are subject to extensive and frequently changing federal, state, local, and foreign laws and regulations, including those concerning
product safety, environmental protection, and occupational health and safety. Some of these laws and regulations require Twin Vee to
obtain permits and limit Twin Vee’s ability to discharge hazardous materials into the environment. If Twin Vee fails to comply
with these requirements, Twin Vee may be subject to civil or criminal enforcement actions that could result in the assessment of fines
and penalties, obligations to conduct remedial or corrective actions, or, in extreme circumstances, revocation of Twin Vee’s permits
or injunctions preventing some or all of Twin Vee’s operations. In addition, the components of Twin Vee’s boats must meet
certain regulatory standards, including stringent air emission standards for boat engines. Failure to meet these standards could result
in an inability to sell Twin Vee’s boats in key markets, which would adversely affect Twin Vee’s business. Moreover, compliance
with these regulatory requirements could increase the cost of Twin Vee’s products, which in turn, may reduce consumer demand.
While Twin Vee believes
that Twin Vee is in material compliance with applicable federal, state, local, and foreign regulatory requirements, and holds all licenses
and permits required thereunder, Twin Vee cannot assure you that Twin Vee will, at all times, be able to continue to comply with applicable
regulatory requirements. Compliance with increasingly stringent regulatory and permit requirements may, in the future, cause Twin Vee
to incur substantial capital costs and increase Twin Vee’s cost of operations, or may limit Twin Vee’s operations, all of
which could have a material adverse effect on Twin Vee’s business or financial condition.
As with most boat construction
businesses, Twin Vee’s manufacturing processes involve the use, handling, storage, and contracting for recycling or disposal of
hazardous substances and wastes. The failure to manage or dispose of such hazardous substances and wastes properly could expose Twin
Vee to material liability or fines, including liability for personal injury or property damage due to exposure to hazardous substances,
damages to natural resources, or for the investigation and remediation of environmental conditions. Under environmental laws, Twin Vee
may be liable for remediation of contamination at sites where Twin Vee’s hazardous wastes have been disposed or at Twin Vee’s
current facility, regardless of whether Twin Vee’s facility is owned or leased or whether the environmental conditions were created
by us, a prior owner or tenant, or third-party. While Twin Vee does not believe that Twin Vee is presently subject to any such liabilities,
Twin Vee cannot assure investors that environmental conditions relating to Twin Vee’s prior, existing, or future sites or operations
or those of predecessor companies will not have a material adverse effect on Twin Vee’s business or financial condition.
Twin Vee’s
industry is characterized by intense competition, which affects Twin Vee’s sales and profits.
The performance sport
boat category and the powerboat industry as a whole are highly competitive for consumers and dealers. Twin Vee also competes against
consumer demand for used boats. Competition affects Twin Vee’s ability to succeed in both the markets Twin Vee currently serves
and new markets that Twin Vee may enter in the future. Competition is based primarily on brand name, price, product selection, and product
performance. Twin Vee competes with several large manufacturers that may have greater financial, marketing, and other resources than
Twin Vee does and who are represented by dealers in the markets in which Twin Vee now operates and into which Twin Vee plans to expand.
Twin Vee also competes with a variety of small, independent manufacturers. Twin Vee cannot assure investors that Twin Vee will not face
greater competition from existing large or small manufacturers or that Twin Vee will be able to compete successfully with new competitors.
Twin Vee’s failure to compete effectively with Twin Vee’s current and future competitors would adversely affect Twin Vee’s
business, financial condition, and results of operations. Twin Vee also competes with other manufacturers for employees.
Twin Vee faces
increasing competition for dealers and have little control over their activities.
Twin Vee faces intense
competition from other performance sport boat manufacturers in attracting and retaining dealers and customers, affecting Twin Vee’s
ability to attract or retain relationships with qualified and successful dealers and consumers looking to purchase boats. Although Twin
Vee’s management believes that the quality of Twin Vee’s products in the boat industry should permit Twin Vee to maintain
Twin Vee’s relationships with Twin Vee’s dealers and Twin Vee’s market share position, there can be no assurance that
Twin Vee will be able to maintain or improve Twin Vee’s relationships with Twin Vee’s dealers or Twin Vee’s market
share position. In addition, independent dealers in the boating industry have experienced significant consolidation in recent years,
which could result in the loss of one or more of Twin Vee’s dealers in the future if the surviving entity in any such consolidation
purchases similar products from a competitor. A substantial deterioration in the number of dealers or quality of Twin Vee’s network
of dealers would have a material adverse effect on Twin Vee’s business, financial condition, and results of operations.
Twin Vee’s
sales may be adversely impacted by increased consumer preference for other leisure activities or used boats or the supply of new boats
by competitors in excess of demand.
Twin Vee’s boats
are not necessities and in times of economic hardship, consumers may cease purchasing non-essential items. Demand for Twin Vee’s
boats may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer
lifestyle, usage pattern or taste. Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to
purchase and enjoy Twin Vee’s boats.
During the economic downturn
that commenced in 2008, there was a shift in consumer demand toward purchasing more used boats, primarily because prices for used boats
are typically lower than retail prices for new boats. If this were to occur again, it could have the effect of reducing demand among
retail purchasers for Twin Vee’s new boats. Also, while Twin Vee has balanced production volumes for Twin Vee’s boats to
meet demand, Twin Vee’s competitors could choose to reduce the price of their products, which could have the effect of reducing
demand for Twin Vee’s new boats. Reduced demand for new boats could lead to reduced sales by Twin Vee, which could adversely affect
Twin Vee’s business, results of operations, and financial condition.
Twin Vee’s
sales and profitability depend, in part, on the successful introduction of new products.
Market acceptance of
Twin Vee’s products depends on Twin Vee’s technological innovation and Twin Vee’s ability to implement technology in
Twin Vee’s boats. Twin Vee’s sales and profitability may be adversely affected by difficulties or delays in product development,
such as an inability to develop viable or innovative new products. Twin Vee’s failure to introduce new technologies and product
offerings that consumers desire could adversely affect Twin Vee’s business, financial condition, and results of operations. If
Twin Vee fails to introduce new features or those Twin Vee introduces fail to gain market acceptance, Twin Vee’s bottom line may
suffer.
In addition, some of
Twin Vee’s direct competitors and indirect competitors may have significantly more resources to develop and patent new technologies.
It is possible that Twin Vee’s competitors will develop and patent equivalent or superior technologies and other products that
compete with ours. They may assert these patents against us and Twin Vee may be required to license these patents on unfavorable terms
or cease using the technology covered by these patents, either of which would harm Twin Vee’s competitive position and may materially
adversely affect Twin Vee’s business.
Twin Vee also cannot
be certain that Twin Vee’s products or features have not infringed or will not infringe the proprietary rights of others. Any such
infringement could cause third parties, including Twin Vee’s competitors, to bring claims against us, resulting in significant
costs and potential damages.
Twin Vee’s
success depends upon the continued strength of Twin Vee’s brand, the value of Twin Vee’s brand, and sales of Twin Vee’s
products could be diminished if Twin Vee, the consumers who use Twin Vee’s products, or the sports and activities in which Twin
Vee’s products are used are associated with negative publicity.
Twin Vee believes that
Twin Vee’s brand is a significant contributor to the success of Twin Vee’s business and that maintaining and enhancing Twin
Vee’s brand is important to expanding Twin Vee’s consumer and dealer base. Failure to continue to protect Twin Vee’s
brand may adversely affect Twin Vee’s business, financial condition, and results of operations. Twin Vee expects that Twin Vee’s
ability to develop, maintain and strengthen the Twin Vee, AquaSport and Forza brands will also depend heavily on the success of Twin
Vee’s marketing efforts. To further promote Twin Vee’s brands and Forza’s brand, Twin Vee and Forza may be required
to change Twin Vee’s marketing practices, which could result in substantially increased advertising expenses, including the need
to use traditional media such as television, radio and print. Many of Twin Vee’s current and potential competitors have greater
name recognition, broader customer relationships and substantially greater marketing resources than Twin Vee do. If Twin Vee does not
develop and maintain strong brands, Twin Vee’s business, prospects, financial condition and operating results will be materially
and adversely impacted.
Negative publicity, including
that resulting from severe injuries or death occurring in the sports and activities in which Twin Vee’s products are used, could
negatively affect Twin Vee’s reputation and result in restrictions, recalls, or bans on the use of Twin Vee’s products. If
the popularity of the sports and activities for which Twin Vee design, manufacture, and sell products were to decrease as a result of
these risks or any negative publicity, sales of Twin Vee’s products could decrease, which could have an adverse effect on Twin
Vee’s net sales, profitability, and operating results. In addition, if Twin Vee becomes exposed to additional claims and litigation
relating to the use of Twin Vee’s products, Twin Vee’s reputation may be adversely affected by such claims, whether or not
successful, including by generating potential negative publicity about Twin Vee’s products, which could adversely impact Twin Vee’s
business and financial condition.
Twin Vee may not
be able to execute Twin Vee’s manufacturing strategy successfully, which could cause the profitability of Twin Vee’s products
to suffer.
Twin Vee’s manufacturing
strategy is designed to improve product quality and increase productivity, while reducing costs and increasing flexibility to respond
to ongoing changes in the marketplace. To implement this strategy, Twin Vee must be successful in Twin Vee’s continuous improvement
efforts, which depend on the involvement of management, production employees, and suppliers. Any inability to achieve these objectives
could adversely impact the profitability of Twin Vee’s products and Twin Vee’s ability to deliver desirable products to Twin
Vee’s consumers.
Twin Vee will rely on complex machinery
for Twin Vee’s operations, and production involves a significant degree of risk and uncertainty in terms of operational performance,
safety, security, and costs.
Twin Vee expects to rely heavily on complex machinery
for Twin Vee’s operations and Twin Vee’s production will involve a significant degree of uncertainty and risk in terms of
operational performance, safety, security, and costs. Twin Vee’s manufacturing plant consists of large-scale machinery combining
many components. The manufacturing plant components are likely to suffer unexpected malfunctions from time to time and will depend on
repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of the manufacturing plant
components may significantly affect operational efficiency. Operational performance and costs can be difficult to predict and are often
influenced by factors outside of Twin Vee’s control, such as, but not limited to, scarcity of natural resources, environmental
hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining
governmental permits, damages or defects in electronic systems, industrial accidents, pandemics, fire, seismic activity, and natural
disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production
equipment, damage to manufacturing facilities, products, supplies, tools and materials, monetary losses, delays and unanticipated fluctuations
in production, environmental damage, administrative fines, increased insurance costs, and potential legal liabilities, all which could
have a material adverse effect on Twin Vee’s business, prospects, financial condition, results of operations, and cash flows. Although
Twin Vee generally carries insurance to cover such operational risks, Twin Vee cannot be certain that Twin Vee’s insurance coverage
will be sufficient to cover potential costs and liabilities arising therefrom. A loss that is uninsured or exceeds policy limits may
require Twin Vee to pay substantial amounts, which could adversely affect Twin Vee’s business, prospects, financial condition,
results of operations, and cash flows.
Twin Vee may need to raise additional
capital that may be required to grow Twin Vee’s business, and Twin Vee may not be able to raise capital on terms acceptable to
us or at all.
Operating Twin Vee’s
business and maintaining Twin Vee’s growth efforts will require significant cash outlays and advance capital expenditures and commitments.
Although the proceeds of Twin Vee’s initial public offering and follow on offering should be sufficient to fund Twin Vee’s
operations, if cash on hand and cash generated from operations and from Twin Vee’s initial public offering and follow on offering
are not sufficient to meet Twin Vee’s cash requirements, Twin Vee will need to seek additional capital, potentially through debt
or equity financings, to fund Twin Vee’s growth. Twin Vee cannot assure investors that Twin Vee will be able to raise needed cash
on terms acceptable to Twin Vee or at all. Financings may be on terms that are dilutive or potentially dilutive to Twin Vee’s stockholders,
and the prices at which new investors would be willing to purchase Twin Vee’s securities may be lower than the price per share
of Twin Vee’s Common Stock in Twin Vee’s public offerings. The holders of new securities may also have rights, preferences
or privileges which are senior to those of existing holders of common stock. If new sources of financing are required, but are insufficient
or unavailable, Twin Vee will be required to modify Twin Vee’s growth and operating plans based on available funding, if any, which
would harm Twin Vee’s ability to grow Twin Vee’s business.
If Twin Vee fails
to manage future growth effectively, Twin Vee may not be able to market or sell Twin Vee’s products successfully.
Any failure to manage Twin Vee’s growth
effectively could materially and adversely affect Twin Vee’s business, prospects, operating results and financial condition. Twin
Vee plans to expand Twin Vee’s operations in the near future. Twin Vee’s future operating results depend to a large extent
on Twin Vee’s ability to manage this expansion and growth successfully. Risks that Twin Vee faces in undertaking this expansion
include:
| |
● |
training
new personnel; |
| |
|
|
| |
● |
forecasting
production and revenue; |
| |
|
|
| |
● |
expanding
Twin Vee’s marketing efforts, including the marketing of a new powertrain that Twin Vee intends to develop; |
| |
|
|
| |
● |
controlling
expenses and investments in anticipation of expanded operations; |
| |
|
|
| |
● |
establishing
or expanding design, manufacturing, sales and service facilities; |
| |
|
|
| |
● |
implementing
and enhancing administrative infrastructure, systems and processes; and |
| |
|
|
| |
● |
addressing
new markets. |
Twin Vee intends to continue
to hire a number of additional personnel, including design and manufacturing personnel and service technicians for Twin Vee’s electric
boats and powertrains. Competition for individuals with experience designing, manufacturing and servicing electric boats is intense,
and Twin Vee may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure
to attract, integrate, train, motivate and retain these additional employees could seriously harm Twin Vee’s business and prospects
Twin Vee depends
upon Twin Vee’s executive officers and Twin Vee may not be able to retain them and their knowledge of Twin Vee’s business
and technical expertise would be difficult to replace.
Twin Vee’s future
success will depend in significant part upon the continued service of Twin Vee’s Chief Executive Officer and other executive officers.
Twin Vee cannot assure investors that Twin Vee will be able to continue to attract or retain such persons. Twin Vee does not have an
insurance policy on the life of Twin Vee’s chief executive officer, and Twin Vee does not have “key person” life insurance
policies for any of Twin Vee’s other officers or advisors. The loss of the technical knowledge and management and industry expertise
of any of Twin Vee’s key personnel could result in delays in product development, loss of customers and sales and diversion of
management resources, which could adversely affect Twin Vee’s operating results.
Certain of Twin
Vee’s shareholders have sufficient voting power to make corporate governance decisions that could have a significant influence
on us and the other stockholders.
Twin Vee’s Chief
Executive Officer beneficially owns 29.38% of Twin Vee’s Common Stock. As a result, Twin Vee’s Chief Executive Officer does
and will have significant influence over Twin Vee’s management and affairs and over matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay
or prevent a change in Twin Vee’s control and might affect the market price of Twin Vee’s common stock, even when a change
in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always
coincide with Twin Vee’s interests or the interests of other stockholders. Accordingly, Twin Vee’s Chief Executive Officer
could cause Twin Vee to enter into transactions or agreements that Twin Vee would not otherwise consider.
Twin Vee may attempt
to grow Twin Vee’s business through acquisitions or strategic alliances and new partnerships, which Twin Vee may not be successful
in completing or integrating.
Twin Vee may in the future
enter into acquisitions and strategic alliances that will enable it to acquire complementary skills and capabilities, offer new products,
expand Twin Vee’s consumer base, enter new product categories or geographic markets, and obtain other competitive advantages. Twin
Vee cannot assure investors, however, that Twin Vee will identify acquisition candidates or strategic partners that are suitable to Twin
Vee’s business, obtain financing on satisfactory terms, complete acquisitions or strategic alliances, or successfully integrate
acquired operations into Twin Vee’s existing operations. Once integrated, acquired operations may not achieve anticipated levels
of sales or profitability, or otherwise perform as expected. Acquisitions also involve special risks, including risks associated with
unanticipated challenges, liabilities and contingencies, and diversion of management attention and resources from Twin Vee’s existing
operations. Similarly, Twin Vee’s partnership with leading franchises from other industries to market Twin Vee’s products
or with third-party technology providers to introduce new technology to the market may not achieve anticipated levels of consumer enthusiasm
and acceptance, or achieve anticipated levels of sales or profitability, or otherwise perform as expected.
Twin Vee relies
on network and information systems and other technologies for Twin Vee’s business activities and certain events, such as computer
hackings, viruses or other destructive or disruptive software or activities may disrupt Twin Vee’s operations, which could have
a material adverse effect on Twin Vee’s business, financial condition and results of operations.
Network and information
systems and other technologies are important to Twin Vee’s business activities and operations. Network and information systems-related
events, such as computer hackings, cyber threats, security breaches, viruses, or other destructive or disruptive software, process breakdowns
or malicious or other activities could result in a disruption of Twin Vee’s services and operations or improper disclosure of personal
data or confidential information, which could damage Twin Vee’s reputation and require us to expend resources to remedy any such
breaches. Moreover, the amount and scope of insurance Twin Vee maintains against losses resulting from any such events or security breaches
may not be sufficient to cover Twin Vee’s losses or otherwise adequately compensate us for any disruptions to Twin Vee’s
businesses that may result, and the occurrence of any such events or security breaches could have a material adverse effect on Twin Vee’s
business and results of operations. The risk of these systems-related events and security breaches occurring has intensified, in
part because Twin Vee maintains certain information necessary to conduct Twin Vee’s businesses in digital form stored on cloud
servers. While Twin Vee develops and maintains systems seeking to prevent systems-related events and security breaches from occurring,
the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts
to overcome security measures become more sophisticated. Despite these efforts, there can be no assurance that disruptions and security
breaches will not occur in the future. Moreover, Twin Vee may provide certain confidential, proprietary and personal information to third
parties in connection with Twin Vee’s businesses, and while Twin Vee obtains assurances that these third parties will protect this
information, there is a risk that this information may be compromised.
Maintaining the secrecy of confidential, proprietary,
or trade secret information is important to Twin Vee’s competitive business position. While Twin Vee has taken steps to protect
such information and invested in information technology, there can be no assurance that Twin Vee’s efforts will prevent service
interruptions or security breaches in Twin Vee’s systems or the unauthorized or inadvertent wrongful use or disclosure of confidential
information that could adversely affect Twin Vee’s business operations or result in the loss, dissemination, or misuse of critical
or sensitive information. A cyber-attack or other significant disruption involving Twin Vee’s information technology systems, or
those of Twin Vee’s vendors, suppliers and other partners, could also result in disruptions in critical systems, corruption or
loss of data and theft of data, funds or intellectual property. A breach of Twin Vee’s security measures or the accidental loss,
inadvertent disclosure, unapproved dissemination, misappropriation or misuse of trade secrets, proprietary information, or other confidential
information, whether as a result of theft, hacking, fraud, trickery or other forms of deception, or for any other reason, could enable
others to produce competing products, use Twin Vee’s proprietary technology or information, or adversely affect Twin Vee’s
business or financial condition. Twin Vee may be unable to prevent outages or security breaches in Twin Vee’s systems. Twin Vee
remains potentially vulnerable to additional known or yet unknown threats as, in some instances, Twin Vee, Twin Vee’s suppliers
and Twin Vee’s other partners may be unaware of an incident or its magnitude and effects. Twin Vee also faces the risk that Twin
Vee exposes Twin Vee’s vendors or partners to cybersecurity attacks. Any or all of the foregoing could adversely affect Twin Vee’s
results of operations and Twin Vee’s business reputation.
Likewise, data privacy
breaches by employees or others with permitted access to Twin Vee’s systems may pose a risk that sensitive data may be exposed
to unauthorized persons or to the public. While Twin Vee has invested in protection of data and information technology, there can be
no assurance that Twin Vee’s efforts will prevent breakdowns or breaches in Twin Vee’s systems that could adversely affect
Twin Vee’s business. The occurrence of any of such network or information systems-related events or security breaches could have
a material adverse effect on Twin Vee’s business, financial condition and results of operations.
Twin Vee’s business and operations
would suffer in the event of computer system failures.
Despite the implementation of security measures,
Twin Vee’s internal computer systems, and those of third parties on which Twin Vee rely, are vulnerable to damage from computer
viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over
the internet, attachments to emails, persons inside Twin Vee’s organization, or persons with access to systems inside Twin Vee’s
organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusions, including by computer
hackers, foreign governments, and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted
attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions in Twin Vee’s
operations, it could result in a material disruption of Twin Vee’s current or future product development programs. For example,
the loss of any customer data could impact Twin Vee’s ability to retain customers or attract new customers. To the extent that
any disruption or security breach was to result in a loss of or damage to Twin Vee’s data or applications, or inappropriate disclosure
of confidential or proprietary information, Twin Vee could incur material legal claims and liability, damage to Twin Vee’s reputation,
and the further development of Twin Vee’s product candidates could be delayed.
Twin Vee is increasingly
dependent on information technology, and Twin Vee’s systems and infrastructure face certain risks, including cybersecurity and
data leakage risks.
Significant disruptions
to Twin Vee’s information technology systems or breaches of information security could adversely affect Twin Vee’s business.
In the ordinary course of business, Twin Vee collects, stores and transmits confidential information, and it is critical that Twin Vee
do so in a secure manner to maintain the confidentiality and integrity of such confidential information. The size and complexity of Twin
Vee’s information technology systems, and those of Twin Vee’s third-party vendors with whom Twin Vee contract, make such
systems potentially vulnerable to service interruptions and security breaches from inadvertent or intentional actions by Twin Vee’s
employees, partners or vendors, from attacks by malicious third parties, or from intentional or accidental physical damage to Twin Vee’s
systems infrastructure maintained by us or by third parties. Maintaining the secrecy of this confidential, proprietary, or trade secret
information is important to Twin Vee’s competitive business position. While Twin Vee have taken steps to protect such information
and invested in information technology, there can be no assurance that Twin Vee’s efforts will prevent service interruptions or
security breaches in Twin Vee’s systems or the unauthorized or inadvertent wrongful use or disclosure of confidential information
that could adversely affect Twin Vee’s business operations or result in the loss, dissemination, or misuse of critical or sensitive
information. A breach of Twin Vee’s security measures or the accidental loss, inadvertent disclosure, unapproved dissemination,
misappropriation or misuse of trade secrets, proprietary information, or other confidential information, whether as a result of theft,
hacking, fraud, trickery or other forms of deception, or for any other reason, could enable others to produce competing products, use
Twin Vee’s proprietary technology or information, or adversely affect Twin Vee’s business or financial condition. Further,
any such interruption, security breach, loss or disclosure of confidential information, could result in financial, legal, business, and
reputational harm to Twin Vee and could have a material adverse effect on Twin Vee’s business, financial position, results of operations
or cash flow.
Uninsured losses
could result in payment of substantial damages, which would decrease Twin Vee’s cash reserves and could harm Twin Vee’s cash
flow and financial condition.
In the ordinary course of business, Twin Vee may
be subject to losses resulting from product liability, accidents, acts of God and other claims against us, for which Twin Vee may have
no insurance coverage. While Twin Vee currently carries commercial general liability, commercial boat liability, excess liability, product
liability, cybersecurity, crime, special crime, drone, cargo stock throughput, builder’s risk, owner controlled insurance program,
property, owners protective, workers’ compensation, employment practices, employed lawyers, production, fiduciary liability and
directors’ and officers’ insurance policies, Twin Vee may not maintain as much insurance coverage as other original equipment
manufacturers do, and in some cases, Twin Vee may not maintain any at all. Additionally, the policies that Twin Vee have may include
significant deductibles, and Twin Vee cannot be certain that Twin Vee’s insurance coverage will be sufficient to cover all or any
future claims against us. A loss that is uninsured or exceeds policy limits may require Twin Vee to pay substantial amounts, which could
adversely affect Twin Vee’s financial condition and results of operations. Further, insurance coverage may not continue to be available
to Twin Vee or, if available, may be at a significantly higher cost, especially if insurance providers perceive any increase in Twin
Vee’s risk profile in the future.
Intellectual Property
Risks
Forza’s patent
applications may not issue as patents, which may have a material adverse effect on its ability to prevent others from commercially exploiting
products similar to its products.
Forza cannot be certain
that it is the first inventor of the subject matter to which it has filed a particular patent application, or that it is the first party
to file such a patent application. If another party has filed a patent application for the same subject matter as it has, it may not
be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult
to determine. As a result, Twin Vee cannot be certain that the patent applications that Forza files will issue, or that Twin Vee’s
issued patents will afford protection against competitors with similar technology. In addition, its competitors may design around Forza’s
issued patents, which may adversely affect its and Twin Vee’s business, prospects, financial condition, results of operations,
and cash flows.
Twin Vee and Forza
may not be able to prevent others from unauthorized use of Twin Vee’s intellectual property, which could harm Twin Vee’s
business and competitive position.
Twin Vee and Forza may
not be able to prevent others from unauthorized use of Twin Vee’s intellectual property, which could harm Twin Vee’s and
Forza’s business and competitive position. Twin Vee and Forza rely on a combination of patent, trade secret (including those in
Twin Vee’s know-how), and other intellectual property laws, as well as employee and third-party nondisclosure agreements,
intellectual property licenses, and other contractual rights to establish and protect rights in Twin Vee’s technology and intellectual
property. Twin Vee’s and Forza’s patent or trademark applications may not be granted, any patents or trademark registrations
that may be issued to us may not sufficiently protect Twin Vee’s and Forza’s intellectual property and any of Twin Vee’s
or Forza’s issued patents, trademark registrations or other intellectual property rights may be challenged by third parties. Any
of these scenarios may result in limitations in the scope of Twin Vee’s or Forza’s intellectual property or restrictions
on Twin Vee’s or Forza’s use of Twin Vee’s intellectual property or may adversely affect the conduct of Twin Vee’s
or Forza’s business. Despite Twin Vee’s or Forza’s efforts to protect Twin Vee’s or Forza’s intellectual
property rights, third parties may attempt to copy or otherwise obtain and use Twin Vee’s or Forza’s intellectual property
or seek court declarations that they do not infringe upon Twin Vee’s or Forza’s intellectual property rights. Monitoring
unauthorized use of Twin Vee’s or Forza’s intellectual property is difficult and costly, and the steps Twin Vee and Forza
have taken or will take to prevent misappropriation may not be successful. From time to time, Twin Vee and Forza may have to resort to
litigation to enforce Twin Vee’s intellectual property rights, which could result in substantial costs and diversion of Twin Vee’s
resources.
Patent, trademark,
and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights
to the same extent as do the laws of the United States. Therefore, Twin Vee’s and Forza’s intellectual property rights
may not be as strong or as easily enforced outside of the United States. Failure to adequately protect Twin Vee’s and Forza’s
intellectual property rights could result in competitors offering similar products, potentially resulting in the loss of some of competitive
advantage and a decrease in Twin Vee’s and Forza’s revenue which would adversely affect Twin Vee’s business, prospects,
financial condition, results of operations, and cash flows.
If Forza’s patents
expire or are not maintained, Forza’s patent applications are not granted or patent rights are contested, circumvented, invalidated
or limited in scope, Forza may not be able to prevent others from selling, developing or exploiting competing technologies or products,
which could have a material adverse effect on its and Twin Vee’s business, prospects, financial condition, results of operations,
and cash flows.
Forza cannot assure that
its pending applications will issue as patents. Even if its patent applications issue into patents, these patents may be contested, circumvented
or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with adequate protection or
competitive advantages. The claims under any patents that issue from Forza’s patent applications may not be broad enough to prevent
others from developing technologies that are similar or that achieve results similar to Forza’s technology. The intellectual property
rights of others could also bar Forza from licensing and exploiting any patents that issue from Forza’s pending applications. Numerous
patents and pending patent applications owned by others exist in the fields in which Forza has developed and are developing its technology.
Many of these existing patents and patent applications might have priority over its patent applications and could subject its patents
to invalidation or its patent applications to rejection. Finally, in addition to patents and patent applications that were filed before
its patents and patent applications, any of its existing or future patents may also be challenged by others on the basis that they are
invalid or unenforceable.
Twin Vee and Forza
may in the future become, subject to claims that Twin Vee or Twin Vee’s employees have wrongfully used or disclosed alleged trade
secrets of Twin Vee’s or Forza’s employees’ former employers.
Many of Twin Vee’s
and Forza’s employees were previously employed by other companies with similar or related technology, products or services. Twin
Vee and Forza are, and may in the future become, subject to claims that Twin Vee, they or these employees have inadvertently or otherwise
used or disclosed trade secrets or other proprietary information of former employers. Litigation may be necessary to defend against these
claims. If Twin Vee or Forza fail to defend such claims, Twin Vee or they may be forced to pay monetary damages or be enjoined from using
certain technology, products, services or knowledge. Even if Twin Vee or they are successful in defending against these claims, litigation
could result in substantial costs and demand on management resources.
Twin Vee’s
and Forza’s use of open-source software in their applications could subject their proprietary software to general release, adversely
affect their ability to sell their and Forza’s services and subject us to possible litigation, claims or proceedings.
Twin Vee plans and Forza
had planned to use open-source software in connection with the development and deployment of Twin Vee’s and Forza’s products
and services. Companies that use open-source software in connection with their products have, from time to time, faced claims challenging
the use of open-source software and/or compliance with open-source license terms. As a result, Twin Vee or Forza could be subject to
suits by parties claiming ownership of what are believed to be open-source software or claiming noncompliance with open- source licensing
terms. Some open-source software licenses may require users who distribute proprietary software containing or linked to open- source
software to publicly disclose all or part of the source code to such proprietary software and/or make available any derivative works
of the open-source code under the same open- source license, which could include proprietary source code. In such cases, the open- source
software license may also restrict us or Forza from charging fees to licensees for their use of Twin Vee’s or Forza’s software.
While Twin Vee and Forza will monitor the use of open-source software and try to ensure that open-source software is not used in a manner
that would subject Twin Vee’s or Forza’s proprietary source code to these requirements and restrictions, such use could inadvertently
occur, in part because open-source license terms are often ambiguous and have generally not been interpreted by U.S. or foreign courts.
Further, in addition
to risks related to license requirements, use of certain open-source software carries greater technical and legal risks than does the
use of third-party commercial software. For example, open-source software is generally provided as-is without any support or
warranties or other contractual protections regarding infringement or the quality of the code, including the existence of security vulnerabilities.
To the extent that Twin Vee’s or Forza’s platformer the platform of Twin Vee’s subsidiaries depends upon the successful
operation of open-source software, any undetected errors or defects in open-source software that Twin Vee or Forza use could prevent
the deployment or impair the functionality of Twin Vee’s systems and injure Twin Vee’s reputation. In addition, the public
availability of such software may make it easier for attackers to target and compromise Twin Vee’s or Forza’s platform through
cyber-attacks. Any of the foregoing risks could materially and adversely affect Twin Vee’s and Forza’s business, prospects,
financial condition, results of operations, and cash flows.
A significant portion
of Twin Vee’s and Forza’s intellectual property is not protected through patents or formal copyright registration. As a result,
neither Twin Vee nor Forza have the full benefit of patent or copyright laws to prevent others from replicating Twin Vee’s or Forza’s
products, product candidates and brands.
Twin Vee has not protected
Twin Vee’s intellectual property rights with respect to Twin Vee’s gas-powered boats through patents or formal copyright
registration, and Twin Vee does not currently have any patent applications pending. There can be no assurance that any patent will issue
or if issued that the patent will protect Twin Vee’s intellectual property. As a result, Twin Vee may not be able to protect Twin
Vee’s intellectual property and trade secrets or prevent others from independently developing substantially equivalent proprietary
information and techniques or from otherwise gaining access to Twin Vee’s intellectual property or trade secrets. In such an instance,
Twin Vee’s competitors could produce products that are nearly identical to ours or Forza’s resulting in us selling less products
or generating less revenue from Twin Vee’s or Forza’s sales.
Confidentiality
agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.
Twin Vee and Forza rely
on trade secrets, know-how and technology, which are not protected by patents, to protect the intellectual property behind Twin Vee’s
boats and the intellectual property behind Forza’s electric powertrain and for the construction of its boats. Twin Vee and Forza
have recently begun to use confidentiality agreements with Twin Vee’s and its collaborators, employees, consultants, outside collaborators
and other advisors to protect its proprietary technology and processes. Twin Vee and Forza intend to use such agreements in the future,
but these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the
event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary
information, and in such cases Twin Vee and Forza could not assert any trade secret rights against such party. Costly and time-consuming
litigation could be necessary to enforce and determine the scope of Twin Vee’s proprietary rights, and failure to obtain or maintain
trade secret protection could adversely affect Twin Vee’s or Forza’s competitive business position.
Twin Vee and Forza may need to defend
themselves against patent, copyright or trademark infringement claims, which may be time-consuming and would cause us and Forza to incur
substantial costs.
The status of the protection
of Twin Vee’s and Forza’s intellectual property is unsettled as Twin Vee and Forza do not have any issued patents, registered
trademarks or registered copyrights for most of Twin Vee’s and Forza’s intellectual property and other than three design,
five utility and two full non-provisional patent applications, neither Twin Vee nor Forza have applied for the same. Companies, organizations
or individuals, including Twin Vee’s competitors, may hold or obtain patents, trademarks or other proprietary rights that would
prevent, limit or interfere with Twin Vee’s or Forza’s ability to make, use, develop, sell or market Twin Vee’s powerboats
and electric powertrains or use third-party components, which could make it more difficult for us or Forza to operate. From time to time,
Twin Vee or Forza may receive communications from third parties that allege Twin Vee’s or Forza’s products or components
thereof are covered by their patents or trademarks or other intellectual property rights. Companies holding patents or other intellectual
property rights may bring suits alleging infringement of such rights or otherwise assert their rights. If Twin Vee or Forza are determined
to have infringed upon a third party’s intellectual property rights, Twin Vee or Forza may be required to do one or more of the
following:
| |
● |
cease
making, using, selling or offering to sell processes, goods or services that incorporate or use the third-party intellectual
property; |
| |
|
|
| |
● |
pay
substantial damages; |
| |
|
|
| |
● |
seek
a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms
or at all; |
| |
|
|
| |
● |
redesign
Twin Vee’s boats or other goods or services to avoid infringing the third-party intellectual property; |
| |
|
|
| |
● |
establish
and maintain alternative branding for Twin Vee’s products and services; or |
| |
|
|
| |
● |
find-third
providers of any part or service that is the subject of the intellectual property claim. |
In the event of a successful
claim of infringement against Twin Vee or Forza and Twin Vee’s or Forza’s failure or inability to obtain a license to the
infringed technology or other intellectual property right, Twin Vee’s business, prospects, operating results and financial condition
could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs,
negative publicity and diversion of resources and management attention.
Risks Related to the
Boating Industry
Demand in the powerboat
industry is highly volatile.
Volatility of demand
in the powerboat industry, especially for recreational powerboats and electric powerboats, may materially and adversely affect Twin Vee’s
business, prospects, operating results and financial condition. The markets in which Twin Vee will be competing have been subject to
considerable volatility in demand in recent periods. Demand for recreational powerboat and electric powerboat sales depends to a large
extent on general, economic and social conditions in a given market. Historically, sales of recreational powerboats decrease during economic
downturns. Twin Vee has fewer financial resources than more established powerboat manufacturers to withstand adverse changes in the market
and disruptions in demand.
General economic
conditions, particularly in the U.S., affect Twin Vee’s industry, demand for Twin Vee’s products and Twin Vee’s business,
and results of operations.
Demand for premium boat
brands has been significantly influenced by weak economic conditions, low consumer confidence, high unemployment, and increased market
volatility worldwide, especially in the U.S. In times of economic uncertainty and contraction, consumers tend to have less discretionary
income and tend to defer or avoid expenditures for discretionary items, such as Twin Vee’s products. Sales of Twin Vee’s
products are highly sensitive to personal discretionary spending levels. Twin Vee’s business is cyclical in nature and its success
is impacted by economic conditions, the overall level of consumer confidence and discretionary income levels. Any substantial deterioration
in general economic conditions that diminishes consumer confidence or discretionary income may reduce Twin Vee’s sales and materially
adversely affect Twin Vee’s business, financial condition and results of operations. Twin Vee cannot predict the duration or strength
of an economic recovery, either in the U.S. or in the specific markets where Twin Vee sell Twin Vee’s products. Corporate restructurings,
layoffs, declines in the value of investments and residential real estate, higher gas prices, higher interest rates, and increases in
federal and state taxation may each materially adversely affect Twin Vee’s business, financial condition, and results of operations.
Consumers often finance
purchases of Twin Vee’s products. Although consumer credit markets have improved, consumer credit market conditions continue to
influence demand, especially for boats, and may continue to do so. There continue to be fewer lenders, tighter underwriting and loan
approval criteria, and greater down payment requirements than in the past. If credit conditions worsen, and adversely affect the ability
of consumers to finance potential purchases at acceptable terms and interest rates, it could result in a decrease in the sales of Twin
Vee’s products.
Global economic
conditions could materially adversely impact demand for Twin Vee’s products and services.
Twin Vee’s operations
and performance depend significantly on economic conditions. Global financial conditions continue to be subject to volatility arising
from international geopolitical developments and global economic phenomenon, as well as general financial market turbulence, including
a significant recent market reaction to the novel coronavirus (COVID-19), resulting in a significant reduction in many major market indices.
Uncertainty about global economic conditions could result in material adverse effects on Twin Vee’s business, results of operations
or financial condition. Access to public financing and credit can be negatively affected by the effect of these events on U.S. and global
credit markets. The health of the global financing and credit markets may affect Twin Vee’s ability to obtain equity or debt financing
in the future and the terms at which financing, or credit is available to us. These instances of volatility and market turmoil could
adversely affect Twin Vee’s operations and the trading price of Twin Vee’s common shares resulting in:
| |
● |
customers
postponing purchases of Twin Vee’s products and services in response to tighter credit, unemployment, negative financial news
and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand
for Twin Vee’s products and services; and |
| |
|
|
| |
● |
third-party
suppliers being unable to produce parts and components for Twin Vee’s products in the same quantity or on the same timeline
or being unable to deliver such parts and components as quickly as before or subject to price fluctuations, which could have a material
adverse effect on Twin Vee’s production or the cost of such production. |
Risks Relating to
Ownership of Twin Vee’s Common Stock
Terms of subsequent
financings may adversely impact your investment.
Twin Vee may have to
engage in common equity, debt, or preferred stock financing in the future. Investors rights and the value of their investment in Twin
Vee’s securities could be reduced. Interest on debt securities could increase costs and negatively impacts operating results. Preferred
stock could be issued in series from time to time with such designation, rights, preferences, and limitations as needed to raise capital.
The terms of preferred stock could be more advantageous to those investors than to the holders of Twin Vee Common Stock. In addition,
if Twin Vee needs to raise more equity capital from the sale of Twin Vee Common Stock , institutional or other investors may negotiate
terms at least as, and possibly more, favorable than the terms of prior investors investment. Twin Vee Common Stock which Twin Vee sells
could be sold into any market which develops, which could adversely affect the market price.
If securities analysts
do not publish research or reports about Twin Vee’s company, or if they issue unfavorable commentary about Twin Vee or Twin Vee’s
industry or downgrade Twin Vee’s Common Stock, the price of Twin Vee’s Common Stock could decline.
The trading market for
Twin Vee’s Common Stock will depend in part on the research and reports that third-party securities analysts publish about Twin
Vee and Twin Vee’s industry. Twin Vee may be unable or slow to attract research coverage and if one or more analysts cease coverage
of Twin Vee, Twin Vee could lose visibility in the market. In addition, one or more of these analysts could downgrade Twin Vee’s
Common Stock or issue other negative commentary about Twin Vee or Twin Vee’s industry. As a result of one or more of these factors,
the trading price of Twin Vee’s Common Stock could decline.
The obligations associated with being
a public company will require significant resources and management attention, which may divert from Twin Vee’s business operations.
As a result of Twin Vee’s
initial public offering, Twin Vee is subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange
Act requires that Twin Vee file annual, quarterly, and current reports with respect to Twin Vee’s business and financial condition.
The Sarbanes-Oxley Act requires, among other things, that Twin Vee establish and maintain effective internal controls and procedures
for financial reporting. As a result, Twin Vee has and will continue to incur significant legal, accounting, and other expenses that
Twin Vee did not previously incur.
Twin Vee has identified
weaknesses in Twin Vee’s internal controls, and Twin Vee cannot provide assurances that these weaknesses will be effectively remediated
or that additional material weaknesses will not occur in the future.
As a public company, Twin Vee is subject to the
reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. The requirements of these rules and regulations continue to increase
Twin Vee’s legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and
place significant strain on Twin Vee’s personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things,
that Twin Vee maintains effective disclosure controls and procedures, and internal control over financial reporting.
As of June 30, 2024, Twin Vee did not yet have
effective disclosure controls and procedures, or internal controls over all aspects of Twin Vee’s financial reporting. Twin Vee
is continuing to develop and refine Twin Vee’s disclosure controls and other procedures that are designed to ensure that information
required to be disclosed by us in the reports that Twin Vee will file with the SEC is recorded, processed, summarized and reported within
the time periods specified in SEC rules and in accordance with GAAP. Twin Vee’s management is responsible for establishing and
maintaining adequate internal control over Twin Vee’s financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
Twin Vee will be required to expend time and resources to further improve Twin Vee’s internal controls over financial reporting,
including by expanding Twin Vee’s staff. However, Twin Vee cannot assure you that Twin Vee’s internal control over financial
reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
Twin Vee will be required to expend time and resources
to further improve Twin Vee’s internal controls over financial reporting, including by expanding Twin Vee’s staff. However,
Twin Vee cannot assure investors that Twin Vee’s internal control over financial reporting, as modified, will enable us to identify
or avoid material weaknesses in the future.
Twin Vee is in the process of hiring additional
staff and providing them with the required training, Twin Vee continues to engage outside consultants with appropriate experience in
GAAP presentation, especially of complex instruments, to devise and implement effective disclosure controls and procedures, or internal
controls. Twin Vee will be required to spend time and resources hiring and engaging additional staff and outside consultants with the
appropriate experience to remedy these weaknesses. Twin Vee cannot assure investors that management will be successful in locating and
retaining appropriate candidates; that newly engaged staff or outside consultants will be successful in remedying material weaknesses
thus far identified or identifying material weaknesses in the future; or that appropriate candidates will be located and retained prior
to these deficiencies resulting in material and adverse effects on Twin Vee’s business.
Twin Vee’s current controls and any new
controls that Twin Vee develops may become inadequate because of changes in conditions in Twin Vee’s business, including increased
complexity resulting from Twin Vee’s international expansion. Further, weaknesses in Twin Vee’s disclosure controls or Twin
Vee’s internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls,
or any difficulties encountered in their implementation or improvement, could harm Twin Vee’s operating results or cause Twin Vee
to fail to meet Twin Vee’s reporting obligations and may result in a restatement of Twin Vee’s financial statements for prior
periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results
of management reports and independent registered public accounting firm audits of Twin Vee’s internal control over financial reporting
that Twin Vee will eventually be required to include in Twin Vee’s periodic reports that will be filed with the SEC. Ineffective
disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in Twin
Vee’s reported financial and other information, which would likely have a negative effect on the market price of Twin Vee’s
common stock.
Twin Vee’s independent registered public
accounting firm is not required to audit the effectiveness of Twin Vee’s internal control over financial reporting until after
Twin Vee are no longer an “emerging growth company” as defined in the JOBS Act. At such time, Twin Vee’s independent
registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Twin Vee’s
internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls
and internal control over financial reporting could have a material and adverse effect on Twin Vee’s business and operating results
and cause a decline in the market price of Twin Vee’s common stock.
Twin Vee’s
failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act as a public company could have a material adverse effect on Twin Vee’s business and share price.
Section 404(a) of the
Sarbanes-Oxley Act requires annual management assessments of the effectiveness of Twin Vee’s internal control over financial reporting
and Twin Vee’s management is required to report on the effectiveness of Twin Vee’s internal control over financial reporting
for such year. Additionally, once Twin Vee is no longer an emerging growth company, as defined by the JOBS Act, Twin Vee’s independent
registered public accounting firm will be required pursuant to Section 404(b) of the Sarbanes-Oxley Act to attest to the effectiveness
of Twin Vee’s internal control over financial reporting on an annual basis. The rules governing the standards that must be met
for Twin Vee’s management to assess Twin Vee’s internal control over financial reporting are complex and require significant
documentation, testing, and possible remediation.
Internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements in accordance with generally accepted accounting principles. Twin Vee is in the process of reviewing, documenting,
and testing Twin Vee’s internal control over financial reporting, but Twin Vee is not currently in compliance with, and Twin Vee
cannot be certain when Twin Vee will be able to implement, the requirements of Section 404(a). Twin Vee may encounter problems or delays
in implementing any changes necessary to make a favorable assessment of Twin Vee’s internal control over financial reporting. In
addition, Twin Vee may encounter problems or delays in completing the implementation of any public accounting firm after Twin Vee cease
to be an emerging growth company. If Twin Vee cannot favorably assess the effectiveness of Twin Vee’s internal control over financial
reporting, or if Twin Vee’s independent registered public accounting firm is unable to provide an unqualified attestation report
on Twin Vee’s internal controls after Twin Vee ceases to be an emerging growth company, investors could lose confidence in Twin
Vee’s financial information and the price of Twin Vee’s common stock could decline.
Additionally, the existence
of the material weakness has required management to devote significant time and incur significant expense to remediate any such material
weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies
in a timely manner. The existence of any material weakness in Twin Vee’s internal control over financial reporting could also result
in errors in Twin Vee’s financial statements that could require us to restate Twin Vee’s financial statements, cause us to
fail to meet Twin Vee’s reporting obligations, and cause stockholders to lose confidence in Twin Vee’s reported financial
information, all of which could materially and adversely affect Twin Vee’s business and share price.
For as long as
Twin Vee is an emerging growth company, Twin Vee will not be required to comply with certain reporting requirements, including those
relating to accounting standards and disclosure about Twin Vee’s executive compensation, that apply to other public companies.
Twin Vee is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, Twin Vee is eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies,” including, but not limited to, (i) not being required to comply with the auditor attestation requirements of
Section 404(b) of the Sarbanes-Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in Twin Vee’s periodic
reports and proxy statements, and (iii) exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and of stockholder approval of any golden parachute payments not previously approved. Twin Vee has elected to adopt these reduced disclosure
requirements. Twin Vee cannot predict if investors will find Twin Vee’s Common Stock less attractive as a result of Twin Vee’s
taking advantage of these exemptions and as a result, there may be a less active trading market for Twin Vee’s Common Stock and
Twin Vee’s stock price may be more volatile.
Twin Vee could remain
an “emerging growth company” for up to five years or until the earliest of (a) the last day of the first fiscal year in which
Twin Vee’s annual gross revenues exceed $1.235 billion, (b) the date that Twin Vee becomes a “large accelerated filer”
as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of Twin Vee’s common stock that is held
by non-affiliates exceeds $700 million as of the last business day of Twin Vee’s most recently completed fiscal quarter, and (c)
the date on which Twin Vee has issued more than $1 billion in non-convertible debt securities during the preceding three-year period.
Twin Vee is also a “smaller
reporting company” as defined in the Exchange Act, and has elected to take advantage of certain of the scaled disclosures available
to smaller reporting companies. To the extent that Twin Vee continues to qualify as a “smaller reporting company” as such
term is defined in Rule 12b-2 under the Exchange Act, after Twin Vee cease to qualify as an emerging growth company, certain of
the exemptions available to us as an “emerging growth company” may continue to be available to Twin Vee as a “smaller
reporting company,” including exemption from compliance with the auditor attestation requirements pursuant to SOX and reduced
disclosure about Twin Vee’s executive compensation arrangements. Twin Vee will continue to be a “smaller reporting company”
until Twin Vee has $250 million or more in public float (based on Twin Vee’s common stock) measured as of the last business
day of Twin Vee’s most recently completed second fiscal quarter or, in the event Twin Vee has no public float (based on Twin Vee’s
common stock) or a public float (based on Twin Vee’s common stock) that is less than $700 million, annual revenues of $100 million
or more during the most recently completed fiscal year.
Twin Vee’s
failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of Twin Vee’s common
stock.
The shares of Twin Vee’s
Common Stock are listed for trading on The Nasdaq Capital Market under the symbol “VEEE.” If Twin Vee fails to satisfy the
continued listing requirements of The Nasdaq Capital Market, such as the corporate governance requirements, the stockholder’s equity
requirement, or the minimum closing bid price requirement, The Nasdaq Capital Market may take steps to de-list Twin Vee’s Common
Stock. Such a de-listing or even notification of failure to comply with such requirements would likely have a negative effect on the
price of Twin Vee’s Common Stock and would impair your ability to sell or purchase Twin Vee’s Common Stock when you wish
to do so. In the event of a de-listing, Twin Vee would take actions to restore Twin Vee’s compliance with The Nasdaq Capital Market’s
listing requirements, but Twin Vee can provide no assurance that any such action taken by us would allow Twin Vee’s Common Stock
to become listed again, stabilize the market price, improve the liquidity of Twin Vee’s Common Stock, prevent Twin Vee’s
Common Stock from dropping below The Nasdaq Capital Market minimum bid price requirement, or prevent future non-compliance with The Nasdaq
Capital Market’s listing requirements.
On May 10, 2024, Twin
Vee 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), Twin Vee’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 notice has no immediate effect on the listing or trading of the Company’s common stock and the common stock will continue to
trade on The Nasdaq Capital Market under the symbol “VEEE.”
In accordance with Nasdaq
Listing Rule 5810(c)(3)(A), Twin Vee has a compliance period of 180 calendar days, or until November 6, 2024, to regain compliance with
Nasdaq Listing Rule 5550(a)(2). Compliance is generally achieved by meeting the price requirement for a minimum of 10 consecutive business
days. However, Nasdaq may, in its discretion, require a company to satisfy the applicable price-based requirement for a period in excess
of 10 consecutive business days, but generally no more than 20 consecutive business days, before determining that a company has demonstrated
an ability to maintain long-term compliance.
If, however, Twin Vee
does not achieve compliance with the Minimum Bid Price Requirement by November 6, 2024, Twin Vee may be eligible for additional time
to comply. In order to be eligible for such additional time, Twin Vee will be required to meet the continued listing requirement for
market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the
Minimum Bid Price Requirement, and must notify Nasdaq in writing of Twin Vee’s intention to cure the deficiency during the second
compliance period.
Twin Vee intends to actively
monitor the bid price of Twin Vee’s common stock and will consider available options to regain compliance with the Nasdaq listing
requirements, including such actions as effecting a reverse stock split to maintain Twin Vee’s Nasdaq listing.
The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities,
which are referred to as “covered securities.” Because Twin Vee’s Common Stock is listed on The Nasdaq Capital Market,
it is a covered security. Although the states are preempted from regulating the sale of covered securities, the federal statute does
allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the
states can regulate or bar the sale of covered securities in a particular case. Further, if Twin Vee were to be delisted from The Nasdaq
Capital Market, Twin Vee’s Common Stock would cease to be recognized as a covered security and Twin Vee would be subject to regulation
in each state in which Twin Vee offers Twin Vee’s securities.
Twin Vee’s
stock price has fluctuated in the past, has recently been volatile, and may be volatile in the future, and as a result, investors in
Twin Vee’s Common Stock could incur substantial losses.
Investors should consider an investment in Twin Vee’s Common Stock risky and
invest only if they can withstand a significant loss and wide fluctuations in the market value of their investment. Investors who purchase
Twin Vee’s Common Stock may not be able to sell their shares at or above the purchase price. Twin Vee’s stock price has been
volatile and may be volatile in the future. The price of Twin Vee’s Common Stock has experienced volatility. On January 20, 2023,
the closing price of Twin Vee’s Common Stock on the Nasdaq was $1.33 per share, on September 30, 2024, the closing price of Twin
Vee’s common stock on the Nasdaq was $0.60 per share It is possible that an active trading market will not continue or be sustained,
which could make it difficult for investors to sell their shares of Twin Vee’s Common Stock at an attractive price or at all. The
stock market in general has been, and the market price of Twin Vee’s Common Stock in particular, will likely be subject to fluctuation,
whether due to, or irrespective of, Twin Vee’s operating results and financial condition. The market price of Twin Vee’s Common
Stock may fluctuate as a result of a number of factors, some of which are beyond Twin Vee’s control, including, but not limited to:
| |
● |
actual
or anticipated variations in Twin Vee’s and Twin Vee’s competitors’ results of operations and financial condition; |
| |
● |
market
acceptance of Twin Vee’s products; |
| |
● |
the mix of products
that Twin Vee sells and related services that Twin Vee provides; |
| |
● |
changes
in earnings estimates or recommendations by securities analysts, if Twin Vee’s Common Stock is covered by analysts; |
| |
● |
development
of technological innovations or new competitive products by others; |
| |
● |
announcements
of technological innovations or new products by us; |
| |
● |
Twin
Vee’s failure to achieve a publicly announced milestone; |
| |
● |
delays
between Twin Vee’s expenditures to develop and market new or enhanced products and the generation of sales from those products; |
| |
● |
developments
concerning intellectual property rights, including Twin Vee’s involvement in litigation; |
| |
● |
Twin
Vee’s sale or proposed sale, or the sale by Twin Vee’s significant shareholders, of Twin Vee’s Common Stock or
other securities in the future |
| |
● |
changes
in key personnel; |
| |
● |
success
or failure of Twin Vee’s research and development projects or those of Twin Vee’s competitors; |
| |
● |
the
trading volume of Twin Vee’s Common Stock; and |
| |
● |
general economic and
market conditions and other factors, including factors unrelated to Twin Vee’s operating performance. |
These factors and any
corresponding price fluctuations may materially and adversely affect the market price of Twin Vee’s Common Stock and result in
substantial losses being incurred by Twin Vee’s investors. In the past, following periods of market volatility, public company
shareholders have often instituted securities class action litigation. If Twin Vee were involved in securities litigation, it could impose
a substantial cost upon us and divert the resources and attention of Twin Vee’s management from Twin Vee’s business.
Twin Vee’s
Common Stock has often been thinly traded, so investors may be unable to sell at or near ask prices or at all if investors need to sell
shares to raise money or otherwise desire to liquidate their shares.
To date, there have been
many days on which limited trading of Twin Vee’s Common Stock took place. Twin Vee cannot predict the extent to which investors’
interests will lead to an active trading market for Twin Vee’s Common Stock or whether the market price of Twin Vee’s Common
Stock will be volatile. If an active trading market does not develop, investors may have difficulty selling Twin Vee’s Common Stock.
Twin Vee is likely to be too small to attract the interest of many brokerage firms and analysts. Twin Vee cannot give investors any assurance
that an active public trading market for Twin Vee’s Common Stock will develop or be sustained. The market price of Twin Vee’s
Common Stock could be subject to wide fluctuations in response to quarterly variations in Twin Vee’s revenues and operating expenses,
announcements of new products or services by us, significant sales of Twin Vee’s Common Stock, including “short” sales,
the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends
in Twin Vee’s markets or general economic conditions.
Twin Vee does not
intend to pay dividends on Twin Vee’s Common Stock for the foreseeable future.
Twin Vee presently has
no intention to pay dividends on Twin Vee’s Common Stock at any time in the foreseeable future. Any decision to declare and pay
dividends in the future will be made at the discretion of Twin Vee’s board of directors and will depend on, among other things,
Twin Vee’s results of operations, financial condition, cash requirements, contractual restrictions, and other factors that Twin
Vee’s board of directors may deem relevant. Furthermore, Twin Vee’s ability to declare and pay dividends may be limited by
instruments governing future outstanding indebtedness Twin Vee may incur.
FINRA sales practice requirements may
limit your ability to buy and sell Twin Vee’s common shares, which could depress the price of Twin Vee’s shares.
FINRA rules require broker-dealers
to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer.
Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations
of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least
some customers. Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy Twin Vee’s
common shares, which may limit an investor’s ability to buy and sell Twin Vee’s shares, have an adverse effect on the market
for Twin Vee’s shares and, thereby, depress their market prices.
Provisions in Twin
Vee’s corporate charter documents and under Delaware law could make an acquisition of Twin Vee’s company, which may be beneficial
to Twin Vee’s stockholders, more difficult and may prevent attempts by Twin Vee’s stockholders to replace or remove Twin
Vee’s current management.
Provisions in Twin Vee’s
corporate charter and Twin Vee’s bylaws may discourage, delay or prevent a merger, acquisition or other change in control of Twin
Vee’s company that stockholders may consider favorable, including transactions in which an investor might otherwise receive a premium
for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of Twin
Vee’s common stock, thereby depressing the market price of Twin Vee’s common stock. In addition, because Twin Vee’s
Board of Directors is responsible for appointing the members of Twin Vee’s management team, these provisions may frustrate or prevent
any attempts by Twin Vee’s stockholders to replace or remove Twin Vee’s current management by making it more difficult for
stockholders to replace members of Twin Vee’s Board of Directors. Among other things included in these provisions:
| |
● |
Twin
Vee’s Board of Directors is divided into three classes, one class of which is elected each year by Twin Vee’s stockholders with
the directors in each class to serve for a three-year term; |
| |
|
|
| |
● |
the
authorized number of directors can be changed only by resolution of Twin Vee’s Board of Directors; |
| |
|
|
| |
● |
directors
may be removed only by the affirmative vote of the holders of at least sixty percent (60%) of Twin Vee’s voting stock,
whether for cause or without cause; |
| |
|
|
| |
● |
Twin
Vee’s bylaws may be amended or repealed by Twin Vee’s Board of Directors or by the affirmative vote of sixty-six and
two-thirds percent (66 2/3%) of Twin Vee’s stockholders; |
| |
|
|
| |
● |
stockholders
may not call annual meetings of the stockholders or fill vacancies on the Twin Vee Board of Directors; |
| |
|
|
| |
● |
Twin
Vee’s Board of Directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will
be determined at the discretion of the board of directors and that, if issued, could operate as a ”poison pill”
to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that Twin Vee’s Board of Directors
does not approve; |
| |
|
|
| |
● |
Twin
Vee’s stockholders do not have cumulative voting rights, and therefore Twin Vee’s stockholders holding a majority of the
shares of common stock outstanding will be able to elect all of Twin Vee’s directors; and |
| |
|
|
| |
● |
Twin
Vee’s stockholders must comply with advance notice provisions to bring business before or nominate directors for election
at a stockholder meeting. |
Moreover, because Twin
Vee is incorporated in Delaware, Twin Vee is governed by the provisions of Section 203 of the Delaware General Corporation Law, which
prohibits a person who owns in excess of 15% of Twin Vee’s outstanding voting stock from merging or combining with us for a period
of three years after the date of the transaction in which the person acquired in excess of 15% of Twin Vee’s outstanding voting
stock, unless the merger or combination is approved in a prescribed manner.
Twin Vee’s
Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain types
of state actions that may be initiated by Twin Vee’s stockholders, which could limit Twin Vee’s stockholders’ ability
to obtain a favorable judicial forum for disputes with us or Twin Vee’s directors, officers, or employees
Twin Vee’s Certificate
of Incorporation provides that, unless Twin Vee consent to the selection of an alternative forum, the Court of Chancery of the State
of Delaware is the exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim
of breach of a fiduciary duty owed by any of Twin Vee’s directors, officers, or other employees to us or Twin Vee’s stockholders,
(iii) any action arising pursuant to any provision of the DGCL or Twin Vee’s certificate of incorporation or bylaws (as either
may be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine. The exclusive forum
provision does not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or any other
claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims,
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction
for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations
thereunder.
These exclusive-forum
provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us
or Twin Vee’s directors, employees, control persons, underwriters, or agents, which may discourage lawsuits against us and Twin
Vee’s directors, employees, control persons, underwriters, or agents. Additionally, a court could determine that the exclusive
forum provision is unenforceable, and Twin Vee’s stockholders will not be deemed to have waived Twin Vee’s compliance with
the federal securities laws and the rules and regulations thereunder. If a court were to find these provisions of Twin Vee’s bylaws
inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, Twin Vee may incur additional
costs associated with resolving such matters in other jurisdictions, which could adversely affect Twin Vee’s business, financial
condition, or results of operations.
Risks Related to the Industry of Twin Vee and
the Combined Entity
RISKS RELATED TO FORZA’S BUSINESS
Forza
is a start-up entity and was expected to incur significant expenses and continuing losses for the foreseeable future.
Forza
is a start-up entity and has had very limited operations to date. To date, Forza has not completed the development of its electric boats
or electric outboard motor. Three different protypes of the electric boat have been built.
The design phase of Forza’s outboard motor was completed and was most recently in the prototype phase before the decision to wind
down opera The estimated costs and timelines that we have developed to
design and complete the design and engineering of the FX1 sport boat and its outboard electric motor and then reach full scale commercial
production are subject to inherent risks and uncertainties involved in the transition from a start-up company focused on research and
development activities to the large-scale manufacture and sale of vehicles.. Forza
did not expect to be profitable for the foreseeable future and anticipated incurring significant costs to continue to develop its boats.
There can be no assurance that Forza’s estimates related to the costs and timing necessary to complete the design and engineering
of a commercially viable electric boat and its outboard electric motor, will prove accurate. These are complex processes that may be
subject to delays, cost overruns and other unforeseen issues. In addition, Forza had engaged in limited marketing activities to date,
so even if it were able to bring an electric boat or other commercial products to market, on time and on budget, there could be no assurance
that customers would embrace its products in significant numbers. Accordingly, On July 11, 2024, the Forza Board of Directors determined
to discontinue and wind down Forza’s business related to the development and sale of electric boats utilizing its proprietary outboard
electric motor. Even if it were able to successfully develop its boats and attract customers, there can be no assurance that Forza will
be financially successful.
There
is substantial doubt about Forza’s ability to continue as a going concern. Forza’s independent registered public accounting
firm has expressed doubt about its ability to continue as a going concern.
The
report of Forza’s independent registered public accounting firm contains a note stating that the accompanying financial statements
have been prepared assuming Forza will continue as a going concern. During the six months ended June 30, 2024 and 2023, Forza incurred
a net loss of $3,999,391 and $3,488,786, respectively and used cash in operations of $1,5526,246 and $2,882,869, respectively. During
the year ended December 31, 2023, Forza incurred a net loss of $5,933,113 and used cash in operations of $4,150,280. Losses have principally
occurred as the result of Forza’s research and development efforts coupled with a lack of operating revenue. Until Forza begins
generating revenue, there is doubt about its ability to become a going concern in the future.
Forza’s
limited operating history makes it difficult to evaluate its future business prospects.
Forza
is a company with an extremely limited operating history and has not generated any revenue from sales of its boats or other products
and services to date. As Forza’s Board of Directors determined to discontinue and wind down Forza’s business related to the
development and sale of electric boats utilizing its proprietary outboard electric motor it is difficult, if not impossible, to forecast
its future results, and Forza has limited insight into trends that may emerge and affect its business.
Forza has identified
material weaknesses in Forza’s internal controls, and Forza cannot provide assurances that these weaknesses will be effectively
remediated or that additional material weaknesses will not occur in the future.
As a public company,
Forza is subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. Forza expects that the requirements of
these rules and regulations will continue to increase Forza’s legal, accounting and financial compliance costs, make some activities
more difficult, time consuming and costly, and place significant strain on Forza’s personnel, systems and resources while Forza
remains a public stand alone company .
The Sarbanes-Oxley Act
requires, among other things, that Forza maintains effective disclosure controls and procedures, and internal controls over financial
reporting.
Forza does not yet have
effective disclosure controls and procedures, or internal controls over all aspects of Forza’s financial reporting. Forza is continuing
to develop and refine Forza’s internal controls over financial reporting. Forza’s management is responsible for establishing
and maintaining adequate internal control over Forza’s financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.
Forza will be required to expend time and resources to further improve Forza’s internal controls over financial reporting, including
by expanding Forza’s staff. However, Forza cannot assure you that Forza’s internal control over financial reporting, as modified,
will enable us to identify or avoid material weaknesses in the future.
Forza has identified material weaknesses in Forza’s
internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a material misstatement of Forza’s financial statements
will not be prevented or detected on a timely basis. The material weaknesses identified to date include that Forza have not yet retained
sufficient staff or engaged sufficient outside consultants with appropriate experience in GAAP presentation, especially of complex instruments,
to devise and implement effective disclosure controls and procedures, or internal controls.
Forza will be required
to expend time and resources to further improve Forza’s internal controls over financial reporting, including by expanding Forza’s
staff. However, Forza cannot assure you that Forza’s internal control over financial reporting, as modified, will enable Forza
to identify or avoid material weaknesses in the future.
Forza’s current
controls and any new controls that Forza develop may become inadequate because of changes in conditions in Forza’s business, including
increased complexity resulting from Forza’s international expansion. Further, weaknesses in Forza’s disclosure controls or
Forza’s internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective
controls, or any difficulties encountered in their implementation or improvement, could harm Forza’s operating results or cause
us to fail to meet Forza’s reporting obligations and may result in a restatement of Forza’s financial statements for prior
periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results
of management reports and independent registered public accounting firm audits of Forza’s internal control over financial reporting
that Forza will eventually be required to include in Forza’s periodic reports that will be filed with the Securities and Exchange
Commission (the “SEC”). Ineffective disclosure controls and procedures, and internal control over financial reporting could
also cause investors to lose confidence in Forza’s reported financial and other information, which would likely have a negative
effect on the market price of Forza’s common stock.
Forza’s independent
registered public accounting firm is not required to audit the effectiveness of Forza’s internal control over financial reporting
until after Forza is no longer an “emerging growth company” as defined in the JOBS Act and meet other requirements. At such
time, Forza’s independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied
with the level at which Forza’s internal control over financial reporting is documented, designed or operating. Any failure to
maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on Forza’s
business and operating results and cause a decline in the market price of Forza’s common stock.
Forza is not likely to receive the previously
anticipated tax abatement from the Job Development Investment Grant.
On July 28, 2022, Forza received notice that the
North Carolina Economic investment committee has approved a Job Development Investment Grant (“JDIG”) providing for reimbursement
to it of up to $1,367,100 over a twelve-year period to establish a new manufacturing plant in McDowell County, North Carolina. The receipt
of grant funding is conditioned upon Forza investing over $10.5 million in land, buildings and fixtures, infrastructure and machinery
and equipment by the end of 2025 and us creating as many as 170 jobs. As a result of Forza’s recent decision to discontinue operations,
Forza is not likely to meet the conditions necessary to receive the grant funding. In addition, there can be no assurance that Forza
will be able to sell the land and partially constructed building in McDowell County, North Carolina for a purchase price equal to the
amount of Forza’s investment in the planned site.
Forza’s outstanding common stock is
substantially controlled by Forza’s management.
Twin Vee PowerCats, Co. currently owns 44%
of Forza’s outstanding common stock. Joseph Visconti, who currently serves as Forza’s Executive Chairman and Chief
of Product Development is also the Chairman of the Board and Chief Executive Officer of Forza’s parent company, Twin Vee PowerCats
Co., and is also the Chairman of the Board and Chief Executive Officer of Twin Vee PowerCats Co. Mr. Visconti beneficially owns 29.38%
of the outstanding stock of Twin Vee PowerCats Co. As a result of these holdings, Mr. Visconti does and will have significant influence
over Forza’s management and affairs and over matters requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. Therefore, Twin Vee PowerCats Co. has substantial influence over any election of Forza’s
directors and Forza’s operations. It should also be noted that for the most part, authorization to modify Forza’s amended
and restated certificate of incorporation, as amended, requires only majority stockholder consent and approval to modify Forza’s
amended and restated bylaws requires authorization of only a majority of the board of directors. This concentration of ownership could
also have the effect of delaying or preventing a change in Forza’s control. Accordingly, Forza’s Executive Chairman and Chief
of Product Development could cause us to enter into transactions or agreements that Forza would not otherwise consider.
In addition, this concentration of ownership may
delay or prevent a change in Forza’s control and might affect the market price of Forza’s common stock, even when a change
in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always
coincide with Forza’s interests or the interests of other stockholders.
Forza’s management overlaps substantially
with the management and beneficial owners of Forza’s principal stockholder, which may give rise to potential conflicts of interest.
Several of Forza’s executive officers and
directors are also officers and/or directors of Forza’s principal stockholder, Twin Vee PowerCats Co., and certain of such executive
officers and directors are, in turn, the principal stockholders of Twin Vee PowerCats Co. For example the Chairman of Forza’s Board
of Directors is the Chairman of the Board of Director and Chief Executive Officer of Twin Vee PowerCats Co. and Forza’s interim
Chief Financial Officer currently serves as the Chief Financial Officer of Twin Vee PowerCats Co. Accordingly, there may be inherent,
albeit non-specific, potential conflicts involved in the participation by members of each company’s management, audit committee,
compensation committee, nominating committee and other applicable board committees which will oversee questions of possible conflicts
of interest and compensation, notwithstanding Forza’s effort to appoint independent directors that do not have these inherent conflicts.
In addition, as a matter of practicality, efficiency and appropriate accounting, the costs of certain services (including salaries of
executive officers) are allocated, which creates inter-company obligations.
Forza’s annual
and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond Forza’s
control.
Forza’s sales and operating results are
expected to vary significantly from quarter to quarter and year to year depending on various factors, many of which are beyond Forza’s
control. These factors include, but are not limited to:
| |
● |
Seasonal
consumer demand for Forza’s products; |
| |
|
|
| |
● |
Discretionary
spending habits; |
| |
|
|
| |
● |
Changes
in pricing in, or the availability of supply in, the powerboat market; |
| |
|
|
| |
● |
Failure
to maintain a premium brand image; |
| |
|
|
| |
● |
Disruption
in the operation of Forza’s manufacturing facilities; |
| |
|
|
| |
● |
Variations
in the timing and volume of Forza’s sales; |
| |
|
|
| |
● |
The
timing of Forza’s expenditures in anticipation of future sales; |
| |
|
|
| |
● |
Sales
promotions by us and Forza’s competitors; |
| |
|
|
| |
● |
Changes
in competitive and economic conditions generally; |
| |
|
|
| |
● |
Consumer
preferences and competition for consumers’ leisure time; |
| |
|
|
| |
● |
Impact
of unfavorable weather conditions; |
| |
|
|
| |
● |
Changes
in the cost or availability of Forza’s labor; and |
| |
|
|
| |
● |
Increased
fuel prices. |
Due to these and other factors, Forza’s
results of operations may decline quickly and significantly in response to changes in order patterns or rapid decreases in demand for
Forza’s products. Forza anticipates that fluctuations in operating results will continue in the future.
Forza depends upon Forza’s executive
officers, and Forza may not be able to retain them and their knowledge of Forza’s business and technical expertise would be difficult
to replace.
Forza’s future success will depend in significant
part upon the continued service of Forza’s executive officers. Forza cannot assure you that Forza will be able to continue to attract
or retain such persons. Forza does not have an insurance policy on the life of Forza’s Executive Chairman and Chief Executive Officer,
and Forza does not have “key person” life insurance policies for any of Forza’s other officers or advisors. The loss
of the technical knowledge and management and industry expertise of any of Forza’s key personnel could result in delays in product
development, loss of customers and sales and diversion of management resources, which could adversely affect Forza’s operating
results.
Risks Relating to Ownership of Forza’s
Common Stock
Terms of subsequent financings may adversely
impact your investment.
Forza may have to engage in common equity, debt,
or preferred stock financing in the future if it continues as a stand alone operating company. Stockholders’ rights and the value
of any investment in Forza’s securities could be reduced. Interest on debt securities could increase costs and negatively impacts
operating results. Preferred stock could be issued in series from time to time with such designation, rights, preferences, and limitations
as needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of common
shares. In addition, if Forza needs to raise more equity capital from the sale of common shares, institutional or other investors may
negotiate terms at least as, and possibly more, favorable than the terms of your investment. Common shares which Forza sells could be
sold into any market which develops, which could adversely affect the market price and could result in dilution to existing shareholders.
Future sales and
issuances of Forza’s Common Stock or rights to purchase common stock, including pursuant to Forza’s equity incentive plans
and outstanding warrants, could result in additional dilution of the percentage ownership of Forza’s stockholders and could cause
Forza’s stock price to fall.
If the Merger is not
consummated and Forza continues as a stand alone operating company Forza expects that significant additional capital may be needed in
the future to continue operations,. To raise capital, Forza may sell common stock, convertible securities or other equity securities
in one or more transactions at prices and in a manner Forza determines from time to time. If Forza sells common stock, convertible securities
or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution
to Forza’s existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of Forza’s
common stock. Pursuant to the Forza X1, Inc. 2022 Stock Incentive Plan (the “2022 Plan”) Forza’s management is authorized
to grant equity awards to Forza’s employees, officers, directors and consultants.
Initially, the aggregate
number of shares of Forza’s common stock that might be issued pursuant to stock awards under Forza’s 2022 Plan was 1,500,000
shares, which has been since increased to 2,680,398 pursuant to the evergreen provision in the 2022 Plan, and of which 790,481 remain
available for grant as of the date hereof. Increases in the number of shares available for future grant or purchase may result in additional
dilution, which could cause Forza’s stock price to decline.
The issuance of the shares
of common stock underlying the options and warrants will have a dilutive effect on the percentage ownership held by holders of Forza’s
common stock.
If securities analysts do not publish research
or reports about Forza’s company, or if they issue unfavorable commentary about us or Forza’s industry or downgrade Forza’s
common stock, the price of Forza’s common stock could decline.
The trading market for Forza’s common stock
will depend in part on the research and reports that third-party securities analysts publish about Forza’s company and Forza’s
industry. To date Forza has not been able to attract significant research coverage and if one or more analysts that should cover Forza
cease coverage of Forza’s company, Forza could lose visibility in the market. In addition, one or more of these analysts could
downgrade Forza’s common stock or issue other negative commentary about Forza’s company or Forza’s industry. As a result
of one or more of these factors, the trading price of Forza’s common stock could decline.
The obligations associated with being a
public company will require significant resources and management attention, which may divert from Forza’s business operations.
As a result of its initial public offering, Forza
is subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires that Forza file annual,
quarterly, and current reports with respect to Forza’s business and financial condition. The Sarbanes-Oxley Act requires, among
other things, that Forza establish and maintain effective internal controls and procedures for financial reporting. As a result, Forza
will incur significant legal, accounting, and other expenses that Forza did not previously incur.
Forza’s has been advised by The Nasdaq Capital Market that its failure to meet
the continued listing requirements of The Nasdaq Capital Market has resulted in a de-listing of Forza’s common stock.
Forza’s shares of common stock are listed for trading on The Nasdaq Capital Market
under the symbol “FRZA.” However, Forza has received a letter from Nasdaq notifying it that due to its failure regain compliance
with the Nasdaq bid price requirement, the Forza Common Stock will be delisted. Such a de-listing or even notification of failure to comply
with such requirements would likely have a negative effect on the price of our common stock and warrants would impair your ability to
sell or purchase Forza’s common stock when you wish to do so.
On October 4, 2023, Forza
received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying it
that for the preceding 30 consecutive business days (August 22, 2023 through October 3, 2023), Forza’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 notice has no immediate effect on the listing or trading of Forza’s common stock and the common stock will continue to trade
on The Nasdaq Capital Market under the symbol “FRZA.”
In
accordance with Nasdaq Listing Rule 5810(c)(3)(A), Forza was provided a compliance period of 180 calendar days, or until April 1, 2024,
to regain compliance with Nasdaq Listing Rule 5550(a)(2). Forza did not regain compliance with the Minimum Bid Price Requirement
by April 1, 2024; however, on April 2, 2024 Forza received written notification from Nasdaq granting our request for a 180-day extension
to regain compliance with Nasdaq Listing Rule 5550(a)(2). Compliance is generally achieved by meeting the price requirement for a minimum
of 10 consecutive business days. However, Nasdaq may, in its discretion, require a company to satisfy the applicable price-based requirement
for a period in excess of 10 consecutive business days, but generally no more than 20 consecutive business days, before determining that
a company has demonstrated an ability to maintain long-term compliance. If Forza did not regain compliance with the Minimum Bid
Price Requirement by September 30, 2024, Nasdaq was expected to provide written notification to Forza that its common stock will be delisted.
On October 1, 2024, Nasdaq provided written notification to Forza that the Forza Common Stock will be delisted.
The National Securities Markets Improvement Act of 1996, which is a federal
statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.”
While Forza’s Common Stock is listed on The Nasdaq Capital Market, its common stock is a covered securitiy. Once delisted, Forza’s
Common Stock will no longer be a covered security. Although the states are preempted from regulating the sale of covered securities, the
federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, upon being delisted from The
Nasdaq Capital Market, Forza Common Stock will cease to be recognized as covered securities and Forza will be subject to regulation in
each state in which it offers its securities, as well as subject to the “penny stock” rules of the SEC, which would make transactions
in Forza Common Stock cumbersome and may reduce the value of an investment in the stock.
Rule
15g-9 under the Exchange Act, establishes the definition of a “penny stock,” for the purposes relevant to Forza, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s
account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction,
setting forth the identity and quantity of the penny stock to be purchased.
In
order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information
and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to
the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination;
and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally,
brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable
to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available
to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in penny stocks.
For as
long as Forza is an emerging growth company, Forza will not be required to comply with certain reporting requirements, including those
relating to accounting standards and disclosure about Forza’s executive compensation, that apply to other public companies.
Forza is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, Forza is eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,”
including, but not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act, (ii) reduced disclosure obligations regarding executive compensation in Forza’s periodic reports and proxy statements, and
(iii) exemptions from the requirements of holding a non-binding advisory vote on executive compensation and of stockholder approval of
any golden parachute payments not previously approved. Forza has elected to adopt these reduced disclosure requirements. Forza cannot
predict if investors will find Forza’s common stock less attractive as a result of Forza’s taking advantage of these exemptions
and as a result, there may be a less active trading market for Forza’s common stock and Forza’s stock price may be more volatile.
Forza could remain an “emerging growth company”
for up to five years or until the earliest of (a) the last day of the first fiscal year in which Forza’s annual gross revenues
exceed $1.235 billion, (b) the date that Forza become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange
Act, which would occur if the market value of Forza’s common stock that is held by non-affiliates exceeds $700 million as of the
last business day of Forza’s most recently completed fiscal quarter, and (c) the date on which Forza have issued more than $1 billion
in non-convertible debt securities during the preceding three-year period.
Forza is also a “smaller reporting company”
as defined in the Exchange Act and have elected to take advantage of certain of the scaled disclosures available to smaller reporting
companies. To the extent that Forza continues to qualify as a “smaller reporting company” as such term is defined in Rule 12b-2
under the Exchange Act, after Forza ceases to qualify as an emerging growth company, certain of the exemptions available to us as an
“emerging growth company” may continue to be available to us as a “smaller reporting company,” including exemption
from compliance with the auditor attestation requirements pursuant to SOX and reduced disclosure about Forza’s executive compensation
arrangements. Forza will continue to be a “smaller reporting company” until Forza have $250 million or more in public
float (based on Forza’s common stock) measured as of the last business day of Forza’s most recently completed second fiscal
quarter or, in the event Forza has no public float (based on Forza’s common stock) or a public float (based on Forza’s common
stock) that is less than $700 million, annual revenues of $100 million or more during the most recently completed fiscal year.
Forza’s common stock price has been
and may continue to be volatile or may decline regardless of Forza’s operating performance and you may not be able to resell your
shares at or above the price paid for your stock.
The trading price of Forza’s common stock has been and is expected to
continue to be volatile and has been and may continue to be subject to wide fluctuations in response to various factors, some of which
are beyond Forza’s control, including limited trading volume. On August 12, 2022, the reported closing price of Forza’s common
stock was $7.49, while on September 30, 2024 the closing price of Forza’s common stock was $0.319. Forza may incur rapid and substantial
decreases in Forza’s stock price in the foreseeable future that are unrelated to Forza’s operating performance for prospects.
Volatility in the market price of Forza’s
common stock may prevent stockholders from being able to sell their shares at or above the price they paid for them. Many factors, which
are outside Forza’s control, may cause the market price of Forza’s common stock to fluctuate significantly, including those
described elsewhere in this “Risk Factors” section and this Joint Proxy Statement/ Prospectus, as well as the following:
| |
● |
Forza’s
operating and financial performance and prospects; |
| |
|
|
| |
● |
Forza’s quarterly
or annual earnings or those of other companies in Forza’s industry compared to market expectations; |
| |
|
|
| |
● |
Conditions that impact
demand for Forza’s products; |
| |
|
|
| |
● |
Future announcements
concerning Forza’s business or Forza’s competitors’ businesses; |
| |
|
|
| |
● |
The public’s
reaction to Forza’s press releases, other public announcements, and filings with the SEC; |
| |
|
|
| |
● |
The size of Forza’s
public float; |
| |
|
|
| |
● |
Coverage by or changes
in financial estimates by securities analysts or failure to meet their expectations; |
| |
|
|
| |
● |
Market and industry
perception of Forza’s success, or lack thereof, in pursuing Forza’s growth strategy; |
| |
|
|
| |
● |
Strategic actions by
us or Forza’s competitors, such as acquisitions or restructurings; |
| |
|
|
| |
● |
Changes in laws or
regulations that adversely affect Forza’s industry or us; |
| |
|
|
| |
● |
Changes in accounting
standards, policies, guidance, interpretations, or principles; |
| |
|
|
| |
● |
Changes in senior management
or key personnel; |
| |
|
|
| |
● |
Issuances, exchanges
or sales, or expected issuances, exchanges or sales of Forza’s capital stock; |
| |
|
|
| |
● |
Changes in Forza’s
dividend policy; |
| |
|
|
| |
● |
Adverse resolution
of new or pending litigation against us; and |
| |
|
|
| |
● |
Changes
in general market, economic, and political conditions in the U.S. and global economies or financial markets, including those resulting
from natural disasters, terrorist attacks, acts of war, and responses to such events. |
As a result, volatility in the market price of
Forza’s common stock may prevent investors from being able to sell their common stock at or above the price paid for such shares
or at all. These broad market and industry factors may materially reduce the market price of Forza’s common stock, regardless of
Forza’s operating performance. In addition, price volatility may be greater if the public float and trading volume of Forza’s
common stock is low. As a result, shareholders may suffer a loss on their investment.
Additionally, recently, securities of certain
companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known
as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led
to the price per share of those companies to trade at significantly inflated rates that is disconnected from the underlying value of
the company. Many investors who have purchased shares in those companies at an inflated rate face the risk of losing a significant portion
of their original investment as the price per share has declined steadily as interest in those stocks have abated. While Forza has no
reason to believe Forza’s shares would be the target of a short squeeze, there can be no assurance that Forza won’t be in
the future, and shareholders may lose a significant portion or all of their investment if they purchase Forza’s shares at a rate
that is significantly disconnected from Forza’s underlying value.
Forza’s Common
Stock has often been thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise
money or otherwise desire to liquidate your shares.
To date, there have been
many days on which limited trading of Forza’s Common Stock took place. Forza cannot predict the extent to which investors’
interests will lead to an active trading market for Forza’s Common Stock or whether the market price of Forza’s Common Stock
will be volatile. If an active trading market does not develop, investors may have difficulty selling any of Forza’s Common Stock
that they buy. Forza is likely to be too small to attract the interest of many brokerage firms and analysts. Forza cannot give you any
assurance that an active public trading market for Forza’s Common Stock will develop or be sustained. The market price of Forza’s
Common Stock could be subject to wide fluctuations in response to quarterly variations in Forza’s revenues and operating expenses,
announcements of new products or services by us, significant sales of Forza’s Common Stock, including “short” sales,
the operating and stock price performance of other companies that investors may deem comparable to us, and news reports relating to trends
in Forza’s markets or general economic conditions.
Forza does not intend to pay dividends on
Forza’s common stock for the foreseeable future.
Forza presently has no intention to pay dividends
on Forza’s Common Stock at any time in the foreseeable future. Any decision to declare and pay dividends in the future will be
made at the discretion of Forza’s Board of Directors and will depend on, among other things, Forza’s results of operations,
financial condition, cash requirements, contractual restrictions, and other factors that Forza’s Board of Directors may deem relevant.
Furthermore, Forza’s ability to declare and pay dividends may be limited by instruments governing future outstanding indebtedness
Forza may incur.
FINRA sales practice requirements may limit your ability to buy
and sell Forza’s Common Stock, which could depress the price of Forza’s shares.
FINRA rules require broker-dealers to have reasonable
grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these
rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some
customers. Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy Forza’s
Common Stock, which may limit your ability to buy and sell Forza’s shares, have an adverse effect on the market for Forza’s
shares and, thereby, depress their market prices.
Volatility in Forza’s Common Stock
price may subject Forza to securities litigation.
The market for Forza’s common shares may
have, when compared to seasoned issuers, significant price volatility, and Forza expect that Forza’s share price may continue to
be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class
action litigation against a company following periods of volatility in the market price of its securities. Forza may, in the future,
be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s
attention and resources.
Provisions in Forza’s corporate charter
documents and under Delaware law could make an acquisition of Forza, which may be beneficial to Forza’s stockholders, more difficult
and may prevent attempts by Forza’s stockholders to replace or remove Forza’s current management.
Provisions in Forza’s corporate charter
and Forza’s bylaws may discourage, delay or prevent a merger, acquisition or other change in control of Forza’s company that
stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions
could also limit the price that investors might be willing to pay in the future for shares of Forza’s Common Stock, thereby depressing
the market price of Forza’s Common Stock. In addition, because Forza’s Board of Directors is responsible for appointing the
members of Forza’s management team, these provisions may frustrate or prevent any attempts by Forza’s stockholders to replace
or remove Forza’s current management by making it more difficult for stockholders to replace members of Forza’s Board of
Directors. Among other things, these provisions:
| |
● |
Forza’s
Board of Directors is divided into three classes, one class of which is elected each year by Forza’s stockholders with the
directors in each class to serve for a three-year term; |
| |
● |
the
authorized number of directors can be changed only by resolution of Forza’s Board of Directors; |
| |
● |
directors
may be removed only by the affirmative vote of the holders of at least sixty percent (60%) of Forza’s voting stock, whether
for cause or without cause; |
| |
● |
Forza’s
bylaws may be amended or repealed by Forza’s Board of Directors or by the affirmative vote of sixty-six and two-thirds percent
(66 2/3%) of Forza’s stockholders; |
| |
● |
stockholders
may not call annual meetings of the stockholders or fill vacancies on the Board of Directors; |
| |
● |
Forza’s
Board of Directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined
at the discretion of the board of directors and that, if issued, could operate as a “poison pill” to dilute the stock
ownership of a potential hostile acquirer to prevent an acquisition that Forza’s board of directors does not approve; |
| |
● |
Forza’s
stockholders do not have cumulative voting rights, and therefore Forza’s stockholders holding a majority of the shares of common
stock outstanding will be able to elect all of Forza’s directors; and |
| |
● |
Forza’s
stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder
meeting. |
Moreover, because Forza is incorporated in Delaware,
Forza is governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess
of 15% of Forza’s outstanding voting stock from merging or combining with us for a period of three years after the date of the
transaction in which the person acquired in excess of 15% of Forza’s outstanding voting stock, unless the merger or combination
is approved in a prescribed manner.
Forza’s amended and restated certificate
of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain types of state
actions that may be initiated by Forza’s stockholders, which could limit Forza’s stockholders’ ability to obtain a
favorable judicial forum for disputes with us or Forza’s directors, officers, or employees.
Forza’s amended and restated certificate
of incorporation provides that, unless Forza consents to the selection of an alternative forum, the Court of Chancery of the State of
Delaware is the exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim
of breach of a fiduciary duty owed by any of Forza’s directors, officers, or other employees to us or Forza’s stockholders,
(iii) any action arising pursuant to any provision of the DGCL or Forza’s amended and restated certificate of incorporation or
bylaws (as either may be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine.
The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange
Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon
federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates
concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder.
These exclusive-forum provisions may limit a stockholder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with us or Forza’s directors, employees, control
persons, underwriters, or agents, which may discourage lawsuits against us and Forza’s directors, employees, control persons, underwriters,
or agents. Additionally, a court could determine that the exclusive forum provision is unenforceable, and Forza’s stockholders
will not be deemed to have waived Forza’s compliance with the federal securities laws and the rules and regulations thereunder.
If a court were to find these provisions of Forza’s bylaws inapplicable to, or unenforceable in respect of, one or more of the
specified types of actions or proceedings, Forza may incur additional costs associated with resolving such matters in other jurisdictions,
which could adversely affect Forza’s business, financial condition, or results of operations.
Forza presently intends to retain Forza’s
earnings, if any, to finance the development and growth of Forza’s business and operations and do not anticipate declaring or paying
cash dividends on Forza’s common stock in the foreseeable future.
Any future determination as to the declaration
and payment of dividends, if any, will be at the discretion of Forza’s board of directors and will depend on then-existing conditions,
including Forza’s operating results, financial condition, contractual restrictions, capital requirements, business prospects, and
other factors Forza’s board of directors may deem relevant. See “Risk Factors — Risks Relating to Ownership of Forza’s
Common Stock — Forza does not intend to pay dividends on Forza’s Common Stock for the foreseeable future”.”
THE MERGER TRANSACTION
This section and the section entitled “The Merger
Agreement” in this Joint Proxy Statement/Prospectus describe the material aspects of the Merger, including the Merger Agreement.
While Twin Vee and Forza believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain
all of the information that is important to you. You should read carefully this entire Joint Proxy Statement/Prospectus for a more complete
understanding of the Merger and the Merger Agreement, attached as Annex A to this Joint Proxy Statement/Prospectus, which
is herein incorporated by reference.
General
At the Effective Time, Forza will merge with and into
a wholly owned subsidiary of Twin Vee, with Forza as surviving entity. Each holder of a share of Forza Common Stock will receive 0.611666275
of a share of Twin Vee Common Stock. See “The Merger Agreement—Merger Consideration.” Based solely upon the outstanding
shares of Twin Vee Common Stock on August 12, 2024 and the outstanding shares of Forza Common Stock on August 12, 2024, immediately following
the completion of the Merger, Forza stockholders will own approximately 36% of the combined company’s outstanding common stock.
Background of the Merger
On November 15, 2023, Mr. Visconti, Mr. Leffew (Forza’s
former Chief Executive Officer), Ms. Gunnerson (Twin Vee’s Chief Financial Officer and Forza’s interim Chief Financial Officer )
and Mr. Schuyler engaged in a telephonic meeting with members of ThinkEquity and Blank Rome LLP to discuss a potential acquisition or
Merger of Forza by or with Twin Vee.
On November 30, 2023, management of Twin Vee
provided to each of the Twin Vee Board of Directors members and the Forza Board of Directors members a memorandum about a potential Merger
of Twin Vee and Forza which included the annual estimated cost savings of $700,000 expected to result from a Merger of Twin Vee and Forza,
and the operational efficiencies, which included the elimination of one set of SEC reports each quarter, one annual meeting, etc. and
the elimination of the need to retain a Chief Financial Officer for Forza which has been challenging to date.
On December 19, 2023, management of Twin Vee provided
to each of the Twin Vee Board of Directors and the Forza Board of Directors a merger proposal that included a discussion of the rationale
for the Merger and Merger objectives, legal considerations and proposed management team, an estimate of the costs anticipated to be associated
with the Merger and proposed management of the combined company and members of the combined company’s Board of Directors post-merger.
On January 17, 2024, the Forza Board of Directors
established a Special Committee in connection with discussing terms of a merger agreement with Twin Vee, Marcia Kull, the only Forza
director that does not also serve on the Twin Vee Board of Directors was appointed by Forza’s Board of Directors as the sole member
of the Forza Special Committee. The formation of the Forza Special Committee was deemed advisable and in the best interests of Forza
and its stockholders because Joseph Visconti, Neil Ross and Kevin Schuyler advised the Forza Board of Directors that as shareholders,
officers and/or directors of Twin Vee they have a conflict of interest with respect to the Merger.
Specifically, the Forza Board of Directors delegated
to the Forza Special Committee the full power and authority of the Forza Board, to the fullest extent permitted by law, to take actions
with respect to the potential Merger with Twin Vee and any review, discussion, consideration, deliberation, examination, investigation,
analysis, assessment, evaluation, exploration, response, negotiation, termination, rejection, approval and/or authorization on behalf
of Forza it deems necessary in connection with the foregoing including, but not limited to:
| A. | the
consideration, evaluation, review, discussion and determination whether the potential Merger
is appropriate and desirable for Forza at this time and if so, the design, oversight, establishment
and implementation of a process related to the potential Merger; |
| B. | the
authorization, monitoring and exercise of general oversight on behalf of Forza of any and
all agreements, proceedings and activities of Forza involving, responding to or relating
to the potential Merger; |
| C. | the
power and authority on behalf of Forza to formulate, structure, negotiate and document the
terms and conditions of the potential Merger; |
| D. | the
power and authority on behalf of Forza to approve and have executed the form of all requisite
documentation or agreements involving, responding to or relating to the potential Merger;
|
| E. | the
authority to the fullest extent permitted by law to enter into definitive documents and agreements
on behalf of Forza with respect to the potential Merger or if not permitted by law to enter
into such documents and agreements without Forza Board approval, to recommend such documents
and agreements to the Forza Board; and |
| F. | all
such other power and authority that may otherwise be exercised by the Forza Board that the
Forza Special Committee may determine is necessary, advisable or appropriate to carry out
and fulfill its duties and responsibilities with respect to any potential Merger. |
Specifically, the Forza Board resolutions provided
that the Forza Board could not approve or take any action with respect to the proposed Merger without the approval of the Forza Special
Committee.
On January 17, 2024, the Twin Vee Board of Directors
established a Special Committee in connection with discussing terms of a merger agreement with Forza, Bard Rockenbach and Pete Melvin,
the only Twin Vee directors who do not also serve on the Forza Board of Directors were appointed by Twin Vee’s Board of Directors
as the members of the Twin Vee Special Committee
The formation of the Twin
Vee Special Committee was deemed advisable and in the best interests of Twin Vee and its stockholders because Joseph Visconti, Neil Ross,
Kevin Schuyler and Preston Yarborough advised the Twin Vee Board of Directors that as shareholders, officers and/or directors of Forza
they have a conflict of interest with respect to the Merger proposal.
Specifically, the Twin Vee
Board of Directors delegated to the Twin Vee Special Committee the full power and authority of the Twin Vee Board, to the fullest extent
permitted by law, to take actions with respect to the proposed Merger with Forza and any review, discussion, consideration, deliberation,
examination, investigation, analysis, assessment, evaluation, exploration, response, negotiation, termination, rejection, approval and/or
authorization on behalf of Twin Vee it deems necessary in connection with the foregoing including, but not limited to:
| A. | the
consideration, evaluation, review, discussion and determination whether the proposed Merger
is appropriate and desirable for Twin Vee at this time and if so, the design, oversight,
establishment and implementation of a process related to the merger proposal; |
| B. | the
authorization, monitoring and exercise of general oversight on behalf of Twin Vee of any
and all agreements, proceedings and activities of Twin Vee involving, responding to or relating
to the proposed Merger; |
| C. | the
power and authority on behalf of Twin Vee to formulate, structure, negotiate and document
the terms and conditions of the proposed Merger; |
| D. | the
power and authority on behalf of Twin Vee to approve and have executed the form of all requisite
documentation or agreements involving, responding to or relating to the proposed Merger;
|
| E. | the
authority to the fullest extent permitted by law to enter into definitive documents and agreements
on behalf of Twin Vee with respect to the merger proposal or if not permitted by law to enter
into such documents and agreements without Twin Vee Board approval, to recommend such documents
and agreements to the Twin Vee Board; and |
| F. | all
such other power and authority that may otherwise be exercised by the Twin Vee Board that
the Twin Vee Special Committee may determine is necessary, advisable or appropriate to carry
out and fulfill its duties and responsibilities with respect to any proposed Merger proposal.
|
Specifically,
the Twin Vee Board resolutions provided that the Twin Vee Board could not approve or take any action with respect to the proposed Merger
without the approval of the Twin Vee Special Committee.
On April 29, 2024, the Forza Special Committee held
a meeting to discuss strategic alternatives, including moving forward with a proposed merger with Twin Vee or a reverse merger.
During the months of April, May, and June 2024, the
Forza and Twin Vee management teams and Twin Vee Board of Directors and Forza Board of Directors engaged in conversations with a third
party engaged in the life science industry regarding a reverse merger with such third party and Forza with Twin Vee acquiring the assets
of Forza. After careful review of the added expenses of the reverse merger, discussions with the third party that a divestiture of Forza
assets would be required, the belief that a divestiture of Forza assets to Twin Vee and the issuance of stock of Twin Vee to Forza stockholders
in consideration for the assets would result in a taxable event for the Forza stockholders without the receipt of cash to pay taxes, the
Forza Board of Directors and Twin Vee Board of Directors determined to abandon the reverse merger.
On June 10, 2024, the Forza Board of Directors held
a meeting to reaffirm the Forza Special Committee that was appointed on January 17, 2024.
On June 12, 2024 InteleK was retained by Forza as
a financial advisor solely in connection with delivery of a fairness opinion with respect to a possible merger with Twin Vee.
On June 19, 2024, the Forza Board of Directors held
a meeting to discuss the potential terms of a merger with Twin Vee.
Later on June 19, 2024, the Twin Vee Board of Directors
held a meeting to discuss the potential terms of a merger with Forza.
On June 21, 2024, Houlihan was retained by Twin Vee
as a financial advisor solely in connection with delivery of a fairness opinion with respect to a possible merger with Forza.
On June 25, 2024, the Twin Vee Special Committee held
a meeting to discuss moving forward with a proposed merger with Forza and terms to be proposed to Forza.
On July 2, 2024, the Forza Special Committee provided
the Twin Vee Special Committee with a proposed term sheet for a merger of the two companies.
On July 3, 2024, the Forza Special Committee held
a meeting to discuss the proposed term sheet for a merger that the Twin Vee Special Committee provided.
On July 11, 2024, the Board of Directors of Forza
determined to discontinue and wind down its business related to the development and sale of electric boats utilizing its proprietary outboard
electric motor. Forza announced its intent to explore strategic alternatives, including a potential merger with Twin Vee.
On July 16, 2024, the Forza Special Committee held
a meeting to discuss proposing a contingent counteroffer to the Twin Vee offer made on July 2, 2024. After the meeting concluded, the
Forza Special Committee presented the contingent counteroffer to the Twin Vee Special Committee.
On July 17, 2024, the Twin Vee Special Committee provided
the Forza Special committee with the book value of Twin Vee and Forza and proposed a 36%/64% split.
On July 18, 2024, the Forza Special Committee held
a meeting to discuss the proposed 36%/64% split. The Forza Special Committee requested additional information regarding the effect of
the recently received property appraisal on Forza’s valuation as well as updated financials. The Forza Special Committee met again
to review the revised valuation. After the meeting concluded, the Forza Special Committee accepted the Twin Vee Special Committee offer.
On July 22, 2024, attorneys from Blank Rome LLP provided
the Twin Vee Board of Directors with a draft merger agreement between Twin Vee and Forza.
Later, on July 22, 2024, attorneys from Blank Rome
LLP provided counsel to Forza with a draft merger agreement between Twin Vee and Forza. Subsequently, counsel to Forza provided the Forza
Board of Directors with the draft merger agreement.
On July 31, 2024, Houlihan provided the Twin Vee Special
Committee and Twin Vee Board of Directors with an initial draft of the Twin Vee Fairness Opinion.
On August 6, 2024, Houlihan issued the Twin Vee Fairness
Opinion and met with the Twin Vee Special Committee and Twin Vee Board of Directors to provide an oral presentation of the Twin Vee Fairness
Opinion.
On August 6, 2024, following the presentation of Houlihan
to the Twin Vee Special Committee and Twin Vee Board of Directors, the Twin Vee Special Committee and Twin Vee Board of Directors discussed
the transaction at length and ultimately accepted the Twin Vee Fairness Opinion, and approved the Merger and the proposed Merger Agreement,
including the issuance of the Twin Vee Common Stock to the Forza stockholders pursuant to the terms of the Merger Agreement.
On August 9, 2024, InteleK provided the Forza Special
Committee and Forza Board of Directors with an initial draft of the Forza Fairness Opinion.
On August 9, 2024, InteleK issued the Forza Fairness
Opinion and met with the Forza Special Committee and Forza Board of Directors to provide an oral presentation of the Forza Fairness Opinion.
On August 9, 2024, following the presentation of InteleK
to the Forza Special Committee and Forza Board of Directors, the Forza Special Committee and Forza Board of Directors discussed the transaction
at length and ultimately accepted the Forza Fairness Opinion, and approved the Merger and the proposed Merger Agreement.
Following the meetings of the Twin Vee Board of Directors
and Forza Board of Directors on August 12, 2024, Forza and Twin Vee exchanged execution copies of the Merger Agreement and delivered the
definitive Merger Agreement as of August 12, 2024.
To date, neither the Twin Vee Special Committee
nor the Forza Special Committee has been disbanded.
On August 16, 2024, the Compensation Committee
of the Twin Vee Board of Directors approved the payment of $10,000 to Bard Rockenbach (Special Committee Chair) and of $5,000 to James
Melvin (Special Committee Member) for their efforts in connection the proposed Merger with Forza. The Forza Special Committee member
did not receive any compensation for service on such committee but does receive compensation for service on the Board and the other committees
of the Board and will receive compensation as a Twin Vee Board member if the Merger is consummated.
Recommendation of the Twin Vee Board of Directors
and its Reasons for the Merger
The Twin Vee Board of Directors has (i) determined
that the Merger with Forza is advisable and fair to, and in the best interest of, Twin Vee and its stockholders, (ii) has approved the
Merger and the Merger Agreement, including the issuance of the Twin Vee Common Stock to the Forza stockholders pursuant to the terms of
the Merger Agreement, and (iii) recommends that Twin Vee stockholders vote “FOR” the approval of the issuance of shares
of Twin Vee Common Stock pursuant to the terms of the Merger Agreement. In considering the recommendation of the Twin Vee Board of Directors
with respect to the Merger Agreement, Twin Vee stockholders should be aware that certain directors and officers of Twin Vee have certain
interests in the Merger that are in addition to the interests of Twin Vee stockholders generally. The Twin Vee Board of Directors consulted
with and received information from Twin Vee management and Twin Vee’s legal and financial advisors in evaluating the Merger, and
considered a number of factors in reaching its decision to take the foregoing actions, including, but not limited to the following:
| |
● |
the belief that the combination of the businesses of Twin Vee and Forza would create more value for Twin Vee stockholders in the long term due to cost reductions than as separate companies; |
| |
● |
the potential cost savings synergies derived from the Merger of Twin Vee and
Forza, including the reduced fees resulting from Forza no longer being a stand-alone public company which reduction is estimated to be
approximately $700,000 per year and includes reduced legal and accounting fees, proxy solicitation, investor relations. The accumulated
losses of Forza may be able to be utilized in the future to offset taxable gains of the consolidated entity, however as a result of Twin
Vee’s own ongoing operating losses, the likelihood of utilization of these tax losses is remote. ; |
| |
● |
the results of the due diligence review of Forza’s operations by Twin Vee’s management, legal advisors and financial advisors; |
| |
● |
the terms and conditions of the Merger Agreement including the relative percentage ownership of Twin Vee securityholders and Forza securityholders immediately following the closing of the Merger, the reasonableness of the fees and expenses related to the Merger and the likelihood that the Merger will be completed; |
| |
● |
the likelihood that the Merger will be consummated on a timely basis; |
| |
● |
the fact that the Exchange Ratio, as defined in the Merger Agreement, is fixed and will not fluctuate based upon changes in the stock prices of Twin Vee or Forza prior to the completion of the Merger; |
| |
● |
the opinion of Twin Vee’s financial advisor, dated August 6, 2024, to the Twin Vee Special Committee that, as of such date and based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.611666275 shares of Twin Vee Common Stock to be issued in exchange for each share of Forza Common Stock pursuant to the merger agreement was fair to Twin Vee’s stockholders from a financial point of view. (See section entitled “The Merger Transaction—Opinion of the Financial Advisor to the Twin Vee Board of Directors”); |
| |
|
|
| |
● |
current financial market conditions and historical market prices, volatility and trading information with respect to Forza Common Stock and Twin Vee Common Stock |
| |
● |
the use of Twin Vee Common Stock as the sole consideration in the Merger, which will allow Twin Vee to proceed with the Merger without having to deplete its existing cash resources; |
| |
|
|
| |
● |
that the Merger would provide existing Twin Vee stockholders a significant opportunity to directly participate in the potential growth of the combined company following the Merger; and |
| |
● |
the belief that the terms and conditions of the Merger Agreement, including the parties’ mutual representations and warranties, covenants, deal protection provisions and closing conditions, are reasonable for a transaction of this nature. |
The Twin Vee Board of Directors also identified and
considered a variety of risks and other countervailing factors in its deliberations concerning whether to approve the Merger and enter
into the Merger Agreement, including, but not limited to, the following:
| |
● |
the risks described under the section entitled “Risk Factors”; |
| |
● |
the risks, challenges and costs inherent in combining the two companies and the substantial expenses to be incurred in connection with the Merger, including the possibility that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the Merger; |
| |
● |
the possible volatility, at least in the short term, of the trading price of Twin Vee Common Stock resulting from the Merger announcement; |
| |
● |
the risk of diverting management’s attention from other strategic priorities to implement merger integration efforts; |
| |
● |
the risk that the Merger might not be consummated in a timely manner, or that the Merger might not be consummated at all; |
| |
● |
the fact that certain of the directors and executive officers of Twin Vee may have conflicts of interest in connection with the Merger, as they may receive certain benefits that are different from, and in addition to, those of the other stockholders of Twin Vee; |
| |
● |
that, while the Merger is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the Merger will be satisfied, and as a result, it is possible that the Merger may not be completed, even if the issuance of the Merger consideration is approved by the stockholders of Twin Vee; |
| |
● |
the
risk to Twin Vee’s business, operations and financial results in the event that the Merger is not consummated; and |
| |
● |
the risk that the anticipated cost savings will not be realized and operational and financial benefits anticipated in connection with the Merger might not be realized by the combined company. |
In view of the wide variety of factors considered
in connection with its evaluation of the Merger and the complexity of these matters, the Twin Vee Board of Directors did not find it useful
and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination
to approve the Merger and the Merger Agreement and to recommend that Twin Vee stockholders vote in favor of the issuance of shares of
Twin Vee Common Stock in the merger. In addition, individual members of the Twin Vee Board may have given differing weights to different
factors. The Twin Vee Board of Directors conducted an overall analysis of the factors described above.
Opinion of the Financial Advisor to the Twin Vee
Board of Directors
Introduction
Twin
Vee retained Houlihan Capital to act as its financial advisor in connection with the Merger.
Twin Vee selected Houlihan Capital to act as its financial advisor based on Houlihan Capital’s
qualifications, expertise and reputation, its knowledge of, and involvement in, recent transactions
in the industry in which Twin Vee operates and its knowledge of Twin Vee’s business
and affairs. Prior to its selection, neither Houlihan nor any affiliate of Houlihan had performed
any services for Twin Vee and/or its affiliates. On August 6, 2024, Houlihan Capital rendered
its opinion to the Twin Vee Board that, which opinion was subsequently confirmed by delivery
of a written opinion dated July 31, 2024 (the “Opinion”), subject to the qualifications,
assumptions, and limitations set forth in the Opinion, as of such date, the Consideration
Shares to be issued or paid in the Merger to Forza shareholders is fair from a financial
point of view to Twin Vee and its shareholders.
The full text of the Opinion
delivered to the Twin Vee Board on August 6, 2024, dated July 31, 2024, which sets forth
the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken
by Houlihan Capital in rendering the Opinion, is attached to this proxy statement/prospectus as Annex C-1 and incorporated by reference
into this proxy statement/prospectus. The summary of the Opinion set forth in this proxy solicitation/prospectus statement is qualified
in its entirety by reference to the full text of the Opinion. All Twin Vee shareholders are urged to, and should, read the Opinion carefully
and in its entirety. The Opinion was directed to the Twin Vee Board and addressed only the fairness from a financial point of view to
its shareholders, as of the date of the Opinion, of the Consideration Shares to be issued by Twin Vee pursuant to the Merger Agreement.
The Opinion did not address any other aspect or implications of the Merger and does not constitute an opinion, advice or recommendation
as to how any Twin Vee shareholder should vote at the [Extraordinary General Meeting]. In addition, the Opinion did not in any manner
address the prices Twin Vee Shares would trade following the Merger or at any time. The Opinion was reviewed and unanimously approved
by Houlihan Capital’s Opinion committee.
In completing its analyses and
for purposes of the Opinion set forth herein, Houlihan Capital has, among other things:
| ● | Held
discussions with certain members of Twin Vee’s management (“Twin Vee Management”)
and Forza’s management (“Forza Management”) regarding the Merger, the historical
performance and the lack of anticipated revenue to be derived from Forza’s electric
boat technology and the future outlook for Forza; |
| ● | Reviewed information provided by Twin Vee and Forza including, but not limited to: |
| o | Twin Vee’s and Forza’s latest reports on Form 10-Q and 10-K and other relevant public documents
as filed with the Securities and Exchange Commission; |
| o | Forza’s unaudited 2Q 2024 10-Q; |
| o | the draft of the Agreement and Plan of Merger by and among Forza X1, Inc., Twin Vee PowerCats Co., and
Twin Vee Merger Sub, Inc. dated July 22, 2024; |
| o | Forza’s audited financial statements for the period October 15, 2021, through December 31, 2021,
and the years ended December 31, 2022, and December 31, 2023; |
| o | the unaudited last twelve months period ended June 30, 2024; |
| o | various Investor Presentations outlining the Target’s business; |
| o | Forza’s intellectual property tracking list; |
| o | the appraisal of the College Dr, Marion, Forza property conducted by Hawkins Appraisal dated June 25,
2024; |
| ● | Reviewed the industry in which Forza operates, which included a review of (i) certain industry research,
(ii) certain comparable publicly traded companies and (iii) certain mergers and acquisitions of comparable businesses; |
| ● | Developed indications of value for Forza using generally accepted valuation methodologies; and |
| ● | Reviewed certain other relevant, publicly available information, including economic, industry, and Forza
specific information. |
In addition, Houlihan Capital
had discussions with Twin Vee Management and Forza Management and their respective advisors concerning the material terms of the Merger
and Forza’s business and operations, assets, present condition and future prospects, and undertook such other studies, analyses
and investigations as Houlihan Capital deemed relevant, necessary or appropriate.
In preparing the Opinion, Houlihan
Capital relied upon and assumed, without independent verification, the accuracy, completeness and reasonableness of the financial, legal,
tax, and other information discussed with or reviewed by Houlihan Capital and assumed such accuracy and completeness for purposes of rendering
an opinion. In addition, Houlihan Capital has not made any independent evaluation or appraisal of any of the assets or liabilities (contingent
or otherwise) of Twin Vee or Forza, nor, except as stated herein, has Houlihan Capital been furnished with any such evaluation or appraisal.
Houlihan Capital has further relied upon the assurances and representations from Twin Vee Management that they are unaware of any facts
that would make the information provided to Houlihan Capital to be incomplete or misleading in any material respect for the purposes of
the Opinion. Houlihan Capital has not assumed responsibility for any independent verification of this information, nor has it assumed
any obligation to verify this information. Nothing came to Houlihan Capital’s attention in the course of this engagement which would
lead it to believe that (i) any information provided to Houlihan Capital or assumptions made by Houlihan Capital are insufficient or inaccurate
in any material respect or (ii) it is unreasonable for Houlihan Capital to use and rely upon such information or make such assumptions.
The following is a summary of
the material financial and comparative analyses that Houlihan Capital deemed to be appropriate for the Merger that were reviewed with
the Twin Vee Board at its meeting held on August 6, 2024 in connection with Houlihan Capital’s delivery of its Opinion. Some of
the summaries of financial analyses below include information presented in tabular format. In order to fully understand Houlihan Capital’s
analyses, the tables must be read together with the text of each summary. The summary of Houlihan Capital’s financial and comparative
analyses described below is not a complete description of the analyses underlying the Opinion. The preparation of a financial opinion
is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analyses
and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to summary description.
Summary of Financial
Analyses
In assessing whether the consideration
to be issued or paid in the Merger to Forza shareholders is fair from a financial point of view to Twin Vee and its shareholders, Houlihan
Capital compared the 0.611666275 exchange ratio per the Merger Agreement, against an implied exchange ratio range that would be received
by the shareholders calculated by Houlihan Capital. After considering the primary approaches that are traditionally used to appraise a
business, as well as commonly used techniques and methods available under each approach, Houlihan Capital decided, based on an assessment
of company-specific factors and available market data, to rely solely upon the market approach, which involves determining Forza’s
30-Day Volume Weighted Average Price (“VWAP”) as well as its traded price as of the date of the opinion, in estimating the
exchange ratio range. Houlihan Capital noted the determined exchange ratio per the Merger Agreement was within the estimated range.
Market Approach
In determining the value of Forza,
the following approaches were employed:
| ● | Market Approach applying the traded price and the 30-day VWAP |
Spot Price
Forza’s price at close as of July 31, 2024, is
$0.3102 per share. Multiplying the traded price by the number of common stock outstanding of 15,754,774 yields an indicated equity value
of approximately $4.9 million.
Volume-Weighted Average Price
Houlihan utilized a 30-Day VWAP
as an indication of Forza’s equity value. The VWAP was calculated using Forza’s volume weighted average price of 30 trading
day’s open, high, low, and close prices. Multiplying the VWAP by the number of common stock outstanding of 15,754,774 yields an
indicated equity value of approximately $6.0 million.
Based on the analyses described
above, Houlihan Capital calculated an indicated equity value range for Forza between $4.9 million and $6.0 million.
Houlihan Capital does believe
that this valuation methodology produced a range of indicated values for the equity of Forza that supports its overall conclusion within
the broader context of its entire analysis and should be considered in conjunction with the results of the other valuation methodologies
that Houlihan Capital applied. Houlihan Capital calculated a range of indicated fair market values for Forza. A summary of the results
of Houlihan Capital’s analysis is as follows:
Indicated Fair Market Value of Equity Range
(millions) |
| Low | |
High |
| $ | 4.9 | | |
$ | 6.0 | |
To determine the exchange ratios
for the Merger, Houlihan Capital started with the indicated equity value of Forza, subtracted the indicated value of Twin Vee’s
forfeited shares, divided by Twin Vee’s closing price as of July 31, 2024, to determine the number of shares to be issued to purchase
the remainder of Forza shares outstanding following the forfeiture of Forza shares held by Twin Vee. We then divided the shares to be
issued by Forza’s share outstanding less the forfeited shares to determine the exchange ratios.
Based on the foregoing, Houlihan
Capital calculated an exchange ratio range for the Merger between approximately 0.5492 and 0.6705. Because the agreed upon exchange ratio
per the Merger Agreement falls within the range, Houlihan Capital concluded that the Merger is fair from a financial point of view to
Twin Vee and its shareholders.
| Indicated Exchange Ratio |
| Low | |
High |
| | 0.5492 | | |
| 0.6705 | |
Valuation of the Warrants and Options
Houlihan Capital utilized the
Black-Scholes model to estimate the fair market values of Forza’s warrants and options as of the Date of Value. The options and
warrants carry little value. According to the terms of the Merger, the convertible securities will convert to Twin Vee options and warrants
at the Exchange Ratio. Given (1) the negligible value of the convertible securities determined in our analysis and (2) how far the current
stock prices are from the respective strike prices of the instruments, the determination of the fairness of the Transaction was not materially
impacted by the presence of these instruments.
Fairness Opinion Conclusion
Houlihan Capital concluded that,
as of the date of the Opinion and based upon and subject to the assumptions, conditions and limitations set forth in the written Opinion,
that (i) the shares of Twin Vee Common Stock to be issued to Forza shareholders in the Merger is fair from a financial point of view to
Twin Vee and its shareholders.
Houlihan Capital Conflict Disclosure and Fees
Houlihan Capital, a FINRA member,
as part of its investment banking services, is regularly engaged in the valuation of businesses and securities in connection with mergers
and acquisitions, private placements, bankruptcy, capital restructuring, solvency analyses, stock buybacks, and valuations for corporate
and other purposes. In compliance with Item 1015 of Regulation M-A, Houlihan Capital confirmed that, within the past two years, neither
Houlihan Capital nor any of its representatives have had any material relationships or engagements with Twin Vee or Forza of any of their
affiliates. This includes, but is not limited to, any financial or advisory services, lending relationships, or any other material financial
transactions or engagements, including any agreements with any party to the Merger Agreement or any of their affiliates providing for
the provision of future services by Houlihan Capital nor any of its representatives. The purpose of this disclosure is to ensure transparency
and to highlight Houlihan Capital’s commitment to deliver an unbiased and independent Opinion. Houlihan Capital has conducted a
thorough internal review to verify the absence of any such relationships and remain committed to the principles of integrity and objectivity
in its professional practice. Houlihan Capital was engaged on a fixed fee basis, and their compensation is not contingent upon the completion
of the Business Combination. Houlihan Capital’s fees to Twin Vee for services in connection with issuing the Opinion were $75,000.
Recommendation of the Forza Board of Directors
and its Reasons for the Merger
The Forza Board of Directors (i) has determined that
the Merger Agreement and the Merger are advisable and fair to, and in the best interests of, Forza and its stockholders, (ii) has approved
the Merger Agreement, and (iii) recommended that the Forza stockholders vote “FOR” the Merger and Merger Agreement.
In reaching its decision to approve the Merger Agreement, the Forza Board of Directors consulted with senior members of Forza’s
management, members of the Forza Board of Directors and with Forza’s legal, financial advisors, consulting and accounting advisors
regarding the strategic and operational aspects of combining Forza and Twin Vee and reviewed the results of the due diligence efforts
undertaken by Forza management and Forza’s legal, consulting and accounting advisors.
The principal factors supporting the Forza Board of
Director’s decision to approve the Merger and the Merger Agreement and recommend that Forza stockholders vote to adopt the Merger
and the Merger Agreement included the following:
| |
● |
that the Merger was superior to the strategic alternatives available to Forza, including continuing as a stand-alone company or attempting to sell Forza to a third-party acquirer, or liquidating, each of which the Forza Board of Directors viewed as less favorable to Forza stockholders than the Merger; |
| |
● |
current and historical information concerning Forza’s and Twin Vee’s respective businesses, business plans, operations, management, financial performance and conditions, technology, operations, prospects and competitive position, before and after giving effect to the Merger and the Merger’s potential effect on stockholder value; |
| |
● |
the potential business, operational and financial synergies that may be realized over time by the combined company following the Merger; |
| |
|
|
| |
● |
the opinion of Forza’s financial advisor, dated August 7, 2024, to the special committee of the Forza Board of Directors that, as of such date and based on and subject to the assumptions, limitations, qualifications and other matters set forth in the opinion, the exchange ratio of 0.611666275 shares of Twin Vee Common Stock to be issued in exchange for each share of Forza Common Stock pursuant to the Merger Agreement was fair to Forza stockholders from a financial point of view; |
| |
● |
its knowledge of the business, operations, financial condition and earnings of Twin Vee; |
| |
● |
the likelihood that the Merger will be completed; |
| |
● |
current financial market conditions and historical market prices, volatility and trading information with respect to Forza’s and Twin Vee Common Stock; |
| |
● |
the terms of the Merger Agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations; |
| |
● |
the consideration to be received by Forza stockholders in the Merger, including the form of such consideration, which enables Forza’s stockholders to continue to have a substantial equity interest in the combined company following the Merger, as well as the fact that the shares of Twin Vee Common Stock to be received by Forza’s stockholders will be received in a tax-free exchange; |
| |
● |
that the Merger should qualify as a reorganization within the meaning of Section 368(a) of the Code and that Forza’s stockholders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their shares of Forza Common Stock for shares of Twin Vee Common Stock in connection with the Merger, except with respect to cash received in lieu of fractional shares of Twin Vee Common Stock. |
The Forza Board of Directors also considered a number
of potentially negative factors in its deliberations concerning the Merger Agreement, including:
| |
● |
the possibility that the Merger might not be completed whether as a result of the failure to satisfy conditions to the closing of the Merger, including the failure to secure the required approvals from Forza and Twin Vee stockholders, or as a result of the termination of the merger agreement by Forza or Twin Vee in certain specified circumstances and the potential effects of the public announcement and pendency of the Merger on management’s attention; |
| |
● |
the effect of a public announcement of the transactions on Forza’s operations, stock price and employees, the potential disruption to Forza and Twin Vee and their businesses as a result of the announcement and pendency of the Merger and the potential adverse effects on the financial results of Forza and Twin Vee as a result of that disruption and the continued operations of the core business of Forza and Twin Vee during the period between the signing of the Merger Agreement and the completion of the Merger; |
| |
● |
Forza’s inability to solicit competing acquisition proposals; |
| |
● |
the risk that the Merger may not be consummated in a timely manner or that
the Merger may not be consummated at all; |
| |
|
|
| |
● |
the risk of not realizing all of the anticipated strategic benefits between Forza and Twin Vee and the risk that other anticipated benefits might not be realized; |
| |
|
|
| |
● |
the substantial costs to be incurred in connection with the Merger, including the costs of integrating the operations of Forza and Twin Vee and the transaction expenses arising from the Merger; and various other applicable risks associated with the combined company and the Merger, including the risks described in the section titled “Risk Factors” |
| |
● |
the fact that the executive officers and all but one of Forza’s directors may have interests in the Merger that are different from, or in addition to, those of Forza’s other stockholders, including the matters described under the section entitled “Chapter One—The Merger—The Merger Transaction—Interests of Forza Directors and Executive Officers in the Merger”, and the risk that these different interests might influence their decisions with respect to the Merger; and |
| |
● |
the other risks of the type and nature described under “Risk Factors” of this Joint Proxy Statement/Prospectus. |
The foregoing discussion of the information and factors
considered by the Forza Board of Directors is not exhaustive, but Forza believes it includes all the material factors considered by the
Forza Board of Directors in connection with its approval and recommendation of the Merger and the other related transactions described
in this Joint Proxy Statement/Prospectus. In view of the wide variety of factors considered by the Forza Board of Directors in connection
with its evaluation of the Merger and the complexity of these matters, the Forza Board of Directors did not consider it practical, and
did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its decision.
Rather, the Forza Board of Directors made its decision based on the totality of information presented to, and the investigation conducted
by, it, including discussions with the senior management of Forza and Forza’s legal and financial advisors, and determined that
the Merger was advisable and fair to, and in the best interests of, Forza and its stockholders. In considering the factors discussed above,
individual directors may have given different weights to different factors.
Opinion of the Financial Advisor to the Forza Board
of Directors
Forza
retained InteleK, to act as its financial advisor in connection with a potential transaction
such as the Merger and to evaluate whether the Merger consideration to be received pursuant
to, and in accordance with, the terms of the Merger Agreement by the Forza stockholders (other
than Twin Vee) was fair, from a financial point of view, to such holders. Forza selected
InteleK to act as its financial advisor based on InteleK’s qualifications, expertise,
reputation and knowledge of the business and affairs of Forza and the industry in which it
operates. Prior to its selection, neither InteleK nor any affiliate of InteleK had performed
any services for Twin Vee and/or its affiliates. InteleK has provided its written consent
to the reproduction of its opinion in this proxy statement. At the meeting of the Board of
Directors on August 9, 2024, InteleK rendered to the Board of Directors its oral opinion,
subsequently confirmed in writing, to the effect that, as of the date thereof and based upon
and subject to the various assumptions, qualifications, limitations, and other matters set
forth therein, the consideration to be received pursuant to, and in accordance with, the
terms of the Merger Agreement by the Forza stockholders (other than Twin Vee) was fair, from
a financial point of view, to such holders. InteleK delivered its written opinion, dated
August 7, 2024, to the Board of Directors following the meeting of the Board of Directors.
The full text of InteleK’s written opinion,
dated August 7, 2024, is attached hereto as Annex C-2 and is incorporated by reference herein. The opinion sets forth, among
other things, the assumptions made, procedures followed, matters considered, and limitations and qualifications of the review undertaken
by InteleK in rendering its opinion. Forza stockholders should read the opinion carefully in its entirety. InteleK’s opinion was
provided to the Board of Directors and addresses only, as of the date of the opinion, the fairness, from a financial point of view, of
the Merger consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Forza stockholders
(other than Twin Vee), to such holders, and it does not address any other aspect of the Merger. It does not constitute a recommendation
as to how any holder of shares of Forza Common Stock should vote with respect to the Merger or any other matter and does not in any manner
address the price at which Forza Common Stock will trade or otherwise be transferable at any time. The summary of InteleK’s opinion
set forth herein is qualified in its entirety by reference to the full text of the opinion, which is attached to this proxy statement
as Annex C-2.
In arriving at its opinion, InteleK reviewed a
draft of the Merger Agreement dated July 22, 2024, certain related documents and certain publicly available financial statements, and
other business and financial information of Forza. InteleK also reviewed certain forward-looking information relating to Forza prepared
by the management of Forza, including a business valuation questionnaire addressing Forza´s business and prospects, proforma financial
statements with estimations as of June 2024 and August 2024, a list of outstanding stock options and warrants as of the Valuation Date,
and details on inventories and fixed assets (which we refer to, together, as the “Management Information”). Additionally,
InteleK discussed the past and current operations and financial condition and the prospects of Forza with senior management of Forza.
Based upon the market slow down for electric vehicles and the entry into the market of large global engine manufacturers and the fact
that no revenue materialized during Q1 or Q2 , management determined to reduce its spend on pursuing its electric boats and therefore
it was anticipated that no revenue would be received by Forza. InteleK also reviewed the historical market prices and trading activity
for Forza Common Stock and for Twin Vee common stock. In addition, InteleK reviewed the financial terms of the Merger, and performed
such other analyses, reviewed such other information and considered such other factors as InteleK deemed appropriate.
In arriving at its opinion, InteleK assumed and
relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied
or otherwise made available to, or discussed with, InteleK by Forza. With respect to the Management Information, InteleK was advised
by the management Forza, and InteleK assumed based on discussions with the management of Forza and the Board of Directors, that the Management
Information had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of
Forza of the future financial performance of Forza and other matters covered thereby. InteleK expressed no view as to the Management
Information or the assumptions on which they were based. InteleK assumed that the terms of the draft Merger Agreement reviewed by InteleK
would not differ materially from the final executed Merger Agreement, and that the Merger will be consummated in accordance with the
terms set forth in the Merger Agreement, without any modification, waiver or delay of any terms or conditions. In addition, InteleK assumed
that in connection with the receipt of all the necessary approvals of the Merger, no delays, limitations, conditions or restrictions
will be imposed that could have an adverse effect on Forza or the contemplated benefits expected to be derived in the Merger. InteleK
has relied upon, without independent verification, the assessment of Forza and its legal, tax or regulatory advisors with respect to
legal, tax or regulatory matters. InteleK did not make any independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of Forza or its affiliates, however, InteleK was furnished with an independent property appraisal developed by Hawkins
Appraisal with respect to Forza´s real estate assets which valued the building located in Marion, North Carolina at $4.8 million.
In addition, InteleK relied, without independent verification, upon the assessment of the management of Forza as to the existing and
future technology and products of Forza and the risks associated with such technology and products, including the fact that management
no longer believed it could effectively compete in the electric boat market or derive revenue from use of its current technology. In
arriving at InteleK’s opinion, InteleK was not authorized to solicit, and did not solicit, interest from any party with respect
to an acquisition, business combination or other extraordinary transaction involving Forza. InteleK’s opinion has been approved
by its opinion committee in accordance with its customary practice.
InteleK’s opinion is necessarily based on financial,
economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. Events
occurring after the date of the opinion may affect InteleK’s opinion and the assumptions used in preparing it, and InteleK has not
assumed any obligation to update, revise or reaffirm its opinion. InteleK’s opinion does not address the underlying business decision
of Forza to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available
to Forza. InteleK’s opinion is limited to the fairness, from a financial point of view, of the Per Share Merger Consideration to
be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Forza Stockholders (other than Parent or any
affiliate of Parent), and InteleK expressed no opinion with respect to the fairness of the amount or nature of the compensation to any
of the officers, directors or employees of Forza or any of its affiliates, or any class of such persons, relative to such consideration.
The following is a brief summary of the material
analyses performed by InteleK in connection with its opinion dated August 7, 2024. The analyses and factors described below must be considered
as a whole; considering any portion of such analyses or factors, without considering all analyses and factors, could create a misleading
or incomplete view of the process underlying InteleK’s opinion. For purposes of its analyses, InteleK utilized, among other things,
the Management Information and third-party research and analyses regarding the macroeconomic and industry factors affecting Forza. Some
of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone,
and in order to more fully understand the financial analyses used by InteleK, the tables must be read together with the full text of
each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including
the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of InteleK’s financial
analyses.
Historical Exchange
Ratio Analysis. InteleK reviewed the historical trading prices for Twin Vee common stock and Forza common stock for the 1-month
and 3-month periods prior to August 7, 2024. InteleK calculated historical average exchange ratios over the 1-month and 3-month periods
by first dividing the closing price per share of Forza common stock on each trading day during the period by the closing price per share
of Twin Vee common stock on the same trading day, and subsequently analyzing the descriptive statistics of these daily historical exchange
ratios over such periods. The following section presents the results of this analysis:
Source: Prepared by InteleK
using data from Yahoo Finance.
Source: InteleK analysis.
Source: Prepared by InteleK
using data from Yahoo Finance.
Source: InteleK analysis.
Source: InteleK analysis
and Yahoo Finance.
The evolution of the historical
exchange ratios and relevant statistics are presented below:
Source: InteleK analysis.
Source: InteleK analysis.
This analysis indicated that
the implied price per share to be paid to Forza stockholders based on the exchange ratio of 0.611666275 shares of Twin Vee for one share
of Forza pursuant to the Merger Agreement is fair from a financial point of view. The proposed exchange ratio accurately approximates
the average observed exchange ratios over the multiple, relevant periods of analysis.
In accordance with the Business
Valuation Standards of the American Society of Appraisers (“ASA”), “fair market value,” as used herein, represents
the price at which the property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller,
acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable
knowledge of the relevant facts.
Relatedly and as discussed
in the Statement of Financial Accounting Standard No. 820 Fair Value Measurement (“FASB 820”), a fair value hierarchy exists
to evaluate and rank the reliability of inputs that reflect assumptions used as a basis for determining fair value. FASB 820 emphasizes
that valuation approaches (income, market, and cost) used to measure the fair value of an asset or liability should maximize the use of
observable inputs, that is, inputs that reflect the assumptions market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting entity. The FASB 820 also requires companies to use actual market
data, when available, or models, when unavailable. For example, Section 820-10-35-6 states that “if there is a principal market
for the asset or liability, the fair value shall represent the price in that market, even if the price in a different market is potentially
more advantageous at the measurement date.”
Based on InteleK’s
analysis of Forza’s financial performance and position, there is no basis to deviate from the fair value hierarchy when determining
the fair value/fair market value of Forza’s common stock. As a result, a quoted price in an active market provides the most reliable
evidence of fair value and should be used to measure fair value/fair market value, as evidenced below.
Income Approach Analysis.
Forza is in a pre-revenue stage of development and has exhibited operating losses in recent years. The high level of uncertainty surrounding
Forza’s expected financial performance makes it impossible to estimate its level of sustainable economic income with reasonable
confidence. As a result, any estimation of fair market value under the income approach is less reliable than the use of quoted prices
in active markets.
Market Approach Analysis.
Forza is in a pre-revenue stage of development and has exhibited operating losses in recent years. The market approach requires the existence
of a positive base on which to apply observed market multiples. In the absence of such a positive base, either sales or profits, and in
the absence of truly comparable companies or transactions in the public or private markets, any estimation of fair market value under
the market approach is less reliable than the use of quoted prices in active markets.
Asset Approach Analysis.
The asset approach provides an indication of value by developing an “economic balance sheet”. All the assets of the business
are identified and listed on the balance sheet and all the business’s liabilities are brought to their current value as of the relevant
date of analysis. The difference between the economic values of the assets and the economic values of the liabilities is an indication
of the equity value under this valuation approach. Forza’s economic value is mainly comprised of cash and real estate. InteleK relied
upon a property appraisal developed by an independent party who concluded that the fair market value of Forza’s real estate was
approximately $4.80 million. This method was deemed less reliable than the use of quoted prices in active markets given the material amount
of operating losses over multiple periods and the illiquid nature of Forza’s property which implies an extended timeframe for liquidation
and higher costs that cannot be easily calculated beforehand.
Since the end of 2023 to
August 7, 2024, 16.80 million shares of Forza have been traded; this is more than double the shares owned by Forza´s controlling
shareholder. The trading volume for shares not yet owned by Twin Vee is considered significant to incorporate relevant information, as
demonstrated by the stock price behavior.
In addition to the above,
Forza’s shareholders should note that the outright sell of a large block of common stock may carry a significant market impact.
The Average Daily Volume (“ADV”) of Forza shares was 59,745 in the 1-month period and 217,428 in the 3-month period. While
there is liquidity in the stock, it is variable and volatile. Therefore, such a type of liquidity of Forza’s stock implies that
any shareholders trying to sell a significant stake could experience material price discounts (liquidity risk) and given the extended
time necessary for the market to absorb a large block of common stock they may be subject to heightened volatility and changes in market
conditions (market risk).
Miscellaneous
In connection with the review of the Merger by the
Board of Directors, InteleK performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation
of a financial opinion is a complex process and is not necessarily amenable to a partial analysis or summary description. In arriving
at its opinion, InteleK considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis
or factor it considered. InteleK believes that selecting any portion of its analyses, without considering all analyses as a whole, could
create a misleading or incomplete view of the process underlying its analyses and opinion. In addition, InteleK may have given various
analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable
than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken
to be InteleK’s view of the actual value of Forza. In performing its analyses, InteleK made numerous assumptions with respect to
industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control
of Forza. Any estimates contained in InteleK’s analyses are not necessarily indicative of future results or actual values, which
may be significantly more or less favorable than those suggested by such estimates.
InteleK conducted the analyses described above solely
as part of its analysis of the fairness, from a financial point of view, of the per share merger consideration (the “Per Share Merger
Consideration”) to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Forza Stockholders
(other than Parent or any affiliate of Parent), to such holders. These analyses do not purport to be appraisals or to reflect the price
at which Forza common stock might actually trade or otherwise be transferable at any time.
InteleK’s opinion and its presentation to the
Board of Directors was one of many factors considered by the Board of Directors in deciding to approve the Merger Agreement. Consequently,
the analyses as described above should not be viewed as determinative of the opinion of the Board of Directors with respect to the Per
Share Merger Consideration to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the Forza Stockholders
(other than Parent or any affiliate of Parent) or of whether the Board of Directors would have been willing to agree to different consideration.
The Per Share Merger Consideration payable in the Merger was determined through arm’s-length negotiations between Forza and Parent
and was approved by the Board of Directors. InteleK provided advice to Forza during these negotiations. InteleK did not, however, recommend
any specific consideration to Forza or that any specific consideration constituted the only appropriate consideration for the Merger.
InteleK provides business valuations and fairness
opinions to business owners, government agencies, boards of directors, and other entities and individuals in connection with strategic
planning, mergers, taxation, litigation and other material items. During the two-year period prior to the date of InteleK’s opinion,
no material relationship existed between InteleK or any of its affiliates and Forza or Parent pursuant to which compensation was received
by InteleK or its affiliates.
Under the terms of its engagement
letter, InteleK provided Forza with financial advisory services in connection with the Merger for which it will be paid an amount currently
estimated at $70,000of which 50% was payable upon the execution of the engagement letter and 50% due and payable before the delivery call
and issuance of the final report (thus, independent of the conclusion reached in the opinion). Forza has also agreed to indemnify InteleK
and its affiliates, their respective members, directors, officers, partners, agents and employees and any person controlling InteleK or
any of its affiliates against certain liabilities, including liabilities under the federal securities laws, and certain expenses related
to or arising out of InteleK’s engagement.
Form of the Merger
The Merger Agreement provides that at the Effective
Time, Merger Sub will be merged with and into Forza and the separate corporate existence of Merger Sub will cease with Forza continuing
as the surviving corporation and as a wholly owned subsidiary of Twin Vee, the combined company.
Twin Vee anticipates that the combined company’s
common stock will be listed on Nasdaq under its current trading symbol “VEEE” following the closing of the Merger.
Merger Consideration
At the closing of the Merger:
| |
● |
each outstanding share of Forza Common Stock will be converted into the right to receive 0.61166627 shares of Twin Vee Common Stock, subject to adjustment for any reverse stock split; |
| |
● |
each outstanding Forza stock option, whether vested or unvested, that has not been exercised prior to the Effective Time will be assumed by Twin Vee and converted into a stock option to purchase 0.61166627 shares of Twin Vee Common Stock for each share of Forza Common Stock covered by such option; and |
| |
● |
each outstanding Forza warrant that has not been exercised prior to the Effective Time will be assumed by Twin Vee and converted into a warrant to purchase 0.61166627 shares of Twin Vee Common Stock for each share of Forza Common Stock covered by such warrant. |
The Exchange Ratio was negotiated so that the pre-closing Forza stockholders
(other than Twin Vee) are expected to own approximately 36% of the Post-Closing Shares, and the stockholders of Twin Vee as of immediately
prior to the Merger are expected to own approximately 64% of the aggregate number of Post-Closing Shares, as defined below. The 7,000,000
shares of Forza Common Stock held by Twin Vee will be cancelled. The Exchange Ratio formula in the Merger Agreement was negotiated so
that the pre-closing stockholders of each of Twin Vee and Forza (excluding Twin Vee as a Forza stockholder) would beneficially
own approximately 64% and 36% of the aggregate number of equity securities of the combined company outstanding immediately following the
Effective Time (the “Post-Closing Shares”), subject to (i) not counting for purposes of the computation any outstanding options
to purchase shares of Twin Vee Common Stock or any outstanding options to purchase shares of Forza Common Stock or (ii) any warrants to
purchase Twin Vee Common Stock or any warrants to purchase Forza Common Stock. Accordingly, any outstanding options or warrants to purchase
shares of Twin Vee Common Stock and Forza Common Stock were not reflected in the computation of the Exchange Ratio. On a fully diluted
basis, taking into all outstanding warrants and options the pre-closing Forza stockholders are expected to own approximately 34.3% of
the outstanding securities of Twin Vee after the Merger, and the stockholders of Twin Vee are expected to own approximately 65.3% of the
aggregate number of the outstanding securities of Twin Vee after the Merger The Exchange Ratio has been fixed. For a more complete description
of the Exchange Ratio, see the section titled “The Merger Agreement—Exchange Ratio” in this Joint Proxy Statement/Prospectus.
Subject to the terms and
conditions of the Merger Agreement, if the Merger is completed, at the Effective Time, (i) each outstanding share of Forza Common
Stock (other than shares held by Twin Vee) will be converted into the right to receive approximately .611666275 shares of Twin Vee Common
Stock (the “Exchange Ratio”), (ii) each outstanding stock option exercisable for shares of Forza Common Stock that is
outstanding at the Effective Time, whether vested or unvested, will be assumed by Twin Vee and converted into a stock option to purchase
the number of shares of Twin Vee Common Stock that the holder would have received if such holder had exercised such stock option for shares
of Forza Common Stock prior to the Merger and exchanged such shares for Twin Vee Common Stock in accordance with the Exchange Ratio, (iii)
each outstanding warrant to purchase shares of Forza Common Stock will be assumed by Twin Vee and converted into a warrant to purchase
the number of shares of Twin Vee Common Stock that the holder would have received if such holder had exercised such warrant for shares
of Forza Common Stock prior to the Merger and exchanged such shares for Twin Vee Common Stock in accordance with the Exchange Ratio, subject
to adjustment for ant reverse stock split, and (iv) the 7,000,000 shares of Forza Common Stock held by Twin Vee will be cancelled.
The Merger Agreement does
not include a price-based termination right and there will be no adjustment to the total number of shares of Twin Vee Common Stock that
Forza stockholders will be entitled to receive for changes in the market price of Twin Vee Common Stock. Accordingly, the market value
of the shares of Twin Vee Common Stock issued pursuant to the Merger will depend on the market value of the shares of Twin Vee Common
Stock at the time the Merger closes, and could vary significantly from the market value on the date of this Joint Proxy Statement/Prospectus.
On [●], 2024, the last trading day before the date of this Joint Proxy Statement/Prospectus, the closing sale price of Twin Vee
Common Stock was $[●] per share and the closing price of Forza Common Stock was $[●] per share.
No fractional shares of Twin
Vee Common Stock will be issuable pursuant to the Merger. Instead, each Forza stockholder who would otherwise be entitled to receive a
fraction of a share of Twin Vee Common Stock, after aggregating all fractional shares of Twin Vee Common Stock issuable to such stockholder,
will be rounded down to the lower whole share.
The Merger Agreement provides
that, at the Effective Time, Twin Vee will deposit with an exchange agent acceptable to Twin Vee and Forza, book-entry shares representing
the shares of Twin Vee Common Stock issuable to Forza stockholders and a sufficient amount of cash to make payments in lieu of fractional
shares.
The Merger Agreement provides
that, promptly after the Effective Time, the exchange agent will mail to each record holder of Forza capital stock immediately prior to
the Effective Time a letter of transmittal and instructions for surrendering and exchanging the record holder’s Forza shares of
Forza Common Stock for shares of Twin Vee Common Stock. Upon surrender of a duly executed letter of transmittal and such other documents
as the exchange agent or Twin Vee may reasonably require, the Forza stock certificate surrendered will be cancelled and the holder of
the Forza stock certificate will be entitled to receive book-entry shares representing the number of whole shares of Twin Vee Common Stock
that such holder has the right to receive pursuant to the provisions of the Merger Agreement At the Effective Time of the Merger, all
holders of Forza capital stock that were outstanding immediately prior to the Effective Time of the Merger will cease to have any rights
as stockholders of Forza. In addition, no transfer of Forza capital stock after the Effective Time of the Merger will be registered on
the stock transfer books of Forza.
If any Forza stock certificate
has been lost, stolen or destroyed, Twin Vee may, in its discretion, and as a condition precedent to the delivery of any shares of Twin
Vee Common Stock, require the owner of such lost, stolen or destroyed certificate to deliver an affidavit claiming such certificate has
been lost, stolen or destroyed and post a bond indemnifying Twin Vee against any claim suffered by Twin Vee related to the lost, stolen
or destroyed certificate or any Twin Vee Common Stock issued in exchange for such certificate as Twin Vee may reasonably request.
From and after the Effective
Time, until it is surrendered, each certificate that previously evidenced Forza capital stock will be deemed to represent only the right
to receive shares of Twin Vee Common Stock. Twin Vee will not pay dividends or other distributions on any shares of Twin Vee Common Stock
to be issued in exchange for any unsurrendered Forza stock until the Forza stock is surrendered as provided in the Merger Agreement.
Treatment of Twin Vee
Stock Options
All options to purchase shares
of Twin Vee Common Stock will remain outstanding immediately after the Effective Time in accordance with their terms. The number of shares
of Twin Vee Common Stock underlying such options and the exercise prices for such options will be appropriately adjusted to reflect the
Twin Vee Reverse Stock Split, assuming the approval of the Twin Vee Reverse Stock Split Proposal by Twin Vee’s stockholders at the
Twin Vee Annual Meeting and if thereafter consummated at the discretion of Twin Vee Board of Directors. The terms governing options to
purchase shares of Twin Vee Common Stock will remain in full force and effect following the closing of the Merger.
Treatment of Forza
Stock Options
At the Effective Time, each option
to purchase shares of Forza Common Stock that are outstanding and unexercised immediately prior to the Effective Time, whether or not
vested, issued under the Forza 2022 Plan shall be assumed by Twin Vee and converted into an option to purchase shares of Twin Vee Common
Stock. Twin Vee will assume the Forza 2022 Plan and each such option in accordance with the terms of the Forza 2022 Plan and the terms
of the stock option agreement by which such option is evidenced. From and after the Effective Time, each option to purchase shares of
Forza Common Stock assumed by Twin Vee may be exercised for such number of shares of Twin Vee Common Stock as is determined by multiplying
the number of shares of Forza Common Stock that were subject to such option by the Exchange Ratio, and rounding the resulting number down
to the nearest whole number of shares of Twin Vee Common Stock. The per share exercise price of the converted option to purchase shares
of Twin Vee Common Stock will be determined by dividing the existing per share exercise price of the option to purchase shares of Forza
Common Stock by the Exchange Ratio, and rounding to the resulting exercise price up to the nearest whole cent. Any restrictions on the
exercise of any option to purchase shares of Forza Common Stock assumed by Twin Vee will continue following the conversion, and the term,
exercisability, vesting schedule and other provisions of such option will generally remain unchanged; provided, that any options to purchase
shares of Forza Common Stock assumed by Twin Vee may be subject to adjustment to reflect changes in Twin Vee’s capitalization after
the Effective Time and that the Twin Vee Board of Directors or a committee thereof will succeed to the authority and responsibility of
the Forza Board of Directors or a committee thereof with respect to each assumed option to purchase shares of Forza Common Stock.
Treatment of Twin Vee
Warrants
All warrants to purchase
shares of Twin Vee Common Swill remain outstanding and unexercised immediately after the Effective Time in accordance with their terms.
The number of shares of Twin Vee Common Stock underlying such warrants and the exercise prices for such warrants will be appropriately
adjusted to reflect the Twin Vee Reverse Stock Split, assuming the approval of the Twin Vee Reverse Stock Split Proposal by Twin Vee’s
stockholders at the Twin Vee Annual Meeting and if thereafter consummated at the discretion of Twin Vee Board of Directors. The terms
governing warrants to purchase shares of Twin Vee Common Stock will remain in full force and effect following the closing of the Merger.
Treatment of Forza
Warrants
At the Effective Time, each
warrant to purchase shares of Forza Common Stock that is outstanding and unexercised immediately prior to the Effective Time, shall be
assumed by Twin Vee and converted into a warrant to purchase shares of Twin Vee Common Stock. Twin Vee will assume the warrants in accordance
with the terms of the warrant agreement by which such warrant is evidenced. From and after the Effective Time, each warrant to purchase
shares of Forza Common Stock assumed by Twin Vee may be exercised for such number of shares of Twin Vee Common Stock as is determined
by multiplying the number of shares of Forza Common Stock that were subject to such warrant by the Exchange Ratio, and rounding the resulting
number down to the nearest whole number of shares of Twin Vee Common Stock. The per share exercise price of the converted warrant will
be determined by dividing the existing per share exercise price of the warrant to purchase shares of Forza Common Stock by the Exchange
Ratio, and rounding to the resulting exercise price up to the nearest whole cent. Any restrictions on the exercise of any warrant to purchase
shares of Forza Common stock assumed by Twin Vee will continue following the conversion, and the term, exercisability, and other provisions
of such warrant will generally remain unchanged.
The closing of the Merger
will occur no later than the second business day after the last of the conditions to the Merger has been satisfied or waived, or at another
time as Twin Vee and Forza agree. Twin Vee and Forza anticipate that the closing of the Merger will occur promptly after the Twin Vee
Annual Meeting and Forza Annual Meeting. However, because the Merger is subject to a number of conditions, neither Twin Vee nor Forza
can predict exactly when the closing will occur or if it will occur at all.
Effective Time of the
Merger
The Merger Agreement requires
the parties to consummate the Merger as promptly as practicable (and in any event within two business days) after all of the conditions
to the closing of the Merger contained in the Merger Agreement are satisfied or waived, including the adoption of the Merger Agreement
by Forza stockholders and the approval by Twin Vee stockholders of the issuance of shares of Twin Vee Common Stock. The Merger will become
effective upon the filing of a certificate of Merger with the Secretary of State of the State of Delaware or at such later time as is
agreed by Twin Vee and Forza and specified in the certificate of merger. Neither Twin Vee nor Forza can predict the exact timing of the
closing of the Merger.
Regulatory Approvals
In the United States, Twin
Vee must comply with applicable federal and state securities laws and the rules and regulations of Nasdaq in connection with the issuance
of shares of Twin Vee Common Stock and the filing of this Joint Proxy Statement/Prospectus with the SEC.
Nasdaq Stock Market Listing
Twin Vee has agreed to use
commercially reasonable efforts to (a) prepare and submit to the Nasdaq (or such other Nasdaq market on which the shares of Twin
Vee Common Stock may then be listed) a notification form for the listing of additional shares with respect to the shares of Twin Vee Common
Stock to be issued in connection with the Merger and to cause such shares to be approved for listing or (b) to the extent required
by Nasdaq pursuant to its “reverse merger” rules, file an initial listing application for the Twin Vee Common Stock on Nasdaq
and to cause such application to be conditionally approved prior to the Effective Time of the Merger. Forza has agreed to cooperate with
Twin Vee as reasonably requested by Twin Vee with respect to such application and to promptly furnish to Twin Vee all information concerning
Forza and its stockholders that may be required or reasonably requested in connection with the application.
In addition, each of Twin
Vee’s and Forza’s obligation to complete the Merger is subject to the condition that the shares of Twin Vee Common Stock to
be issued in the Merger be approved for listing (subject to official notice of issuance) on Nasdaq as of the closing of the Merger. If
Twin Vee’s notification form or initial listing application, as applicable, is accepted and such approval is obtained, Twin Vee
anticipates that the combined company’s Common Stock will be listed on Nasdaq under Twin Vee’s current trading symbol “VEEE”
following the closing of the Merger.
Anticipated Accounting Treatment
The Merger is expected to
be treated as an asset acquisition by Twin Vee. To determine the accounting for this transaction under U.S. GAAP, a company must
assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition.
The guidance requires an initial screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated
in a single asset or group of similar assets. If that screen is met, the set is not a business. In connection with the acquisition of
Forza, substantially all the fair value is included in cash and cash equivalents and , as such, the acquisition is expected to be
treated as an asset acquisition.
Certain U.S. Federal Income Tax Consequences of
the Merger
General
The following general discussion summarizes the material
United States federal income tax consequences of the Merger to Twin Vee, Forza and holders of Forza capital stock who are “U.S.
Holders” (as defined below) and who hold their Forza capital stock as a capital asset within the meaning of Section 1221 of the
Code. Except as explicitly provided herein, this discussion does not discuss the United States federal income tax consequences to “Non-U.S.
Holders.” The term “Non-U.S. Holder” means a beneficial owner of Forza capital stock that is not a U.S. Holder or an
entity classified as a partnership for U.S. federal income tax purposes. If a partnership or other flow-through entity is a beneficial
owner of Forza capital stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status
of the partner or other owner and the activities of the partnership or other entity. A partner in a partnership holding Forza capital
stock should consult its tax advisor as to the particular tax consequences of the Merger to such holder.
For purposes of this discussion, a U.S. Holder means:
| |
● |
a citizen or resident of the United States; |
| |
● |
a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any of its political subdivisions; |
| |
● |
a trust, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust; or |
| |
● |
an estate that is subject to U.S. federal income tax on its income regardless if its source. |
This section does not discuss all of the United States
federal income tax consequences that may be relevant to a particular stockholder in light of his or her individual circumstances or to
stockholders subject to special treatment under the federal income tax laws, including, without limitation:
| |
● |
brokers or dealers in securities or foreign currencies; |
| |
● |
stockholders who are subject to the alternative minimum tax provisions of the Code; |
| |
● |
tax-exempt organizations; |
| |
● |
stockholders who are “Non-U.S. Holders” (except as explicitly provided herein); |
| |
● |
stockholders that have a functional currency other than the United States dollar; |
| |
● |
banks, financial institutions or insurance companies; |
| |
● |
stockholders who acquired Forza stock in connection with stock option or stock purchase plans or in other compensatory transactions; |
| |
● |
stockholders who hold Forza stock as part of an integrated investment, including a straddle, hedge, or other risk reduction strategy, or as part of a conversion transaction or constructive sale; or |
| |
● |
persons under the jurisdiction of a court in a Title 11 or similar case. |
No ruling has been or will be sought from the Internal
Revenue Service (“IRS”) as to the United States federal income tax consequences of the Merger, and the following summary is
not binding on the IRS or the court nor will it preclude the IRS from adopting a position contrary to those expressed in this section.
This discussion is based upon the Code, laws, regulations, rulings and decisions in effect as of the date of this Joint Proxy Statement/Prospectus,
all of which are subject to change, possibly with retroactive effect. This summary does not address the tax consequences of the Merger
under state, local and foreign laws or under United States federal tax law other than income tax law. There can be no assurance that the
IRS will not challenge one or more of the tax consequences described herein.
Twin Vee’s and Forza’s stockholders
are urged to consult their own tax advisors as to the specific tax consequences to them of the merger, including any applicable federal,
state, local and foreign tax consequences.
Subject to the qualifications, assumptions and limitations
set forth herein and the U.S. federal income tax opinion filed as Exhibit 8.1 herewith, the following discussion represents the opinion
of Blank Rome LLP, counsel to Twin Vee, with respect to the material U.S. federal income tax consequences of the Merger to Twin Vee, Forza,
and holders of Forza capital stock.
The Merger should constitute a “reorganization”
within the meaning of Section 368(a) of the Code.
Forza stockholders should not recognize any gain or
loss upon the receipt of Twin Vee Common Stock in exchange for Forza stock in connection with the merger (except to the extent of cash
received by a U.S. Holder in lieu of a fractional share of Twin Vee Common Stock, as discussed below).
The aggregate tax basis of the Twin Vee Common Stock
received by a Forza stockholder in connection with the merger should be the same as the aggregate tax basis of the Forza stock surrendered
in exchange for Twin Vee Common Stock (except for any portion of the basis of Forza stock that is allocated to any fractional share interest
for which cash is received).
The holding period of the Twin Vee Common Stock received
by a Forza stockholder in connection with the Merger should include the holding period of the Forza stock surrendered in connection with
the Merger.
Twin Vee and Forza should not recognize gain or loss
solely as a result of the Merger; except for the possible recognition of gain by Forza as result of the payment by Twin Vee of Forza’s
reorganization expenses, and other intercompany transactions.
Tax Return Reporting Requirements
If you receive Twin Vee Common Stock as a result of
the Merger, you will be required to retain records pertaining to the Merger, and you will be required to file with your United States
federal income tax return for the year in which the merger takes place, a statement setting forth certain facts relating to the merger
as provided in Treasury Regulations Section 1.368-3(b). The facts to be disclosed by a U.S. Holder include the U.S. Holder’s basis
in the Forza or Twin Vee stock, as the case may be which are transferred and the number of shares of Twin Vee shares received in the transaction.
Taxable Acquisition – U.S. Holders
The failure of the Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Code would result in a Forza U.S. Holder recognizing capital gain or loss with respect to
the shares of Forza stock surrendered by such U.S. Holder equal to the difference between the stockholder’s basis in the shares
and the fair market value, as of the Effective Time of the Merger, of the Twin Vee stock received in exchange for the Forza stock (and
the cash received in lieu of a fractional share of Forza stock). In such event, a U.S. Holder’s aggregate basis in the Twin Vee
Common Stock so received would equal its fair market value and such U.S. Holder’s holding period would begin the day after the merger.
A dissenting U.S. Holder who receives cash will be required to recognize gain or loss in the same manner as described above (see discussion
of dissenters in a reorganization above).
The foregoing discussion is not intended to be a complete
analysis or description of all potential United States federal income tax consequences of the Merger. In addition, the discussion does
not address tax consequences which may vary with, or are contingent on, your individual circumstances. Moreover, the discussion does not
address any non-income tax or any foreign, state or local tax consequences of the Merger. Accordingly, you are urged to consult with your
own tax advisor to determine the particular United States federal, state, local or foreign income or other tax consequences to you of
the Merger. Neither Twin Vee nor Forza has been asked to address, nor have they addressed, any other consequences of the Merger, including
for example any issues related to intercompany transactions, changes in accounting methods resulting from the Merger, the conversion of
options, or the status of the tax attributes of each party to the Merger after the transaction is consummated.
Appraisal Rights and Dissenters’ Rights
No appraisal rights are available
to holders of Twin Vee Common Stock or Forza Common Stock in connection with the Merger in accordance with Section 262 of the DGCL.
Effective Time of the Merger
The Merger Agreement requires the parties to consummate
the Merger after all of the conditions to the consummation of the Merger contained in the Merger Agreement are satisfied or waived, including
the adoption of the Merger Agreement by the stockholders of Forza. The Merger will become effective upon the filing of a certificate of
merger with the Secretary of State of the State of Delaware or at such later time as is agreed by Twin Vee and Forza and specified in
the certificate of merger. Neither Twin Vee nor Forza can predict the exact timing of the consummation of the Merger.
Regulatory Approvals
Twin Vee and Forza must comply with applicable federal
and state securities laws in connection with the issuance of shares of Twin Vee Common Stock and the filing of this Joint Proxy Statement/Prospectus
with the SEC. In addition, Twin Vee must comply with the rules and regulations of Nasdaq.
Board of Directors and Executive Officers of Twin
Vee After the Completion of the Merger
Board of Directors
Upon completion of the Merger, the combined company’s
Board of Directors will consist of five (5) members, in three staggered classes, consisting of four of the current members of the Twin
Vee Board of Directors, Joseph Visconti, Preston Yarborough, Kevin Schuyler, and Neil Ross, and the four current members of the Forza
Board of Directors (three of which are also currently members of the Twin Vee Board of Directors), Joseph Visconti, Marcia Kull, Neil
Ross and Kevin Schuyler. The Class I directors will be Neil Ross and Marcia Kull, whose terms will expire at the annual meeting of stockholders
to be held in 2025. The Class II director will be Preston Yarborough, whose term will expire at the annual meeting of stockholders to
be held in 2026. The Class III directors will be Kevin Schuyler and Joseph Visconti, whose terms will expire at the annual meeting of
stockholders to be held in 2027.
Of the five directors of Twin Vee Board of Directors
who will serve on the combined company’s Board of Directors following the completion of the Merger, all of such persons, other than
Joseph Visconti and Preston Yarborough meet the independence standards of the SEC and Nasdaq.
Below is information regarding certain characteristics
of the combined company’s Board of Directors, utilizing the template included in the related Nasdaq Stock Market (“Nasdaq”)
rules.
Board Diversity Matrix (upon completion
of the Merger)
| Total Number of Directors |
5 |
| |
Female |
Male |
Non-Binary |
Did Not Disclose
Gender |
| Part I: Gender Identity |
|
| Directors |
1 |
4 |
0 |
0 |
| Part II: Demographic Background |
|
| African American or Black |
|
|
|
|
| Alaskan Native or Native American |
|
|
|
|
| Asian |
|
|
|
|
| Hispanic or Latinx |
|
|
|
|
| Native Hawaiian or Pacific Islander |
|
|
|
|
| White |
1 |
4 |
|
|
| Two or More Races or Ethnicities |
|
|
|
|
| LGBTQ+ |
-- |
| Did Not Disclose Demographic Background |
-- |
Executive Officers
Effective as of the closing of the Merger, the combined company’s executive
officers, will consist of Twin Vee’s current executive officers, Joseph Visconti, Preston Yarborough, Karl Zimmer and Mike Dickerson.
Joseph Visconti will serve as the President and Chief Executive Officer of the subsidiary Forza.
Interests of Twin Vee Directors and Executive Officers
in the Merger
In considering the recommendation of the Twin Vee
Board of Directors to vote “FOR” the issuance of the Twin Vee Common Stock to the Forza stockholders pursuant to the
terms of the Merger Agreement, Twin Vee stockholders should be aware that certain members of the Twin Vee Board of Directors and its executive
officers of Twin Vee have interests in the Merger that may be in addition to, or different from, their interests as Twin Vee stockholders.
These interests may create the appearance of a conflict of interest. The Twin Vee Board of Directors was aware of these potential conflicts
of interest during its deliberations on the merits of the Merger and in making its decisions in approving the Merger Agreement, the Merger
and the other transactions contemplated by the Merger Agreement. The Twin Vee Board of Directors formed the Twin Vee Special Committee
consisting of two Twin Vee directors who did not have a conflict of interest.
Joseph Visconti, Preston Yarborough, Kevin Schuyler, and Neil Ross are currently
directors of Twin Vee and are expected to continue as directors of the combined company following the completion of the Merger, and to
hold office from and after the completion of the Merger until his successor is duly elected and qualified or until his death, resignation
or removal. Joseph Visconti, the Chief Executive Officer of Twin Vee, also serves as the Interim Chief Executive Officer and Chief Product
Officer of Forza and Michael Dickerson, the Chief Financial Officer of Twin Vee, currently serves as the Interim Chief Financial Officer
of Forza.
Joseph Visconti beneficially owns 70,000 shares of Forza Common Stock and options
to purchase 644,000 shares of Forza Common Stock and will receive 42,816 shares of Twin Vee Common Stock upon consummation of the Merger
and options to purchase 3,364 shares of Twin Vee Common Stock.
Michael Dickerson beneficially owns 0 shares of Forza
Common Stock and will receive 0 shares of Twin Vee Common Stock upon consummation of the Merger.
Kevin
Schuyler beneficially owns 9,332 shares of Forza Common Stock and options to purchase 5,500
shares of Forza Common Stock and will receive 5,708 shares of Twin Vee Common Stock upon
consummation of the Merger and options to purchase 3,364 shares of Twin Vee Common Stock.
Neil
Ross beneficially owns options to purchase 5,500 shares of Forza Common Stock and will receive
3,364 shares of Twin Vee Common Stock upon consummation of the Merger.
Marcia
Kull beneficially owns 4,605 shares of Forza Common Stock and options to purchase 5,500 shares
of Forza Common Stock and will receive 2,816 shares of Twin Vee Common Stock upon consummation
of the Merger and options to purchase 3,364 shares of Twin Vee Common Stock.
Preston Yarborough beneficially owns options to purchase
75,000 shares of Forza Common Stock and will receive options to purchase 45,875 shares of Twin Vee Common Stock upon consummation of the
Merger.
Interests of Forza Directors and Executive Officers
in the Merger
In considering the recommendation of the Forza Board
of Directors to vote “FOR” the adoption and the approval of the Merger and the Merger Agreement, Forza stockholders
should be aware that certain members of the Forza Board of Directors and all of the executive officers of Forza have interests in the
Merger that may be in addition to, or different from, their interests as Forza stockholders. These interests may create the appearance
of a conflict of interest. The Forza Board of Directors was aware of these potential conflicts of interest during its deliberations on
the merits of the Merger and in making its decisions in approving the Merger Agreement, the Merger and the other transactions contemplated
by the Merger Agreement. Marcia Kull is expected to serve as a director of the combined company following the completion of the Merger,
and to hold office from and after the completion of the Merger until her successor is duly elected and qualified or until her death, resignation
or removal and Mr. Visconti will continue to serve as the Interim Chief Executive Officer of Forza after the Merger. Joseph Visconti,
Marcia Kull, Kevin Schuyler, and Neil Ross are all directors of Forza and are expected to serve as directors of the combined company after
the Merger. Joseph Visconti currently serves and executive chairman of the Forza Board of Directors and Michael Dickerson, the Chief Financial
Officer of Twin Vee, currently serves as the Interim Chief Financial Officer of Forza.
Restrictions on Sales of Shares of Twin Vee Common
Stock Received in the Merger
All shares of Twin Vee Common Stock received by Forza
stockholders in connection with the Merger will be freely tradable.
Nasdaq Listing of Twin Vee Common Stock; Delisting
and Deregistration of Forza Common Stock
Application will be made to Nasdaq to have the shares
of Twin Vee Common Stock issued in connection with the Merger approved for listing on Nasdaq, where Twin Vee Common Stock currently is
traded under the symbol “VEEE.” If the Merger is completed, Forza Common Stock will be delisted from Nasdaq and there will
no longer be a trading market for such stock. In addition, promptly following the closing of the Merger, Forza Common Stock will be deregistered
under the Exchange Act and Forza will no longer file reports with SEC.
THE MERGER AGREEMENT
The following is a summary of selected provisions
of the Merger Agreement. While Twin Vee and Forza believe that this description covers the material terms of the Merger Agreement, it
may not contain all of the information that is important to you. The Merger Agreement has been attached as Annex A to this Joint
Proxy Statement/Prospectus to provide you with information regarding its terms. It is not intended to provide any other factual information
about Twin Vee and Forza. The following description does not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement. You should refer to the full text of the Merger Agreement for details of the Merger and the terms and conditions of
the Merger Agreement. The Merger Agreement is incorporated by reference into this Joint Proxy Statement/Prospectus.
The Merger Agreement contains representations and
warranties that Twin Vee on the one hand, and Forza, on the other hand, have made to one another as of specific dates. These representations
and warranties have been made for the benefit of the other parties to the Merger Agreement and may be intended not as statements of fact
but rather as a way of allocating the risk to one of the parties if those statements prove to be incorrect. In addition, the assertions
embodied in the representations and warranties are qualified by information in confidential disclosure schedules exchanged by the parties
in connection with signing the Merger Agreement. While Twin Vee does not believe that these disclosure schedules contain information required
to be publicly disclosed under the applicable securities laws, other than information that has already been so disclosed, the disclosure
schedules do contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the
attached Merger Agreement. Accordingly, you should not rely on the representations and warranties as current characterizations of factual
information about Twin Vee, or Forza because they were made as of specific dates, may be intended merely as a risk allocation mechanism
between Twin Vee and Forza and are modified by the disclosure schedules.
General
Under the Merger Agreement, Forza will merge with and into a wholly owned subsidiary
of Twin Vee, with Forza continuing as the surviving company.
Closing and Effective Time of the Merger
The closing of the Merger will occur no later than
the second (2nd) business day after the satisfaction or waiver of the conditions provided in the Merger Agreement, or on such
other date as Twin Vee and Forza may agree in writing. However, because the Merger is subject to a number of conditions, neither Twin
Vee nor Forza can predict exactly when the closing will occur or if it will occur at all. Please see the section entitled “The Merger
Agreement—Conditions to Completion of the Merger” in this Joint Proxy Statement/Prospectus.
The Effective Time of the Merger will be the time
and date when the Merger becomes effective, which shall be the date and time of acceptance for record of the certificate of Merger that
will be filed with the Delaware Secretary of State, or such other time specified in the certificate of merger.
Merger Consideration
Conversion of Forza Common Stock
At the Effective Time of the Merger, each share of Forza Common Stock issued
and outstanding immediately prior to the Effective Time will be cancelled and extinguished and automatically converted into and become
exchangeable for Twin Vee Common Stock as described below (other than the 7,000,000 shares of Forza Common Stock held by Twin Vee which
shall be cancelled). No fractional shares of Twin Vee Common Stock will be issued. Please see the section entitled “The Merger Agreement—Fractional
Shares of Twin Vee Common Stock” in this Joint Proxy Statement/Prospectus.
Exchange Ratio
The Merger Agreement provides that stockholders of
Forza will receive 0.611666275 shares of Twin Vee Common Stock for each share of Forza Common Stock in the Merger. The Exchange Ratio
is fixed and not subject to adjustment.
Forza Common Stock Held by Twin Vee
At the Effective Time of the Merger, the 7,000,000
shares of Forza Common Stock held by Twin Vee will be cancelled. All outstanding shares of Twin Vee Common Stock will remain as outstanding
shares of Twin Vee Common Stock and will not be converted or otherwise affected by the Merger. For more information regarding the Twin
Vee Common Stock, please see the section entitled “Certain Additional Information—Description of Twin Vee Capital Stock”
in this Joint Proxy Statement/Prospectus.
Fractional Shares of Twin Vee Common Stock
No fractional shares of Twin Vee Common Stock will
be issued to any stockholder of Forza upon completion of the Merger. The holder of shares of Forza Common Stock who would otherwise be
entitled to a fraction of Twin Vee Common Stock (after aggregating all fractional shares of Twin Vee Common Stock that otherwise would
be received by such holder), will, in lieu of such fraction of a share, be rounded to the nearest whole share.
Share Issuance Process
Promptly following the Effective Time, Twin Vee will
make available for delivery the shares of Twin Vee Common Stock issuable under the Merger Agreement. These shares will be issuable in
accordance with the stock register of Forza as of the Effective Time, to each holder of record of Forza as of such time. Physical stock
certificates of Forza Common Stock will not be required to be exchanged for Twin Vee Common Stock certificates and will be automatically
issuable in exchange for outstanding shares of Forza Common Stock. All shares of Forza Common Stock will be deemed to no longer be issued
and outstanding as of the Effective Time, subject to rights of dissenting shares as set forth in the Merger Agreement.
All shares of Twin Vee Common Stock received by Forza
stockholders in connection with the Merger will be freely tradable.
Conversion of Forza Options and Warrants
Each stock option exercisable for shares of Forza
Common Stock that is outstanding at the Effective Time of the Merger will be assumed by Twin Vee and converted into a stock option to
purchase, on the same terms and conditions, a number of shares of Twin Vee Common Stock equal to the product of (a) the number of shares
of Forza Common Stock subject to such options and (b) the Exchange Ratio, rounding the number down to the nearest whole number of shares
of Twin Vee Common Stock. In addition, each warrant exercisable for shares of Forza Common Stock that is outstanding at the Effective
Time of the Merger will be assumed by Twin Vee and converted into a warrant to purchase, on the same terms and conditions, a number of
shares of Twin Vee Common Stock equal to the product of (a) the number of shares of Forza Common Stock subject to such options and (b)
the Exchange Ratio, rounding the number down to the nearest whole number of shares of Twin Vee Common Stock.
Directors and Officers of Twin Vee Following the
Merger
Directors and Officers
Effective as of the closing of the Merger, Joseph
Visconti, Preston Yarborough, Marcia Kull, Kevin Schuyler, and Neil Ross will be the directors of the combined company and the officers
of the combined company will be the current officers of Twin Vee, until their respective successors are duly appointed.
Effective as of the closing of the Merger, Kevin Schuyler
will be appointed by Twin Vee as lead independent director and the compensation payable to the Twin Vee’s directors will be adjusted
as follows: (i) Kevin Schuyler, lead independent director: $100,000 per year; (ii) Neil Ross – independent director: $45,000 per
year; and (iii) Marcia Kull – independent director: $45,000 per year.
In addition, effective as of the closing of the Merger,
the members of the Twin Vee Special Committee will be entitled to receive the following compensation: (i) Bard Rockenbach: $10,000 and
(ii) James Melvin: $5,000.
Certificate of Incorporation
At the Effective Time, Twin Vee will continue as the
combined corporation. Twin Vee will continue to be governed by its Certificate of Incorporation, as it existed prior to the Merger.
Conditions to Completion of the Merger
Each party’s obligation to complete the Merger
is subject to the satisfaction or waiver by each of the parties, at or prior to the Merger, of various conditions, which include the following:
| |
● |
stockholders of Forza must have approved and adopted the Merger Agreement, and approved the Merger, by the requisite vote under Delaware Law and the Twin Vee stockholders must have approved the issuance of the shares of Twin Vee Common Stock pursuant to the terms of the Merger Agreement in accordance with the Nasdaq rules. Twin Vee, in its capacity as a principal stockholder of Forza, has agreed to vote the shares of Forza Common Stock held by it for the approval and adoption of the Merger only if a majority of the other stockholders of Forza that are present in person or by proxy at the Forza Annual Meeting vote to approve and adopt the Merger. |
| |
● |
the registration statement on Form S-4, of which this Joint Proxy Statement/Prospectus is a part, must have been declared effective by the SEC in accordance with the Securities Act and must not be subject to any stop order suspending the effectiveness of the registration statement on Form S-4 and no similar proceeding in respect to the Joint Proxy Statement/Prospectus will have been initiated or threatened in writing by the SEC. All other filings will have been approved or declared effective and no stop order will have been issued and no proceeding will have been initiated to revoke any such approval or effectiveness; |
| |
● |
a listing application for the issuance of the shares of Twin Vee Common Stock in the Merger and such other shares of Twin Vee Common Stock to be reserved for issuance in connection with the Merger shall have been filed with Nasdaq and Nasdaq shall not have disapproved of the listing of such shares; |
| |
|
|
| |
● |
no court, administrative agency, commission, governmental or regulatory authority, has enacted, enforced or entered any statute, rule, regulation, or other order which is in effect and which has the effect of making the Merger illegal or otherwise prohibiting the consummation of the Merger; |
| |
|
|
| |
● |
all representations and warranties of each party in the Merger Agreement subject to exceptions in certain schedules and exhibits to the Merger Agreement must be true and correct in all material respects on the date of the Merger Agreement and on the closing date of the Merger with the same force and effect as if made on the date on which the Merger is to be completed or, if such representations and warranties address matters as of a particular date, then as of that particular date. Each party shall have delivered to the other party a certificate with respect to the foregoing executed on behalf of the other party by a duly authorized officer of such party; |
| |
|
|
| |
● |
each party to the Merger Agreement must have performed or complied with in all material respects all covenants and agreements required to be performed or complied with by it on or before the closing of the Merger, and the parties must have received a certificate to such effect signed on behalf of the other party by a duly authorized officer of such party; |
| |
|
|
| |
● |
no material adverse effect with respect to the other party will have occurred since the date of the Merger Agreement; |
| |
● |
all proceedings in connection with the Merger and the other transactions contemplated by the Merger Agreement and all certificates and documents delivered by the other party as required under the Merger Agreement or otherwise reasonably requested by the requesting party will be executed and delivered by the other party and will be reasonably satisfactory to the requesting party. |
In addition, the obligation of Twin Vee to complete
the Merger is further subject to the satisfaction or waiver of the following conditions:
| |
● |
Forza must have obtained the consents, waivers and approvals required to be obtained in connection with the consummation of the transactions contemplated by the Merger Agreement. |
No Solicitation
During the period commencing from the date of the
Merger Agreement until the earlier to occur of the termination of the Merger Agreement and the Effective Time, neither Forza nor Twin
Vee will, nor will they authorize or permit any of their respective representatives, to directly or indirectly:
| ● | solicit, initiate, knowingly encourage, induce or knowingly facilitate the communication, the making,
submission or announcement of any acquisition transaction (as defined below); |
| ● | furnish any nonpublic information regarding such party to any person in connection with or in response to an acquisition proposal
or inquiry; |
| ● | engage in discussions or negotiations with any person with respect to any acquisition transaction, except
as to the existence of the non-solicitation provisions in the Merger Agreement; |
| ● | approve, endorse or recommend any acquisition transaction, except as permitted by the Merger Agreement
in respect of a bona fide acquisition proposal (which acquisition proposal did not arise out of a material breach of the non-solicitation
provisions of the Merger Agreement) that is determined, in good faith to be a Superior Offer (as defined in the Merger Agreement); or |
| ● | enter into any letter of intent or any contract agreement contemplating
or relating to an acquisition transaction (other than a confidentiality agreement as permitted); provided that prior to the vote
of its stockholders, the parties to the Merger Agreement may furnish nonpublic information, and enter into discussions or negotiations
with, any person in response to a bona fide written inquiry or proposal, which such party’s Board of Directors determines in good
faith, after consultation with its independent financial advisor, if any, and its outside legal counsel, constitutes, or would reasonably
be expected to result in, a Superior Offer (as defined in the Merger Agreement) and is not withdrawn) if: (A) neither such party nor any
representative of such party shall have materially breached the non-solicitation provisions of the Merger Agreement with respect to such
acquisition inquiry or acquisition proposal, (B) the Board of Directors of such party concludes in good faith, after consulting with outside
legal counsel, that the failure to take such action would reasonably be expected to be result in a breach of the fiduciary duties of the
Board of Directors of such party under applicable law; (C) prior to furnishing any such nonpublic information to, or entering into discussions
with, such person, such party gives the other party written notice of the identity of such person, copies of any written correspondence
from such person relating to such acquisition inquiry or acquisition proposal, and of such party’s intention to furnish nonpublic
information to, or enter into discussions with, such person; (D) such party receives from such person an executed confidentiality agreement;
and (E) at least two (2) business days prior to furnishing any such nonpublic information to such person, such party furnishes such nonpublic
information to the other party (to the extent such nonpublic information has not been previously furnished by such party to the other
party). |
However, before obtaining
the Twin Vee stockholder approval or Forza stockholder approval, respectively, required to consummate the Merger, each of Forza and Twin
Vee may furnish nonpublic information regarding such party to, and may enter into discussions or negotiations with, any person in response
to a bona fide written acquisition proposal, which the Twin Vee Board of Directors or the Forza Board of Directors, respectively, determines
in good faith, after consultation with their respective financial advisors and outside legal counsel, constitutes or is reasonably likely
to result in a “superior offer,” as defined in the Merger Agreement and as defined in the section titled “The Merger Agreement—Non-Solicitation”
below, and is not withdrawn, if:
| |
● |
neither party nor any of its directors, officers, employees, agents, attorneys, accountants, investment bankers, advisors and representatives has breached the non-solicitation provisions of the Merger Agreement described above; |
| |
● |
the Twin Vee Board of Directors or Forza Board of Directors, respectively, concludes in good faith based on the advice of outside legal counsel, that the failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the Twin Vee or Forza board of directors, respectively, under applicable law; |
| |
● |
Twin Vee or Forza, respectively receives from the third-party an executed confidentiality agreement containing provisions (including nondisclosure provisions, use restrictions, non-solicitation provisions and no hire provisions) at least as favorable to such party as those contained in the confidentiality agreement between Twin Vee and Forza; and |
| |
● |
at least two business days prior to furnishing such nonpublic information to a third-party, Twin Vee or Forza furnishes the same information to the other party to the extent not previously furnished. |
If either Twin Vee or Forza
receives an acquisition proposal or acquisition inquiry at any time during the period between August 12, 2024 and the earlier to occur
of (a) the Effective Time and (b) termination of the Merger Agreement, then such party must promptly, and in no event later
than one business day after becoming aware of such acquisition proposal or acquisition inquiry, advise the other party orally and in writing
of such acquisition proposal or acquisition inquiry, including the identity of the person making or submitting the acquisition proposal
or acquisition inquiry and the material terms thereof. Each of Twin Vee and Forza must keep the other reasonably informed with respect
to the status and material terms of any such acquisition proposal or acquisition inquiry and any material modification or proposed material
modification thereto.
An “acquisition transaction” means any
transaction or series of transactions involving: any merger, consolidation, amalgamation, share exchange, business combination, issuance
of securities, acquisition of securities, reorganization, recapitalization, tender offer, exchange offer or other similar transaction:
(i) in which a party or any of its subsidiaries is a constituent corporation; (ii) in which a person or “group” (as defined
in the Exchange Act and the rules promulgated thereunder) of persons directly or indirectly acquires beneficial or record ownership of
securities representing more than 20% of the outstanding securities of any class of voting securities of a party or any of its subsidiaries;
or (iii) in which a party or any of its subsidiaries issues securities representing more than 20% of the outstanding securities of any
class of voting securities of such party or any of its subsidiaries; or any sale, lease, exchange, transfer, license, acquisition or disposition
of any business or businesses or assets that constitute or account for 20% or more of the fair market value of the consolidated assets
of a party and its subsidiaries, taken as a whole.
A “superior offer” means an unsolicited
bona fide acquisition proposal (with all references to “more than twenty percent (20%)” or “twenty percent (20%) or
more” in the definition of acquisition transaction being treated as references to “fifty percent (50%)” for these purposes),
that was not obtained or made as a direct or indirect result of a breach of (or in violation of) the Merger Agreement, made by a third
party that the Board of Directors of Twin Vee or Forza, as applicable, determines in good faith, after consultation with its outside legal
counsel and financial advisor(s), and after taking into account all financial, legal, regulatory, and other aspects of such acquisition
proposal (including the financing terms, the ability of such third party to finance such Acquisition Proposal and the likelihood of consummation
thereof), (1) is more favorable from a financial point of view to the Twin Vee or Forza stockholders, as applicable, than as provided
hereunder (including any changes to the terms of the Merger Agreement proposed by either party in response to such superior offer pursuant
to and in accordance with the provisions of the Mergers Agreement), (2) is reasonably capable of being completed on the terms proposed
without unreasonable delay and (3) includes termination rights exercisable by the party on terms that are not materially less favorable
to such party than the terms set forth in the Merger Agreement, all from a third party capable of performing such terms.
Any violation of the non-solicitation provisions in
the Merger Agreement will be deemed to be a material breach.
Approval of Stockholders
Forza Annual Meeting
Forza is obligated under the Merger Agreement to call,
give notice of, convene and hold a meeting of its stockholders for purposes of considering the Merger and the Merger Agreement.
Twin Vee Annual Meeting
Twin Vee is obligated under the Merger Agreement to
call, give notice of, convene and hold a meeting of its stockholders for purposes of approving the issuance of the shares of Twin Vee
Common Stock to Forza stockholders pursuant to the terms of the Merger Agreement.
Conduct of Business Pending the Merger
During the period commencing from the date of the
Merger Agreement and continuing until the earlier to occur of the termination of the Merger Agreement or the Effective Time, Forza, except
to the extent that Twin Vee consents in writing, is not permitted to:
| ● | declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares
of its capital stock; |
| |
● |
amend its charter documents or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction except as contemplated by the Merger Agreement; |
| ● | lend money to any person; incur or guarantee any indebtedness for borrowed money; issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt securities; guarantee any debt securities of others; or make
any capital expenditure or commitment; |
| ● | make, rescind, change or revoke any material tax election; |
| ● | enter into any material transaction outside the ordinary course of business; |
| ● | enter into, amend or terminate any material contract other than in the ordinary course of business; |
| ● | other than as required by law or generally accepted accounting principles, take any action to change its
accounting policies or procedures; |
| |
● |
terminate or modify in any material respect any material insurance policy; |
| ● | issue any shares of common stock or other securities; or |
| ● | agree, resolve or commit to do any of the foregoing actions.
|
During the period commencing from the date of the
Merger Agreement and continuing until the earlier to occur of the termination of the Merger Agreement or the Effective Time, Twin Vee,
except to the extent that Forza consents in writing, is not permitted to:
| |
● |
declare,
accrue, set aside or pay any dividend or make any other distribution in respect of any shares of its capital stock; |
| |
● |
amend
its charter documents or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization,
reclassification of shares, stock split, reverse stock split or similar transaction except as contemplated by the Merger Agreement; |
| |
● |
lend
money to any person; incur or guarantee any indebtedness for borrowed money; issue or sell any debt securities or options, warrants,
calls or other rights to acquire any debt securities; guarantee any debt securities of others; or make any capital expenditure or
commitment; |
| |
● |
make,
rescind, change or revoke any material tax election; |
| |
● |
enter
into any material transaction outside the ordinary course of business; |
| |
● |
terminate
or modify in any material respect any material insurance policy; |
| |
● |
enter
into, amend or terminate any material contract other than in the ordinary course of business; |
| |
● |
other
than as required by law or generally accepted accounting principles, take any action to change its accounting policies or procedures;
or |
| |
● |
agree,
resolve or commit to do any of the foregoing actions. |
Other Agreements
Each of Twin Vee and Forza has agreed to use its commercially
reasonable efforts to:
| |
● |
coordinate
with the other in preparing and exchanging information for purposes of (i) compliance with state and federal securities laws, and
(ii) filing with the SEC this Joint Proxy Statement/Prospectus; |
| |
● |
consult
and agree with each other about any public disclosure either will make concerning the Merger, subject to certain exceptions; |
| |
● |
obtain
all consents, waivers and approvals, for the consummation of the transactions contemplated by the Merger Agreement; and |
| |
● |
provide
the other party and its representatives’ reasonable access to information concerning the business of the other party as such
other party may reasonably request. |
Forza has further agreed to promptly take all steps
necessary in accordance with Delaware Law, its Amended and Restated Certificate of Incorporation and its Amended and Restated Bylaws,
to convene a meeting of the stockholders of Forza, to be held as promptly as practicable, for the purpose of voting upon the Merger Agreement
and the Merger
Twin Vee has further agreed to promptly take all steps
necessary in accordance with Delaware Law, Twin Vee’s Certificate of Incorporation and Twin Vee’s Bylaws, to convene a meeting
of the stockholders of Twin Vee, to be held as promptly as practicable, for the purpose of voting upon the issuance of the shares of Twin
Vee Common Stock pursuant to the terms of Merger Agreement.
Any party may waive compliance with any of the agreements
or conditions contained in the Merger Agreement which waiver shall be written and signed on behalf of such party. There are no other requirements
with respect to obtaining a waiver other than the requirement that it is in writing and signed on behalf of such party.
Termination
The Merger Agreement may be terminated at any time
before the completion of the Merger, whether before or after the required stockholder approvals to complete the Merger have been obtained,
as set forth below:
| |
● |
by
mutual written consent of Twin Vee and Forza, duly authorized by their respective boards of directors; |
| |
● |
by
either Twin Vee or Forza if the Merger is not consummated by December 1, 2024 (the “End Date”); provided, however,
that this right to terminate is not available to any party whose action or failure to act has been a principal cause of the failure
of the merger to occur on or before such date and such action or failure is a breach of the Merger Agreement; provided, further,
that, in the event that the SEC has not declared effective under the Securities Act this Joint Proxy Statement/Prospectus by
the date which is sixty days prior to the End Date, then Twin Vee shall be entitled to extend the End Date for an additional thirty
days; |
| |
● |
by
either Twin Vee or the Forza if a court, administrative agency, commission, governmental or regulatory authority issues a final and
non-appealable order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; |
| |
● |
by
Twin Vee if the requisite approval of the stockholders of Forza is not obtained by reason of the failure to obtain the requisite
vote at a meeting of the stockholders of Forza, duly convened therefor or at any adjournment or postponement thereof; |
| |
● |
by
either Forza or Twin Vee if the requisite approval of the stockholders of Twin Vee is not obtained by reason of the failure
to obtain the requisite vote at a meeting of the stockholders of Twin Vee, duly convened therefor or at any adjournment or postponement
thereof; provided, however, that this right to terminate is available to Twin Vee if the failure to obtain the requisite vote
shall have been caused by Twin Vee’s action or failure to act and such action or failure to act constitutes a material breach
by Twin Vee of the Merger Agreement; |
| |
● |
by
Twin Vee if a “Forza triggering event” has occurred, which is defined as an event where (i) the Forza Board of Directors
shall have failed to recommend that Forza’s stockholders vote to approve the Merger Agreement and Merger (the “Forza
Board Recommendation”) or shall for any reason have withdrawn or modified in a manner adverse to Twin Vee the Forza Board Recommendation;
(ii) Forza shall have failed to include in this Joint Proxy Statement/Prospectus the Forza Board Recommendation; (iii) Forza shall
have failed to hold the its stockholders’ meeting within sixty (60) days after the Form S-4 Registration Statement relating
to this Joint Proxy Statement/Prospectus is declared effective under the Securities Act (other than to the extent that the Form S-4
Registration Statement is subject to any stop order or proceeding (or threatened proceeding by the SEC) seeking a stop order with
respect to the Form S-4 Registration Statement, in which case such sixty (60) day period shall be tolled for so long as such stop
order remains in effect or proceeding or threatened proceeding remains pending); provided that Forza may adjourn the meeting
in order to obtain a quorum of its stockholders or as reasonably determined by it to comply with applicable law; (iv) the Forza Board
of Directors shall have publicly approved, endorsed or recommended any other acquisition proposal; (v) the Forza Board of Directors
shall have failed to publicly reaffirm the Forza Board Recommendation within ten (10) days after Twin Vee so requests in writing;
(vi) Forza or its representatives shall have breached the non-solicitation provisions of the Merger Agreement; |
| |
● |
by
Forza if a “Company triggering event” has occurred, which is defined as an event where (i) the Twin Vee Board of Directors
shall have failed to recommend that Twin Vee’s stockholders vote to approve the issuance of Twin Vee common stock in the Merger
(the “Twin Vee Board Recommendation”) or shall for any reason have withdrawn or modified in a manner adverse to Forza
the Twin Vee Board Recommendation; (ii) Twin Vee shall have failed to include in this Joint Proxy Statement/Prospectus the Twin Vee
Board Recommendation; (iii) Twin Vee shall have failed to hold the its stockholders’ meeting within sixty (60) days after the
Form S-4 Registration Statement relating to this Joint Proxy Statement/Prospectus is declared effective under the Securities Act
(other than to the extent that the Form S-4 Registration Statement is subject to any stop order or proceeding (or threatened proceeding
by the SEC) seeking a stop order with respect to the Form S-4 Registration Statement, in which case such sixty (60) day period shall
be tolled for so long as such stop order remains in effect or proceeding or threatened proceeding remains pending); provided
that Twin Vee may adjourn the meeting in order to obtain a quorum of its stockholders or as reasonably determined by it to comply
with applicable law; the Forza Board of Directors shall have failed to publicly reaffirm the Forza Board Recommendation within ten
(10) days after Twin Vee so requests in writing; (iv) the Twin Vee Board of Directors shall have publicly approved, endorsed or recommended
any other acquisition proposal; (v) the Twin Vee Board of Directors shall have failed to publicly reaffirm the Twin Vee Board Recommendation
within ten (10) days after Forza so requests in writing; (vi) Twin Vee or its representatives shall have breached the non-solicitation
provisions of the Merger Agreement; |
| |
● |
by
Forza, upon a breach of any representation, warranty, covenant or agreement on the part of Twin Vee set forth in the Merger Agreement,
or if any representation or warranty of Twin Vee becomes untrue, such that the conditions to the Merger would not be satisfied as
of the time of such breach or as of the time such representation or warranty becomes untrue; provided, however, that if such
inaccuracy in Twin Vee’s representations and warranties or breach by Twin Vee is curable by Twin Vee through the exercise of
its commercially reasonable efforts, then Forza may not terminate the Merger Agreement for thirty (30) calendar days following the
delivery of written notice from Forza to Twin Vee of such breach, provided Twin Vee continues to exercise commercially reasonable
efforts to cure such breach; |
| |
● |
by
Twin Vee, upon a breach of any representation, warranty, covenant or agreement on the part of Forza set forth
in the Merger Agreement, or if any representation or warranty of Forza becomes untrue, such that the conditions
to the merger would not be satisfied as of the time of such breach or as of the time such representation
or warranty becomes untrue; provided, however, that if such inaccuracy in Forza’s representations
and warranties or breach by Forza is curable by Forza through the exercise of its commercially reasonable
efforts, then Twin Vee may not terminate the merger agreement for thirty (30) calendar days following the
delivery of written notice from Twin Vee to Forza of such breach, provided Forza continues to exercise commercially
reasonable efforts to cure such breach;
|
| |
● |
by
Twin Vee, if any time prior to the requisite approval of the stockholders of Twin Vee being obtained Twin Vee has received another
acquisition proposal that the Twin Vee Board of Directors deems is a Superior Offer (as defined in the Merger Agreement), Twin
Vee has complied with its obligations under the Merger Agreement in order to accept such Superior Offer, Twin Vee both concurrently
terminates the Merger and enters into a definitive agreement that provides for the consummation of such Superior Offer; or
|
| |
● |
by
Forza if any time prior to the requisite approval of the stockholders of Forza being obtained Forza has received another acquisition
proposal that the Forza Board of Directors deems is a Superior Offer (as defined in the Merger Agreement), Forza has complied with
its obligations under the Merger Agreement in order to accept such Superior Offer, Forza both concurrently terminates the Merger
and enters into a definitive agreement that provides for the consummation of such Superior Offer. |
Expenses
Each party to the Merger Agreement will be responsible
for the payment of all fees and expenses incurred by such party in connection with the Merger Agreement and the transactions contemplated
by the Merger Agreement.
Representations and Warranties
The Merger Agreement contains substantially similar
representations and warranties of Twin Vee and Forza as to, among other things:
| |
● |
corporate
organization and existence; |
| |
● |
corporate
power and authority; |
| |
● |
certificates
of incorporation and bylaws; |
| |
● |
authority
relative to the merger agreement; |
| |
● |
no
conflict, required filings and consents; |
| |
● |
absence
of certain changes or events; |
| |
● |
the
registration statement, and Proxy statement/prospectus; |
| |
● |
agreements,
contracts and commitments; |
| |
● |
no
undisclosed liabilities; |
| |
● |
employee
benefit plans; |
| |
● |
restrictions
on business activities; |
| |
● |
vote
required to adopt the merger agreement and approve the merger. |
The representations and warranties are, in many respects,
qualified by materiality and knowledge, and will not survive the Merger, but their accuracy forms the basis of one of the conditions to
the obligations of Twin Vee and Forza to complete the Merger.
The Merger Agreement may be amended in writing by
the parties at any time.
Management
OF TWIN VEE AND TWIN VEE BOARD OF DIRECTORS
Executive Officers and Directors of Twin Vee
Twin Vee’s business and affairs are organized
under the direction of the Twin Vee Board of Directors, which currently consists of six members. The following table sets forth the names,
ages and positions of Twin Vee’s executive officers and directors as of
of August 20, 2024:
| Name |
|
Age |
|
Position |
| Executive Officers: |
|
|
|
|
| Joseph C. Visconti |
|
59 |
|
Chief Executive Officer and Director |
| Preston Yarborough |
|
44 |
|
Vice President and Director |
| Karl Zimmer |
|
47 |
|
President |
| Michael Dickerson |
|
57 |
|
Chief Financial & Administrative Officer |
| |
|
|
|
|
| Non-Employee Directors: |
|
|
|
|
| Bard Rockenbach (1)(2)(3) |
|
62 |
|
Director |
| James Melvin (1)(2)(3) |
|
62 |
|
Director |
| Neil Ross (1)(2)(3)(6) |
|
62 |
|
Director |
| Kevin Schuyler (1)(2)(3)(4)(5) |
|
55 |
|
Director |
(1) Member of the audit committee
(2) Member of the compensation committee
(3) Member of the nominating and corporate governance
committee
(4) Chair of audit committee
(5) Chair of compensation committee
(6) Chair of nominating and corporate governance
Executive Officers
Joseph Visconti has been Twin Vee’s
Chief Executive Officer and Chair of the Board since 2015. He also served as President of Twin Vee from 2015 until July 2024. Mr. Visconti
also serves as the Chair of the Board and Chief of Product Development of Forza and its interim Chief Executive Officer. With over 25
years of executive level operational and financial experience, Mr. Visconti was the founder, CEO and President of two previous companies,
the first company was a regional Investment Bank that he built to over 400 employees and sold in 2000. The second company was ValueRich,
a financial media company that was taken public on the American Stock Exchange in 2007. ValueRich transitioned from media related business
to Twin Vee PowerCats, Inc. in 2015. Mr. Visconti has experience building teams of professionals with a focus on product development and
bringing those products to market. Mr. Visconti received his Associate’s degree from Lynn University in 1984. Twin Vee believe that
Mr. Visconti’s experience leading Twin Vee and his operational and financial experience makes him well qualified to be a director
of Twin Vee.
Preston Yarborough has been Twin Vee’s Vice President since Twin Vee’s inception,
Twin Vee’s Director since August 2010 and since August 2010 had acted as the Director of Product Development of Twin Vee Powercats,
Inc., which company was merged into Twin Vee in 2022. Twin Vee believe Mr. Yarborough’s history and experience developing products
and managing the development of new products with us and Twin Vee Powercats, Inc. make him a valuable member of Twin Vee’s board
and management.
Karl. Zimmer has been
Twin Vee’s President since July 2024. Mr. Zimmer has approximately 30 years of corporate experience in senior and executive level
operational roles. From August 2023 to March 2024, he served as the President of Florida Beef, Inc., a beef harvesting processing company,
From July 2015 to August 2023, he was the President and CEO of Premium Peanut, LLC, a peanut shelling and oil production company. Mr.
Zimmer holds a Bachelor of Science in Industrial Engineering from the University of Cincinnati.
Michael Dickerson
has been Twin Vee’s Chief Financial & Administrative Officer since April 4, 2024. Mr. Dickerson has 35 years of corporate experience
in senior and executive level finance and operational roles, including finance & accounting, treasury, investor relations & corporate
communications, risk management and other related roles. In February 2024, he served in a consulting capacity at Savannah River Logistics
as their Executive Vice President, Chief Financial & Administrative Officer, and Treasurer. From August 2022 until November 2023,
he served as Vice President, Investor Relations & Risk Management, at Dorman Products, Inc. From August 2018 to March 2022, he served
as Vice President, Corporate Communications & Investor Relations, at Aaron’s Inc. Mr. Dickerson holds a Bachelor of Science
in Business Administration in Accounting from the University of Dayton in Dayton, Ohio. Additionally, he is a member of the American Institute
of Certified Public Accounts (AICPA), a member of the Ohio Society of Certified Public Accountants (OSCPA), and a Senior Roundtable Member
of the National Investor Relations Institute (NIRI).
Independent Directors
Bard Rockenbach has been a member of Twin Vee’s
Board of Directors since November 7, 2021. Mr. Rockenbach has been a practicing attorney for 33 years. Since January 2005, he has been
the managing partner of Burlington & Rockenbach, P.A., a trial and appellate litigation law firm in West Palm Beach, Florida. Before
forming Burlington & Rockenbach, P.A., Rockenbach was a solo practitioner and also worked for insurance defense law firms throughout
Florida. Mr. Rockenbach is board certified by the Florida Bar Association in appellate practice and has over 250 published decisions.
In addition to his legal experience, Mr. Rockenbach has served on the Board of Directors of the Appellate Practice Section of the Florida
Justice Association as both a chairman and a director. He was also the chairman of the Palm Beach County Bar Association Technology Committee.
Mr. Rockenbach has a Bachelor of Science in Accounting from the University of Florida and a Juris Doctor from the Stetson University College
of Law.
Twin Vee believes Mr. Rockenbach’s broad understanding
of business and legal matters, as well as his passion for boats and sailing, make him an invaluable member of the Twin Vee Board of Directors
and well qualified to be a director of Twin Vee.
James Melvin has been a member of the Twin
Vee Board of Directors since April 8, 2021. Mr. Melvin, a multiple class world and national sailboat champion, is an innovative designer
of yachts and aircrafts. He founded Morrelli & Melvin in 1992, a design and engineering company specializing in sailboats and yachts
and has served as its Chief Executive Officer since its inception. Since October 2019, he has served as the President of Pro Coach Boats
LLC, a company he founded that manufacturer and sells boats, and since May 2019, he has served as the Chief Technology Officer of Argo
Rocket Marine LLC, a provider of space industry marine services and products. Mr. Melvin received his degree in Aerospace Engineering
from Boston University.
Twin Vee believes that Mr. Melvin’s expertise
in designing boats and aircraft and managing all aspects of a boat company, as well as his passion for boats and sailing make him an invaluable
member of the Twin Vee Board of Directors and well qualified to be a director of Twin Vee.
Neil Ross has been a member of the Twin Vee
Board of Directors since April 8, 2021. Mr. Ross also serves as a member of the Board of Directors of Forza. He has over 30 years of experience
in launching products and companies and promoting and growing brands. He has served as the Chief Executive Officer of James Ross Advertising
since founding it in February 2003. Most notably, Neil has extensive marine experience partnering with brands like Galati Yachts Sales,
Jefferson Beach Yacht Sales, Allied Marine, Bertram Yachts, Twin Vee, Jupiter Marine and Sealine to name a few. Mr. Ross received his
Bachelor’s degree from Florida State University.
Twin Vee believes Mr. Ross’ experience in the
yacht and boating industry as well as his expertise in brand awareness and growth makes him well qualified to be a director of Twin Vee.
Kevin Schuyler, CFA has been a member of Twin
Vee’s Board of Directors since July 2022. Mr. Schuyler also serves as a member of the Board of Directors of Forza. Mr. Schuyler
is the Vice Chairman of the board of directors and Lead Independent Director of Adial Pharmaceuticals, Inc. where he has served as a director
since April 2016. He currently also serves as a senior managing director at CornerStone Partners, a full-service institutional CIO and
investment office located in Charlottesville, VA, with approximately $10 billion under management. Prior to joining CornerStone Partners
in 2006, he held various positions with McKinsey & Company, Louis Dreyfus Corporation and The Nature Conservancy. Mr. Schuyler serves
on various boards and committees of Sentara Martha Jefferson Hospital, the US Endowment for Forestry and Communities, and Stone Barns
Center. He is a member of the investment committee of the Margaret A. Cargill Philanthropies. Mr. Schuyler graduated with honors from
Harvard College and received his MBA from The Darden Graduate School of Business at the University of Virginia. He is a member of the
Chartered Financial Analyst Society of Washington, DC. Twin Vee selected Mr. Schuyler to serve on the Twin Vee Board of Directors because
he brings extensive knowledge of the financial markets.
Twin Vee believes Mr. Schuyler’s business background
provides him with a broad understanding of the financial markets and the financing opportunities available to Twin Vee.
Family Relationships
No family relationships exist between any director,
executive officer or person nominated or chosen to be a director or officer.
INFORMATION REGARDING THE TWIN VEE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Below is information regarding certain characteristics of the Twin Vee
Board of Directors, utilizing the template included in the related Nasdaq Stock Market (“Nasdaq”) rules.
Board Diversity Matrix (as of July 1, 2024)
| Total Number of Directors |
6 |
| |
Female |
Male |
Non-Binary |
Did Not Disclose
Gender |
| Part I: Gender Identity |
|
| Directors |
0 |
6 |
0 |
0 |
| Part II: Demographic Background |
|
| African American or Black |
|
|
|
|
| Alaskan Native or Native American |
|
|
|
|
| Asian |
|
|
|
|
| Hispanic or Latinx |
|
|
|
|
| Native Hawaiian or Pacific Islander |
|
|
|
|
| White |
0 |
6 |
|
|
| Two or More Races or Ethnicities |
|
|
|
|
| LGBTQ+ |
-- |
| Did Not Disclose Demographic Background |
-- |
Twin Vee Board of Directors Composition
The Twin Vee Board of Directors currently consists
of six members; however, after the Merger the Board of Directors of the combined company will consist of five (5) members. The number
of directors will be fixed by Twin Vee’s Board of Directors, subject to the terms of Twin Vee’s Certificate of Incorporation
and Bylaws. Four of Twin Vee’s current directors will continue to serve as a director of Twin Vee until the election and qualification
of his or her successor, or until his or her earlier death, resignation or removal and one of Forza’s current directors will serve
as a director of Twin Vee until the election and qualification of his or her successor, or until his or her earlier death, resignation
or removal.
Twin Vee’s Certificate of Incorporation provides
that the Twin Vee’s Board of Directors is divided into three (3) classes with staggered three-year terms. Only one class of directors
will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective three-year
terms. Twin Vee’s current directors are divided among the three (3) classes as follows:
| |
● |
the Class I directors are Neil Ross and Bard Rockenbach, and their terms will expire at the annual meeting of stockholders to be held in 2025; |
| |
● |
the Class II directors are James Melvin and Preston Yarborough, and their terms will expire at the annual meeting of stockholders to be held in 2026; and |
| |
● |
the Class III directors are Kevin Schuyler and Joseph Visconti, and their terms will expire at the annual meeting of stockholders to be held in 2027, assuming they are re-elected at the Twin Vee Annual Meeting. |
At each annual meeting of stockholders, upon the expiration
of the term of a class of directors, the successor to each such director in the class will be elected to serve from the time of election
and qualification until the third annual meeting following his or her election and until his or her successor is duly elected and qualified,
in accordance with Twin Vee’s Certificate of Incorporation. Any additional directorships resulting from an increase in the number
of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of Twin
Vee’s directors.
This classification of the Twin Vee Board of Directors
may have the effect of delaying or preventing changes in control of Twin Vee’s company.
In addition, under the terms of Twin Vee’s Certificate
of Incorporation and Twin Vee’s Bylaws, members of the Twin Vee Board of Directors may only be removed for cause. This may also
have the effect of delaying or preventing changes in control of Twin Vee’s company.
After the Merger it is anticipated that Twin
Vee directors will be divided among the three (3) classes as follows:
| |
● |
the Class I directors are Neil Ross and Marcia Kull, and their terms will expire at the annual meeting of stockholders to be held in 2025; |
| |
● |
the Class II directors are Preston Yarborough, and their terms will expire at the annual meeting of stockholders to be held in 2026; and |
| |
● |
the Class III directors are Kevin Schuyler and Joseph Visconti, and their terms will expire at the annual meeting of stockholders to be held in 2024. |
Director Independence
Twin Vee Common Stock has traded The Nasdaq Capital
Market, or Nasdaq, under the symbol “VEEE” since July 21, 2021. Under the rules of Nasdaq, independent directors must comprise
a majority of a listed company’s board of directors within one year of the completion of its initial public offering. In addition,
the rules of Nasdaq require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating
and corporate governance committees be independent. Audit committee members and compensation committee members must also satisfy the independence
criteria set forth in Rule 10A-3 and Rule 10C-1, respectively, under the Exchange Act. Under the rules of Nasdaq, a director
will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person
does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a
director.
To be considered to be independent for purposes of
Rule 10A-3 and under the rules of Nasdaq, a member of an audit committee of a listed company may not, other than in his or her capacity
as a member of the audit committee, the board of directors, or any other board of directors committee: (1) accept, directly or indirectly,
any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person
of the listed company or any of its subsidiaries.
To be considered independent for purposes of Rule 10C-1
and under the rules of Nasdaq, the Twin Vee Board of Directors must affirmatively determine that each member of the compensation committee
is independent, including a consideration of all factors specifically relevant to determining whether the director has a relationship
to the company which is material to that director’s ability to be independent from management in connection with the duties of a
compensation committee member, including, but not limited to: (i) the source of compensation of such director, including any consulting,
advisory or other compensatory fee paid by the company to such director; and (ii) whether such director is affiliated with the company,
a subsidiary of the company or an affiliate of a subsidiary of the company.
Twin Vee’s Board of Directors undertook a review
of its composition, the composition of its committees and the independence of Twin Vee’s directors and considered whether any director
has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her
responsibilities. Based upon information requested from and provided by each non-employee director concerning his or her background, employment
and affiliations, including family relationships, Twin Vee’s Board of Directors has determined that none of Messrs. Rockenbach,
Ross, Melvin, and Schuyler have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and that each of these directors is “independent” as that term is defined under the rules of Nasdaq and Rule 10A-3
and Rule 10C-1 under the Exchange Act. Twin Vee’s Board of Directors has also determined that Marcia Kull is independent.
In making these determinations, Twin Vee’s Board
of Directors considered the current and prior relationships that each non-employee director has with Twin Vee’s company and all
other facts and circumstances Twin Vee’s Board of Directors deemed relevant in determining their independence, including the beneficial
ownership of Twin Vee’s capital stock by each non-employee director, and the transactions involving them described in “Certain
Relationships and Related Transactions.”
Board of Directors Leadership Structure
To assure effective independent oversight, the Twin
Vee Board of Directors has adopted a number of governance practices, including:
| |
● |
executive
sessions of the independent directors after certain board meetings, as required by Nasdaq; and |
| |
● |
annual
performance evaluations of the Chief Executive Officer by the independent directors, led by the Compensation |
The Twin Vee Board of Directors
does not have a policy that requires the separation of the roles of Chief Executive Officer and Chairman of the Board. The Twin Vee Board
of Directors annually reviews its leadership structure to assess what best serves the interests of Twin Vee and its shareholders at a
given time. Currently, the positions of Chief Executive Officer and Executive Chairman are held by the same person. The Twin Vee Board
of Directors does not have a lead independent director. The Twin Vee Board of Directors has determined its leadership structure is appropriate
and effective given its stage of development; however after the Merger, Twin Vee intends to appoint Kevin Schuyler as its lead independent
director,. In that role, he will presides over the Board’s executive sessions, during which our independent directors meet without
management, and he serves as the principal liaison between management and the independent directors of the Board. The Lead Director also:
| |
● |
confers with the Chairman of the Board regarding Board meeting agenda; |
| |
● |
chairs meetings of the independent directors including, where appropriate, setting the agenda and briefing the Chairman of the Board on issues discussed during the meeting; |
| |
● |
oversees the annual performance evaluation of the CEO; |
| |
● |
consults with the Nominating and Governance Committee and the Chairman of the Board regarding assignment of Board members to various committees; and |
| |
● |
performs such other functions as the Board may require. |
We believe the combination of Mr. Visconti
as our Chairman of the Board and an independent director as our Lead Director is an effective structure for our company. The division
of duties and the additional avenues of communication between the Board and our management associated with this structure provide the
basis for the proper functioning of our Board and its oversight of management.
INFORMATION REGARDING COMMITTEES OF
THE TWIN VEE BOARD OF DIRECTORS
Board of Directors Committees
Twin Vee currently has an audit committee, a compensation
committee and a nominating and corporate governance committee, each of which have the composition and the responsibilities described below.
The following table shows the directors who are currently members or Chairman of each of these committees.
| Board Members |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating and Corporate
Governance
Committee |
| Bard Rockenbach |
|
Member |
|
Member |
|
Member |
| James Melvin |
|
Member |
|
Member |
|
Member |
| Neil Ross |
|
Member |
|
Member |
|
Chairman |
| Kevin Schuyler |
|
Chairman |
|
Chairman |
|
Member |
Audit Committee
The members of Twin Vee’s audit committee consist
of Bard Rockenbach, James Melvin, Neil Ross and Kevin Schuyler. Mr. Schuyler serves as the chair of Twin Vee’s audit committee.
All of the members of the audit committee are independent, as that term is defined under the rules of Nasdaq. The primary purpose of the
audit committee is to oversee the quality and integrity of Twin Vee’s accounting and financial reporting processes and the audit
of Twin Vee’s financial statements. Specifically, the audit committee will:
| |
● |
select and hire the independent registered public accounting firm to audit Twin Vee’s financial statements; |
| |
● |
help to ensure the independence and performance of the independent registered public accounting firm; |
| |
● |
approve audit and non-audit services and fees; |
| |
● |
review financial statements and discuss with management and the independent registered public accounting firm Twin Vee’s annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews and the reports and certifications regarding internal controls over financial reporting and disclosure controls; |
| |
● |
prepare the audit committee report that the SEC requires to be included in Twin Vee’s annual proxy statement; |
| |
● |
review reports and communications from the independent registered public accounting firm; |
| |
● |
review the adequacy and effectiveness of Twin Vee’s internal controls and disclosure controls and procedure; |
| |
● |
review Twin Vee’s policies on risk assessment and risk management; |
| |
● |
review related party transactions; |
| |
● |
establish and oversee procedures for the receipt, retention and treatment of accounting related complaints and the confidential submission by Twin Vee’s employees of concerns regarding questionable accounting or auditing matters; and |
| |
|
|
| |
● |
review and discuss Twin Vee’s policies regarding information technology security and protection from cyber risks. |
Twin Vee’s audit committee operates under a
written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy of which is available on Twin
Vee’s website at www.twinvee.com. The Board has determined that Mr. Schuyler is an audit committee financial expert, as such term
is used in Section 407 of Regulation S-K.
Compensation Committee
Twin Vee’s compensation committee consists of
Bard Rockenbach, James Melvin, Neil Ross and Kevin Schuyler. Mr. Schuyler serves as the chair of Twin Vee’s compensation committee.
All of the members of Twin Vee’s compensation committee are independent, as that term is defined under the rules of Nasdaq. Twin
Vee’s compensation committee oversees Twin Vee’s compensation policies, plans and benefits programs. The compensation committee
also:
| |
● |
oversees Twin Vee’s overall compensation philosophy and compensation policies, plans and benefit programs; |
| |
● |
reviews and recommends to Twin Vee’s board of directors for approval compensation for Twin Vee’s executive officers and directors; |
| |
● |
prepares the compensation committee report that the SEC would require to be included in Twin Vee’s annual proxy statement if Twin Vee were no longer deemed to be an emerging growth company or a smaller reporting company; and |
| |
● |
administers Twin Vee’s equity compensation plans. |
Twin Vee’s compensation committee operates under
a written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy of which is available on
Twin Vee’s website at www.twinvee.com.
Nominating and Corporate Governance Committee
The members of Twin Vee’s nominating and corporate
governance committee consist of Bard Rockenbach, James Melvin, Neil Ross and Kevin Schuyler. Neil Ross serves as the chair of Twin Vee’s
nominating and corporate governance committee. Each is independent, as that term is defined under the rules of Nasdaq. Twin Vee’s
nominating and corporate governance committee oversees and assists Twin Vee’s board of directors in reviewing and recommending nominees
for election as directors. Specifically, the nominating and corporate governance committee:
| |
● |
identifies, evaluates and makes recommendations to Twin Vee’s board of directors regarding nominees for election to Twin Vee’s board of directors and its committees; |
| |
● |
considers and make recommendations to Twin Vee’s board of directors regarding the composition of Twin Vee’s board of directors and its committees; |
| |
● |
reviews developments in corporate governance practices; |
| |
● |
evaluates the adequacy of Twin Vee’s corporate governance practices and reporting; and |
| |
● |
evaluates the performance of Twin Vee’s board of directors and of individual directors. |
Candidates for director should have certain minimum qualifications, including
the ability to understand basic financial statements, being over 21 years of age, having relevant business experience (taking into account
the business experience of the other directors), and having high moral character. The nominating and corporate governance committee retains
the right to modify these minimum qualifications from time to time.
In evaluating an incumbent director whose term of
office is set to expire, the nominating and corporate governance committee reviews such director’s overall service to Twin Vee during
such director’s term, including the number of meetings attended, level of participation, quality of performance, and any transactions
with Twin Vee engaged in by such director during his term.
When selecting a new director nominee, the nominating
and corporate governance committee first determines whether the nominee must be independent for Nasdaq purposes or whether the candidate
must qualify as an “audit committee financial expert.” The nominating and corporate governance committee then uses its network
of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm to assist
in the identification of qualified director candidates. The nominating and corporate governance committee also will consider nominees
recommended by our stockholders.
The nominating and corporate governance committee
does not distinguish between nominees recommended by our stockholders and those recommended by other parties. In considering any person
recommended by one of our stockholders, the nominating and corporate governance committee will look for the same qualifications that it
looks for in any other person that it is considering for a position on the Board of Directors. The nominating and corporate governance
committee evaluates the suitability of potential nominees, taking into account the current board composition, including expertise, diversity
and the balance of inside and independent directors. The nominating and corporate governance committee does not have a set policy or process
for considering diversity in identifying nominees, but endeavors to establish a diversity of background and experience in a number of
areas of core competency, including business judgment, management, accounting, finance, knowledge of our industry, strategic vision, research
and development and other areas relevant to our business.
Twin Vee’s nominating and corporate governance
committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy
of which is available on Twin Vee’s website at www.twinvee.com.
Risk Oversight
In its governance role, and particularly in exercising
its duty of care and diligence, the board of directors is responsible for ensuring that appropriate risk management policies and procedures
are in place to protect the company’s assets and business. The Twin Vee Board of Directors has broad and ultimate oversight responsibility
for Twin Vee’s risk management processes and programs and executive management is responsible for the day-to-day evaluation and
management of risks to Twin Vee.
Code of Conduct and Ethics
Twin Vee has adopted a written code of conduct and
ethics that applies to Twin Vee’s directors, officers and employees, including Twin Vee’s principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions. The code of business conduct and
ethics is available on Twin Vee’s website at www.twinvee.com. Twin Vee intends to disclose future amendments to such code, or any
waivers of its requirements, applicable to any principal executive officer, principal financial officer, principal accounting officer
or controller or persons performing similar functions or Twin Vee’s directors on Twin Vee’s website identified above. The
inclusion of Twin Vee’s website address in this Joint Proxy Statement/Prospectus does not include or incorporate by reference the
information on Twin Vee’s website herein. Twin Vee will provide any person, without charge, upon request, a copy of Twin Vee’s
code of conduct and ethics. Such requests should be made in writing to the attention of Glenn Sonoda, Secretary, Twin Vee PowerCats Co.,
3101 US-1 Fort Pierce, Florida 34982.
Limitation of Liability and Indemnification
Twin Vee’s Certificate of Incorporation and
Bylaws provide that Twin Vee will indemnify Twin Vee’s directors and officers, and may indemnify Twin Vee’s employees and
other agents, to the fullest extent permitted by Delaware law. Delaware law prohibits Twin Vee’s Certificate of Incorporation from
limiting the liability of Twin Vee’s directors for the following:
| |
● |
any breach of the director’s duty of loyalty to us or to Twin Vee’s stockholders; |
| |
● |
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
| |
● |
unlawful payment of dividends or unlawful stock repurchases or redemptions; and |
| |
● |
any transaction from which the director derived an improper personal benefit. |
If Delaware law is amended to authorize corporate
action further eliminating or limiting the personal liability of a director, then the liability of Twin Vee’s directors will be
eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Twin Vee’s Certificate of Incorporation does
not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms
of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities under
any other laws, such as the federal securities laws or other state or federal laws. Under Twin Vee’s bylaws, Twin Vee will also
be empowered to purchase insurance on behalf of any person whom Twin Vee is required or permitted to indemnify.
In the case of an action or proceeding by or in the
right of Twin Vee’s or any of Twin Vee’s subsidiaries, no indemnification will be provided for any claim where a court determines
that the indemnified party is prohibited from receiving indemnification. Twin Vee believes that these charter and bylaw provisions are
necessary to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions
in Twin Vee’s Certificate of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for
breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though
an action, if successful, might benefit us and Twin Vee’s stockholders. Moreover, a stockholder’s investment may be harmed
to the extent Twin Vee pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to Twin Vee’s directors, officers and controlling persons pursuant to the foregoing provisions,
or otherwise, Twin Vee have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in
the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of Twin Vee’s directors
or officers as to which indemnification is being sought, nor are Twin Vee aware of any pending or threatened litigation that may result
in claims for indemnification by any director or officer.
In addition to the indemnification that will be provided
for in Twin Vee’s Certificate of Incorporation and Bylaws, the employment agreements with certain of Twin Vee’s executive
officers include indemnification provisions providing for rights of indemnification as set forth in Twin Vee’s Certificate of Incorporation
and Bylaws.
Board and Committee Meetings and Attendance
The Twin Vee Board of Directors and its committees
meet regularly throughout the year, and also hold annual meetings and act by written consent from time to time. During 2023, the Twin
Vee Board of Directors met two (2) times; the Audit Committee met six (6) times, the Compensation Committee met two (2) times, and the
Nominating and Corporate Governance Committee met one (1) time. During 2023, each current member of the Twin Vee Board of Directors attended
at least 75% of the aggregate of all meetings of the Twin Vee Board of Directors and of all meetings of committees of the Twin Vee Board
of Directors on which such member served that were held during the period in which such director served.
Board Attendance at Annual Stockholders’ Meeting
Twin Vee’s policy is to invite and encourage
each member of the Twin Vee Board of Directors to attend Twin Vee’s annual meetings of stockholders. At the 2023 Annual Meeting
of Twin Vee Stockholders one director appeared in person.
Review and Approval of Transactions with Related
Persons
The Twin Vee Board of Directors has adopted policies
and procedures for review, approval and monitoring of transactions involving Forza and “related persons” (directors and executive
officers or their immediate family members, or stockholders owning 5% or greater of Twin Vee’s outstanding stock). The policy covers
any related person transaction that meets the minimum threshold for disclosure in the Proxy Statement under the relevant rules of the
Securities and Exchange Commission (the “SEC”). Pursuant to Twin Vee’s charter, Twin Vee’s Audit Committee reviews
on an on-going basis for potential conflicts of interest, and approve if appropriate, all Twin Vee’s “Related Party Transactions.”
For purposes of the Audit Committee Charter, “Related Party Transactions” means those transactions required to be disclosed
pursuant to Item 404 of SEC Regulation S-K.
A discussion of Twin Vee’s current related person
transactions appears in this Joint Proxy Statement/Prospectus under “Transactions with Related Persons, Promoters and Certain Control
Persons.”
Communication with Directors
Historically, Twin Vee has not provided a formal process
related to stockholder communications with the Twin Vee Board of Directors. Nevertheless, every effort has been made to ensure that the
views of stockholders are heard by the Twin Vee Board of Directors or individual directors, as applicable, and that appropriate responses
are provided to stockholders in a timely manner.
Stockholders and interested parties who wish to communicate
with the Twin Vee Board of Directors, non-management members of the Twin Vee Board of Directors as a group, a committee of the Twin Vee
Board of Directors or a specific member of the Twin Vee Board of Directors may do so by letters addressed to the attention of Twin Vee’s
Corporate Secretary, who will relay the communications to the Twin Vee Board of Directors and/or its members, as appropriate.
The address for these communications is: Twin Vee
PowerCats Co., c/o Corporate Secretary, 3101 S US Hwy 1, Fort Pierce, Florida 34982.
Anti-Hedging/Anti-Pledging Policy
Twin Vee has adopted an insider trading policy (the
“Trading Policy”) with respect to the policies and procedures covering trades of Twin Vee’s securities and the handling
of Twin Vee’s confidential information. The Trading Policy, which applies to all officers, employees, directors, consultants and
independent contractors (each a “Covered Person”), prohibits the trading of Twin Vee’s securities by a Covered Person
or a member of their household who is in possession of material non-public information. The Trading Policy also prohibits, among other
things, hedging and pledging. Consequently, no employee, executive officer or director may enter into a hedge or pledge of Twin Vee’s
Common Stock, including short sales, derivatives, put options, swaps and collars.
Equity Compensation Policy
While Twin Vee does not have a formal written policy
in place with regard to the timing of awards of options in relation to the disclosure of material nonpublic information, the Twin Vee
Compensation Committee does not seek to time equity grants to take advantage of information, either positive or negative, about Twin Vee’s
company that has not been publicly disclosed. Upon consummation of Twin Vee’s initial public offering, all of Twin Vee’s officers
and directors were awarded equity grants. Twin Vee intends to make annual equity grants to officers and directors coincident with each
annual meeting of stockholders. Option grants are effective on the date the award determination is made by the Twin Vee Compensation Committee,
and the exercise price of options is the closing market price of Twin Vee Common Stock on the business day of the grant or, if the grant
is made on a weekend or holiday, on the prior business day.
TWIN VEE DIRECTOR COMPENSATION
2023 Director Compensation
Cash Compensation
Twin Vee’s directors cash compensation for the
year ended December 31, 2023 remained the same as the prior year. All non-employee directors are entitled to receive the following cash
compensation for their services:
| |
● |
$5,000 per year for service as a board member; |
| |
● |
$12,000 per year additionally for service as chair of the audit committee; |
| |
● |
$5,000 per year additionally for service as member of the audit committee (excluding committee chair); |
| |
● |
$10,000 per year additionally for service as chair of the compensation committee; |
| |
● |
$4,000 per year additionally for service as member of the compensation committee (excluding committee chair); |
| |
● |
$5,000 per year additionally for service as chair of the nominating and corporate governance committee; |
| |
● |
$3,000 per year additionally for service as member of the nominating and corporate governance committee (excluding committee chair); |
All cash payments to non-employee directors who served
in the relevant capacity at any point during the immediately preceding prior fiscal quarter will be paid quarterly in arrears. A non-employee
director who served in the relevant capacity during only a portion of the prior fiscal quarter will receive a pro-rated payment of the
quarterly payment of the applicable cash retainer.
Effective as of the closing of the Merger, Kevin Schuyler
will be appointed by Twin Vee as lead independent director and the compensation payable to the Twin Vee’s directors will be adjusted
as follows: (i) Kevin Schuyler, lead independent director: $100,000 per year; (ii) Neil Ross – independent director: $45,000 per
year; and (iii) Marcia Kull – independent director: $45,000 per year.
In addition, effective as of the closing of the Merger,
the members of the Twin Vee Special Committee will be entitled to receive the following compensation: (i) Bard Rockenbach: $10,000 and
(ii) James Melvin: $5,000.
Equity Compensation
Each non-employee director who served as a director
during 2021 received an initial grant of non-qualified stock options under the Twin Vee PowerCats Co. Amended and Restated 2021 Stock
Incentive Plan (the “Twin Vee 2021 Plan”) to purchase 5,500 shares of Twin Vee Common Stock, which options vest pro rata on
a monthly basis over a period of twelve months from the grant date, subject to the grantee’s continued service through that date.
Each non-employee director who served as a director during 2022 received a grant of non-qualified stock options under Twin Vee’s
2021 Plan to purchase 5,500 shares of Twin Vee Common Stock, which options vest pro rata on a monthly basis over a period
of twelve months from the grant date, subject to the grantee’s continued service through that date.
Director Compensation Table
The following table sets forth information regarding
the compensation earned for service on the Twin Vee Board of Directors by Twin Vee’s non-employee directors during the year ended
December 31, 2023. The compensation for each of Messrs. Visconti and Yarborough as an executive officer is set forth above under “—Summary
Compensation Table.” Messrs. Visconti and Yarborough receive no compensation for service as a director.
(a)
Name |
|
(b)
Fees Earned or Paid in Cash ($) |
|
I
Stock Awards ($) |
|
(d)
Option Awards(1) ($) |
|
(e)
Non-Equity Incentive Plan Compensation ($) |
|
(f)
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|
(g)
All Other Compensation ($) |
|
(h)
Total ($) |
| Bard Rockenbach |
|
|
17,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,000 |
|
| James Melvin |
|
|
17,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,000 |
|
| Neil Ross |
|
|
19,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,000 |
|
| Kevin Schuyler |
|
|
30,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,732 |
|
| |
(1) |
During the year ended December 31, 2023, no equity compensation was awarded to any directors. |
| |
(2) |
As of December 31, 2023, the following are the outstanding aggregate number of option awards held by each of Twin Vee’s directors who were not also Named Executive Officers: |
| Name |
|
Option Awards (#) |
| Bard Rockenbach |
|
|
10,083 |
|
| James Melvin |
|
|
11,000 |
|
| Neil Ross |
|
|
11,000 |
|
| Kevin Schuyler |
|
|
5,500 |
|
During 2023, each non-employee member of the Twin
Vee Board of Directors received an annual cash fee of $5,000, all non-employee directors received an annual cash fee of $5,000, $4,000
and $3,000 for service on the Audit, Compensation and Nominating and Corporate Governance Committee, respectively, and the Chairman of
the Audit, Compensation and Nominating and Corporate Governance Committee received a cash fee of $12,000, $10,000 and $5,000, respectively.
In addition, in 2021 and 2022 each non-employee member of the Twin Vee Board of Directors has been issued an annual option grant exercisable
for 5,500 shares of Twin Vee Common Stock, for a term of one year, vesting monthly over one year of the date of grant. During the year
ended December 31, 2023, no equity compensation was awarded to any directors.
TWIN VEE EXECUTIVE COMPENSATION
Twin Vee’s named executive officers for the
year ended December 31, 2023, which consisted of Twin Vee’s principal executive officer and the next most highly compensated executive
officers, were:
| |
● |
Joseph C. Visconti, Twin Vee’s Chief Executive Officer and Former President |
| |
● |
Preston Yarborough, Twin Vee’s Vice President |
| |
● |
Carrie Gunnerson, Twin Vee’s Former Chief Financial Officer |
Summary Compensation Table
The following table sets forth information regarding
the compensation that was paid to Twin Vee’s named executive officers during the years ended December 31, 2023 and December 31,
2022.
| |
|
|
|
|
|
|
|
Option |
|
All Other |
|
|
| Name and Principal Position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Awards ($)(1) |
|
Compensation ($) |
|
Total ($) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Joseph C. Visconti |
|
|
2023 |
|
|
|
250,000 |
|
|
|
300,000 |
|
|
|
80,016 |
|
|
|
49,758 |
(2) |
|
|
679,774 |
|
| Chief Executive Officer and Former President |
|
|
2022 |
|
|
|
250,000 |
|
|
|
300,000 |
|
|
|
1,990,196 |
|
|
|
44,356 |
(2) |
|
|
2,584,552 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preston Yarborough |
|
|
2023 |
|
|
|
185,841 |
|
|
|
61,208 |
|
|
|
27,212 |
|
|
|
23,036 |
(3) |
|
|
297,297 |
|
| Vice President |
|
|
2022 |
|
|
|
160,000 |
|
|
|
42,167 |
|
|
|
— |
|
|
|
21,030 |
(3) |
|
|
223,197 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrie Gunnerson |
|
|
2023 |
|
|
|
211,000 |
|
|
|
63,300 |
|
|
|
27,212 |
|
|
|
18,461 |
(4) |
|
|
319,973 |
|
| Former Chief Financial Officer |
|
|
2022 |
|
|
|
187,462 |
|
|
|
73,300 |
|
|
|
107,516 |
|
|
|
12,080 |
(4) |
|
|
380,358 |
|
| (1) |
Options issued pursuant to the Twin Vee 2021 Stock Incentive Plan and the Forza 2022 Stock Incentive Plan. The amounts in the “Option Awards” column reflect the dollar amounts of the grant date fair value for the financial statement reporting purposes for stock options for the fiscal year ended December 31, 2023 in accordance with ASC 718. The fair value of the options was determined using the Black-Scholes model. For a discussion of the assumptions used in computing this valuation, see Note 14 of the Notes to Consolidated Financial Statements in the Twin Vee consolidated audited financial statement for the years ended December 31, 2023 and 2022 included in this Joint Proxy Statement/ Prospectus. |
| |
|
| (2) |
Consists of $30,000 of car expense paid, $18,461 of health insurance expense, and $1,297 of life insurance paid in 2023 and $30,000 of car expenses and $14,356 of health insurance expenses paid in 2022. |
| |
|
| (3) |
Consists of $12,000 of car expenses paid and $11,036 of health insurance expense paid in 2023 and $12,000 of car expenses and $9,030 of health insurance paid in 2022. |
| |
|
| (4) |
Consists of $18,461 of health insurance expense paid in 2023 and $12,080 of health insurance paid in 2022. |
| |
|
| (5) |
Mrs. Gunnerson provided notice of her resignation to be effective May 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End (December 31, 2023)
The following table provides information about the
number of outstanding equity awards held by each of Twin Vee’s named executive officers as of December 31, 2023:
| Option
Awards | |
| |
| |
|
| Name | |
Number
of Securities Underlying Unexercised Options (Exercisable) | |
Number
of Securities Underlying Unexercised Options (Unexercisable) | |
Option
Exercise Price | |
Option
Expiration Date | |
Equity
Incentive Plan Awards: Number of Unearned Shares That Have Not Vested | |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested |
| | |
| |
| |
| |
| |
| |
|
| Joseph
C. Visconti | |
| 219,111 | | |
| 52,889 | (1) | |
| 5.80 | | |
6/8/2031 | |
| — | | |
| — | |
|
Chief Executive Officer and Former President | |
| 188,889 | | |
| 2,111,111 | (2) | |
| 5.00 | | |
8/10/2032 | |
| — | | |
| — | |
| |
| 97,222 | | |
| 152,778 | (3) | |
| 2.01 | | |
10/19/2032 | |
| — | | |
| — | |
| | |
| 33,333 | | |
| 66,667 | (4) | |
| 1.33 | | |
12/14/2032 | |
| — | | |
| — | |
| | |
| 6,453 | | |
| 137,547 | (6) | |
| 0.70 | | |
10/4/2033 | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| Preston
Yarborough | |
| 109,555 | | |
| 26,445 | (1) | |
| 5.80 | | |
6/8/2031 | |
| — | | |
| — | |
| Vice
President | |
| 1,389 | | |
| 23,611 | (6) | |
| 0.70 | | |
10/3/2033 | |
| — | | |
| — | |
| | |
| 1,388 | | |
| 23,612 | (7) | |
| 1.35 | | |
10/4/2033 | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| Carrie
Gunnerson | |
| 58,933 | | |
| 77,067 | (5) | |
| 3.87 | | |
9/30/2031 | |
| — | | |
| — | |
| Former
Chief Financial Officer | |
| 33,333 | | |
| 66,667 | (4) | |
| 1.33 | | |
12/14/2032 | |
| — | | |
| — | |
| | |
| 1,389 | | |
| 23,611 | (6) | |
| 0.70 | | |
10/4/2033 | |
| — | | |
| — | |
| | |
| 1,388 | | |
| 23,612 | (7) | |
| 1.35 | | |
10/4/2033 | |
| — | | |
| — | |
| |
(1) |
On July 23, 2021, options were granted, under the Twin Vee 2021 Stock Incentive Plan, vesting monthly over 3 years. |
| |
(2) |
On August 11, 2022, options were granted, under the Forza 2022 Stock Incentive Plan, vesting monthly over 3 years. |
| |
(3) |
On October 20, 2022, options were granted, under the Twin Vee 2021 Stock Incentive Plan, vesting monthly over 3 years. |
| |
(4) |
On December 15, 2022, options were granted, under the Forza 2022 Stock Incentive Plan, vesting monthly over 3 years. |
| |
(5) |
On October 1, 2021, options were granted, under the Twin Vee 2021 Stock Incentive Plan, vesting monthly over 5 years. |
| |
(6) |
On October 4, 2023, options were granted, under the Forza 2022 Stock Incentive Plan, vesting monthly over 3 years. |
| |
(7) |
On October 4, 2023, options were granted, under the Twin Vee 2021 Stock Incentive Plan, vesting monthly over 3 years. |
Employment Arrangements with Twin Vee’s Named
Executive Officers
Joseph Visconti, Chief Executive Officer
Twin Vee entered into a five-year employment agreement with Mr. Visconti (the
“Visconti Employment Agreement”) effective upon the closing of the Twin Vee initial public offering in July 2021. Under the
Visconti Employment Agreement, Mr. Visconti serves as Twin Vee’s Chief Executive Officer. He receives an annual base salary of $250,000
and is eligible to receive an annual performance cash bonus with a target amount equal to 125% of his annual base salary, based upon achievement
of performance goals established by the compensation committee of the Twin Vee Board of Directors. Upon the completion of Twin Vee’s
initial public offering in July 2021, Mr. Visconti received a stock option to purchase 272,000 shares of Twin Vee Common Stock under the
Twin Vee 2021 Plan, vesting pro rata on a monthly basis over a three-year period subject to continued employment through each vesting
date. On October 20, 2022, Mr. Visconti received a stock option to purchase 250,000 shares of Twin Vee Common Stock under the Twin Vee
2021 Plan, vesting pro rata on a monthly basis over a three-year period subject to continued employment through each vesting date.
The Visconti Employment Agreement provides that Mr.
Visconti will be eligible to participate in all benefit and fringe benefit plans generally made available to Twin Vee’s other executive
officers. In addition, he is entitled to (i) four weeks of paid vacation per year, (ii) a $2,500 a month car allowance and (iii) the cost
of medical insurance for coverage for Mr. Visconti and his family.
The Visconti Employment Agreement provides that it
shall continue until terminated: (i) by mutual agreement; (ii) due to death or disability of Mr. Visconti; (iii) by Mr. Visconti without
good reason upon 90 days written notice to us; (iv) by us for cause (as defined in the Visconti Employment Agreement); (v) by Twin Vee
without cause; or (vi) by Mr. Visconti for good reason (as defined in the Visconti Employment Agreement).
Pursuant to the Visconti Employment Agreement, Mr.
Visconti is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He is also bound by confidentiality
provisions.
In the event of a termination by Twin Vee without
cause or a termination by Mr. Visconti for good reason other than in connection with a change in control, Mr. Visconti will receive: an
aggregate of twelve months of salary continuation at his then-current base annual salary, paid out in equal installments over a 6 month
period; payment of any amount of annual bonus accrued for the year prior to the date of termination; payment of the bonus Mr. Visconti
would have received based on the attainment of performance goals had he remained employed through the end of the year of termination,
pro-rated based on the number of days in the termination year that Mr. Visconti was employed by Twin Vee (paid when its other senior executives
receive payment of their annual bonuses); reimbursement of COBRA premiums for up to twelve months; and full vesting for any outstanding,
unvested equity awards granted under the Twin Vee 2021 Plan. Mr. Visconti’s outstanding vested stock options in Twin Vee will generally
remain exercisable no longer than six months following such a termination.
In the event of a termination by Twin Vee without
cause or a resignation by Mr. Visconti for good reason within twelve months following a change in control, Mr. Visconti will receive an
aggregate of 18 months of salary continuation at his then-current base annual salary, paid out in equal installments over a twelve month
period; payment of any amount of annual bonus accrued for the year prior to the year of termination; payment of a pro-rated target annual
bonus for the year of termination based on the number of days in the termination year that Mr. Visconti was employed by Twin Vee; payment
of one time his then-current target annual bonus; reimbursement of COBRA premiums for up to 18 months; and full vesting for any outstanding,
unvested equity awards granted under the Twin Vee 2021 Plan. Mr. Visconti’s outstanding vested stock options will generally remain
exercisable no longer than six months following such a termination.
The receipt of any termination benefits described
above is subject to Mr. Visconti’s execution of a release of claims in favor of Twin Vee, a form of which is attached as an exhibit
to the Visconti Employment Agreement.
In the event of Mr. Visconti’s termination due
to death or disability, Mr. Visconti will receive full vesting for any outstanding, unvested equity awards granted under the Twin Vee
2021 Plan. Mr. Visconti’s outstanding vested stock options will generally remain exercisable no longer than six months following
such a termination.
Preston Yarborough, Vice President and Director
of Product Development
Twin Vee entered into a five-year employment agreement
with Mr. Yarborough (the “Yarborough Employment Agreement”) effective upon the closing of Twin Vee’s initial public
offering in July 2021. Under the Yarborough Employment Agreement, Mr. Yarborough serves as Twin Vee’s Vice President and Director
of Product Development. He receives an annual base salary of $160,000 and is eligible to receive an annual performance cash bonus with
a target amount equal to 50% of his annual base salary, based upon achievement of performance goals established by the compensation committee
of the Twin Vee Board of Directors. Upon the completion of Twin Vee’s initial public offering in July 2021, Mr. Yarborough received
a stock option to purchase 136,000 shares of Twin Vee Common Stock under the Twin Vee 2021 Plan, vesting monthly over a three-year period
subject to continued employment through each vesting date.
The Yarborough Employment Agreement provides that
Mr. Yarborough would be eligible to participate in all benefit and fringe benefit plans generally made available to Twin Vee’s other
executive officers. In addition, he is entitled to (i) four weeks of paid vacation per year, (ii) a $1,000 a month car allowance and (iii)
the cost of medical insurance for coverage for Mr. Yarborough and his family.
The Yarborough Employment Agreement provides that
it shall continue until terminated (i) by mutual agreement; (ii) due to death or disability of Mr. Yarborough; (iii) by Mr. Yarborough
without good reason upon 90 days written notice to Twin Vee; (iv) by Twin Vee for cause (as defined in the Yarborough Employment Agreement);
(v) by Twin Vee without cause; or (vi) by Mr. Yarborough for good reason (as defined in the Yarborough Employment Agreement).
Pursuant to the Yarborough Employment Agreement, Mr.
Yarborough is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He is also bound by confidentiality
provisions.
In the event of a termination by Twin Vee without
cause or a termination by Mr. Yarborough for good reason other than in connection with a change in control, Mr. Yarborough will receive:
an aggregate of nine months of salary continuation at his then-current base annual salary, paid out in equal installments over a six month
period; payment of any amount of annual bonus accrued for the year prior to the date of termination; payment of the bonus Mr. Yarborough
would have received based on the attainment of performance goals had he remained employed through the end of the year of termination,
pro-rated based on the number of days in the termination year that Mr. Yarborough was employed by Twin Vee (paid when Twin Vee’s
other senior executives receive payment of their annual bonuses); reimbursement of COBRA premiums for up to nine months; and full vesting
for any outstanding, unvested equity awards granted under the Twin Vee 2021 Plan. Mr. Yarborough’s outstanding vested stock options
will generally remain exercisable no longer than six months following such a termination.
In the event of a termination by Twin Vee without
cause or a resignation by Mr. Yarborough for good reason within twelve months following a change in control, Mr. Yarborough will receive
an aggregate of twelve months of salary continuation at his then-current base annual salary, paid out in equal installments over a twelve
month period; payment of any amount of annual bonus accrued for the year prior to the year of termination; payment of a pro-rated target
annual bonus for the year of termination based on the number of days in the termination year that Mr. Yarborough was employed by Twin
Vee; payment of one time his then-current target annual bonus; reimbursement of COBRA premiums for up to twelve months; and full vesting
for any outstanding, unvested equity awards granted under the Twin Vee 2021 Plan. Mr. Yarborough’s outstanding vested stock options
will generally remain exercisable no longer than six months following such a termination.
The receipt of any termination benefits described
above is subject to Mr. Yarborough’s execution of a release of claims in favor of Twin Vee, a form of which is attached as an exhibit
to the Yarborough Employment Agreement.
In the event of Mr. Yarborough’s termination
due to death or disability, Mr. Yarborough will receive full vesting for any outstanding, unvested equity awards granted under the Twin
Vee 2021 Plan. Mr. Yarborough’s outstanding vested stock options will generally remain exercisable no longer than six months following
such a termination.
On October 4, 2023, the Board of Directors approved
the temporary payment of $7,000 a month in additional compensation to Preston Yarborough for services to be rendered by him as Interim
Plant Manager of the AquaSport manufacturing plant in White Bluff Tennessee, for so long as he continues to act in that capacity.
Employment Arrangements with Current Executive
Officers That Are Not Named Executive Officers
Karl Zimmer, President
In connection with his appointment,
effective July 12, 2024 (the “Effective Date”), Twin Vee entered into a three-year employment agreement (the “Employment
Agreement”) with Mr. Zimmer to employ Mr. Zimmer as Twin Vee’s President at an annual base salary of $200,000, which further
provides that he is eligible to receive an annual performance cash bonus with a target amount equal to 50% of his annual base salary,
based upon achievement of performance goals established by the compensation committee of Twin Vee’s Board of Directors, provided
that if Twin Vee achieves EBITDA profitability, inclusive of public company fees, Mr. Zimmer shall be eligible to receive a target annual
performance cash bonus of 100% of his annual base salary. Pursuant to the Employment Agreement, on July 12, 2024, Mr. Zimmer received
a stock option (the “Initial Stock Option”) to purchase 500,000 shares of Twin Vee Common Stock under the Twin Vee2021 Amended
Stock Incentive Plan (“2021 Plan”), vesting pro rata on an annual basis over five (5) years commencing on the one-year anniversary
of the grant date, subject to continued employment through each vesting date. In addition, the Employment Agreement provides that subject
to approval of the Compensation Committee of Twin Vee’s Board of Directors and its Board of Directors, Mr. Zimmer will be granted
an additional stock option to purchase 500,000 shares of Twin Vee Common Stock (the “Additional Stock Option”) promptly upon
the requisite stockholder approval of an increase in the number of shares available for issuance of awards under the 2021 Plan. The specific
vesting terms and exercise price of the additional stock options will be determined by the Compensation Committee and the Board of Directors.
The Employment Agreement
provides that Mr. Zimmer is eligible to participate in all benefit and fringe benefit plans generally made available to Twin Vee’s
other executive officers, such as a 401(k) plan with up to 4% Twin Vee matching if Mr. Zimmer contributes 5% of his base salary. In addition,
he is entitled to: (i) four weeks of paid vacation per year; (ii) up to $1,000 per month toward the cost of medical insurance coverage
for Mr. Zimmer and his family; and (iii) $50,000 for relocation expenses and temporary lodging while relocating to Fort Pierce, Florida.
The Employment Agreement
provides that it shall continue until terminated: (i) by mutual agreement; (ii) due to death or disability of Mr. Zimmer; (iii) by Mr.
Zimmer voluntarily upon 90 days written notice to Twin Vee; (iv) by Mr. Zimmer with good reason (as defined in the Employment Agreement)
upon 60 days written notice to Twin Vee; (v) by Twin Vee for cause (as defined in the Employment Agreement); or (vi) by Twin Vee without
cause.
Pursuant to the Employment
Agreement, Mr. Zimmer is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He is also bound
by confidentiality provisions.
In the event of a termination
by Twin Vee without cause or if Mr. Zimmer resigns for good reason after the first three months as a result of a material diminution in
his base salary for longer than 12 months, and such termination is not in connection with a change of control (as defined in the Employment
Agreement), Mr. Zimmer will receive: (i) an aggregate of six months of salary continuation at his then-current base annual salary, paid
out in equal installments over a six month period; (ii) vesting with respect to 50% of his then outstanding, unvested shares of Common
Stock issuable upon exercise of the Initial Stock Options if such termination occurs after the one year anniversary of the Effective Date
and prior to the two year anniversary of the Effective Date and full vesting of the shares of Common Stock issuable upon exercise of the
Initial Stock Options if such termination occurs after the two year anniversary of the Effective Date; (iii) extension of the exercise
period for all of his then outstanding vested stock options to the first to occur of the 6 month anniversary of the date of termination
or the expiration date of the stock options.
In the event of a termination
by Twin Vee without cause or if Mr. Zimmer resigns for good reason and such termination is in connection with a change of control, Mr.
Zimmer will receive: (i) an aggregate of six months of salary continuation at his then-current base annual salary, paid out in equal installments
over a six month period; (ii) full vesting with respect to all of his then outstanding, unvested shares of Common Stock issuable upon
exercise of the Initial Stock Options; (iii) vesting with respect to 50% of his then outstanding, unvested shares of Common Stock issuable
upon exercise of the Additional Stock Options if such termination occurs after the one year anniversary of the Effective Date and prior
to the two year anniversary of the Effective Date and full vesting of the shares issuable upon exercise of the Additional Stock Options
if such termination occurs after the two year anniversary of the Effective Date; and (iv) extension of the exercise period for all of
his then outstanding vested stock options to the first to occur of the 6 month anniversary of the date of termination, the expiration
date of the stock options, or such earlier time as provided under the applicable plan or grant agreement with respect to a change of control.
In the event of a termination
by Twin Vee with cause or a voluntary termination by Mr. Zimmer without good reason, all further vesting of his outstanding equity awards
will terminate immediately and all payments of compensation by Twin Vee to him will terminate immediately. The receipt of any termination
benefits described above is subject to Mr. Zimmer’s execution of a release of claims in favor of Twin Vee, a form of which is attached
as an exhibit to the Employment Agreement.
In the event of Mr. Zimmer’s
termination due to death or disability, Mr. Zimmer will receive full vesting for any outstanding, unvested equity awards granted under
the Twin Vee 2021 Plan. Mr. Zimmer’s outstanding vested stock options will generally remain exercisable no longer than six months
following such a termination.
Michael Dickerson, Chief
Financial & Administrative Officer
In connection with his appointment,
Twin Vee entered into a five-year employment agreement (the “Dickerson Employment Agreement”) with Mr. Dickerson to employ
Mr. Dickerson as Twin Vee’s Chief Financial & Administrative Officer at an annual base salary of $200,000 and is eligible to
receive an annual performance cash bonus with a target amount equal to 50% of his annual base salary, based upon achievement of performance
goals established by the compensation committee of the Twin Vee Board of Directors. Pursuant to the Dickerson Employment Agreement, on
April 4, 2024, Mr. Dickerson received a stock option to purchase 150,000 shares of Twin Vee Common Stock under the Twin Vee 2021 Plan,
vesting one-sixth on the date which is six months after issuance and subsequently in thirty equal monthly installments commencing on the
first day of the month thereafter, subject to continued employment through each vesting date.
The Dickerson Employment
Agreement provides that Mr. Dickerson is eligible to participate in all benefit and fringe benefit plans generally made available to Twin
Vee’s other executive officers. In addition, he is entitled to: (i) four weeks of paid vacation per year and (ii) up to $2,000 per
month toward the cost of medical insurance coverage for Mr. Dickerson and his family. Further, when Twin Vee earns $8,000,000 in top line
revenue for any rolling three-month period, the Dickerson Employment Agreement provides that Mr. Dickerson will receive: (i) a $1,000
a month car allowance and (iii) reimbursement of the full cost of medical insurance for coverage for Mr. Dickerson and his family.
The Dickerson Employment
Agreement provides that it shall continue until terminated (i) by mutual agreement; (ii) due to death or disability of Mr. Dickerson;
(iii) by Mr. Dickerson upon 90 days written notice to us; (iv) by Twin Vee for cause (as defined in the Dickerson Employment Agreement);
or (v) by Twin Vee without cause.
Pursuant to the Dickerson
Employment Agreement, Mr. Dickerson is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He
is also bound by confidentiality provisions.
In the event of a termination
by Twin Vee without cause after the first three months, Mr. Dickerson will receive: an aggregate of six months of salary continuation
at his then-current base annual salary, paid out in equal installments over a 6 month period. In the event of a termination by Twin Vee
without cause or a termination by Mr. Dickerson, all further vesting of his outstanding equity awards will terminate immediately and all
payments of compensation by Twin Vee to him will terminate immediately. The receipt of any termination benefits described above is subject
to Mr. Dickerson’s execution of a release of claims in favor of Twin Vee.
In the event of Mr. Dickerson’s
termination due to death or disability, Mr. Dickerson will receive full vesting for any outstanding, unvested equity awards granted under
the Twin Vee 2021 Plan. Mr. Dickerson’s outstanding vested stock options will generally remain exercisable no longer than six months
following such a termination.
Carrie Gunnerson, Former Chief Financial Officer
Twin Vee had entered into a five-year employment agreement
with Ms. Gunnerson (the “Gunnerson Employment Agreement”) effective in October 2021. Under the Gunnerson Employment Agreement,
Ms. Gunnerson served as Twin Vee’s Chief Financial Officer and received an annual base salary of $211,000 and was eligible to receive
an annual performance cash bonus with a target amount equal to 30% of her annual base salary, based upon achievement of performance goals
established by the compensation committee of Twin Vee’s board of directors. Ms. Gunnerson also received a stock option to purchase
136,000 shares of Twin Vee Common Stock under the Twin Vee 2021 Plan, vesting monthly over a five-year period subject to continued employment
through each vesting date.
The Gunnerson Employment Agreement provided that Ms.
Gunnerson was eligible to participate in all benefit and fringe benefit plans generally made available to Twin Vee’s other executive
officers. In addition, she was entitled to four weeks of paid vacation per year.
The Gunnerson Employment Agreement provided that it
shall continue until terminated (i) by mutual agreement; (ii) due to death or disability of Ms. Gunnerson; (iii) by Ms. Gunnerson without
good reason upon 90 days written notice to Twin Vee; (iv) by Twin Vee for cause (as defined in the Gunnerson Employment Agreement); (v)
by Twin Vee without cause; or (vi) by Ms. Gunnerson for good reason (as defined in the Gunnerson Employment Agreement). The Gunnerson
Employment Agreement terminated on May 31, 2024, the effective date of Ms. Gunnerson’s resignation as Twin Vee’s Chief Financial
Officer.
Pursuant to the Gunnerson Employment Agreement, Ms.
Gunnerson is subject to a one-year post-termination non-compete and non-solicit of employees and clients. She is also bound by confidentiality
provisions.
Employee Benefit and Stock Plans
Simple IRA Plan
Twin Vee maintains a Simple IRA retirement savings
plan for the benefit of Twin Vee’s employees, including Twin Vee’s named executive officers, who satisfy certain eligibility
requirements. Under the Simple IRA, eligible employees may elect to defer a portion of their compensation, within the limits prescribed
by the Code, on a pre-tax basis through contributions to the Simple IRA plan. The Simple IRA plan authorizes employer safe harbor matching
contributions equal to 3% of covered compensation for eligible employees. The Simple IRA plan is intended to qualify under Sections 401(a)
and 501(a) of the Code. As a tax-qualified retirement program, contributions to the Simple IRA plan and earnings on those contributions
are not taxable to the employees until distributed from the Simple IRA plan.
Twin Vee 2021 Stock Incentive Plan
On April 8, 2021, the Twin Vee Board of Directors
and Twin Vee’s stockholders approved the Twin Vee PowerCats Co. 2021 Stock Incentive Plan, which plan was amended and restated as
the Twin Vee PowerCats Co. Amended and Restated 2021 Stock Incentive Plan on June 1, 2021 (the “Twin Vee 2021 Plan”). The
Twin Vee 2021 Plan became effective immediately prior to the closing of Twin Vee’s initial public offering in July 2021. The principal
provisions of the Twin Vee 2021 Plan are summarized in Twin Vee Proposal No. 5 under the heading “Summary of the Twin Vee 2021
Plan” which is hereby incorporated by reference.
INFORMATION ABOUT THE ANNUAL MEETINGS AND VOTING
The Twin Vee Board of Directors is using this Joint
Proxy Statement/Prospectus to solicit proxies from the holders of Twin Vee Common Stock for use at the Twin Vee Annual Meeting. This Joint
Proxy Statement/Prospectus and accompanying form of Twin Vee proxy is being first mailed to Twin Vee stockholders on or about [●],
2024.
The Forza Board of Directors is using this Joint Proxy
Statement/Prospectus to solicit proxies from the holders of Forza Common Stock for use at the Forza Annual Meeting. This Joint Proxy Statement/Prospectus
and accompanying form of Forza proxy is being first mailed to Forza stockholders on or about [●], 2024.
MATTERS RELATED TO THE ANNUAL MEETINGS
Voting
Twin Vee
Twin Vee stockholders may vote their shares in person
at your meeting or by proxy. Twin Vee recommends that stockholders vote by proxy even if they plan to attend the Twin Vee Annual Meeting.
Stockholders can always change their vote at the annual meetings.
Voting instructions are included on the proxy or proxy
card. If a Twin Vee stockholder properly gives its proxy and submits it in time to vote by mailing it in the enclosed envelope, electronically
via the Internet) or telephone, one of the individuals named as the proxy will vote the shares as the stockholder has directed. Twin Vee
stockholders may vote for or against the proposals or abstain from voting. Abstentions will be counted for purposes of determining a quorum
at the meeting. With respect to Twin Vee Proposals No. 1, if a stockholder marks his, her or its proxy “abstain” with respect
to such proposal, he, she or it will be in effect voting against such proposal. If shares are held in “street name” by a broker,
bank or other nominee, the broker cannot vote the shares on Twin Vee Proposals No. 1, No. 2 or No. 5 without stockholder’s instructions.
This is a “broker non-vote.” Twin Vee Proposals No. 3, No. 4 and No. 6 are believed to be routine matters for which brokers
that vote at the Twin Vee Annual Meeting may vote in their discretion if beneficial owners do not provide voting instructions to the brokers.
If a stockholder marks his, her or its proxy “abstain” with respect to such proposal, he, she or it will be in effect voting
against such proposal. If shares are held in “street name” by a broker, bank or other nominee, the broker cannot vote the
shares on Twin Vee Proposals No. 1, No. 2 or No. 5 without stockholder’s instructions. Broker non-votes are not expected with respect
to Twin Vee Proposals No. 3, No. 4 or No. 6 as they are routine matters for which brokers that vote at the Twin Vee Annual Meeting may
vote in their discretion if beneficial owners do not provide voting instructions to the brokers.
If you are a Twin Vee stockholder and you submit your
proxy but do not make specific choices, your proxy will follow the Twin Vee Board of Directors’ recommendations and vote your shares:
| ● | “FOR” the approval of the issuance of the shares of Twin Vee Common Stock pursuant to the
terms of Merger Agreement (the “Stock Issuance Proposal”); |
| ● | “FOR” the election of the two (2) nominees for Class III director named in this Joint Proxy
Statement/Prospectus to the Twin Vee Board of Directors, each to serve a three-year term expiring at the 2027 Annual Meeting of Twin Vee
Stockholders and until such director’s successor is duly elected and qualified; |
| ● | “FOR” the ratification of the appointment of Grassi & Co., CPAs, P.C. as Twin Vee’s
independent registered public accounting firm for its fiscal year ending on December 31, 2024; |
| ● | “FOR” the approval of an amendment to Twin Vee’s Certificate
of Incorporation, in substantially the form attached to this Joint Proxy Statement/Prospectus as Annex B-1, at the discretion of
the Twin Vee Board of Directors, to effect a reverse stock split with respect to the issued and outstanding shares of Twin Vee Common
Stock, at a ratio of 1-for-2 to 1-for-20 (the “Range”), with the ratio within such Range to be determined at the discretion
of the Twin Vee Board of Directors and included in a public announcement, subject to the authority of the Twin Vee Board of Directors
to abandon such amendment (the “Twin Vee Reverse Stock Split Proposal”); and |
| ● | To consider and vote upon an adjournment of the Twin Vee Annual Meeting, if necessary, if a quorum is
present, to solicit additional proxies if there are not sufficient votes in favor of Stock Issuance Proposal and/or the Twin Vee Reverse
Stock Split Proposal. |
Voting
Forza
Forza stockholders may vote their shares in person
at your meeting or by proxy. Forza recommends that stockholders vote by proxy even if they plan to attend the Forza Annual Meeting. Stockholders
can always change their vote at the annual meetings.
Voting instructions are included on the proxy or proxy
card. If a Forza stockholder properly gives its proxy and submits it in time to vote by mailing it in the enclosed envelope, electronically
via the Internet) or telephone, one of the individuals named as the proxy will vote the shares as the stockholder has directed. Forza
stockholders may vote for or against the proposals or abstain from voting. Abstentions will be counted for purposes of determining a quorum
at the meeting. With respect to Forza Proposal No. 1, if a stockholder marks his, her or its proxy “abstain” with respect
to such proposal, he, she or it will be in effect voting against such proposal. If shares are held in “street name” by a broker,
bank or other nominee, the broker cannot vote the shares on Forza Proposals No. 1 or No. 2 without stockholder’s instructions. This
is a “broker non-vote.” Broker non-votes are not expected with respect to Forza Proposals No. 3, No. 4 or No. 5 since these
are routine matters for which brokers that vote at the Forza Annual Meeting may vote in their discretion if beneficial owners do not provide
voting instructions to the brokers. If shares are held in “street name” by a broker, bank or other nominee, the broker cannot
vote the shares on Proposals No. 1 or No. 2 without stockholder’s instructions.
If you are a Forza stockholder and you submit your
proxy but do not make specific choices, your proxy will follow the Forza Board of Directors’ recommendations and vote your shares:
| ● | “FOR” the adoption and approval of the Merger and the Merger Agreement, as described in the
attached Joint Proxy Statement/Prospectus (the “Merger Proposal”); and |
| ● | “FOR” the election of the one (1) nominee for Class II director named in the accompanying
Joint Proxy Statement/Prospectus to the Forza Board of Directors, to serve a three-year term expiring at the 2027 Annual Meeting of Forza
Stockholders and until such director’s successor is duly elected and qualified; |
| ● | “FOR” the ratification of the appointment of Grassi & Co., CPAs, P.C. as Forza’s
independent registered public accounting firm for its fiscal year ending on December 31, 2024; |
| ● | “FOR” the approval of an amendment to Forza’s Amended
and Restated Certificate of Incorporation in substantially the form attached to the accompanying Joint Proxy Statement/Prospectus as Annex
B-2, at the discretion of the Forza Board of Directors to effect a reverse stock split (the “Forza Reverse Stock Split Proposal”); |
| ● | To consider and vote upon an adjournment of the Forza Annual Meeting, if necessary, if a quorum is present,
to solicit additional proxies if there are not sufficient votes in favor of the Merger Proposal and/or the Forza Reverse Stock Split Proposal; |
Revoking Your Proxy. You may revoke your proxy
before it is voted by:
| ● | submitting a new proxy with a later date, |
| ● | submitting a vote electronically via the Internet with a later date, if that was how the original vote
was submitted, |
| ●
| notifying your company’s Secretary in writing before the meeting that you have revoked your proxy,
or
|
| ● | voting in person at the meeting. |
Voting in person. If you plan to attend a meeting
and wish to vote in person, you will be given a ballot at the meeting. However, if your shares are held in the name of your broker, bank
or other nominee, and you are a Twin Vee or Forza stockholder, you must bring an account statement or letter from the nominee indicating
that you are the beneficial owner of the shares on [●], 2024, the Record Date for shares entitled to vote at the Twin Vee Annual
Meeting and the Forza Annual Meeting.
Proxy solicitation. Twin Vee and Forza will
each pay its own costs, if any, of soliciting proxies.
In addition to this mailing, Twin Vee and Forza officers
may solicit proxies personally and electronically via the Internet.
The extent to which these proxy soliciting efforts
will be necessary depends entirely upon how promptly proxies are submitted. You should send in your proxy without delay. Twin Vee and
Forza also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.
Do not send in any stock certificates with your
proxy. Twin Vee will provide instructions for the surrender of stock certificates for Forza stockholders.
Other Business; Adjournments
Neither Twin Vee nor Forza is currently aware of any
other business to be acted upon at either meeting.
Adjournments may be made for the purpose of, among
other things, soliciting additional proxies. Any adjournment may be made from time to time by approval of the holders of shares representing
a majority of the votes present in person or by proxy at the meeting, whether or not a quorum exists, without further notice other than
by an announcement made at the meeting. Neither Twin Vee nor Forza currently intends to seek an adjournment of its meeting.
Appraisal Rights
Holders of Twin Vee Common Stock are not entitled
to appraisal rights under Delaware law in connection with any matters to be voted on at the Twin Vee Annual Meeting. In addition, holders
of Forza Common Stock are not entitled to appraisal rights under Delaware law in connection with the Merger to be voted on at the Forza
Annual Meeting.
INFORMATION ABOUT TWIN
VEE AND FORZA
General
Twin
Vee is a designer, manufacturer and marketer of recreational and commercial power boats. Twin Vee believes its company has been an innovator
in the recreational and commercial power catamaran industry. Twin Vee currently has 13 gas-powered models in production ranging in size
from its 20-foot mono hull, single engine, center console to its newly designed 40-foot offshore 400 GFX catamaran, quad engines. While
its 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 new mono hull line addresses the largest
portion of the overall market.
Twin
Vee has organized its business into three operating segments: (i) its gas-powered boat segment which manufactures and distributes gas-powered
boats under the Twin Vee and AquaSport names; (ii) its electric-powered boat segment which until recently was developing fully electric
boats, through its publicly owned subsidiary, Forza and (iii) its franchise segment which is developing a standard product offering and
will be selling franchises across the United States through its wholly owned subsidiary, Fix My Boat, Inc.
Twin
Vee’s gas-powered boats allow consumers to use them for a wide range of recreational activities including fishing, diving and water
skiing and commercial activities including transportation, eco tours, fishing and diving expeditions. Twin Vee believes that the performance,
quality and value of its boats position it to achieve our goal of increasing our market share and expanding the power catamaran boating
market. Twin Vee currently primarily sell its boats through a current network of 23 independent boat dealers in 37 locations across North
America and the Caribbean who resell its boats to the end user Twin Vee and AquaSport customers. Twin Vee is continuing its recruiting
efforts for high quality boat dealers and seeks to establish new dealers and distributors domestically and internationally to distribute
its boats as its grows its production and introduce new models. Twin Vee also recently announced plans to develop an automotive industry-inspired
web-based "Pro-Direct Platform" to allow customers to design and configure their new boats and receive real-time pricing for
the purchase of the boats direct from Twin Vee. Twin Vee’s gas-powered boats are currently outfitted with gas-powered outboard
combustion engines.
During
the second quarter of 2024, Twin Vee experienced a significant reduction in demand for its products, as has been experienced throughout
the boating industry. Total units sold in the quarter were 24 compared to 75 in the second quarter of 2023, a 68% reduction, compared
to a 47% reduction in revenue over the same period. This difference is due to the average selling price per unit in each quarter. Sales
for the second quarter of 2024 included 2 40’ boats with an average selling price of $630,000 each while the second quarter of
2023 had 0 40’ foot boats. Twin Vee’s objectives have been to add new, larger boat models including a new line of GFX2 models,
expand its dealers and distribution network, and increase unit production to fulfill our customer and dealer orders.
Due to
the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, Forza,
entered the business of designing and developing a line of electric-powered boats. Forza’s electric boats are being designed as
fully integrated electric boats including the hull, outboard motor and control system. To date, Forza as built-out and tested multiple
Forza company units, including: three offshore-style catamarans, two bay boat-style catamarans, one deck boat and three 22-foot center
console (F22) monohulls. The past year has seen a marked deceleration in the global demand for recreational marine vehicles, influenced
heavily by economic uncertainties and shifting consumer priorities. This slowdown reflects broader trends affecting the recreational
vehicle industries at large, including electric vehicles (EVs). Notably, the global shift towards EV adoption has been much slower than
initially anticipated. Several leading automotive manufacturers have adjusted their strategies, accordingly, including halting the construction
of dedicated EV factories.
The slower-than-expected
adoption rates have led to cautious consumer spending and investment in EV technology, directly impacting Tiwn Vee’s and Forza’s
market. Specifically, the electric boat segment has experienced even more sluggish growth than the automotive sector. In addition, many
of the larger players in the boat industry, such as Mercury Marine, have completed their development efforts and have brought their electric
outboard motors to market. Despite these challenges, Twin Vee has managed to sustain operations through strategic adjustments, including
cost management and a focus on strategic partnerships. Twin Vee has implemented measures that have reduced cash burn and conserved cash
reserves while seeking to leverage its technological advancements through strategic collaborations and partnerships to enhance shareholder
value. Twin Vee has responded to the industry challenges by tightening its financial reins to mitigate the impacts of reduced demand
with a view toward long-term sustainability. In an effort to further retain cash and reduce expenditures and as a result of current market
conditions, on July 11, 2024, the Board of Directors of Forza determined to discontinue and wind down Forza’s business related
to the development and sale of electric boats utilizing its proprietary outboard electric motor. Forza announced exploring strategic
alternatives, including a potential Merger.
Business
of Twin Vee’s Segments
Gas-powered
Boats
Twin
Vee’s gas-powered boat segment accounted for 100% of its net revenue in fiscal years 2023 and 2022. In 2023, Twin Vee’s gas
powered segment had locations in Fort Pierce, Florida, and White Bluff, Tennessee. Twin Vee believes its company has been an innovator
in the recreational and commercial power catamaran industry. Twin Vee currently has 13 gas-powered models in production ranging in size
from its 20-foot mono hull, single engine, center console to its newly designed 40-foot offshore 400 GFX catamaran, quad engines. While
its 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 new mono hull line addresses the largest
portion of the overall market. Twin Vee’s home base operations for its gas-powered boats is in Fort Pierce, Florida and is a 7.5-acre
facility with several buildings totaling over 75,000 square feet. Twin Vee currently employs approximately 80 people.
During
the 2023 fiscal year, Twin Vee focused its efforts on increased throughput through its facility, and fully integrating the new models
that it introduced in 2023. In February 2023, Twin Vee announced its launch of its new AquaSport, a new-monohull boat brand that will
initially include a 22-foot center console monohull, a 25-foot dual console, single-engine day boat, a 22-foot dual console monohull
and a 25 foot deck boat, single engine. Twin Vee delivered its first monohull boats in January of 2024. In May of 2023, Twin Vee entered
into a finance lease, securing the rights to the AquaSport brand and facility in White Bluff, Tennessee. The AquaSport brand is expected
to appeal to first-time boat buyers, the freshwater market, and consumers that prefer a monohull boat opening a significantly larger
portion of the market share to Twin Vee.
During the year ended
December 31, 2023, one individual dealer had sales of over 10% of Twin Vee’s
total sales, and one customer represented 10.3% of total sales. During the year ended December 31, 2022, one individual dealer had
sales of over 10% of our total sales, and one customer represented 12% of total sales. For the six months ended June 30, 2024,
three individual dealers represented over 10% of Twin Vee’s total sales, or 38% in total. For the six months
ended June 30, 2023, one individual dealer represented over 10% of Twin Vee’s sales, and that dealer represented 20% of total sales.
Twin
Vee’s Twin-Hull Shape
Twin Vee catamaran boats
are designed for a dry and smooth ride. As a Twin Vee moves through the water, the boat’s symmetrical catamaran hull has lifting
strakes on the side of each hull. Lifting strakes are known to produce lift at the bow of a boat by displacing water, allowing the
boat to, in essence, glide above the water rather than lumber through it. Twin Vee’s lifting strakes work to not only create lift,
but also to make the ride smoother. The forward motion of a catamaran boat lifts water up towards the top of the tunnel while pushing
the water inward to form two counter-flowing vortexes. As these vortexes are being formed, the Twin Vee hull design aerates these vortexes
with small air bubbles, which are then compressed at an increasing rate as the vortexes move down the tunnel. It is the kinetic energy
stored in these compressed air bubbles, which creates a smooth and stable ride. As speed increases, the kinetic energy increases at a
non-linear rate as more and more air is induced into the increasingly faster flowing vortexes. The trailing surfaces the Twin Vee hulls
are specifically designed to facilitate propulsion efficiency by discharging the kinetic energy and air bubbles from the counter-flowing
vortexes upon exiting astern, thus providing the propellers with a steady flow of super clean and highly ordered water.
This
fact, combined with a catamaran’s soft ride, results in Twin Vee’s renowned efficiency and smooth, seaworthy safety. At speed,
the Twin Vee’s displacement hull slices through the water, traveling with the shape of the seas rather than flying over them and
experiencing reentry shock. This results in a stable and smooth ride. The following are some benefits of the catamaran, or Twin Vee’s,
hull shape.
Power
Catamaran Hull Benefits
| |
● |
Catamaran
stability. Catamarans have parallel hulls on the outer edges of the boat rather than in the middle, providing superior
stability. Twin Vee hulls travel with the wave shapes because the buoyancy is to the outside, resisting the snap roll pendulum
motion of deep vee monohulls. A Twin Vee wider footprint negates the effects of rolling seas, making them less likely to capsize
and reduce seasickness. |
| |
● |
Shallow
draft for travelling in “skinny” waters. The weight of the boat is distributed to two hulls for a shallower
draft. The shallow draft of the Twin Vee design provides access to areas that conventional hulls cannot reach. With a Twin Vee,
you can enjoy the beach and not have to wade in the water to get there. |
| |
● |
More
usable deck space. The relatively rectangular design of the Twin Vee expanded deck area allows for more usable deck space
than monohulls. Twin Vee boats are wider in the bows providing more open area in open models and bigger berths in cabins. Lounge
in the front of a Twin Vee dual console and then jump into a similar-sized monohull. |
| |
● |
Single
engine get home capability. Twin Vee catamaran hulls do not need planning speed power to travel rapidly on a single engine.
Minimum bow rise for greater visibility, a Twin Vee deck is parallel to the water at all speeds allowing you to maintain your
line of sight and giving you greater fuel efficiency. |
| |
● |
Docking
and maneuverability. With the extra separation between the motors, over most mono hull boats, you can cross-clutch the motors
and turn or spin the boat up to its own length. |
| |
● |
Maintains
a plane at lower speed for fuel efficiency. The catamaran hull can maintain a plane at lower speeds and catamaran boats create
less drag in turn offering better fuel efficiency and a more economical boat to maintain. |
| |
● |
Fish
one side of a Twin Vee. Enjoy fishing without the extreme listing of a monohull. |
Twin
Vee’s Monohull
Twin
Vee expects its new monohull line to appeal to first-time boat buyers, the freshwater market and consumers that prefer a monohull boat.
This new monohull brand will be selling into a much larger portion of the market.
Franchise
Twin
Vee’s franchise segment is being developed and we plan to utilize a franchise model for marine mechanics across the country through
its wholly owned subsidiary, Fix My Boat, Inc.
Electric-Powered
Boats
The mission
of Forza was to inspire the adoption of sustainable recreational boating by producing stylish electric sport boats. Forza was focused
on the creation, implementation and sale of electric boats utilizing Forza’s electric vehicle (“EV”) technology to
control and power its boats and proprietary outboard electric motor. Forza’s electric boats were being designed as fully integrated
electric boats including the hull, outboard motor and control system.
Forza
was initially Twin Vee’s wholly owned subsidiary and prior to Forza’s incorporation on October 15, 2021, it operated as the
Electra Power Sports™ Division of Twin Vee. Following Twin Vee’s initial public offering that closed on July 23, 2021, it
determined in October 2021 that for several reasons that include, but are not limited to, avoiding confusion in the marketplace between
Twin Vee’s legacy gas-powered line of boats, that Twin Vee would market its new independent line of electric boats under a new
brand name (and new subsidiary) separate and apart from Twin Vee. Twin Vee and Forza brands are unique in their own way, includingthe
profile of the targeted Forza customer who is environmentally conscious and would purchase an electric boat versus gas-powered model,
(ii) the marketing and sales strategy of each company, and (iii) Twin Vee’s use of a third-party dealer network. In addition, it
was expected that electric powered boats would require a specific and unique level of training and knowledge for supporting and servicing
the technical and warranty claims that might arise. The service and support of gas and electric powered boats are very different, and
it became clear to Twin Vee that Forza required its own unique brand.
In an
effort to retain cash and reduce expenditures and as a result of current market conditions, on July 11, 2024, Forza’s Board of
Directors determined to discontinue and wind down Forza’s 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. As part of
this decision, Forza 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, Forza has recorded an impairment charge of $1,674,000 against
the carrying cost of its partially constructed building at June 30, 2024. Forza has evaluated any material liabilities resulting from
this action and has determined that there are no additional material liabilities to be recorded as of June 30, 2024.
Overall
Strategy
Twin
Vee intends to capitalize on the thriving broader marine industry through the following strategies:
Develop
New and Innovative Products in Its Core Market. As an innovator, designer, manufacturer, and marketer of catamaran powerboats,
Twin Vee strives to design new and inventive products that appeal to a broad customer base. Twin Vee intends to launch a number of new
products and features with best-in-class quality, with the goal of increasing sales and significant margin expansion.
Increase
the Power Boat Category Segment. Twin Vee’s near-term product development strategy is to expand its product line to
reach underserved segments of the catamaran and monohull powerboat category that are distinct from its traditional customer base. With
Twin Vee’s existing supplier relationships, material agreements, and manufacturing processes, should allow it to offer this product
line at an attractive price point for the consumer while sustaining our gross margins and the product attributes critical to the Twin
Vee brand.
Capture
Additional Share from Adjacent Boating Categories. Another focus is to grow Twin Vee’s market share is to enhance
its ability to introduce new products with increased versatility, functionality, and performance to a more expansive customer base that
values boats for both water sports and general recreational boating purposes. Twin Vee intends to launch several marketing campaigns
that will focus on new product launches and help to educate the market on its value proposition to customers.
Effectively
Manage Dealer Inventory and Further Strengthen Our Dealer Network. Twin Vee views its dealers as its partners and product champions.
Therefore, Twin Vee will continue to devote significant time and resources to finding high quality dealers and developing and improving
their performance over time. Twin Vee believes the quality and trust in its dealer relationships are more beneficial to its long-term
success than the quantity of dealers. Twin Vee currently has a network of 20 independent boat dealers in 34 locations across North America,
the Caribbean and Central America.
Increase
Our Sales in International Markets. Twin Vee believes it has a brand that will have natural growth in international markets.
Catamaran powerboats have already been accepted as the norm in many international markets. For example, the
global catamaran market size was worth USD 1.35 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of
5.8% from 2022 to 2030. The U.S. catamaran market size was worth USD 342.5 million in 2021 and is expected to expand at a CAGR of 5.4%
from 2022 to 2030. With further expansion into global distribution with our expanding dealer network, including Dubai, Puerto Rico, and
Costa Rica Twin Vee is able to increase market share. Based on Twin Vee’s brand and product
offering, as well as out potential distribution strengths,
Twin
Vee believes it is well positioned to leverage its reputation and capture additional international sales. Twin Vee believes that it will
increase its international sales by promoting its products in developed markets where it has a dealer base and in international markets
where rising consumer incomes are expected to increase demand for recreational products, such as Australia, Europe, Israel, Dubai and
Brazil. Twin Vee is also developing new product offerings that will specifically target certain product demand from its international
consumers and that it believes will drive further sales growth in international markets.
Twin Vee’s Strengths
and Competitive Advantages
Twin Vee believes that the
following are the key investment attributes of its company:
Recognized
Brand. Twin Vee believes the Twin Vee and AquaSport brands are well-known among boating enthusiasts for performance, quality,
and value, and that the market recognizes both Twin Vee and AquaSport as brands that deliver a proposition.
Diverse
Product Offering. Twin Vee is able to attract consumers across multiple categories within the recreational powerboat
industry. Twin Vee currently has 13 gas-powered models in production ranging in size from its 20-foot mono hull, single engine, center
console to its newly designed 40-foot offshore 400 GFX catamaran, quad engines. While its 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 new mono hull line addresses the largest portion of the overall market.
Focus
on Innovative Product Offerings. Twin Vee is currently designing numerous new boat models to meet market demand and grow
its business, and its current focus is on bring a full line of monohull boats to the market under the AquaSport brand.
Price
Point. Twin Vee has also made investments in infrastructure and engineering. These investments have resulted in lower material
waste, reduced labor hours per boat, reduced re-work, and increased production efficiencies. Therefore, Twin Vee is able to offer favorable
pricing while increasing margins by controlling costs through disciplined engineering and manufacturing processes.
Our
Markets
According
to SSI data (Statistical Surveys Incorporated), 270,809 new watercrafts were sold in the U.S. in 2023 a decline of -14.52% across the
entire industry compared to 2022. Twin Vee’s core market corresponds most directly with the saltwater outboard market defined by
SSI and is further categorized by the power catamaran segment. The saltwater outboard market is experiencing a decline of -18.71% compared
to 2022 with a total of 25, 377 new units sold in the U.S. With the current decline in the market, further normalizing post Covid. Comparatively,
Twin Vee has experienced an increase of 4% percent for 2023 sales compared to 2022. Looking ahead to 2024, Twin Vee has expanded is market
offering to include monohulls with the acquisition of the 60+ year old AquaSport Boats brand as of June 1st, 2023 and will further expand
its model lineup with new and exciting models across both brands.
Outboard
Motor Market
An outboard
motor is a propulsion system for boats, consisting of a self-contained unit that includes engine, gearbox and propeller or jet drive,
designed to be affixed to the outside of the boat. As well as providing propulsion, outboards provide steering control, as they are designed
to pivot over their mountings and thus control the direction of thrust. Outboard motors tend to be found on smaller watercraft as it
is more efficient for larger boats to have an inboard system. Although outboard engines powered by fossil fuels have traditionally dominated
this market and continue to do so, electric outboard motors are a relatively new phenomenon that have been growing in step with the growth
in the electric boat market. The boats that Twin Vee sells and manufacture all have outboard motors.
According
to the NMMA, sales of outboard engines in the United States (which includes outboard motors) were $3.6 billion in 2022. Consumer demand
for higher-performance engines hit an all-time high in 2020. The market did see a decline of 6% in 2022, over 2021.
Although
many recreational boats can be powered by outboard or inboard motors, many consumers prefer outboard motors. Among the reasons for their
preference are that, unlike inboard motors, outboard motors can be easily removed for storage or repairs, they provide more room in the
boat as they are attached to the transom outside of the boat, they tend to have a shallower draft and they can be more easily replaced
in the event the motor no longer works or a desire to upgrade to a higher horsepower.
Electric
Boat Market
The past
year has seen a marked deceleration in the global demand for recreational marine vehicles, influenced heavily by economic uncertainties
and shifting consumer priorities. This slowdown reflects broader trends affecting the recreational vehicle industries at large, including
electric vehicles (EVs). Notably, the global shift towards EV adoption has been much slower than initially anticipated. Several leading
automotive manufacturers have adjusted their strategies, accordingly, including halting the construction of dedicated EV factories.
The slower-than-expected
adoption rates have led to cautious consumer spending and investment in EV technology, directly impacting Forza’s market. Specifically,
the electric boat segment has experienced even more sluggish growth than the automotive sector. In addition, while Forza’s electric
boats had not yet completed the development stage, many of the larger players in the boat industry, such as Mercury Marine, have completed
their development efforts and have brought their electric outboard motors to market.
In an
effort to retain cash and reduce expenditures and as a result of current market conditions, on July 11, 2024, Forza’s Board of
Directors determined to discontinue and wind down Forza’s business related to the development and sale of electric boats utilizing
its proprietary outboard electric motor.
Twin
Vee’s Dealer Network
Twin
Vee primarily sells its gas-powered boats through a network of 20 independent dealers in 34 locations across North America, the Caribbean
(one in the Bahamas, Puerto Rico and Cayman Islands) and Central America (Panama City, Panama). Twin Vee is always seeking to recruit
and establish new dealers and distributors domestically and is striving to develop international distribution.
Twin
Vee establishes performance criteria that its dealers must meet in order to be part of our network to ensure its dealer network remains
strong, which include minimum annual purchase orders. As a member of its network, dealers in North America may qualify for floor plan
financing programs, rebates, seasonal discounts, promotional co-op payments and other allowances. Twin Vee expects this will strengthen
its dealers’ ability to sell its products. Twin Vee also recently announced plans to develop an automotive industry-inspired web-based
"Pro-Direct Platform" to allow customers to design and configure their new boats and receive real-time pricing for the purchase
of the boats direct from Twin Vee.
Twin
Vee consistently review its distribution network to identify opportunities to expand its geographic footprint and improve its coverage
of the market. Twin Vee believes that its diverse product offering and strong market position in each region of the United States helped
it capitalize on growth opportunities as its industry recovered from the economic downturn. Twin Vee has the ability to opportunistically
add new dealers and new dealer locations to previously underserved markets and use data and performance metrics to monitor dealer performance.
Twin Vee believes its outstanding dealer network allows it to distribute its products more efficiently than its smaller competitors.
Twin
Vee does not have written agreements with its dealers. Prior to the beginning of each year, Twin Vee establishes a minimum number of
units that each dealer must acquire based upon indications of interest from the dealers. Payment for the units is made by the dealer
or a third-party lender once the boat is manufactured and delivered to the dealer. Dealers are not contractually obligated to purchase
any boats. Although to date most dealers have purchased boats for which they have provided indications of interest, Twin Vee could experience
excess inventory and costs if a dealer should choose not to purchase a boat for which it has provided an indication of interest.
Floor
Plan Financing
Twin
Vee’s North American dealers often purchase boats through floor plan financing programs with third-party floor plan financing providers.
During the year ended December 31, 2023, a majority of Twin Vee’s North American shipments were made pursuant to floor plan financing
programs through which its dealers participate. These programs allow dealers across our brands to establish lines of credit with third-party
lenders to purchase inventory. Under these programs, a dealer draws on the floor plan facility upon the purchase of Twin Vee boats and
the lender pays the invoice price of the boats. As is typical in the industry, Twin Vee has entered into repurchase agreements with certain
floor plan financing providers to its dealers. Under the terms of these arrangements, in the event a lender repossesses a boat from a
dealer that has defaulted on its floor financing arrangement and is able to deliver the repossessed boat to Twin Vee, Twin Vee is obligated
to repurchase the boat from the lender. Twin Vee’s obligation to repurchase such repossessed products for the unpaid balance of
its original invoice price for the boat is subject to reduction or limitation based on the age and condition of the boat at the time
of repurchase, and in certain cases by an aggregate cap on repurchase obligations associated with a particular floor financing program.
Twin
Vee’s exposure under repurchase agreements with third-party lenders is mitigated by its ability to reposition inventory with a
new dealer in the event that a repurchase event occurs. The primary cost to Twin Vee of a repurchase event is any margin loss on the
resale of a repurchased unit. To date, Twin Vee has not been required to repurchase any boats under repurchase agreements.
Competition
The powerboat
industry, including the performance sport boat category, is highly competitive for consumers and dealers. Competition affects our ability
to succeed in the markets Twin Vee currently serves and new markets that it may enter in the future. Twin Vee competes with several large
manufacturers that may have greater financial, marketing and other resources than it does. Twin Vee competes with large manufacturers
who are represented by dealers in the markets in which Twin Vee now operates and into which it plans to expand. Twin Vee also compete
with a wide variety of small, independent manufactures. Competition in our industry is based primarily on brand name, price and product
performance.
Twin
Vee also compete with other leisure activities. Twin Vee boats are not necessities and in times of economic hardship, consumers may cease
purchasing non-essential items. Luxury items may not be used for recreational and sport purposes, and demand for Twin Vee boats may be
adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle,
usage pattern or taste.
Twin
Vee also faces competition for employees. Competition for individuals with experience designing, manufacturing and servicing electric
boats is intense, and Twin Vee may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future.
The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm Twin Vee’s business
and prospects.
Raw
Materials, Principal Suppliers, and Customers
Twin
Vee purchases a number of its product parts and components from third-party suppliers, including the fiberglass it uses to manufacture
the fiberglass parts of its boats, hydrocarbon feedstocks and steel, as well as product parts and components, such as engines and electronic
controls, through a sales order process. The most significant component used in manufacturing Twin Vee gas-powered boats, based on cost,
are engines. Twin Vee maintains good relationships with its engine suppliers, which include Suzuki Motor of America, Inc., Mercury Marine
and Yamaha Motor Corporation.
Twin
Vee does not maintain long-term contracts with preferred suppliers, but instead relies on informal arrangements and off-the-shelf purchases.
Twin Vee purchases motors from three different manufactures, it has not experienced any material shortages in any of its product parts,
or components. Temporary shortages, when they do occur, usually involve manufacturers of these products adjusting model mix, introducing
new product lines, or limiting production in response to an industry-wide reduction in boat demand.
Intellectual
Property
Twin
Vee has not protected its intellectual property rights for its gas-powered motor products through patents or formal copyright registration,
and does not currently have any patent applications pending related to its gas-powered boats.
Forza Intellectual Property
Forza
has three design and four utility patent applications on file with the United States Patent and Trademark Office. Certain patent applications
were originally filed by, and in the name of, the individual who was the inventor of the technology and since have been assigned to us.
Below is a list of pending patent applications that we are seeking approval for from the United States Patent and Trademark Office. There
can be no assurance that the patent applications will issue, or that issued patents will afford protection against competitors with similar
technology. See “Intellectual Property Risks.”
| IDEA
/ CONCEPT NAME |
DESCRIPTION |
IP
TYPE |
App
Number and Filing Date |
360
Steering Lower Pod with Disconnect
|
For
outboard, lower pod steering mechanism using slewing bearing and spur gear mechanism allowing
for
a full 360-degree rotation. Also features a pass through the center method for cooling fluid,
and
an easy way to interchange lower drive units with the fixed upper unit. |
Full
Non-provisional Patent
|
App
# 63,207,748
FILING
DATE 03/18/21
Received
Notice of Patent Granted January 2024 |
Original
Outboard Cover Design
|
Original
shape of outboard cover
|
Design
Patent
|
App
# 29/818,844
FILING
DATE 12/10/21
Received
Notice of Patent Granted January 2024 |
| Unibody
Frame |
Shape
of frame that allows vertical mounting of motor and transmission inside the outboard |
Design
Patent
|
App
# 29/818,842
FILING
DATE 12/10/21
Received
Notice of Patent Granted January 2024 |
| Outboard
cover design — ALPHA 01 version |
shape
of the updated prototype cover and cowling
|
Design
Patent
|
App
# 29/819,262
FILING
DATE 12/14/21
Received
Notice of Patent Granted January 2024 |
| Trim
and Tilt with cable routing thru pivot axis |
A
trim and tilt assembly that routes cables through the pivot axis which protects cables, keeps
the
bundle
from excessive bending and results in a cleaner design |
Utility
Patent |
App
# 63,287,740
FILING
DATE 12/09/21 |
| Jet
Drive Lower Unit for an Electric Outboard |
The
design of the lower jet drive as it is configured for the integration with the electric outboard |
Utility
Patent |
App
# 63,293,420
FILING
DATE 12/23/21 |
| Closed
Loop Heat Exchanger Integrated in a Lower Drive Unit |
Integrate
a cooling radiator inside of the lower drive propeller or jet drive unit itself. Simplify the cooling circuit by eliminating the
need for a raw sea water intake. |
Full
Non-provisional Patent |
App
# 18/150,943
FILING
DATE 1/06/22 |
| cooling
circuit with cartridge style inserts in the lower unit |
Similar
to the above but a more refined methodology of using a set of unique 3D metal printed heat exchanger cartridges |
Full
Non-provisional Patent |
App
# 18/404,991
FILING
DATE 1/05/24 |
| Outboard
Motor Cowling Latch Assembly |
The
outboard top cover should not be removed until the electric motor and inverter is safely de-energized which typically takes 4 to
5 seconds after powering down. This invention features a special latch mechanism, a sensor to detect position of latch, and a locking
solenoid which will prevent inadvertent removal of cowling cover which will prevent a user from being electrocuted. |
Utility
Patent
|
App
# 18/507782
Filing
Date 11/14/23 |
| Docking
Assist Motor Control and Auto-pilot mode for Trailer loading and launching |
Similar
to docking assist GPS guided auto-pilot systems but this one is specifically intended to assist with single handed boat launching
or loading to and from a trailer. Use position sensors on the trailer, have the boat automatically guided safely by itself while
the captain is backing trailer into the water, or on the trailer preparing the winch, etc. |
Utility
Patent
|
App
# 63/402,124
FILED
8/30/2023 |
| Double
Motor Stack for an outboard powerhead arrangement |
Cascadia
and other EV motor vendors offer a configuration where the DC motor can be stacked on top of another motor to double the power output
of the vehicle. Packing this into an outboard motor design might be a first for the industry and will be worth patenting if possible. |
Utility
Patent
|
App
# 63/402,124
FILING
DATE 8/30/22 |
Insurance and Product Warranties
Twin
Vee carries various insurance policies, including policies to cover general products liability, directors and officers, workers’
compensation and other casualty and property risks, to protect against certain risks of loss consistent with the exposures associated
with the nature and scope of its operations. Twin Vee’s policies are generally based on our safety record as well as market trends
in the insurance industry and are subject to certain deductibles, limits and policy terms and conditions.
Twin
Vee provides limited product warranties, generally covering periods of ten years for the hull and the motors are under warranty by their
manufacturer.
In addition,
Twin Vee provides a three-year limited fiberglass small parts warranty on some small fiberglass parts and components, such as consoles.
Gelcoat is covered up to one year. Additionally, fiberglass lids, plastic lids, electrical panels, bilge pumps, aerator pumps or other
electrical devices (excluding stereos, depth finders, radar, chart plotters except for installation if installed by Twin Vee), steering
systems, electrical panels, and pumps are covered under a one-year basic limited systems warranty. Some materials, components or parts
of the boat that are not covered by our limited product warranties are separately warranted by their manufacturers or suppliers. These
other warranties include warranties covering engines purchased from suppliers and other components.
Environmental,
Safety and Regulatory Matters
Certain
materials used in Twin Vee’s manufacturing, including the resins used in production of our boats, are toxic, flammable, corrosive
or reactive and are classified by the federal and state governments as “hazardous materials.” Control of these substances
is regulated by the Environmental Protection Agency (the “EPA”) and state pollution control agencies. The United States Clean
Air Act (the “CAA”) and corresponding state and provincial rules regulate emissions of air pollutants. The Occupational Safety
and Health Administration (“OSHA”) standards limit the emissions to which an employee may be exposed without the need for
respiratory protection or upgraded plant ventilation. Twin Vee’s facilities are regularly inspected by OSHA and by state and local
inspection agencies and departments. Twin Vee believes that its facility complies in all material aspects with these regulations. Although
capital expenditures related to compliance with environmental laws are expected to increase, Twin Vee does not currently anticipate any
material expenditure will be required to continue to comply with existing environmental or safety regulations in connection with its
existing manufacturing facilities.
Powerboats
sold in the United States must be manufactured to meet the standards of certification required by the United States Coast Guard. In addition,
boats manufactured for sale in the European Community must be certified to meet the European Community’s imported manufactured
products standards. These certifications specify standards for the design and construction of powerboats. Twin Vee believes that all
of its boats meet these standards. In addition, safety of recreational boats is subject to federal regulation under the Boat Safety Act
of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting
safety. Twin Vee has instituted recalls for defective component parts produced by certain of its third-party suppliers. None of
the recalls has had a material adverse effect on Twin Vee.
In addition
to the regulation of our manufacturing operations, the EPA has adopted regulations stipulating that many marine propulsion engines meet
certain air emission standards. The engines used in Twin Vee’s products, all of which are manufactured by third parties, are warranted
by the manufacturers to be in compliance with the EPA’s emission standards. Furthermore, the engines used in Twin Vee’s products
must comply with the applicable emission standards under the Center for European Policy Analysis (“CEPA”) and corresponding
provincial legislation. The additional cost of complying with these regulations has increased Twin Vee’s cost to purchase the engines
and, accordingly, has increased the cost to manufacture our products.
If Twin
Vee is not able to pass these additional costs along to our dealers, it may have a negative impact on its business and financial condition.
Employees/Human
Capital
Twin
Vee currently employ approximately 90 employees in our gas-powered boat segment, all of whom are full time employees. Forza currently
has 4 full time employees. None of our employees are represented by a labor union.
Competitive
Pay and Benefits
Twin
Vee’s compensation programs are designed to align the compensation of its employees with its performance and to provide the proper
incentives to attract, retain and motivate employees to achieve superior results. The structure of Twin Vee’s compensation programs
balances incentive earnings for both short-term and long-term performance. Specifically:
| |
● |
Twin
Vee provides employee wages and benefits that are competitive and consistent with employee
positions, skill levels, experience, knowledge and geographic location; |
| |
● |
Twin
Vee aligns its executives’ long-term equity compensation with its shareholders’
interests by linking realizable pay with stock performance; and |
| |
● |
all
employees are eligible for health insurance, paid and unpaid leaves, a retirement plan and life and disability/accident coverage. |
Health
and Safety
The
health and safety of our employees is Twin Vee’s highest priority, and this is consistent with our operating philosophy. Accordingly,
with the global spread of the ongoing novel coronavirus pandemic, Twin Vee implemented plans designed to address and mitigate the impact
of the COVID-19 pandemic on the safety of its employees and its business, which include:
| |
● |
adding
work from home flexibility; |
| |
|
|
| |
● |
adjusting
attendance policies to encourage those who are sick to stay home; |
| |
● |
increasing
cleaning protocols across all locations; and |
| |
● |
initiating
regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols and procedures. |
Corporate
Information
Twin
Vee’s principal executive office is located at 3101 S. US-1, Ft. Pierce, Florida 34982 and our telephone number is (772) 429-2525.
We maintain our corporate website at www.twinvee.com. The reference to Twin Vee’s website is an inactive textual reference only,
the information that can be accessed through its website is not part of this Joint Proxy Statement/ Prospectus, and investors should
not rely on any such information in deciding whether to purchase Twin Vee Common Stock.
Twin
Vee was incorporated in the State of Florida as Twin Vee Catamarans, Inc. on December 1, 2009 and reincorporated in Delaware on April
7, 2021 under the name to Twin Vee PowerCats Co. ValueRich, Inc. was incorporated under the laws of the state of Florida on July 11,
2003 and reincorporated in Delaware on March 3, 2006. On February 17, 2015 ValueRich, Inc. consummated the acquisition of Twin Vee Catamarans,
Inc. On April 26, 2016, ValueRich, Inc. changed its name and began operating under the name Twin Vee PowerCats, Inc. On December 5, 2022,
the merger of Twin Vee PowerCats, Inc. into Twin Vee was approved.
Forza X1, Inc. was
initially incorporated as Electra Power Sports, Inc. on October 15, 2021, which name was subsequently changed to Forza X1, Inc. on October
29, 2021. Prior to Forza’s incorporation on October 15, 2021, the electric boat business was operated as our Electra Power Sports™
Division. Following Twin Vee’s initial public offering that closed on July 23, 2021, Twin Vee determined in October 2021 that for
several reasons, that we would market our new independent line of electric boats under a new brand name (and new subsidiary).
Fix My
Boat, Inc. was incorporated on September 21, 2021 in Delaware and was merged into Twin Vee on July 23, 2024
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF TWIN VEE
The following discussion,
which focuses on Twin Vee’s results of operations, contains forward-looking information and statements. Actual events or results
may differ materially from those indicated or anticipated, as discussed in the section entitled “Forward Looking Statements.”
The following discussion of Twin Vee’s financial condition and results of operations should also be read in conjunction with Twin
Vee’s financial statements and notes to financial statements contained elsewhere in this Joint Proxy Statement/Prospectus.
Overview
Twin Vee is a designer, manufacturer
and marketer of recreational and commercial power boats. Twin Vee believes it has been an innovator in the recreational and commercial
power catamaran industry. Twin Vee currently has 13 gas-powered models in production ranging in size from its 20-foot mono hull, single
engine, center console to its newly designed 40-foot offshore 400 GFX catamaran, quad engines. While Twin Vee’s 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, our new mono hull line addresses the largest portion of the overall market.
Twin Vee has organized its business into three operating segments: (i) its gas-powered
boat segment which manufactures and distributes gas-powered boats under the Twin Vee and AquaSport names; (ii) its electric-powered boat
segment which is developing fully electric boats, through Forza and (iii) its franchise segment which is developing a franchise business
model.
Twin Vee’s gas-powered boats allow consumers
to use them for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including
transportation, eco tours, fishing and diving expeditions. Twin Vee believes that the performance, quality and value of its boats positions
it to achieve its goal of increasing Twin Vee’s market share and expanding the power catamaran boating market. Twin Vee currently
primarily sells its boats through a current network of 23 independent boat dealers in 37 locations across North America and the Caribbean
who resell Twin Vee’s boats to the end user Twin Vee and AquaSport customers. Twin Vee continues recruiting efforts for high quality
boat dealers and seek to establish new dealers and distributors domestically and internationally to distribute its boats as it grows its
production and introduce new models. Twin Vee’s gas-powered boats are currently outfitted with gas-powered outboard combustion engines.
During the first quarter of 2024, Twin Vee experienced
a significant reduction in demand for its products, as has been experienced throughout the boating industry. Total units sold in the quarter
were 32 compared to 54 in the first quarter of 2023, a 41% reduction, in line with the 41% reduction in revenue over the same period.
Twin Vee’s objectives have been to add new, larger boat models including a new line of GFX2 models, expand its dealers and distribution
network, and increase unit production to fulfill its customer and dealer orders. Twin Vee has also added its monohull line, shipping its
first model of the monohull, the 22-foot, in February of 2023. The combination of fewer but larger Twin Vee units combined with the new
monohull models resulted in a flat average selling price in the first quarter of 2024 compared to the prior year quarter.
Due to the growing demand for sustainable, environmentally
friendly electric and alternative fuel commercial and recreational vehicles, Forza, is designing and developing a line of electric-powered
boats. Forza’s electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control
system. To date, Forza X1 has built-out and tested multiple Forza company units, including: three offshore-style catamarans, two bay boat-style
catamarans, one deck boat and three 22-foot center console (F22) monohulls. The past year has seen a marked deceleration in the global
demand for recreational marine vehicles, influenced heavily by economic uncertainties and shifting consumer priorities. This slowdown
reflects broader trends affecting the recreational vehicle industries at large, including electric vehicles (EVs). Notably, the global
shift towards EV adoption has been much slower than initially anticipated. Several leading automotive manufacturers have adjusted their
strategies, accordingly, including halting the construction of dedicated EV factories.
The slower-than-expected adoption rates have led to
cautious consumer spending and investment in EV technology, directly impacting Twin Vee’s market. Specifically, the electric boat
segment has experienced even more sluggish growth than the automotive sector. In addition, while Forza’s electric boats are still
in the development stage, many of the larger players in the boat industry, such as Mercury Marine, have completed their development efforts
and have brought their electric outboard motors to market. Despite these challenges, we have managed to sustain operations through strategic
adjustments, including cost management and a focus on strategic partnerships. Twin Vee has implemented measures that have reduced cash
burn and conserved cash reserves while seeking to leverage its technological advancements through strategic collaborations and partnerships
to enhance shareholder value. Twin Vee has responded to the industry challenges by tightening its financial reins to mitigate the impacts
of reduced demand with a view toward long-term sustainability.
Results of Operations
Comparison of the Three Months Ended June 30, 2024 and 2023
The following table provides certain selected financial information for
the periods presented:
| |
|
Three Months Ended June 30, |
|
|
| |
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
| Net sales |
|
$ |
4,326,821 |
|
|
$ |
8,124,632 |
|
|
$ |
(3,797,881 |
) |
|
|
(47 |
%) |
| Cost of products sold |
|
$ |
4,124,481 |
|
|
$ |
7,188,917 |
|
|
$ |
(3,064,439 |
) |
|
|
(43 |
%) |
| Gross profit |
|
$ |
202,340 |
|
|
$ |
935,715 |
|
|
$ |
(733,375 |
) |
|
|
(78 |
%) |
| Operating expenses |
|
$ |
4,861,416 |
|
|
$ |
3,979,942 |
|
|
$ |
881,474 |
|
|
|
22 |
% |
| Loss from operations |
|
$ |
(4,659,076 |
) |
|
$ |
(3,044,227 |
) |
|
$ |
(1.614,849 |
) |
|
|
53 |
% |
| Other income |
|
$ |
139,880 |
|
|
$ |
1,140,484 |
|
|
$ |
(1,000,604 |
) |
|
|
(88 |
%) |
| Net loss |
|
$ |
(4,519,196 |
) |
|
$ |
(1,903,743 |
) |
|
$ |
(2,615,453 |
) |
|
|
(137 |
%) |
| Basic and dilutive income per share of Common Stock |
|
$ |
(0.31 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.17 |
) |
|
|
(121 |
%) |
| Weighted average number of shares of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock outstanding |
|
|
9,520,000 |
|
|
|
9,520,000 |
|
|
|
|
|
|
|
|
|
Net Sales and Cost of Sales
Twin Vee’s net sales decreased by $3,797,811,
or 47% to $4,326,821 for the three months ended June 30, 2024 from $8,124,632 for the three months ended June 30, 2023. This decrease
was due to a decrease in the number of boats sold during the three months ended June 30, 2024 and the mix of boats sold, including the
addition of a monohull line of boats, which have a much lower average price than our dual-hull boats. The number of boats sold during
the three months ended June 30, 2024 decreased 68% compared to the three months ended June 30, 2023.
Gross Profit
Gross profits decreased by $733,375 or 78% to $202,340
for the three months ended June 30, 2024 from $935,715 for the three months ended June 30, 2023. Gross profit as a percentage of sales,
for the three months ended June 30, 2024 and 2023, was 5% and 12% respectively. On a sequential basis, gross profit as a percentage of
revenues was down slightly at 4.7% in the second quarter of 2024 compared to 5.3% in the first quarter of 2024 despite a reduction in
revenues of $949,522 between the same periods. Through continuous efficiency improvements, we were able to effectively offset most of
the impact of fixed cost deleveraging in the production facility. Twin Vee continues to right size the workforce and drive efficiency
in all parts of our cost structure.
Total Operating Expenses
During the three months ended June 30, 2024, operating
expenses were $4,861,416 and included an impairment charge of $1,674,000 related to the Forza impairment of property & equipment.
Before this charge operating expenses for the three months ended June 30, 2024 and 2023 were $3,187,416 and $3,979,942 respectively. Operating
expenses as a percentage of sales excluding the impairment charge were 73.7% compared to 49.0% in the prior year. Twin Vee’s total
operating expenses, for our gas-powered boat segment, for the three months ended June 30, 2024 and 2023 were $1,943,927 and $2,400,942
respectively. As a percentage of net sales, for the three months ended June 30, 2024 and 2023, operating expenses for our gas-powered
segment were 44.9% and 29.6%, respectively. Twin Vee’s total operating expenses for Forza, its electric powered boat and development
segment, for the three months ended June 30, 2024 and 2023 were $2,916,563 and $1,578,722, respectively.
Selling, general, and administrative expenses decreased
by approximately 17%, or $158,471 to $755,959 for the three months ended June 30, 2024, compared to $914,430 for the three months ended
June 30, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, hiring costs and office supplies.
Sales and marketing expenses decreased by $114,122, from $127,580 for the three months ended June 30, 2023, to $241,702 for the three
months ended June 30, 2024. Hiring expenses declined $11,910 for the three months ended June 30, 2024 to $7,066 compared to $18,976 in
the second quarter of 2023. Office supplies expenses declined $24,022 in the second quarter of 2024 to $11,766 compared to $35,788 in
the second quarter of 2023.
Salaries and wage related expenses decreased 43%,
or $902,824 to $1,199,348 for the three months ended June 30, 2024, compared to $2,102,172 for the three months ended June 30, 2023. The
majority of the decrease is due to reductions in staffing levels at Forza, as well as the staffing of Aquasport. Included in salaries
and wage related expenses for the three months ended June 30, 2024 was stock-based compensation expense of $317,743, Forza’s portion
of that expense being $183,815. In total, stock-based compensation expense decreased by $171,617 or 35.1% as compared to the prior year
period.
Research and development expenses increased by $83,811,
or 56%, to $344,784 for the three months ended June 30, 2024, from $261,473 for the three months ended June 30, 2023. This increase was
due primarily to the charges for an inventory allowance related to R&D Cascadia electric motors at Forza, partially offset by lower
R&D activity.
Professional fees increased by 8% or $35,062 to $452,367
for the three months ended June 30, 2024, compared to $417,305 for the three months ended June 30, 2023. This increase was due primarily
to higher legal and consulting expenses in the current year related to exploration of strategic options at Forza.
Depreciation and amortization expense increased by
53%, or $150,396 to $434,958 for the three months ended June 30, 2024, as compared to $284,563 for the three months ended June 30, 2023.
This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.
Other income decreased by $1,000,604 to $139,880 for
the three months ended June 30, 2024, as compared to $1,140,484 for the three months ended June 30, 2023. This decrease was due to the
second quarter 2023 recognition of income from the Employee Retention Credit of $937,482.
Net Loss
Net loss for the three months ended June 30, 2024
was $4,519,194, as compared to $1,903,743 for the three months ended June 30, 2023, an increase in loss of $2,615,451. Twin Vee’s
electric segment, which does not generate any revenue at this time, incurred a loss of $2,831,554 for the three months ended June 30,
2024, related mostly to staffing costs and research and development. Twin Vee’s gas-powered segment incurred a loss of $1,681,418
for the three months ended June 30, 2024, due largely to the rapid decline in orders for new boats during the first half of 2024. Basic
and dilutive loss per share of common stock for the three months ended June 30, 2024 was ($0.31), as compared to ($0.14) for the three
months ended June 30, 2023.
Comparison of the Six Months Ended June 30, 2024 and 2023
The following table provides certain selected financial information for
the periods presented:
| |
|
Six Months Ended June 30, |
|
|
|
|
| |
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
| Net sales |
|
$ |
9,603,164 |
|
|
$ |
17,001,847 |
|
|
$ |
(7,398,683 |
) |
|
|
(44 |
%) |
| Cost of products sold |
|
$ |
9,123,511 |
|
|
$ |
14,456,574 |
|
|
$ |
(5,333,063 |
) |
|
|
(37 |
%) |
| Gross profit |
|
$ |
479,653 |
|
|
$ |
2,545,273 |
|
|
$ |
(2,065,620 |
) |
|
|
(81 |
%) |
| Operating expenses |
|
$ |
7,681,934 |
|
|
$ |
7,959,023 |
|
|
$ |
(277,089 |
) |
|
|
(3 |
%) |
| Loss from operations |
|
$ |
(7,202,281 |
) |
|
$ |
(5,413,750 |
) |
|
$ |
(1,788,531 |
) |
|
|
33 |
% |
| Other income |
|
$ |
347,891 |
|
|
$ |
1,681,542 |
|
|
$ |
(1,333,651 |
) |
|
|
(79 |
%) |
| Net loss |
|
$ |
(6,854,390 |
) |
|
$ |
(3,732,208 |
) |
|
$ |
(3,122,182 |
) |
|
|
84 |
% |
Basic and dilutive income per share of common
stock |
|
$ |
(0.49 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.23 |
) |
|
|
(47 |
%) |
Weighted average number of shares of common
stock outstanding |
|
|
9,520,000 |
|
|
|
9,520,000 |
|
|
|
|
|
|
|
|
|
Net Sales and Cost of Sales
Twin Vee’s net sales decreased by $7,398,683,
or 44% to $9,603,164 for the six months ended June 30, 2024 from $17,001,847 for the six months ended June 30, 2023. This decrease was
due to a decrease in the number of boats sold during the first half of 2024 and the mix of boats sold, including the addition of a monohull
line of boats, which have a much lower average price than Twin Vee’s dual-hull boats. The number of boats sold during the six months
ended June 30, 2024 decreased 57% compared to the six months ended June 30, 2023.
Gross Profit
Gross profits decreased by $2,065,620 or 81% to $479,653
for the six months ended June 30, 2024 from $2,545,273 for the six months ended June 30, 2023. Gross profit as a percentage of sales,
for the six months ended June 30, 2024 and 2023, was 5% and 15% respectively. Through continuous efficiency improvements, the company
was partially able to offset the impact of fixed cost deleveraging in the production facility as revenues declined 44% over the same period
last year. We continue to right size the workforce and drive efficiency in all parts of Twin Vee’s cost structure.
Total Operating Expenses
During the six months ended June 30, 2024, operating
expenses were $7,681,934 and included an impairment charge of $1,674,000 related to the Forza impairment of property & equipment.
Before the impact of this charge, operating expenses for the six months ended June 30, 2024 and 2023 were $6,007,934 and $7,959,023 respectively.
Operating expenses as a percentage of sales were 62.6% compared to 46.8% in the prior year. Twin Vee’s total operating expenses,
for Twin Vee’s gas-powered boat segment, for the six months ended June 30, 2024 and 2023 were $3,478,677 and $4,299,093 respectively.
Before the impact of the impairment charge, as a percentage of net sales, for the six months ended June 30, 2024 and 2023, operating expenses
for Twin Vee’s gas-powered segment were 36.2% and 42.6%, respectively. Twin Vee’s total operating expenses for Forza, Twin
Vee’s electric powered boat and development segment, for the six months ended June 30, 2024 and 2023 were $4,202,330 and $3,658,531,
respectively.
Selling, general, and administrative expenses decreased
by approximately 25%, or $487,208 to $1,452,687 for the six months ended June 30, 2024, compared to $1,937,120 for the six months ended
June 30, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, D&O insurance, hiring costs and
office supplies, primarily resulting from the decline in R&D activity at Forza between periods.
Salaries and wage related expenses decreased 35%,
or $1,344,306 to $2,495,616 for the six months ended June 30, 2024, compared to $3,839,922 for the six months ended June 30, 2023. The
majority of the decrease is due to reductions in staffing levels at Forza, as well as the staffing of Aquasport. Included in salaries
and wage related expenses for the six months ended June 30, 2024 was stock-based compensation expense of $744,026, Forza’s portion
of that expense being $476,956. In total, stock-based compensation expense decreased by $228,299 or 23.5% as compared to the prior year
period.
Research and development expenses decreased by $469,646,
or 49%, to $494,475 for the six months ended June 30, 2024, from $964,121 for the six months ended June 30, 2023. This decrease was due
primarily to the charges for an inventory allowance related to R&D Cascadia electric motors at Forza, more than offset by lower
R&D activity in the Forza electric motor segment.
Professional fees decreased by 1% or $7,330 to $707,692
for the six months ended June 30, 2024, compared to $715,022 for the six months ended June 30, 2023.
Depreciation and amortization expense increased by
71%, or $357,401 to $860,239 for the six months ended June 30, 2024, as compared to $502,838 for the six months ended June 30, 2023. This
increase is due to the addition of fixed assets, primarily molds, to increase Twin Vee’s production levels and throughput.
Other income decreased by $1,333,652 to $347,890 for
the six months ended June 30, 2024, as compared to $1,681,542 for the six months ended June 30, 2023. This decrease was due to the first
half of 2023 recognition of income from the Employee Retention Credit of $1,267,055.
Net Loss
Net loss for the six months ended June 30, 2024 was
$6,854,390, as compared to $3,732,208 for the six months ended June 30, 2023, an increase of $3,122,182. Twin Vee’s electric segment,
which does not generate any revenue at this time, incurred a loss of $3,999,391 for the six months ended June 30, 2024, related mostly
to staffing costs and research and development. Twin Vee’s gas-powered segment incurred a loss of $2,848,776 for the six months
ended June 30, 2024, due largely to the rapid decline in orders for new boats during the first half of 2024. Basic and dilutive loss per
share of common stock for the six months ended June 30, 2024 was ($0.49), as compared to ($0.26) for the six months ended June 30, 2023.
Comparison of the Years Ended December 31, 2023 and 2022
The following table provides certain selected financial information for
the years presented:
| |
|
Years Ended |
|
|
|
|
| |
|
December 31, |
|
|
|
|
| |
|
2023 |
|
2022 |
|
$ Change |
|
% Change |
| Net sales |
|
$ |
33,425,912 |
|
|
$ |
31,987,724 |
|
|
$ |
1,438,188 |
|
|
|
4 |
% |
| Cost of products sold |
|
$ |
23,702,885 |
|
|
$ |
21,330,918 |
|
|
$ |
2,371,967 |
|
|
|
11 |
% |
| Gross profit |
|
$ |
9,723,027 |
|
|
$ |
10,656,806 |
|
|
$ |
(933,779 |
) |
|
|
(9 |
%) |
| Operating expenses |
|
$ |
21,710,326 |
|
|
$ |
16,678,514 |
|
|
$ |
5,031,812 |
|
|
|
30 |
% |
| Loss from operations |
|
$ |
(11,987,299 |
) |
|
$ |
(6,021,708 |
) |
|
$ |
(5,965,591 |
) |
|
|
99 |
% |
| Other income |
|
$ |
(2,205,103 |
) |
|
$ |
(228,294 |
) |
|
$ |
(1,976,809 |
) |
|
|
866 |
% |
| Net loss |
|
$ |
(9,782,196 |
) |
|
$ |
(5,793,414 |
) |
|
$ |
(3,988,782 |
) |
|
|
69 |
% |
| Basic and dilutive income per share of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock |
|
$ |
(0.76 |
) |
|
$ |
(0.67 |
) |
|
$ |
(0.10 |
) |
|
|
15 |
% |
| Weighted average number of shares of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock outstanding |
|
|
9,520,000 |
|
|
|
7,624,938 |
|
|
|
|
|
|
|
|
|
Net Sales and Cost Sales
Twin Vee’s net sales increased $1,438,187, or
4% to $33,425,911 for the year ended December 31, 2023 from $31,987,724 for the year ended December 31, 2022. The number of boats sold
during fiscal year ended December 31, 2023 increased 21% over the number of Twin Vee’s boats sold during the fiscal year ended December
31, 2022. However, Twin Vee’s average cost per unit decreased approximately $26,000. In 2023, Twin Vee introduced Twin Vee’s
monohull line of boats. These are low-cost entry-level boats, in a very competitive sector. Twin Vee believe that adding a full line up
of monohull boats will allow us to continue to increase Twin Vee’s net sales year over year. In 2023, 40% of Twin Vee’s sales
or approximately $6,000,000, were attributed to Twin Vee’s 220 monohull,
Gross Profit
Gross profits decreased by $933,779, or 9% to $9,723,027
for the year ended December 31, 2023 from $10,656,806 for the year ended December 31, 2022. Gross profit as a percentage of sales, for
the year ended December 31, 2023 and 2022 was 29% and 33% respectively. Twin Vee attributes the 4% decline in gross profit percentage
to decreased demand in the marine sector.
Total Operating Expenses
Twin Vee’s total operating expenses for the
year ended December 31, 2023 and 2022 were $21,710,326 and $16,678,514 respectively. Operating expenses as a percentage of sales were
65% compared to 52% in the prior year.
Selling, general and administrative expenses increased
by approximately 35%, or $974,781 to $3,734,406 for the year ended December 31, 2023, compared to $2,759,625 for the year ended December
31, 2022. Twin Vee’s advertising and marketing expenses increased 296%, from $112,319 for the year ended December 31, 2022, to $331,911
for the year ended December 31, 2023. This is due to increased expenses associated with Twin Vee’s new AquaSport line and the Forza
Electrification event. Twin Vee’s rent expense increased 31%, or $134,456 to $567,602 for the year ended December 31, 2023. The
increase was due to Forza Tech Center being rent for a full year compared to only 3 months in 2022, resulting in an increase of $118,900;
along with a 5% increase for Twin Vee’s rent in Fort Pierce. Hiring expense increased $77,889, due to Forza utilizing Recruiting
firs to hire two Engineers. Filing fee and investor relations fees increased $85,286, due to Forza being public for an entire year in
2023, compared to only a partial year in 2022. Dues and subscriptions increased $163,812 for the year ended December 31, 2023, this is
due to subscriptions related to Twin Vee’s new ERP system, training and safety, marketing related subscriptions, option tracking
and engineering related subscriptions. Expenses related to travel increased by $202,619, for the year ended December 31, 2023, this was
due to required travel for staff to go to Twin Vee’s three different facilities as well as international travel related to Forza.
Twin Vee also saw an increase of $60,341 for the year ended December 31, 2023, for Twin Vee’s workers compensation expense due to
Twin Vee’s increased employment levels. Numerous other items make up the remaining increase approximately $24,000 of increased selling,
general and administrative expense increase.
Salaries and wage related expenses increased by approximately
22%, or $2,472,011 to $13,929,580 for the year ended December 31, 2023, compared to $11,457,569 for the year ended December 31, 2022.
The increase in salaries and wages of $1,458,260 was the result of aggressively ramping up of production, which required increasing Twin
Vee’s production and adding mid-level staff. Included in salaries and wages for the year ended December 31, 2023 was a non-cash
stock-based compensation expense of $1,902,749, which was an increase of $453,997 from the prior year, due to the issuance of options
to employees. Twin Vee has also incurred production and executive bonus expense increase of $42,300 for the year ended December 31, 2023.
Twin Vee’s cost of benefits, primarily health insurance, holiday pay and 401K, increased by approximately $178,996, due to Twin
Vee’s increase in headcount. Expenses for board fees increased by $60,375 in 2023, during the year ended December 31, 2022 Twin
Vee only incurred board fees for a portion of the year for Forza. During the years ended December 31, 2023 and 2022, respectively, Twin
Vee incurred $123,048 and $0 in commission expense. The remaining increase of salaries and wages during the year ended December 31, 2021
was associated with payroll taxes and benefits.
Professional fees increased by 29%, or $283,351 to
$1,249,388 for the year ended December 31, 2023, compared to $966,037 for the year ended 2022. Professional fees related to Forza increased
$194,692 for the year ended December 31, 2023, as Twin Vee carried the costs of audit and legal fees of a public organization for an entire
year compared to only a partial year in 2022. The remaining increase was due to consulting services to install and manage Twin Vee’s
new ERP system.
Depreciation
expense for the year ended December 31, 2023 increased by 144%, or $799,633 to $1,353,383
for the year ended December 31, 2023 compared to $553,750 in December 31, 2022. Since Twin
Vee’s initial public offering in 2021 Twin Vee have made significant investments in
equipment, leasehold improvements and boat molds that resulted in an increased Twin Vee’s
depreciation expense.
Research and design expenses for the year ended December
31, 2023, was $1,443,569 compared to $941,533, for the year ended December 31, 2022. These expenses are associated with Twin Vee’s
development of Twin Vee’s electric propulsion system for Forza.
Other income increased by 866%, or $1,976,809 to $2,205,103
for the year ended December 31, 2023, compared to $228,294 for the year ended, 2022. The increase in other income is primarily the result
of $1,267,055 in Employee Retention Credit income. Twin Vee incurred an increase in net gain in fair value of Twin Vee’s marketable
securities of $191,722, compared to a net loss in fair value of Twin Vee’s marketable securities of $133,988 in 2022, due to improved
financial market. Additionally, Twin Vee recorded $909,215 in dividend income during 2023, compared to $0, in 2022. For the year ended
December 31, 2023 Twin Vee did see an increase in interest expense of $57,002.
Net Loss
Net loss for the year ended December 31, 2023, was
$9,479,511, compared to $5,793,414 for the year ended December 31, 2022. Twin Vee has spent much of the last two year assembling the tools
and people necessary to increase production levels. While Twin Vee’s revenue levels increased, Twin Vee’s expenses also increased.
Toward the end of 2023, market condition worsened, forcing us to close the Tennessee facility and consolidate operation in Fort Pierce.
That coupled with the additional expenses associated with being a public company and Twin Vee’s research and development efforts
for Twin Vee’s electric boat division, resulted in a net loss for 2023. With these investments, Twin Vee is building the foundation
for Twin Vee’s future, not only for Twin Vee’s gas-powered boats, but also for Twin Vee’s electric boat division. Twin
Vee has decreased Twin Vee’s head count significantly and work to right size the business for the current state of the economy,
while keep Twin Vee’s core strengths intact. Basic and dilutive loss per share of Twin Vee Common Stock increased for the year ended
December 31, 2023 to ($0.76) compared to ($0.67) for the year ended December 31, 2022.
Liquidity and Capital Resources
A primary source of funds for the year ended December
31, 2023 and through June 30, 2024 was net cash received from Twin Vee’s secondary offering, as well as Forza’s initial public
and secondary offering and revenue generated from operations. Twin Vee’s primary use of cash was related to funding the expansion
of Twin Vee’s operations through capital improvements, as well as molds for the expansion of Aquasport and Twin Vee models. With
reduced demand offsetting uncertainty on certain component availability, prolonged lead time and rising prices, Twin Vee had been selectively
reducing inventory levels. Twin Vee’s priority over the next several months is to expand the Twin Vee GFX 2 lineup which will require
additional investment in molds and machinery.
The following table provides selected financial data
about us as of June 30, 2024 and December 31, 2023.
| | |
June 30, | |
December 31, | |
| |
|
| | |
2024 | |
2023 | |
Change | |
% Change |
| Cash, cash equivalents and restricted cash | |
$ | 14,138,336 | | |
$ | 16,755,233 | | |
$ | (2,616,897 | | |
| (18.5 | %) |
| Marketable securities | |
$ | 995,208 | | |
$ | 4,462,942 | | |
$ | (3,467,734 | ) | |
| (77.7 | %) |
| Current assets | |
$ | 19,582,107 | | |
$ | 26,646,318 | | |
$ | (7,064,211 | ) | |
| (26.5 | %) |
| Current liabilities | |
$ | 4,560,5601 | | |
$ | 4,216,345 | | |
$ | 344,215 | | |
| 8.2 | % |
| Working capital | |
$ | 15,021,548 | | |
$ | 22,429,972 | | |
$ | (7,408,425 | ) | |
| (33.0 | %) |
| | |
June
30, | |
December
31, | |
| |
|
| | |
2024 | |
2023 | |
Change | |
%
Change |
| Cash,
cash equivalents and restricted cash | |
$ | 14,138,337 | | |
$ | 16,497,703 | | |
$ | (2,359,366 | ) | |
| (14.3 | ) |
| Marketable
securities | |
$ | 995,208 | | |
$ | 4,462,942 | | |
$ | (3,467,734 | ) | |
| (77.7 | ) |
| Current
assets | |
$ | 19,582,107 | | |
$ | 26,646,318 | | |
$ | (7,064,211 | ) | |
| (26.5 | ) |
| Current
liabilities | |
$ | 4,560,5601 | | |
$ | 4,216,345 | | |
$ | 344,215 | | |
| 8.2 | |
| Working
capital | |
$ | 15,021,548 | | |
$ | 22,429,972 | | |
$ | (7,408,425 | ) | |
| (33.0 | ) |
The following table provide selected financial data
about us as of December 31, 2023 and December 31, 2022.
| |
|
December 31, |
|
December 31, |
| |
|
2023 |
|
2022 |
| |
|
|
|
|
| Cash, cash equivalents and restricted cash |
|
$ |
16,755,233 |
|
|
$ |
23,501,007 |
|
| Marketable securities |
|
$ |
4,462,942 |
|
|
$ |
2,927,518 |
|
| Current assets |
|
$ |
26,646,318 |
|
|
$ |
29,887,529 |
|
| Current liabilities |
|
$ |
4,216,345 |
|
|
$ |
3,791,063 |
|
| Working capital |
|
$ |
22,429,972 |
|
|
$ |
26,096,466 |
|
As of June 30, 2024, Twin Vee had $14,138,336 of cash,
cash equivalents, and restricted cash, $995,208 of marketable securities, total current assets of $19,582,107 and total assets of $35,427,305.
Twin Vee’s total liabilities were $7,814,052. Twin Vee’s total liabilities were comprised of current liabilities of $4,560,560
which included accounts payable and accrued liabilities of $3,887,425, leases liability of $666,959, contract liability of $6,175 and
long-term liabilities of $3,253,493. As of December 31, 2023, we had $16,755,233 of cash, cash equivalents, and restricted cash, $4,462,942
of marketable securities, total current assets of $26,646,318 and total assets of $39,846,713. Twin Vee’s total current liabilities
were $4,216,345 and total liabilities of $7,797,098 which included long-term finance and operating leases liabilities of $3,080,853.
The accumulated deficit was $18,978,912 as of June 30, 2024 compared to
accumulated deficit of $14,346,984 as of December 31, 2023.
Twin Vee believes
that its cash, cash equivalents, and marketable securities will provide sufficient resources to finance operations for the next 24 months
from the date of the filing of the Quarterly Report on Form 10-Q for the quarter ended June 30,2024. In addition to cash, cash equivalents,
and marketable securities, Twin Vee anticipates that it will be able to rely, in part, on cash flows from operations in order to meet
its liquidity and capital expenditure needs in the next year. Twin Vee expects Forza’s expenses to decrease as it curtails its
operation and the construction of its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be
paid for through the proceeds of Forza’s public offerings, provided the conditions to receipt of the grant funding are met, of
which there can be no assurance.
Cash Flow
| | |
Six Months Ended June 30, | |
| |
|
| | |
2024 | |
2023 | |
Change | |
% Change |
| Cash used in operating activities | |
$ | (2,232,013 | ) | |
$ | (3,430,097 | ) | |
$ | 1,198,084 | | |
| 35 | % |
| Cash (used in) provided by investing activities | |
$ | (247,855 | ) | |
$ | (655,669 | ) | |
$ | (407,814 | ) | |
| 62 | % |
| Cash (used in) provided by financing activities | |
$ | (137,029 | ) | |
$ | 6,921,886 | | |
$ | (7,058,915 | ) | |
| (102 | %) |
| Net Change in cash, cash equivalents and restricted cash | |
$ | (2,616,897 | ) | |
$ | 2,836,120 | | |
$ | (5,453,0167 | ) | |
| (192 | %) |
Cash Flow
| |
|
Years
Ended December 31, |
|
|
|
|
| |
|
2023 |
|
2022 |
|
Change |
|
% Change |
| Cash used in operating activities |
|
$ |
(6,934,773 |
) |
|
$ |
(4,146,031 |
) |
|
|
(2,788,742 |
) |
|
|
(67 |
%) |
| Cash used in investing activities |
|
$ |
(6,629,021 |
) |
|
$ |
(195,605 |
) |
|
|
6,433,416 |
|
|
|
3,289 |
% |
| Cash provided by financing activities |
|
$ |
6,818,020 |
|
|
$ |
20,867,340 |
|
|
|
(14,049,320 |
) |
|
|
(67 |
%) |
| Cash, cash equivalents and restricted cash at end of year |
|
$ |
16,755,233 |
|
|
$ |
23,501,007 |
|
|
|
(6,745,774 |
) |
|
|
(29 |
%) |
Cash Flow from Operating Activities
For the six months ended June 30, 2024, net cash flows
used in operating activities was $2,232,013 compared to $3,430,097 during the six months ended June 30, 2023. This use of cash was due
primarily to a $6,854,390 net loss partially offset by a $448,182 reduction in net inventory levels and depreciation and amortization
of $860,239, stock-based compensation of $744,026, and an impairment of property & equipment of $1,674,000 since December 31, 2023.
For the year ended December 31, 2023, net cash flows
used in operating activities was $6,934,773 compared to $4,146,031 during the year ended December 31, 2022. Twin Vee has increased inventory
levels by $1,296,045, due to having three different manufactures for engines and to bringing inventory in for the Tennessee facility,
and due to Twin Vee’s increased product offerings. Twin Vee’s net loss was $9,782,196, was decreased by non-cash expenses
of approximately $4,062,597 primarily due to stock-based compensation of $1,902,749, depreciation of $1,353,383, change of right-of-use
asset and lease liabilities of $474,630, change in inventory reserve of $419,616 and net change in fair value of marketable securities
of $87,781. For the year ended December 31, 2023, Twin Vee’s accounts payable increased $333,346, due to Twin Vee’s increase
in inventory, prepaid expenses and other current assets decreases by $419,195, due to not being required to prepay for incoming engines,
as Twin Vee were in 2022. For the year ended December 31, 2023, Twin Vee’s operating lease liabilities decreased $479,315 and Twin
Vee’s accrued liabilities decreased by $165,257. Contract liabilities increased by $38,895. Accounts receivable increased by $65,993.
Cash Flow from Investing Activities
During the six months ended June 30, 2024, cash used in investing activities was
$247,855, due primarily to net sales of marketable securities partially offset by investments in property, plant and equipment. This compares
to a use of cash in investing activities of $655,669 in the six months ended June 30, 2023.
During the year ended December 31, 2023, Twin Vee
used $6,629,021 for investment activities, compared to $195,605 used during the year ended December 31, 2022. Twin Vee increased Twin
Vee’s property and equipment by $5,162,478, Twin Vee invested in marketable securities of $1,343,702 and Twin Vee realized a gain
on the sale of marketable securities, available for sale of $103,941. The majority of the property and equipment purchased were molds
for Twin Vee’s boat production, for AquaSport and Twin Vee, investing and additional $3,593,709. Twin Vee further spent $1,119,758
on the land in Tennessee and in North Carolina. Twin Vee also spent approximately $714,991 on machinery and equipment.
Cash Flows from Financing Activities
For the six months ended June 30, 2024, net cash used
in financing activities was approximately $137,029 compared to net cash provided by financing activities of $6,921,886 in the six months
ended June 30, 2023. primarily from the issuance of Forza common stock.
For the year ended December 31, 2023, net cash provided by financing activities
was approximately $6,818,020 compared to net cash provided by financing activities of $20,867,340 for the year ended December 31, 2022. The
cash flow from financing activities for the year ended December 31, 2023 included proceeds of $6,996,015 and deferred offering cost of
$66,463 from a follow on underwritten public offering for Forza in June 2023. Additional cash used for financing activities of $90,153
was related to equipment financing, and $21,379 was used for a Forza buy back of stock. The cash provided by financing activities for
the year ended December 31,2022, included $20,867,3340 in net proceeds from the Forza offering.
CRITICAL ACCOUNTING ESTIMATES
Twin Vee believes that several accounting policies
are important to understanding Twin Vee’s historical and future performance. Twin Vee refers to these policies as “critical”
because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time Twin Vee
makes the estimate, and different estimates—which also would have been reasonable—could have been used, which would have resulted
in different financial results.
Twin Vee’s management’s discussion and
analysis of financial condition and results of operations is based on Twin Vee’s condensed consolidated financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of Twin Vee’s condensed consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure
of contingent assets and liabilities. On an ongoing basis, Twin Vee evaluate Twin Vee’s 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.
The notes to Twin Vee’s condensed consolidated
financial statements contained herein contain a summary of Twin Vee’s significant accounting policies. Twin Vee consider the following
accounting policies critical to the understanding of the results of Twin Vee’s operations:
Revenue Recognition
Twin Vee revenue is derived primarily from the sale
of boats, motors and trailers to its independent dealers. Twin Vee 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. Twin Vee 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. Twin Vee 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 statements of operations. The consideration recognized represents the amount specified
in a contract with a customer, net of estimated incentives Twin Vee 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.
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.
Use of Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States “U.S. GAAP” requires management to make estimates and assumptions
that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Included in those estimates
are assumptions about allowances for inventory obsolescence, useful life of fixed assets, warranty reserves and bad-debt reserves.
Inventories
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. Provisions
are made when necessary to reduce excess or obsolete inventories to their net realizable value.
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
As required by FASB ASC Topic 460, Guarantees,
Twin Vee is including the following disclosure applicable to Twin Vee’s product warranties.
Twin Vee 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. Twin Vee’s warranty reserve is calculated as the gross sales multiplied by
the historical warranty expense return rate.
Leases
Twin Vee adopted FASB Accounting Standards Update
(“ASU”) No. 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, Twin Vee applied a dual approach
to all leases whereby Twin Vee is a lessee and classify leases as either finance or operating leases based on the principle of whether
or not the lease is effectively a financed purchase by us. Lease classification is evaluated at the inception of the lease agreement.
Deferred Income Taxes and Valuation Allowance
Twin Vee account for income taxes under ASC 740 “Income
Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets
if it is more likely than not that Twin Vee will not realize tax assets through future operations.
OFF-BALANCE SHEET ARRANGEMENTS
Twin Vee did not have during the periods presented, and Twin Vee does not
currently have, any off-balance sheet arrangements, as defined under SEC rules.
INFORMATION REGARDING FORZA
Information About Forza’s Executive Officers and Directors
Forza’s business and affairs are organized under
the direction of the Forza Board of Directors, which currently consists of four members. The following table sets forth the names, ages
and positions of Forza’s executive officers and directors as of [●], 2024:
| Name |
|
Age |
|
Position |
| Executive Officers: |
|
|
|
|
| Joseph C. Visconti |
|
59 |
|
Executive Chairman of the Board, Interim Chief Executive Officer and Chief of Product Development |
| Michael Dickerson |
|
57 |
|
Interim Chief Financial Officer |
| |
|
|
|
|
| Non-Employee Directors: |
|
|
|
|
| Marcia Kull (1)(2)(3) |
|
66 |
|
Director |
| Neil Ross (1)(2)(3)(6) |
|
62 |
|
Director |
| Kevin Schuyler (1)(2)(3)(4)(5) |
|
55 |
|
Director |
(1) Member of the audit committee
(2) Member of the compensation committee
(3) Member of the nominating and corporate governance
and nominating committee
(4) Chair of audit committee
(5) Chair of compensation committee
(6) Chair of nominating and corporate governance and
nominating committee
Executive Officers
Joseph Visconti, Executive Chairman of the Board,
Interim Chief Executive Officer and Chief of Product Development
Mr. Visconti has been Forza’s Executive Chairman of the Board and Chief
of Product Development since July 22, 2022. Mr. Visconti was appointed Interim Chief Executive Officer, on March 12, 2024. From Forza’s
inception (October 15, 2021) until July 22, 2022, Mr. Visconti served as Forza’s Chairman of the Board and the Chief Executive Officer.
He also serves as the Chief Executive Officert and Director of Twin Vee PowerCats Co., Forza’s conmajmtrolling owner, since 2015,
which is listed on the Nasdaq Capital Market. He is also the Chairman of the Board and Chief Executive Officer of, Twin Vee PowerCats,
Inc., the parent company of Twin Vee PowerCats Co. With over 25 years of executive level operational and financial experience, Mr. Visconti
was the founder, CEO and President of two previous companies, the first company was a regional Investment Bank that he built to over 400
employees and sold in 2000. The second company was ValueRich, a financial media company that was taken public on the American Stock Exchange
in 2007. ValueRich transitioned from media related business to Twin Vee PowerCats, Inc. in 2015. Mr. Visconti has experience building
teams of professionals with a focus on product development and bringing those products to market. Mr. Visconti received his Associate’s
degree from Lynn University in 1984. Forza believes that Mr. Visconti’s operational and financial experience makes him well qualified
to serve on Forza’s board of directors as Forza’s Executive Chairman of the Board.
Mr. Visconti currently devotes approximately 20% of
his working time to Forza’s affairs.
Michael Dickerson, Interim Chief Financial &
Administrative Officer
Mr. Dickerson has been Forza’s Chief Financial
& Administrative Officer since April 9, 2024. Mr. Dickerson has 35 years of corporate experience in senior and executive level finance
and operational roles, including finance & accounting, treasury, investor relations & corporate communications, risk management
and other related roles. In February 2024, he served in a consulting capacity at Savannah River Logistics as their Executive Vice President,
Chief Financial & Administrative Officer, and Treasurer. From August 2022 until November 2023, he served as Vice President, Investor
Relations & Risk Management, at Dorman Products, Inc. (Nasdaq: DORM). From August 2018 to March 2022, he served as Vice President,
Corporate Communications & Investor Relations, at Aaron’s Inc. (NYSE: AAN). Mr. Dickerson holds a Bachelor of Science in Business
Administration in Accounting from the University of Dayton in Dayton, Ohio. Additionally, he is a member of the American Institute of
Certified Public Accounts (AICPA), a member of the Ohio Society of Certified Public Accountants (OSCPA), and a Senior Roundtable Member
of the National Investor Relations Institute (NIRI).
Daniel Norton, President
Mr. Norton was appointed President on March 12, 2024,
upon the resignation of James Leffew, Chief Executive Officer and President. Mr. Norton has spent over 22 years working in the technical
design engineering arena for companies including Caterpillar Inc., Gerber Technology, and ATI Industrial Automation, in various project
management and engineering development positions. He currently holds over 20 patents related to innovative electromechanical solutions
to automation, boat docking, and work piece clamping. He is also the inventor of the NLS (Nautical Landing System) technology and has
been developing the Smartlander positive restraint system for use in heavy duty marine applications. Mr. Norton received his Bachelor
of Science degree in Mechanical Engineering in 1998, from Northeastern University. and is a member of the American Society of Mechanical
Engineers. He received his Certified Scrum Product Owner certification in 2019.
Independent Directors
Kevin Schuyler, CFA, Director
Kevin Schuyler has been a member of Forza’s
Board of Directors since December 2021 and a member of the Board of Directors of Twin Vee PowerCats Co., Forza’s controlling shareholder,
since July 2022. Mr. Schuyler is the Vice Chairman of the board of directors and Lead Independent Director of Adial Pharmaceuticals, Inc.
where he has served as a director since April 2016. He currently also serves as a senior managing director at CornerStone Partners, a
full-service institutional CIO and investment office located in Charlottesville, VA, with approximately $12 billion under management.
Prior to joining CornerStone Partners in 2006, he held various positions with McKinsey & Company, Louis Dreyfus Corporation and The
Nature Conservancy. Mr. Schuyler serves on various boards and committees of Sentara Martha Jefferson Hospital. He is a member of the investment
committee of the Margaret A. Cargill Philanthropies. Mr. Schuyler graduated with honors from Harvard College and received his MBA from
The Darden Graduate School of Business at the University of Virginia. He is a member of the Chartered Financial Analyst Society of Washington,
DC. Forza selected Mr. Schuyler to serve on Forza’s board of directors because he brings extensive knowledge of the financial markets.
Mr. Schuyler’s business background provides him with a broad understanding of the financial markets and the financing opportunities
available to Forza.
Neil Ross, Director
Mr. Ross has been a
member of Forza’s Board of Directors since December 2021 and a member of the Board of Directors of Twin Vee PowerCats Co., Forza’s
controlling shareholder, since April 2021. He has over 30 years of experience in launching products and companies and promoting and growing
brands. He has served as the Chief Executive Officer of James Ross Advertising since founding it in February 2003. Most notably, Neil
has extensive marine experience partnering with brands like Galati Yachts Sales, Jefferson Beach Yacht Sales, Allied Marine, Bertram
Yachts, Twin Vee, Jupiter Marine and Sealine to name a few. Mr. Ross received his Bachelor’s degree from Florida State University.
Forza believes Mr. Ross’ experience in the yacht and boating industry as well as his expertise in brand awareness and growth makes
him well qualified to be a director of Forza.
Marcia Kull, Director
Ms. Kull has been a member of Forza’s Board
of Directors since July 2022. Since November 2017, Ms. Kull has served as President of SheGoes, Inc., where she provides consulting services
that guide manufacturers’ strategic efforts to prepare regulators and distribution chains to accept and advocate for new technologies.
From April 2017 through October 2017, she served as President of Torqeedo, Inc., a pioneer in the field of water-based electromobility,
where she guided the global sales team to exceed revenue target, resulting in a successful acquisition. From April 2005 through March
2017, Ms. Kull worked at Volvo Penta where she served as Vice President-Marine Sales (from November 2011 through March 2017) where she
led a diverse sales team offering products in both leisure (gasoline stern drive, diesel inboard, stern drive, jet and Volvo Penta
IPS) and commercial marine segments throughout the United States, Canada,
Mexico, the Caribbean and Central America. Ms. Kull
also practiced as a trial attorney for over 11 years where she specialized in defending manufacturers in complex products liability, warranty
and other business litigation. Ms. Kull received her Bachelor’s degree from the University of Iowa and her JD from the University
of Iowa College of Law. Forza believe Ms. Kull’s business experience, particularly in the boating industry as well as her legal
expertise makes her well qualified to be a director of Forza.
Family Relationships
No
family relationships exist between any director, executive officer or person nominated or
chosen to be a director or officer.
INFORMATION REGARDING THE FORZA BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Below is information regarding certain characteristics
of the Forza Board of Directors, utilizing the template included in the related Nasdaq rules.
Board Diversity Matrix (as of July 1, 2024)
| Total Number of Directors |
4 |
| |
Female |
Male |
Non-Binary |
Did Not Disclose
Gender |
| Part I: Gender Identity |
|
| Directors |
1 |
3 |
0 |
0 |
| Part II: Demographic Background |
|
| African American or Black |
|
|
|
|
| Alaskan Native or Native American |
|
|
|
|
| Asian |
|
|
|
|
| Hispanic or Latinx |
|
|
|
|
| Native Hawaiian or Pacific Islander |
|
|
|
|
| White |
1 |
3 |
|
|
| Two or More Races or Ethnicities |
|
|
|
|
| LGBTQ+ |
-- |
| Did Not Disclose Demographic Background |
-- |
| |
|
Forza Board of Directors Composition
The Forza Board of Directors currently consists of
four members. Each of Forza’s current directors will continue to serve as a director until the election and qualification of his
or her successor, or until his or her earlier death, resignation or removal.
Forza’s Amended and Restated Certificate of
Incorporation provides that Forza’s board of directors is divided into three classes with staggered three-year terms. Only one class
of directors will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective
three-year terms. Forza’s current directors are divided among the three classes as follows:
| |
● |
the Class I director is Kevin Schuyler, and his terms will expire at the annual meeting of stockholders to be held in 2026; |
| |
|
|
| |
● |
the Class II director is Marcia Kull, and her term will expire at the annual meeting of stockholders to be held in 2027, assuming she is re-elected at the Forza Annual Meeting; and |
| |
|
|
| |
● |
the Class III directors are Neil Ross and Joseph Visconti, and their terms will expire at the annual meeting of stockholders to be held in 2025. |
At each annual meeting of stockholders, upon the expiration
of the term of a class of directors, the successor to each such director in the class will be elected to serve from the time of election
and qualification until the third annual meeting following his or her election and until his or her successor is duly elected and qualified,
in accordance with Forza’s Amended and Restated Certificate of Incorporation. Any additional directorships resulting from an increase
in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third
of Forza’s directors.
This classification of the Forza Board of Directors
may have the effect of delaying or preventing changes in control of Forza’s company.
In addition, under the terms of Forza’s Amended
and Restated Certificate of Incorporation and Forza’s Amended and Restated Bylaws, members of the Forza Board of Directors may only
be removed for cause. This may also have the effect of delaying or preventing changes in control of Forza’s company.
If the Merger is effected, the directors of Forza
will each resign as directors.
Director Independence
Forza Common Stock has traded The Nasdaq Capital
Market, or Nasdaq, under the symbol “FRZA” since August 12, 2022. However, Forza has received a letter from Nasdaq notifying
it that due to its failure regain compliance with the Nasdaq bid price requirement, the Forza Common Stock will be delisted. Under the
rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors within one year of the
completion of its initial public offering. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member
of a listed company’s audit, compensation and nominating and corporate governance committees be independent. Audit committee members
and compensation committee members must also satisfy the independence criteria set forth in Rule 10A-3 and Rule 10C-1, respectively,
under the Exchange Act. Under the rules of Nasdaq, a director will only qualify as an “independent director” if, in the opinion
of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.
To be considered to be independent for purposes of
Rule 10A-3 and under the rules of Nasdaq, a member of an audit committee of a listed company may not, other than in his or her capacity
as a member of the audit committee, the board of directors, or any other board of directors committee: (1) accept, directly or indirectly,
any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person
of the listed company or any of its subsidiaries.
To be considered independent for purposes of Rule 10C-1
and under the rules of Nasdaq, the board of directors must affirmatively determine that each member of the compensation committee is independent,
including a consideration of all factors specifically relevant to determining whether the director has a relationship to the company which
is material to that director’s ability to be independent from management in connection with the duties of a compensation committee
member, including, but not limited to: (i) the source of compensation of such director, including any consulting, advisory or other
compensatory fee paid by the company to such director; and (ii) whether such director is affiliated with the company, a subsidiary
of the company or an affiliate of a subsidiary of the company.
Forza’s Board of Directors undertook a review
of its composition, the composition of its committees and the independence of Forza’s directors and considered whether any director
has a material relationship with Forza that could compromise his or her ability to exercise independent judgment in carrying out his or
her responsibilities. Based upon information requested from and provided by each non-employee director concerning his or her background,
employment and affiliations, including family relationships, Forza’s board of directors has determined that none of Messrs. Ross
and Schuyler and Ms. Kull have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and that each of these directors is “independent” as that term is defined under the rules of Nasdaq and Rule 10A-3
and Rule 10C-1under the Exchange Act.
In making these determinations, Forza’s board
of directors considered the current and prior relationships that each non-employee director has with Forza’s company and all other
facts and circumstances Forza’s Board of Directors deemed relevant in determining their independence, including the beneficial ownership
of Forza’s capital stock by each non-employee director, and the transactions involving them described in the section titled “Certain
Relationships and Related Transactions.”
Forza Board of Directors Leadership Structure
To assure effective independent
oversight, the Forza Board of Directors has adopted a number of governance practices, including:
● executive
sessions of the independent directors after certain board meetings, as required by Nasdaq; and
● annual
performance evaluations of the Chief Executive Officer by the independent directors, led by the Compensation Committee.
The
Forza Board of Directors does not have a policy that requires the separation of the roles
of Chief Executive Officer and Chairman of the Board. The Forza Board of Directors annually
reviews its leadership structure to assess what best serves the interests of Forza and its
shareholders at a given time. Joseph Visconti currently serves as Forza’s Executive
Chairman and as Forza’s Interim Chief Executive Officer, with Daniel Norton serving
as its President. Previously, the positions of Chief Executive Officer and Executive Chairman
were held by different persons, with Jim Leffew holding the position of Chief Executive Officer
until his resignation on March 6, 2024. The Forza Board of Directors does not have a lead
independent director. The Forza Board of Directors determined that the creation of a separate
Executive Chairman role, distinct from the role of President, enables Mr. Visconti to continue
to work with Forza’s President, Mr. Norton, and Forza’s senior management, to
help shape and execute Forza’s strategy and direction, as well as other key business
initiatives, subject in all cases to the direction of the Forza Board of Directors. The Forza
Board of Directors has determined its leadership structure is appropriate and effective given
its stage of development.
INFORMATION REGARDING COMMITTEES OF
THE FORZA BOARD OF DIRECTORS
The Forza Board of Directors has the authority to
appoint committees to perform certain management and administration functions. As disclosed above, the Forza Board of Directors has established
an Audit Committee (the “Forza Audit Committee”), a Compensation Committee (the “Forza Compensation Committee”)
and Nominating and Corporate Governance Committee (the “Forza Nominating and Corporate Governance Committee”), each of which
have the composition and the responsibilities described below. In addition, on January 17, 2024, the Forza Board of Directors established
a Special Committee in connection with discussing terms of a merger agreement with Twin Vee, Marcia Kull, the only Forza director that
does not also serve on the Twin Vee Board of Directors was appointed by Forza’s Board of Directors as the sole member of the Forza
Special Committee. The Forza Board of Directors may establish other committees to facilitate the management of Forza’s business.
The composition and functions of each committee are described below. Members serve on these committees until their resignation or until
otherwise determined by the Forza Board of Directors.
All of the committees comply with all applicable requirements
of the Sarbanes-Oxley Act of 2002, Nasdaq, and SEC, rules and regulations as further described below. The charters for each of these committees
are available on Forza’s website at www.forzax1.com. Information contained on or accessible through Forza’s website
is not a part of this Joint Proxy Statement/Prospectus and the inclusion of such website address herein is an inactive textual reference
only.
The following table shows the directors who are currently
members or Chairman of each of the Forza Audit Committee, Forza Compensation Committee and Forza Nominating and Corporate Governance Committee.
| Board Members |
|
Forza Audit
Committee |
|
Forza Compensation
Committee |
|
Forza Nominating and Corporate
Governance
Committee |
| Marcia Kull |
|
Member |
|
Member |
|
Member |
| Neil Ross |
|
Member |
|
Member |
|
Chairman |
| Kevin Schuyler |
|
Chairman |
|
Chairman |
|
Member |
Forza Audit Committee
The members of the Forza Audit Committee consist of
Marcia Kull, Neil Ross and Kevin Schuyler. Mr. Schuyler serves as the chair of the Forza Audit Committee. All of the members of the Forza
Audit Committee are independent, as that term is defined under the rules of Nasdaq. The primary purpose of the Forza Audit Committee is
to oversee the quality and integrity of Forza’s accounting and financial reporting processes and the audit of Forza’s financial
statements. Specifically, the Forza Audit Committee will:
| |
● |
select and hire the independent registered public accounting firm to audit Forza’s financial statements; |
| |
● |
help to ensure the independence and performance of the independent registered public accounting firm; |
| |
● |
approve audit and non-audit services and fees; |
| |
● |
review financial statements and discuss with management and the independent registered public accounting firm Forza’s annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews and the reports and certifications regarding internal controls over financial reporting and disclosure controls; |
| |
● |
prepare the audit committee report that the SEC requires to be included in Forza’s annual proxy statement; |
| |
● |
review reports and communications from the independent registered public accounting firm; |
| |
● |
review the adequacy and effectiveness of Forza’s internal controls and disclosure controls and procedure; |
| |
● |
review Forza’s policies on risk assessment and risk management; |
| |
● |
review related party transactions; and |
| |
● |
establish and oversee procedures for the receipt, retention and treatment of accounting related complaints and the confidential submission by Forza’s employees of concerns regarding questionable accounting or auditing matters. |
The Forza Audit Committee operates under a written
charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy of which is available on Forza’s
website at www.forzax1.com. The Forza Board of Directors has determined that Mr. Schuyler is an audit committee financial expert, as such
term is used in Section 407 of Regulation S-K.
Compensation
Committee
The Forza Compensation Committee consists of Kevin
Schuyler, Neil Ross and Marcia Kull. Mr. Schuyler serves as the chair of the Forza Compensation Committee. All of the members of the Forza
Compensation Committee are independent, as that term is defined under the rules of Nasdaq. The Forza Compensation Committee oversees Forza’s
compensation policies, plans and benefits programs. The Forza Compensation Committee also:
| |
● |
oversees Forza’s overall compensation philosophy and compensation policies, plans and benefit programs; |
| |
● |
reviews and recommends to the Forza Board of Directors for approval compensation for Forza’s executive officers and directors; |
| |
● |
prepares the compensation committee report that the SEC would require to be included in Forza’s annual proxy statement if Forza were no longer deemed to be an emerging growth company or a smaller reporting company; and |
| |
● |
administers Forza’s equity compensation plans. |
The Forza Compensation Committee operates under a
written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy of which is available on Forza’s
website at www.forzax1.com.
Forza Nominating and Corporate Governance Committee
The members of the Forza Nominating and Corporate
Governance Committee consist of Neil Ross, Marcia Kull and Kevin Schuyler. Neil Ross serves as the chair of the Forza Nominating and Corporate
Governance Committee. Each is independent, as that term is defined under the rules of Nasdaq. The Forza Nominating and Corporate Governance
Committee oversees and assists the Forza Board of Directors in reviewing and recommending nominees for election as directors. Specifically,
the Forza Nominating and Corporate Governance Committee:
| |
● |
identifies, evaluates and makes recommendations to the Forza Board of Directors regarding nominees for election to the Forza Board of Directors; |
| |
● |
considers and make recommendations to the Forza Board of Directors regarding the composition of the Forza Board of Directors and its committees; |
| |
● |
reviews developments in Forza’s corporate governance practices; |
| |
● |
evaluates the adequacy of Forza’s corporate governance practices and reporting; and |
| |
● |
evaluates the performance of the Forza Board of Directors and of individual directors. |
Candidates for director to the Forza Board of Directors
should have certain minimum qualifications, including the ability to understand basic financial statements, being over 21 years of age,
having relevant business experience (taking into account the business experience of the other directors), and having high moral character.
The Forza Nominating and Corporate Governance Committee retains the right to modify these minimum qualifications from time to time.
In evaluating an incumbent director whose term of
office is set to expire, the Forza Nominating and Corporate Governance Committee reviews such director’s overall service to Forza
during such director’s term, including the number of meetings attended, level of participation, quality of performance, and any
transactions with Forza engaged in by such director during his or her term.
When selecting a new director nominee, the Forza Nominating and Corporate Governance
Committee first determines whether the nominee must be independent or whether the candidate must qualify as an “audit committee
financial expert.” The Forza Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of
potential candidates, but may also engage, if it deems appropriate, a professional search firm to assist in the identification of qualified
director candidates. The Forza Nominating and Corporate Governance Committee also will consider nominees recommended by Forza’s stockholders.
The Forza Nominating and Corporate Governance Committee
does not distinguish between nominees recommended by Forza’s stockholders and those recommended by other parties. In considering
any person recommended by one of Forza’s stockholders, the Forza Nominating and Corporate Governance Committee will look for the
same qualifications that it looks for in any other person that it is considering for a position on the Forza Board of Directors. The Forza
Nominating and Corporate Governance Committee evaluates the suitability of potential nominees, taking into account the current board composition,
including expertise, diversity and the balance of inside and independent directors. The Forza Nominating and Corporate Governance Committee
does not have a set policy or process for considering diversity in identifying nominees, but endeavors to establish a diversity of background
and experience in a number of areas of core competency, including business judgment, management, accounting, finance, knowledge of Forza’s
industry, strategic vision, research and development and other areas relevant to its business.
The Forza Nominating and Corporate Governance Committee
operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq, a copy of which is
available on Forza’s website at www.forzax1.com.
Risk Oversight
In its governance role, and particularly in exercising
its duty of care and diligence, the Forza Board of Directors is responsible for ensuring that appropriate risk management policies and
procedures are in place to protect Forza’s assets and business. The Forza Board of Directors has broad and ultimate oversight responsibility
for Forza’s risk management processes and programs and executive management is responsible for the day-to-day evaluation and management
of risks to Forza.
Forza Code of Conduct and Ethics
Forza has adopted a written code of conduct and ethics
(the “Forza Code of Conduct”) that applies to Forza’s directors, officers and employees, including Forza’s principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The
Forza Code of Conduct is available on Forza’s website at www.forzax1.com. Forza intends to disclose future amendments to such code,
or any waivers of its requirements, applicable to any principal executive officer, principal financial officer, principal accounting officer
or controller or persons performing similar functions or Forza’s directors on Forza’s website identified above. The inclusion
of Forza’s website address in this Joint Proxy Statement/Prospectus does not include or incorporate by reference the information
on Forza’s website herein. Forza will provide any person, without charge, upon request, a copy of the Forza Code of Conduct. Such
requests should be made in writing to the attention of Glenn Sonoda, Secretary, Forza X1, Inc., 3101 US-1 Fort Pierce, Florida 34982.
Limitation of Liability and Indemnification
Forza’s Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws provide that Forza will indemnify Forza’s directors and officers, and may indemnify
Forza’s employees and other agents, to the fullest extent permitted by Delaware law. Delaware law prohibits Forza’s Amended
and Restated Certificate of Incorporation from limiting the liability of Forza’s directors for the following:
| |
● |
any breach of the director’s duty of loyalty to Forza or to Forza’s stockholders; |
| |
● |
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; |
| |
● |
unlawful payment of dividends or unlawful stock repurchases or redemptions; and |
| |
● |
any transaction from which the director derived an improper personal benefit. |
If Delaware law is amended to authorize corporate
action further eliminating or limiting the personal liability of a director, then the liability of Forza’s directors will be eliminated
or limited to the fullest extent permitted by Delaware law, as so amended. Forza’s Amended and Restated Certificate of Incorporation
does not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other
forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director’s responsibilities
under any other laws, such as the federal securities laws or other state or federal laws. Under Forza’s Amended and Restated Bylaws,
Forza is also empowered to purchase insurance on behalf of any person whom Forza is required or permitted to indemnify.
In the case of an action or proceeding by or in the
right of Forza’s company or any of Forza’s subsidiaries, no indemnification will be provided for any claim where a court determines
that the indemnified party is prohibited from receiving indemnification. Forza believes that these charter and bylaw provisions are necessary
to attract and retain qualified persons as directors and officers.
The limitation of liability and indemnification provisions
in Forza’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws may discourage stockholders from bringing
a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against
directors and officers, even though an action, if successful, might benefit Forza and Forza’s stockholders. Moreover, a stockholder’s
investment may be harmed to the extent Forza pays the costs of settlement and damage awards against directors and officers pursuant to
these indemnification provisions.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to Forza’s directors, officers and controlling persons pursuant to the foregoing provisions,
or otherwise, Forza has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of Forza’s directors or
officers as to which indemnification is being sought, nor is Forza aware of any pending or threatened litigation that may result in claims
for indemnification by any director or officer.
In addition to the indemnification that will be provided
for in Forza’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, the employment agreements with
certain of Forza’s executive officers include indemnification provisions providing for rights of indemnification.
FORZA EXECUTIVE COMPENSATION
Forza’s named executive officers for the year
ended December 31, 2023, which consisted of Forza’s principal executive officer and the next most highly compensated executive officers,
were:
| |
● |
Joseph C. Visconti, Interim Chief Executive Officer, Executive Chairman and Chief of Product Development |
| |
● |
Jim Leffew, Former President and Former Chief Executive Officer |
| |
● |
Carrie Gunnerson, Former Interim Chief Financial Officer |
Forza Summary Compensation Table
The following table sets forth information regarding
the compensation that was paid to Forza’s named executive officers during the years ended December 31, 2023 and December 31, 2022.
| Name and Principal Position | |
Year | |
Salary ($) | |
Bonus ($) | |
Option
Awards (1) | |
All Other
Compensation ($) | |
Total ($) |
| Joseph C. Visconti (2) | |
| 2023 | | |
| 75,000 | | |
| — | | |
| 80,016 | | |
| — | | |
| 155,016 | |
| Interim Chief Executive Officer, Executive Chairman and Chief of Product Development | |
| 2022 | | |
| 27,115 | | |
| — | | |
| 1,742,757 | | |
| — | | |
| 1,769,872 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Jim Leffew (3) (4) | |
| 2023 | | |
| 250,000 | | |
| — | | |
| 80,016 | | |
| 13,065 | | |
| 343,081 | |
| Former President and Former Chief Executive Officer | |
| 2022 | | |
| 225,961 | | |
| 10,000 | | |
| 1,742,757 | | |
| 9,354 | | |
| 1,988,072 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Carrie Gunnerson (5) | |
| 2023 | | |
| — | | |
| — | | |
| 13,892 | | |
| — | | |
| 13,892 | |
| Former Interim Chief Financial Officer | |
| 2022 | | |
| — | | |
| — | | |
| 107,516 | | |
| — | | |
| 107,516 | |
| (1) |
The
amounts in the “Option Awards” column reflect the dollar amounts of the grant date fair value for the financial statement
reporting purposes for stock options for the fiscal year ended December 31, 2023 in accordance with ASC 718. The fair value of the
options was determined using the Black-Scholes model. For a discussion of the assumptions used in computing this valuation, see Note
12 of the Notes to Financial Statements in the Forza consolidated audited financial statement for the years ended December 31, 2023
and 2022 included in this Joint Proxy Statement/ Prospectus. |
| |
|
| (2) |
Mr.
Visconti was appointed Forza’s Executive Chairman and Chief of Product Development in July 2022. In March 2024, Mr. Visconti
was appointed as Forza’s Interim Chief Executive Officer upon the resignation of Mr. Leffew. |
| (3) |
Mr. Leffew was appointed Forza’s Chief Executive Officer in July 2022. On March 6, 2024, Mr. Leffew notified Forza of his decision to resign from his position as Chief Executive Officer. |
| |
|
| (4) |
Consists of $13,065 and $9,354 of health insurance expenses
paid in 2023 and 2022. |
| |
|
| (5) |
During the year ended December 31, 2023 and 2022, Forza did not pay any cash compensation for services rendered by Mrs. Gunnerson, however Mrs. Gunnerson did receive compensation from Twin Vee for services performed for Forza and for Twin Vee and an option grant. Mrs. Gunnerson served as Forza’s Chief Financial Officer until the appointment of Ms. Camacho in August 2022 and was appointed as Forza’s Interim Chief Financial Officer on February 6, 2023, upon the resignation of Ms. Camacho. On March 4, 2024, Mrs. Gunnerson notified Forza of her decision to resign, effective May 31, 2024, from her position as Interim Chief Financial Officer of Forza. |
Forza Outstanding Equity Awards at Fiscal
Year-End (December 31, 2023)
The following table provides information about the
number of outstanding equity awards held by each of Forza’s named executive officers as of December 31, 2023:
| | |
Option Awards | |
| |
Stock Awards |
| Name | |
Number of Securities Underlying Unexercised Options (Exercisable) | |
Number of Securities Underlying Unexercised Options (Unexercisable) | |
Option Exercise Price | |
Option Expiration Date | |
Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested | |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested |
| | |
| |
| |
| |
| |
| |
|
| Joseph C. Visconti | |
| 6,453 | | |
| 137,547 | (4) | |
| 0.70 | | |
10/03/2033 | |
| — | | |
| — | |
| Interim Chief Executive Officer, Executive Chairman and Chief of Product Development | |
| 188,889 | | |
| 211,111 | (2) | |
| 5.00 | | |
8/10/2032 | |
| — | | |
| — | |
| | |
| 33,333 | | |
| 66,667 | (3) | |
| 1.33 | | |
12/14/2032 | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| Jim Leffew | |
| 6,453 | | |
| 137,547 | (4) | |
| 0.70 | | |
10/03/2033 | |
| — | | |
| — | |
| Former President and Former Chief Executive Officer | |
| 188,889 | | |
| 211,111 | (2) | |
| 5.00 | | |
8/10/2032 | |
| | | |
| | |
| | |
| 33,333 | | |
| 66,667 | (3) | |
| 1.33 | | |
12/14/2032 | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| Carrie Gunnerson | |
| 1,389 | | |
| 23,611 | (4) | |
| 0.70 | | |
10/03/2033 | |
| — | | |
| — | |
| Former Interim Chief Financial Officer | |
| 33,333 | | |
| 66,667 | (3) | |
| 1.33 | | |
12/14/2032 | |
| | | |
| | |
| |
(1) |
Mrs. Gunnerson served as Forza’s Chief Financial Officer until the appointment of Ms. Camacho in August 2022 and was appointed as Forza’s Interim Chief Financial Officer on February 6, 2023 upon the resignation of Ms. Camacho. |
| |
|
|
| |
(2) |
On August 11, 2022, options were granted, under the Forza 2022 Plan, vesting monthly over 3 years. Mr. Leffew resigned as Chief Executive Officer on March 6, 2024. |
| |
|
|
| |
(3) |
On December 15, 2022, options were granted, under the Forza 2022 Plan, vesting monthly over 3 years. |
| |
|
|
| |
(4) |
On October 4, 2023, options were granted, under the Forza 2022 Plan, vesting monthly over 3 years. |
| |
|
|
| |
(5) |
On March 4, 2024, Mrs. Gunnerson provided notice of her resignation as Interim Chief Financial Officer, effective May 31, 2024. |
Employment Arrangements with Forza’s Named
Executive Officers
Joseph Visconti
Upon
the completion of Forza’s initial public offering, Forza entered into a five-year employment
agreement with Mr. Visconti (the “Visconti Forza Employment Agreement”). Under
the Visconti Forza Employment Agreement, Mr. Visconti serves as Forza’s Executive Chairman
and Chief of Product Development. In March 2024, Mr. Visconti began serving as the Interim
Chief Executive Officer of Forza. He receives an annual base salary of $75,000 and is eligible
to receive an annual performance cash bonus with a target amount equal to 100% of his annual
base salary, based upon achievement of performance goals established by the compensation
committee of the Forza Board of Directors. In addition, Mr. Visconti was granted a stock
option to purchase 400,000 shares of Forza Common Stock under the Forza 2022 Plan, which
will vest monthly over a three-year period subject to continued employment through each vesting
date.
The Visconti Forza Employment Agreement provides that
Mr. Visconti is eligible to participate in all benefit and fringe benefit plans generally made available to Forza’s other executive
officers.
The Visconti Forza Employment Agreement provides that
it shall continue until terminated (i) by mutual agreement; (ii) due to death or disability of Mr. Visconti; (iii) by Mr. Visconti without
good reason upon 90 days written notice to Forza; (iv) by Forza for cause (as defined in the Visconti Forza Employment Agreement); (v)
by Forza without cause; or (vi) by Mr. Visconti for good reason (as defined in the Visconti Forza Employment Agreement).
Pursuant to the Visconti Forza Employment Agreement,
Mr. Visconti is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He is also bound by confidentiality
provisions.
In the event of a termination by Forza without cause
or a termination by Mr. Visconti for good reason other than in connection with a change in control, Mr. Visconti will receive: an aggregate
of twelve months of salary continuation at his then-current base annual salary, paid out in equal installments over a 6 month period;
payment of any amount of annual bonus accrued for the year prior to the date of termination; payment of the bonus Mr. Visconti would have
received based on the attainment of performance goals had he remained employed through the end of the year of termination, pro-rated based
on the number of days in the termination year that Mr. Visconti was employed by Forza (paid when Forza’s other senior executives
receive payment of their annual bonuses); reimbursement of COBRA premiums for up to twelve months; and full vesting for any outstanding,
unvested equity awards granted under the Forza 2022 Plan. Mr. Visconti’s outstanding vested stock options in Forza will generally
remain exercisable no longer than six months following such a termination.
In the event of a termination by Forza without cause
or a resignation by Mr. Visconti for good reason within twelve months following a change in control, Mr. Visconti will receive an aggregate
of 18 months of salary continuation at his then-current base annual salary, paid out in equal installments over a twelve month period;
payment of any amount of annual bonus accrued for the year prior to the year of termination; payment of a pro-rated target annual bonus
for the year of termination based on the number of days in the termination year that Mr. Visconti was employed by Forza; payment of one
time his then-current target annual bonus; reimbursement of COBRA premiums for up to 18 months; and full vesting for any outstanding,
unvested equity awards granted under the Forza 2022 Plan. Mr. Visconti’s outstanding vested stock options will generally remain
exercisable no longer than six months following such a termination.
The receipt of any termination benefits described
above is subject to Mr. Visconti’s execution of a release of claims in favor of Forza, a form of which is attached as an exhibit
to the Visconti Forza Employment Agreement.
In the event of Mr. Visconti’s termination due
to death or disability, Mr. Visconti will receive full vesting for any outstanding, unvested equity awards granted under the Forza 2022
Plan. Mr. Visconti’s outstanding vested stock options will generally remain exercisable no longer than six months following such
a termination.
Jim Leffew
Employment
Agreement with Former Chief Executive Officer
Forza
had entered into a three-year employment agreement with Mr. Leffew (the “Leffew Employment
Agreement”) effective as of December 15, 2021 (the “Effective Date”) as
amended on July 22, 2022. Under the Leffew Employment Agreement, as amended Mr. Leffew serves
as Forza’s President and Chief Executive Officer. He receives an annual base salary
of $125,000 and is eligible to receive an annual performance cash bonus with a target amount
equal to 100% of his annual base salary, based upon achievement of performance goals established
by the compensation committee of the board of directors. In addition, upon the completion
of the Forza initial public offering, Mr. Leffew’s annual base salary was increased
to $250,000 and he will be granted a stock option to purchase 400,000 shares of Forza Common
Stock under Forza’s proposed 2022 Stock Option Plan, which will vest pro rata on
a monthly basis over a three-year period subject to continued employment through each vesting
date.
The Leffew Employment Agreement provides that Mr.
Leffew will be eligible to participate in all benefit and fringe benefit plans generally made available to Forza’s other executive
officers. In addition, he is entitled to four weeks of paid vacation per year.
The Leffew Employment Agreement provides that it shall
continue until terminated (i) by mutual agreement; (ii) due to death or disability of Mr. Leffew; (iii) by Mr. Leffew without good reason
upon 90 days written notice to Forza; (iv) by Forza for cause (as defined in the Leffew Employment Agreement); (v) by Forza without cause;
or (vi) by Mr. Leffew for good reason (as defined in the Leffew Employment Agreement).
Pursuant to the Leffew Employment Agreement, Mr. Leffew
is subject to a one-year post-termination non-compete and non-solicit of employees and clients. He is also bound by confidentiality provisions.
In the event of a termination by Forza without cause
or a termination by Mr. Leffew for good reason during the first six months following the Effective Date, he will receive a severance payment
equal to his monthly base salary as is in effect on the termination date multiplied by three (less applicable tax withholdings), such
amounts to be paid out monthly in substantially equal installments over the three month period following such termination in accordance
with Forza’s normal payroll policies. If Mr. Leffew’s employment is terminated by Forza without cause or if he resigns for
Good Reason after the first six months following the Effective Date, he will receive a severance payment equal to his monthly base salary
as is in effect on the termination date multiplied by six (less applicable tax withholdings), such amounts to be paid out monthly in substantially
equal installments over the six month period following such termination in accordance with Forza’s normal payroll policies.
The receipt of any termination benefits described
above is subject to Mr. Leffew’s execution of a release of claims in favor of Forza, a form of which is attached as an exhibit to
the Leffew Employment Agreement.
In the event of Mr. Leffew’s termination due
to death or disability, Mr. Leffew will receive full vesting for any outstanding, unvested equity awards granted under the Forza 2022
Plan. Mr. Leffew’s outstanding vested stock options will generally remain exercisable no longer than six months following such a
termination.
Mr. Leffew resigned as Forza’s Chief Executive
Officer in March 2024.
Carrie Gunnerson
Employment Agreement with Twin Vee
Twin Vee entered into a five-year employment agreement
with Ms. Gunnerson (the “Gunnerson Employment Agreement”) effective in October 2021. Under the Gunnerson Employment Agreement,
Ms. Gunnerson serves as Twin Vee’s Chief Financial Officer. She receives an annual base salary of $175,000 and is eligible to receive
an annual performance cash bonus with a target amount equal to 30% of her annual base salary, based upon achievement of performance goals
established by the compensation committee of Twin Vee’s board of directors. Ms. Gunnerson also received a stock option to purchase
136,000 shares of Twin Vee Common Stock under the Twin Vee 2021 Plan, vesting monthly over a five-year period subject to continued employment
through each vesting date. Ms. Gunnerson also received a stock option to purchase 100,000 shares of Forza Common Stock for her provision
of consulting services to Forza.
The Gunnerson Employment Agreement provides that Ms.
Gunnerson would be eligible to participate in all benefit and fringe benefit plans generally made available to Twin Vee’s other
executive officers. In addition, she is entitled to four weeks of paid vacation per year.
The Gunnerson Employment Agreement provides that it
shall continue until terminated (i) by mutual agreement; (ii) due to death or disability of Ms. Gunnerson; (iii) by Ms. Gunnerson without
good reason upon 90 days written notice to Twin Vee; (iv) by Twin Vee for cause (as defined in the Gunnerson Employment Agreement); (v)
by Twin Vee without cause; or (vi) by Ms. Gunnerson for good reason (as defined in the Gunnerson Employment Agreement).
Pursuant to the Gunnerson Employment Agreement, Ms.
Gunnerson is subject to a one-year post-termination non-compete and non-solicit of employees and clients. She is also bound by confidentiality
provisions.
In the event of a termination by Twin Vee without
cause or a termination by Ms. Gunnerson for good reason during the first six (6) months following the effective date of the Gunnerson
Employment Agreement, Ms. Gunnerson will receive an aggregate of three months of salary continuation at her then-current base annual salary,
paid out in equal installments over a three-month period. In the event of a termination by Twin Vee without cause or a termination by
Ms. Gunnerson for good reason after the first six (6) months following the effective date of the Gunnerson Employment Agreement, Ms. Gunnerson
will receive an aggregate of six months of salary continuation at her then-current base annual salary, paid out in equal installments
over a six-month period. Ms. Gunnerson’s outstanding vested stock options will generally remain exercisable no longer than six months
following such a termination.
The receipt of any termination benefits described above is subject to Ms. Gunnerson’s
execution of a release of claims in favor of Forza, a form of which is attached as an exhibit to the Gunnerson Employment Agreement.
In the event of Ms. Gunnerson’s termination
due to death or disability, Ms. Gunnerson will receive full vesting or any outstanding, unvested equity awards granted under the Twin
Vee 2021 Plan. Ms. Gunnerson’s outstanding vested stock options will generally remain exercisable no longer than six months following
such a termination.
Employment Agreements with Forza’s Current
Executive Officers
Michael Dickerson, Interim Chief Financial Officer
Mr. Dickerson has been Forza’s
Chief Financial & Administrative Officer since April 4, 2024.
Mr. Dickerson does not have an employment agreement
with Forza. See “Twin Vee Executive Compensation-Employment Agreements” for a description of Mr. Dickerson’s employment
agreement with Twin Vee.
Employee Benefit and Stock Plans
Simple IRA Plan
Forza maintains a Simple IRA retirement savings plan
for the benefit of Forza’s employees, including Forza’s named executive officers, who satisfy certain eligibility requirements.
Under the Simple IRA, eligible employees may elect to defer a portion of their compensation, within the limits prescribed by the Code,
on a pre-tax basis through contributions to the Simple IRA plan. The Simple IRA plan authorizes employer safe harbor matching contributions
equal to 3% of covered compensation for eligible employees. The Simple IRA plan is intended to qualify under Sections 401(a) and
501(a) of the Code. As a tax-qualified retirement program, contributions to the Simple IRA plan and earnings on those contributions are
not taxable to the employees until distributed from the Simple IRA plan.
2022 Stock Incentive Plan
Forza adopted the Forza X1 2022 Stock Incentive Plan,
or the Forza 2022 Plan. The principal provisions of the Forza 2022 Plan are summarized below.
Administration
The Forza 2022 Plan vests broad powers in a committee
to administer and interpret the Forza 2022 Plan. The Forza Board of Directors has initially designated the compensation committee to administer
the Forza 2022 Plan. Except when limited by the terms of the Forza 2022 Plan, the compensation committee has the authority to, among other
things: select the persons to be granted awards; determine the type, size and term of awards; establish performance objectives and conditions
for earning awards; determine whether such performance objectives and conditions have been met; and accelerate the vesting or exercisability
of an award. In its discretion, the compensation committee may delegate all or part of its authority and duties with respect to granting
awards to one or more of Forza’s officers, subject to certain limitations and provided applicable law so permits.
The Forza Board of Directors may amend, alter or discontinue
the Forza 2022 Plan and the compensation committee may amend any outstanding award at any time; provided, however, that no such amendment
or termination may adversely affect awards then outstanding without the holder’s permission. In addition, any amendments seeking
to increase the total number of shares reserved for issuance under the Forza 2022 Plan or modifying the classes of participants eligible
to receive awards under the Forza 2022 Plan will require ratification by Forza’s stockholders in accordance with applicable law.
Additionally, as described more fully below, neither the compensation committee nor the board of directors is permitted to reprice outstanding
options or stock appreciation rights without shareholder consent.
Eligibility
Any of Forza’s employees, directors, consultants,
and other service providers, or those of Forza’s affiliates, are eligible to participate in the Forza 2022 Plan and may be selected
by the compensation committee to receive an award.
Vesting
The compensation committee determines the vesting
conditions for awards. These conditions may include the continued employment or service of the participant, the attainment of specific
individual or corporate performance goals, or other factors as determined in the compensation committee’s discretion (collectively,
“Vesting Conditions”).
Shares of Stock Available for Issuance
Subject to certain adjustments, the maximum number
of shares of Common Stock that may be issued under the Forza 2022 Plan in connection with awards is 1,970,250 shares, which takes into
account awards made available on January 1, 2024 due to the evergreen provision in the Forza 2022 Plan. In addition, the maximum number
of shares of Common Stock that may be issued under the Forza 2022 Plan will automatically increase on January 1 of each calendar year
for a period of ten years commencing on January 1, 2024 and ending on (and including) January 1, 2033, 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; provided,
however that the board of directors may act prior to January 1 of a given calendar year to provide that the increase for such year will
be a lesser number of shares of Common Stock. Forza has issued options to purchase an aggregate of 1,441,500 shares of Forza Common Stock.
All available shares may be utilized toward the grant of any type of award under the Forza 2022 Plan. The Forza 2022 Plan imposes a $250,000
limitation on the total grant date fair value of awards granted to any non-employee director in his or her capacity as a non-employee
director in any single calendar year.
DIRECTOR COMPENSATION
2023 Director Compensation
Prior
to the closing of Forza’s initial public offering in August 2022, Forza’s directors
did not receive any compensation for their service as directors. After the closing of Forza’s
IPO, directors who are not employees received compensation for their service as directors,
including service as members of each committee on which they serve.
Cash Compensation
All non-employee directors are entitled to receive
the following cash compensation for their services:
| |
● |
$10,000 per year for service as a board member; |
| |
● |
$20,000 per year additionally for service as chair of the audit committee; |
| |
● |
$7,500 per year additionally for service as member of the audit committee (excluding committee chair); |
| |
● |
$15,000 per year additionally for service as chair of the compensation committee; |
| |
● |
$5,000 per year additionally for service as member of the compensation committee (excluding committee chair); |
| |
● |
$7,500 per year additionally for service as chair of the nominating and corporate governance committee; |
| |
● |
$3,000 per year additionally for service as member of the nominating and corporate governance committee (excluding committee chair); |
All cash payments to non-employee directors who served
in the relevant capacity at any point during the immediately preceding prior fiscal quarter will be paid quarterly in arrears. A non-employee
director who served in the relevant capacity during only a portion of the prior fiscal quarter will receive a pro-rated payment of the
quarterly payment of the applicable cash retainer.
Equity Compensation
Effective
upon the closing of Forza’s initial public offering, each non-employee director received
an initial grant of non-qualified stock options under the Forza 2022 Plan to purchase 5,500
shares of Forza Common Stock, which options vest pro rata on a monthly basis
over a period of twelve months from the grant date, subject to the grantee’s continued
service through that date.
Director Compensation
Table
The following table sets forth information regarding
the compensation earned for service on the Forza Board of Directors by Forza’s non-employee directors during the year ended December
31, 2023. The compensation for each of Messrs. Visconti and Leffew as an executive officer is set forth above under “—Summary
Compensation Table.” Messrs. Visconti and Leffew receive no compensation for service as a director.
(a)
Name | |
(b)
Fees Earned or Paid in Cash ($) | |
(c)
Stock Awards ($) | |
(d)
Option Awards(1) ($) | |
(e)
Non-Equity Incentive Plan Compensation ($) | |
(f)
Nonqualified Deferred Compensation Earnings ($) | |
(g)
All Other Compensation ($) | |
(h)
Total ($) |
| Marcia Kull | |
| 25,500 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 25,500 | |
| Neil Ross | |
| 30,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 30,000 | |
| Kevin Schuyler | |
| 48,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 48,000 | |
| |
(1) |
The
amounts in the “Option Awards” column reflect the dollar amounts of the grant date fair value for the financial statement
reporting purposes for stock options for the fiscal year ended December 31, 2023 in accordance with ASC 718. The fair value of the
options was determined using the Black-Scholes model. For a discussion of the assumptions used in computing this valuation, see Note
12 of the Notes to Financial Statements in the Forza consolidated audited financial statement for the years ended December 31, 2023
and 2022 included in this Joint Proxy Statement/ Prospectus. |
| |
(2) |
As of December 31, 2023, the following are the outstanding aggregate number of option awards held by each of Forza’s directors who were not also Named Executive Officers: |
| Name | |
Option Awards (#) |
| Marcia Kull | |
| 5,500 | |
| Neil Ross | |
| 5,500 | |
| Kevin Schuyler | |
| 5,500 | |
During 2023, each non-employee member of the Board of Directors receives
an annual cash fee of $5,000, all non-employee directors receive an annual cash fee of $5,000, $4,000 and $3,000 for service on the Audit,
Compensation and Nominating and Corporate Governance Committee, respectively, and the Chairman of the Audit, Compensation and Nominating
and Corporate Governance Committee receives a cash fee of $12,000, $10,000 and $5,000, respectively.
MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF FORZA
Results of Operations
Comparison of the Three Months Ended June 30,
2024 and 2023
The following table provides
certain selected financial information for the periods presented:
| | |
June 30, | |
|
| | |
2024 | |
2023 | |
Change | |
% Change |
| Cost of sales | |
$ | 26,841 | | |
$ | 40,796 | | |
$ | (13,955 | ) | |
| (34 | %) |
| Gross loss | |
$ | (26,841 | ) | |
$ | (40,796 | ) | |
$ | 13,955 | ) | |
| (34 | %) |
| Operating expenses | |
$ | 2,916,563 | | |
$ | 1,578,723 | | |
$ | 1,337,840 | | |
| 85 | % |
| Loss from operations | |
$ | (2,943,404 | ) | |
$ | (1,619,519 | ) | |
$ | (1,323,885 | ) | |
| 82 | % |
| Other income | |
$ | 111,850 | | |
$ | 135,865 | | |
$ | (24,015 | ) | |
| (18 | %) |
| Net loss | |
$ | (2,831,554 | ) | |
$ | (1,483,654 | ) | |
$ | (1,347,900 | ) | |
| 91 | % |
| Net loss per common share: Basic and Diluted | |
$ | (0.18 | ) | |
$ | (0.13 | ) | |
$ | (0.05 | ) | |
| 42 | % |
| Weighted average number of shares of Common Stock outstanding | |
| 15,754,774 | | |
| 11,446,391 | | |
| 4,308,383 | | |
| | |
Operating Expenses
Operating expenses for the three months ended June 30, 2024 increased by $1,337,840
due primarily to an asset impairment charge of $1,674,000. Before the impact of this charge, operating expenses decreased by $336,160
to $1,242,563 as compared to $1,578,723 for the three months ended June 30, 2023. Operating expenses include salaries, selling, general,
and administrative, research and development, professional fees, and depreciation. Research and development costs for the three months
ended June 30, 2024 were $340,907, as compared to $261,473 for the three months ended June 30, 2023. Forza’s research and development
expenses in the second quarter of 2024 included a valuation charge to reserve for the value of R&D electric motors of $175,820. Excluding
the impact of this charge, research & development charges declined $96,386 for the quarter, due to large expenditures in the second
quarter of 2023 when we were in the early stages of development of Forza’s prototype electric motors and control systems. Salaries
and wages for the three months ended June 30, 2024 were $432,308, as compared to $864,838 for the three months ended June 30, 2023, and
were primarily related to reductions in staffing in engineering and design. For the three months ended June 30, 2024, salaries and wages
included $183,815 of stock option expense, as compared to $341,817 for the three months ended June 30, 2023. Forza’s expenses for
selling, general, and administrative for the three months ended June 30, 2024, were $247,464, as compared to $334,315 for the three months
ended June 30, 2023. Professional fees for the three months ended June 30, 2024 were $158,077, as compared to $69,867 for the three months
ended June 30, 2023. Depreciation and amortization for the three months ended June 30, 2024 was $63,807, as compared to $48,230 for the
three months ended June 30, 2023, the increase being attributable to the addition of equipment and tooling.
Other expense and income
Interest expense was $813 and
$1,493, respectively for the three months ended June 30, 2024 and 2023.
Because
the proceeds from Forza’s initial public offering and secondary offering have been
partly invested in money market vehicles, those monies earned dividend income. Dividend income
was $112,663 and $137,358, respectively, for the three months ended June 30, 2024 and 2023.
Comparison of the Six Months Ended June 30,
2024 and 2023
The following table provides
certain selected financial information for the periods presented:
| | |
Six Months Ended June 30, | |
| |
|
| | |
2024 | |
2023 | |
$ | |
% Change |
| Cost of sales | |
$ | 56,413 | | |
$ | 90,737 | | |
$ | (34,324 | ) | |
| (38 | %) |
| Gross loss | |
$ | (56,413 | ) | |
$ | (90,737 | ) | |
$ | 34,324 | | |
| (38 | %) |
| Operating expenses | |
$ | 4,202,330 | | |
$ | 3,658,533 | | |
$ | 543,797 | | |
| 15 | % |
| Loss from operations | |
$ | (4,258,743 | ) | |
$ | (3,749,270 | ) | |
$ | (509,473 | ) | |
| 14 | % |
| Other income | |
$ | 259,352 | | |
$ | 260,484 | | |
$ | (1,132 | ) | |
| (0 | %) |
| Net loss | |
$ | (3,999,391 | ) | |
$ | (3,488,786 | ) | |
$ | (510,605 | ) | |
| 15 | % |
| Net loss per common share: Basic and Diluted | |
$ | (0.25 | ) | |
$ | (0.32 | ) | |
$ | 0.06 | | |
| (20 | %) |
| Weighted average number of shares of common stock outstanding | |
| 15,754,774 | | |
| 10,950,863 | | |
| 4,803,911 | | |
| | |
Operating Expenses
Operating expenses for the six
months ended June 30, 2024 increased by $543,797 due primarily to an asset impairment charge during the second quarter of $1,674,000.
Excluding the impact of this charge, operating expenses decreased by $1,130,203 to $2,528,330 as compared to $3,658,533 for the six months
ended June 30, 2023. Operating expenses include salaries, selling, general, and administrative, research and development, professional
fees, and depreciation. Research and development costs for the six months ended June 30, 2024 were $510,105, as compared to $964,121 for
the six months ended June 30, 2023. Forza’s research and development expenses declined for the quarter, due to large expenditures
in the first half of 2023 when we were in the early stages of development of Forza’s prototype electric motors and control systems,
partially offset by an inventory valuation charge during the first six months of 2024 of $289,072. Salaries and wages for the six months
ended June 30, 2024 were $1,122,851, as compared to $1,727,602 for the six months ended June 30, 2023, and were primarily related to reductions
in staffing in engineering and design. For the six months ended June 30, 2024 salaries and wages included $476,956 of stock option expense,
as compared to $682,980 for the six months ended June 30, 2023. Forza’s expenses for selling, general, and administrative for the
six months ended June 30, 2024, were $524,516, as compared to $688,977 for the six months ended June 30, 2023. Professional fees for the
six months ended June 30, 2024 were $251,106, as compared to $193,907 for the six months ended June 30, 2023. Depreciation and amortization
for the six months ended June 30, 2024 was $119,752, as compared to $83,926 for the six months ended June 30, 2023, the increase being
attributable to the addition of equipment and tooling.
Other expense and income
Interest expense was $3,938 and
$1,784, respectively for the six months ended June 30, 2024 and 2023.
Because
the proceeds from Forza’s initial public offering and secondary offering are partly
invested in money market vehicles, those monies earn dividend income, interest income, and
capital gains. Dividend and interest income was $245,010 and $262,268, respectively, for
the six months ended June 30, 2024 and 2023. Net realized gains were $18,280 and zero, respectively,
for the three months ended June 30, 2024 and 2023.
Comparison of the Years Ended December 31, 2023 and 2022
The following table provides certain selected financial
information for the periods presented:
| | |
Years Ended December 31, | |
| |
|
| | |
2023 | |
2022 | |
Change | |
% Change |
| Net sales - related party | |
$ | 37,118 | | |
$ | — | | |
| 37,118 | | |
| — | |
| Cost of sales - related party | |
$ | 33,744 | | |
$ | — | | |
| 33,744 | | |
| — | |
| Cost of sales | |
$ | 123,893 | | |
$ | 232,744 | | |
| (108,851 | ) | |
| (47 | %) |
| Gross loss | |
$ | (120,519 | ) | |
$ | (232,744 | ) | |
| 112,225 | | |
| (48 | %) |
| Operating expenses | |
$ | 6,472,914 | | |
$ | 3,420,515 | | |
| 3,052,399 | | |
| 89 | % |
| Loss from operations | |
$ | (6,593,433 | ) | |
$ | (3,653,259 | ) | |
| (2,940,174 | ) | |
| 80 | % |
| Other income | |
$ | 660,320 | | |
$ | 23,178 | | |
| 637,142 | | |
| 2,749 | % |
| Net loss | |
$ | (5,933,113 | ) | |
$ | (3,630,081 | ) | |
| (2,303,032 | ) | |
| 63 | % |
| Net loss per common share: Basic and Diluted | |
$ | (0.44 | ) | |
$ | (0.44 | ) | |
| (0.01 | ) | |
| 2 | % |
Net Sales and Cost Sales
Forza’s net sales for the year ended December
31, 2023 and 2022, respectively were $37,118 and $0. Forza’s net sales were due to intercompany sales to Twin Vee, Forza’s
controlling shareholder. There were no sales to third parties during the years ended December 31, 2023 and 2022.
Gross Profit
Gross loss for the year ended December 31, 2023 and
2022, respectively was $120,519 and $232,744. The gross profit related to the intercompany sales was $3,374.
Operating Expenses
Operating expenses for the year ended December 31,
2023 increased by $3,052,399 to $6,593,433, compared to $3,420,515, for the year ended December 31, 2022. Operating expenses include salaries,
selling and general and administrative, research and development, professional fees and depreciation. All of Forza’s operating expenses
increased significantly over the prior period, as Forza increase Forza’s engineering staff, and moved into building and testing
complete motors and boats. Research and development fees for the year ended December 31, 2023 were $1,540,903 compared to $957,220, for
the year ended December 31, 2022. Salaries and wages for the year ended December 31, 2023 were $3,279,195 compared to $1,770,126, for
the year ended December 31, and most of which was paid to the designers of Forza’s fully electric motor, control system and boat.
For the year ended December 31, 2023 salaries and wages included $1,345,270 of stock option expense, compared to $458,346, for the year
ended December 31, 2022. Forza’s expenses for selling, general and administrative for the year ended December 31, 2023, were $1,112,920
compared to $473,900. Professional fees for the year ended December 31, 2023 were $353,996 compared to $159,304, as Forza carried the
costs of audit and legal fees of a public organization for an entire year compared to only a partial year in 2022. Depreciation for the
year ended December 31, 2023 was $185,900 compared to $59,965, for year ended December 31, 2022, this is due to the addition of assets
throughout 2023, Forza would anticipate continued increases as Forza purchases equipment, and molds. Forza have incurred and expect to
continue to incur significant costs in pursuit of Forza’s financing and construction of Forza’s new manufacturing facility.
Other expense and income
Interest expense for the years ended December 31,
2023 and 2022, respectively were $3,694 and $3,286.
Interest income for the years ended December 31, 2023
and 2022, respectively were $1,401 compared to $14,752.
Dividend income for the years ended December 31, 2023
and 2022, respectively were $507,794 and $43,294. Unrealized gain on marketable securities for the years ended December 31, 2023 and 2022,
respectively were $103,941, and $0. The realized gain on marketable securities for the years ended December 31, 2023 and 2022, respectively
were $50,878, and $0. These increases are due to increased interest rate and account balance throughout 2023.
For the year ended December 31, 2022, Forza recorded
a loss on the sales of assets of $31,582, this was the result of expense paid to secure land in Fort Pierce, Florida to build a new manufacturing
facility. It was determined that the costs associated with building on that lot were prohibitive, Forza cancelled the contract resulting
in the loss of $31,582.
Results of Operations and Known Trends or Future
Events
To date much of Forza’s operational activity
has been related to the design and build of prototype and testing, as such Forza does not have any sales or cost of goods sold. The design
of Forza’s new electric boat shell has been completed and Forza is now preparing to begin Forza’s production process utilizing
monohulls. The design of the motors and the motor control system is largely complete; however, the testing and iteration phase may result
in significant changes, improvements, and upgrades. To date Forza has not generated any revenues. Forza will not generate any operating
revenues until Forza completes the design, build and testing of Forza’s EV boats and commercialize them. As stated above, however,
Forza have engaged with several high-profile marine manufacturers and are offering Forza’s electrification expertise as a service.
Forza will generate non-operating income in the form of interest income on cash, and cash equivalents. Forza is uncertain on when
Forza will generate revenues from the sale of these fully integrated electric boat. Forza X1 continues to build and test prototype engines
and boats.
Liquidity and Capital Resources
The following table provide
selected financial data as of June 30, 2024 and December 31, 2023:
| | |
June 30, | |
December 31, | |
| |
|
| | |
2024 | |
2023 | |
Change | |
% Change |
| Cash and cash equivalents | |
$ | 8,188,879 | | |
$ | 9,821,531 | | |
$ | (1,632,652 | ) | |
| (16.6 | %) |
| Current assets | |
$ | 8,553,852 | | |
$ | 13,370,219 | | |
$ | (4,816,367 | ) | |
| (36.0 | %) |
| Current liabilities | |
$ | 585,243 | | |
$ | 842,594 | | |
$ | (257,351 | ) | |
| (30.5 | %) |
| Working capital | |
$ | 7,968,609 | | |
$ | 12,527,625 | | |
$ | (4,559,016 | ) | |
| (36.4 | %) |
As
of June 30, 2024, Forza had cash and cash equivalents, and working capital of $8,188,879
and $7,968,609, respectively, compared to $9,821,531 and $12,527,625, respectively, on December
31, 2023. Forza had incurred significant costs in pursuit of our construction of its new
manufacturing facility which it has been financing. Its management planned to use the proceeds
from Forza’s initial public offering and secondary offering to finance the expenses
related to the construction of the facility, which Forza is no longer pursuing. Forza believes
that its current capital resources will be sufficient to fund its operations while it pursues
strategic alternatives for its business and believes that its current capital resources will
be sufficient until {November 2025]. Forza expects to continue to incur net losses, and to
have cash outflows for at least the next 12 months.
As
of December 31, 2023, Forza had cash and cash equivalents, and working capital of $9,821,531
and $12,813,609, respectively, compared to $12,767,199 and $12,833,743, respectively, on
December 31, 2022. In August of 2022 Forza completed its initial public offering, which increased
Forza’s cash by approximately $15,231,000, and in June of 2023 Forza completed a secondary
offering, which increased Forza’s cash by approximately $6,930,000.
| | |
Six Months | |
| |
|
| | |
June 30, | |
| |
|
| | |
2024 | |
2023 | |
Change | |
% Change |
| Cash used in operating activities | |
$ | (1,526,246 | ) | |
$ | (2,882,869 | ) | |
$ | 1,356,623 | | |
| (47 | %) |
| Cash provided by (used in) investing activities | |
$ | 123,493 | | |
$ | (224,088 | ) | |
$ | 347,581 | | |
| (155 | %) |
| Cash (used in) provided by financing activities | |
$ | (229,899 | ) | |
$ | 6,856,078 | | |
$ | 7,085,977 | | |
| (103 | %) |
| | |
Years Ended | |
| |
|
| | |
December 31, | |
| |
|
| | |
2023 | |
2022 | |
Change | |
% Change |
| Cash used in operating activities | |
$ | (4,150,280 | ) | |
$ | (3,377,621 | ) | |
| (772,659 | ) | |
| 23 | % |
| Cash used in investing activities | |
$ | (5,727,892 | ) | |
$ | (606,726 | ) | |
| (5,121,166 | ) | |
| 844 | % |
| Cash provided by financing activities | |
$ | 6,932,504 | | |
$ | 14,948,261 | | |
| (8,015,757 | ) | |
| -54 | % |
Cash Flow from Operating Activities
During
the six months ending June 30, 2024 and 2023, Forza generated negative cash flows from operating
activities of $1,526,246 and $2,882,869, respectively. During the six months ending June
30, 2024, our cash used in operating activities was primarily a result of operating losses
incurred and a reduction in accrued liabilities since December 31, 2023.
During the years ended December 31, 2023 and 2022, Forza generated negative cash
flows from operating activities of $4,150,280 and $3,337,621, respectively. During the years ending December 31, 2023 and 2022, Forza
had a net loss of $5,933,113 and $3,630,081, respectively. During the year ended December 31, 2023 Forza’s cash used in operating
activities was impacted by an increase of inventory of $844,618, accounts payable of $12,208 and operating lease liabilities of $94,954.
The increase in inventory relates to a minimum purchase requirement of motors from Cascadia. During the year ended December 31, 2023,
Forza’s cash used in operating activities was impacted by an increase of prepaid expenses of $446,227, accrued liabilities of $369,641,
and by non-cash expenses of $1,918,372 due to depreciation, change in fair value of marketable securities, change in inventory reserve,
realized gain on sale of marketable securities, stock option expense and change of right-of-use.
Cash Flows from Investing Activities
For the six months ended June
30, 2024 net cash provided by investing activities was $123,493 resulting from redemptions of marketable securities more than offsetting
the purchase of property and equipment and building compared to a use of cash for the six months ended June 30, 2023 of $224,088 for the
purchase of property and equipment.
For the years ended December 31, 2023 and 2022, Forza used $5,727,892 and $606,726,
respectively, in investing activities, $2,826,901 for the purchase of marketable securities, and $2,797,050, for the purchase of property
and equipment, primarily expenses associated with construction of Forza’s new manufacturing facility in North Carolina.
Cash Flows from Financing Activities
During the six months ended
June 30, 2024, net cash used in financing activities was $229,899. During the six months ended June 30, 2023, net cash provided by financing
activities was $6,856,078 resulting primarily from the issuance of common stock.
During the year ended December 31, 2023, net cash
provided by financing activities was $6,932,504. The cash flow from financing activities for the year ended December 31, 2023 included
net proceeds of $6,929,552 from a follow on underwritten public offering in June 2023. During the year ended December 31,2022, net cash
provided by financing activities was $14,948,261, driven primarily by the net proceeds from Forza’s initial public offering.
Critical Accounting Estimates
This discussion and analysis
of Forza’s financial condition and results of operations is based on four financial statements, which have been prepared in accordance
with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires Forza
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Forza’s
estimates are based on Forza’s historical experience and on various other factors that Forza believes are reasonable under the circumstances,
that results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimated under different assumptions or conditions. While Forza’s significant
accounting policies are described in more detail in the notes to Forza’s financial statements included elsewhere in the Quarterly
Report on Form 10-Q, Forza believe that the following accounting policies are critical to understanding Forza’s historical and future
performance, as these policies relate to the more significant areas involving managements judgements and estimates.
Controls and Procedures
Forza is now currently required
to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. Forza is only required to comply
with the internal control over financial reporting requirements of the Sarbanes-Oxley Act for the twelve-month period ending December
31, 2023. Only in the event that Forza is deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an
emerging growth company, would Forza be required to comply with the independent registered public accounting firm attestation requirement.
Further, for as long as Forza remains an emerging growth company as defined in the JOBS Act, Forza intends to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement.
Revenue Recognition
Forza recognizes revenue when
obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. Revenue is measured
as the amount of consideration it expects to receive in exchange for a product.
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 June 30, 2024 and December 31, 2023, Forza had customer deposits of $6,175 and $5,700, respectively,
which is recorded as contract liabilities on the Condensed Balance Sheet. These deposits are not expected to be recognized as revenue
within a one-year period.
Use of Estimates
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) required management
to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those
estimates. Included in those estimates are assumptions about useful life of fixed assets.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments with original
maturities of three months or less at the time of purchase. On June 30, 2024, Forza had cash and cash equivalents of $8,188,879, and on
December 31, 2023, Forza had cash and cash equivalents of $9,821,531.
Property and Equipment
Property and equipment are stated
at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. The estimated
useful lives of property and equipment range from three to seven years. Upon sale or retirement, the cost and related accumulated depreciation
and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in the results of operations.
Repairs and maintenance expenses, which do not increase the useful lives of the assets, are charged to operations as incurred.
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.
Research and Development
Research and development costs
are expensed as incurred. For the three months ended June 30, 2024 and 2023, research and development costs were $340,907 and 261,473,
respectively. Such costs for the six months ended June 30, 2024 were $510,105, as compared to $964,121 for the six months ended June 30,
2023.
Advertising Costs
Advertising and marketing costs
are expensed as incurred. Such costs for the six months ended June 30, 2024 were $5,254, as compared to $62,896 for the six months ended
June 30, 2023. Such costs for the three months ended June 30, 2024 were $3,742, as compared to $50,340 for the three months ended June
30, 2023. Advertising and marketing costs are included in selling, general, and administrative expenses in the accompanying statements
of operations
Leases
Forza 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 Forza’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.
Forza 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. Forza’s lease terms may include options to extend or terminate the lease when it is reasonably certain
that Forza will exercise that option. Lease expenses for lease payments is recognized on a straight-line basis over the lease term.
Income Taxes
Forza is a C Corporation under
the Internal Revenue Code and a similar section of the state code.
All income tax amounts
reflect the use of the liability method under accounting for income taxes. Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus deferred taxes arising primarily from differences between
financial and tax reporting purposes.
Deferred income taxes, net of
appropriate valuation allowances, are determined using the tax rates expected to be in effect when the taxes are actually paid. Valuation
allowances are recorded against deferred tax assets when it is more likely than not that such assets will not be realized. When an uncertain
tax position meets the more likely than not recognition threshold, the position is measured to determine the amount of benefit or expense
to recognize in the financial statements.
In accordance with U.S GAAP,
Forza follows the guidance in FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes. At June 30, 2024, Forza does not believe
it has any uncertain tax positions that would require either recognition or disclosure in the accompanying financial statements.
Forza’s income tax returns
are subject to review and examination by federal, state and local governmental authorities.
Recent Accounting Pronouncements
All newly issued accounting
pronouncements not yet effective have been deemed either immaterial or not applicable.
OFF-BALANCE SHEET ARRANGEMENTS
Forza did not have during the
periods presented, and Forza does not currently have, any off-balance sheet arrangements, as defined under Securities and Exchange Commission
rules.
CERTAIN ADDITIONAL INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF
TWIN VEE, FORZA AND THE COMBINED COMPANY
Ownership of Twin Vee Common Stock Prior to the
Merger
The following table sets forth the beneficial ownership
of Twin Vee Common Stock as of [●], 2024 (the Twin Vee Record Date), by:
| |
● |
each person, or group of affiliated persons, who is known by Twin Vee to beneficially own more than 5% of Twin Vee Common Stock; |
| |
● |
each of the named executive officers listed in the Twin Vee Summary Compensation Table; |
| |
● |
each of Twin Vee’s directors; and |
| |
● |
all of Twin Vee’s current executive officers and directors as a group. |
As of [●], 2024, Twin Vee had 9,520,000 shares
of Twin Vee Common Stock outstanding.
Twin Vee has determined beneficial ownership in accordance
with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting
power or investment power with respect to those securities. In addition, the rules include shares of Twin Vee Common Stock issuable pursuant
to the exercise of profits interest units, options, warrants or other rights that are either immediately exercisable or exercisable on
or before [●], 2024, which is approximately 60 days after the Twin Vee Record Date. These shares are deemed to be outstanding and
beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person,
but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated,
the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially
owned by them, subject to applicable community property laws.
Unless otherwise indicated, the address of each beneficial
owner listed in the table below is c/o Twin Vee PowerCats Co., 3101 S. US-1 Ft. Pierce, Florida 34982.
| Name of Beneficial Owner | |
Number of Shares
Beneficially Owned | |
Percentage
of Shares Beneficially Owned |
| Named Executive Officers and Directors | |
| | | |
| | |
| Joseph Visconti (1) | |
| 2,797,366 | | |
| 29.38 | % |
| Preston Yarborough(2) | |
| 195,180 | | |
| 2.00 | % |
| James Melvin(3) | |
| 11,000 | | |
| * | |
| Kevin Schuyler(4) | |
| 6,863 | | |
| * | |
| Bard Rockenbach(5) | |
| 10,083 | | |
| * | |
| Neil Ross(3) | |
| 11,000 | | |
| * | |
| Carrie Gunnerson(6) | |
| 75,127 | | |
| * | |
| All current executive officers and directors as a group (6 persons) | |
| 3,031,492 | | |
| 31.84 | % |
| 5% Stockholders | |
| | | |
| | |
| | |
| | | |
| | |
| Marathon Micro Fund, L.P.(6) | |
| 950,000 | | |
| 9.98 | % |
| AWM Investment Company, Inc. and affiliates (7) | |
| 939,176 | | |
| 9.98 | % |
* Represents beneficial ownership of less than one
percent .
| (1) |
Joseph Visconti was issued 2,321,152 shares of Twin Vee Common Stock upon the consummation of the Merger between Twin Vee and Twin Vee Powercats, Inc. Mr. Visconti was granted an option to purchase 272,000 shares of Twin Vee Common Stock upon the consummation of the Twin Vee initial public offering, and was granted an additional option to purchase 250,000 shares of Twin Vee Common Stock on October 20, 2022. There are 388,832 shares of Twin Vee Common Stock that will vest and be exercisable within 60 days of the Twin Vee Record Date and are included in the number of shares of Twin Vee Common Stock beneficially owned by Mr. Visconti. |
| |
|
| (2) |
Mr. Yarborough was issued 38,357 shares of Twin Vee Common Stock upon the consummation of the Merger between Twin Vee and Twin Vee Powercats, Inc. Twin Vee granted an option to purchase 136,000 shares of Twin Vee Common Stock upon the consummation of the Twin Vee initial public offering and 25,000 shares of Twin Vee Common Stock on October 4, 2023, of which 133,305 shares of Twin Vee Common Stock will vest and be exercisable within 60 days of the Twin Vee Record Date and are included in the number of shares of Twin Vee Common Stock beneficially owned by Mr. Yarborough. |
| |
|
| (3) |
Messrs. Melvin and Ross were each granted an option to purchase 5,500 shares of Twin Ve Common Stock upon the consummation of the Twin Vee initial public offering, and were granted another 5,500 shares on October 20, 2022; of which 11,000 shares of Twin Vee Common Stock will vest and be exercisable within 60 days of the Twin Vee Record Date, and are included in the number of shares of Twin Vee Common Stock beneficially owned by each of Messrs. Melvin and Ross. |
| |
|
| (4) |
In connection with his appointment, effective July 6, 2022, Mr. Schuyler was awarded an option to purchase 5,500 shares of Twin Vee Common Stock at an exercise price of $2.62 per share, vesting pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten years from the date of grant, all of which are currently exercisable and are included in the number of shares of Twin Vee Common Stock beneficially owned by Schuyler. Also includes 1,363 shares of Twin Vee Common Stock owned by Mr. Schuyler. |
| |
|
| (5) |
In connection with his appointment, effective November 7, 2021, Mr. Rockenbach was awarded an option to purchase 5,500 shares of Twin Vee Common Stock at an exercise price of $3.87 per share, vesting pro rata on a monthly basis over a twelve-month period and exercisable for a period of ten years from the date of grant. Mr. Rockenbach was awarded another 4,583 shares on November 4, 2022, with the same vesting schedule. There will be 10,083 shares of Twin Vee Common Stock vested and be exercisable within 60 days of the Twin Vee Record Date, and are included in the number of shares of Twin Vee Common Stock beneficially owned by Rockenbach. |
| |
|
| (6) |
Ms. Gunnerson was granted an option to purchase 136,000 shares of Twin Vee Common Stock upon in connection with joining Twin Vee as Chief Financial Officer, and an additional 25,000 share on October 4, 2023, of which 75,127 shares of Twin Vee Common Stock will vest and be exercisable within 60 days of the Twin Vee Record Date, and are included in the number of shares of Twin Vee Common Stock beneficially owned by Ms. Gunnerson . |
| |
|
| (7) |
Information is based upon a Schedule 13G/A filed with the SEC on February 3, 2022 by James G. Kennedy, the partner of Marathon Micro Fund, L.P. The address of Marathon Micro Fund, L.P. is 4 North Park Drive, Suite 106, Hunt Valley, Maryland 34982. |
| (8) |
Information is based upon a Schedule 13G filed with the SEC on February 14, 2024. AWM Investment Company, Inc., a Delaware corporation (“AWM”) is the investment adviser to Special Situations Cayman Fund, L.P., a Cayman Islands Limited Partnership (CAYMAN) and Special Situations Fund III QP, L.P., a Delaware limited partnership (SSFQP). (CAYMAN and SSFQP, will hereafter be referred to as the Funds). The principal business of each Fund is to invest in equity and equity-related securities and other securities of any kind or nature. David M. Greenhouse (Greenhouse) and Adam C. Stettner (Stettner) are members of: SSCayman, L.L.C., a Delaware limited liability company (SSCAY), the general partner of CAYMAN and MGP Advisers Limited Partnership, a Delaware limited partnership (MGP), the general partner of SSFQP. Greenhouse and Stettner are also controlling principals of AWM. As the investment adviser to the Funds, AWM holds sole voting and investment power over 218,284 shares of Twin Vee Common Stock held by CAYMAN and 730,778 Shares held by SSFQP. The address of AWM is c/o Special Situations Funds, 527 Madison Avenue, Suite 2600, New York, NY 10022. |
Ownership of Forza Common Stock Prior to the Merger
The following table sets forth the beneficial ownership
of Forza Common Stock as of [●], 2024 (the Forza Record Date), by:
| |
● |
each person, or group of affiliated persons, who is known by Forza to beneficially own more than 5% of Forza Common Stock; |
| |
● |
each of the named executive officers listed in the Forza Summary Compensation Table; |
| |
● |
each of Forza’s directors; and |
| |
● |
all of Forza’s current executive officers and directors as a group. |
As of [●], 2024, Forza had [●] shares of
Forza Common Stock outstanding.
Forza has determined beneficial ownership in accordance
with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting
power or investment power with respect to those securities. In addition, the rules include shares of Forza Common Stock issuable pursuant
to the exercise of profits interest units, options, warrants or other rights that are either immediately exercisable or exercisable on
or before [●], 2024, which is approximately 60 days after the Forza Record Date. These shares are deemed to be outstanding and beneficially
owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are
not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the
persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned
by them, subject to applicable community property laws.
Unless otherwise indicated, the address of each beneficial
owner listed in the table below is c/o Forza X1, Inc. 3101 S. US-1 Ft. Pierce, Florida 34982.
| | |
Shares Beneficially Owned |
| Name of Beneficial Owner | |
Shares | |
Percentage |
| Named Executive Officers and Directors | |
| | | |
| | |
| Joseph Visconti (1)(2)(4)(5) | |
| 2,179,850 | | |
| 13.80 | % |
| Carrie Gunnerson(4)(6) | |
| 74,283 | | |
| — | |
| Jim Leffew(2)(4)(5)(7) | |
| 322,866 | | |
| 2.01 | % |
| Neil Ross(3) | |
| 5,500 | | |
| — | |
| Marcia Kull(3) | |
| 10,105 | | |
| — | |
| Kevin Schuyler(3) | |
| 14,832 | | |
| — | |
| All current executive officers and directors as a group (4 persons) | |
| 2,210,287 | | |
| 23.22 | % |
| 5% Stockholders | |
| | | |
| | |
| Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc.(1) | |
| 7,000,000 | | |
| 44.43 | % |
| * |
Represents beneficial ownership of less than one percent. |
| (1) |
Joseph Visconti is Forza’s Interim Chief Executive Officer, Executive Chairman and Chief of Product Development. He is also the Chairman of the Twin Vee Board of Directors and Twin Vee’s Chief Executive Officer. These shares are owned directly by Twin Vee. Mr. Visconti owns 24.455% of the outstanding Twin Vee Common Stock. Twin Vee is the owner of 7,000,000 shares of Forza Common Stock. Mr. Visconti is deemed to have control over the shares of Forza Common Stock owned by Twin Vee. Mr. Visconti disclaims beneficial ownership of these securities. Also includes 70,000 shares of Forza Common Stock owned directly by Mr. Visconti. |
| |
|
| (2) |
Both of Mr. Visconti and Mr. Leffew were issued an option to purchase 400,000 shares of Forza Common Stock immediately after the Forza initial public offering of which 244,444 will vest and be exercisable within 60 days of the Forza Record Date. |
| |
|
| (3) |
Forza’s non-employee directors, Messrs. Ross and Schuyler and Ms. Kull were issued an option to purchase 5,500 shares of Forza Common Stock immediately after the Forza initial public offering of which 5,500 will vest and be exercisable within 60 days of the Forza Record Date. |
| (4) |
Mr. Visconti, Mr. Leffew and Mrs. Gunnerson
were issued options to purchase 100,000 shares of Forza Common Stock on December 15, 2022, of which 47,222 will vest and be exercisable
within 60 days of the Forza Record Date. |
| |
|
| (5) |
Mr. Visconti and Mr. Leffew were issued
options to purchase 144,000 shares of Forza Common Stock on October 4, 2023, of which 28,000 will vest and be exercisable within 60 days
of the Forza Record Date. |
| |
|
| (6) |
Mrs. Gunnerson was issued options to purchase 25,000 shares of Forza Common Stock on October 4, 2023, of which 4,861 will vest and be exercisable within 60 days of the Forza Record Date. Ms. Gunnerson resigned as Forza’s Interim Chief Financial Officer effective May 31, 2024. |
| |
|
| (7) |
Mr. Leffew resigned as Forza’s Chief Executive Officer and a
director effective as of March 6, 2024. |
DESCRIPTION OF TWIN VEE CAPITAL STOCK
DESCRIPTION OF SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Twin Vee has one class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is its common stock, par value
$0.001 per share (the “Twin Vee Common Stock”).
General
The following is a description of the material terms
of Twin Vee Common Stock. This is a summary only and does not purport to be complete. It is subject to and qualified in its entirety by
reference to Twin Vee’s Certificate of Incorporation, and Twin Vee’s Bylaws, each of which are incorporated by reference as
an exhibit to this Joint Proxy Statement/Prospectus. Twin Vee encourages you to read its Certificate of Incorporation, Bylaws and the
applicable provisions of the Delaware General Corporation Law (“DGCL”), for additional information.
Common Stock
Holders of shares of Twin Vee Common Stock are entitled
to one vote for each share held of record on all matters submitted to a vote of stockholders. Except as otherwise provided in Twin Vee’s
Certificate of Incorporation or as required by law, all matters to be voted on by Twin Vee’s stockholders other than matters relating
to the election and removal of directors must be approved by a majority of the shares present in person or by proxy at the meeting and
entitled to vote on the subject matter or by a written resolution of the stockholders representing the number of affirmative votes required
for such matter at a meeting. The holders of Twin Vee Common Stock do not have cumulative voting rights in the election of directors.
Holders of shares of Twin Vee Common Stock are entitled
to receive dividends when and if declared by the Twin Vee Board of Directors out of funds legally available therefor, subject to any statutory
or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any
outstanding preferred stock.
Upon Twin Vee’s dissolution or liquidation or
the sale of all or substantially all of Twin Vee’s assets, after payment in full of all amounts required to be paid to creditors
and subject to any rights of preferred stockholders, the holders of shares of Twin Vee Common Stock will be entitled to receive pro rata
Twin Vee’s remaining assets available for distribution.
Holders of shares of Twin Vee Common Stock do not
have preemptive, subscription, redemption, or conversion rights. There will be no redemption or sinking fund provisions applicable to
the Common Stock.
Forum Selection
Twin
Vee’s Certificate of Incorporation provides that unless Twin Vee consents in writing
to the selection of an alternative forum, the Court of Chancery of the State of Delaware
will, to the fullest extent permitted by applicable law, be the sole and exclusive forum
for (i) any derivative action or proceeding brought on Twin Vee’s behalf; (ii) any
action asserting a claim of breach of a fiduciary duty owed by any of Twin Vee’s directors,
officers or other employees to us or Twin Vee’s stockholders; (iii) any action asserting
a claim against us, any director or Twin Vee’s officers or employees arising pursuant
to any provision of the DGCL, Twin Vee’s Certificate of Incorporation or Twin Vee’s
Bylaws; or (iv) any action asserting a claim against Twin Vee, any director or Twin Vee’s
officers or employees that is governed by the internal affairs doctrine, except, as to each
of clauses (i) through (iv) above, for any claim as to which the Court of Chancery determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery
(and the indispensable party does not consent to the personal jurisdiction of the Court of
Chancery within ten (10) days following such determination), which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery, or for which the Court
of Chancery does not have subject matter jurisdiction. Twin Vee’s Certificate of Incorporation
further provides that the choice of the Court of Chancery as the sole and exclusive forum
for any derivative action or proceeding brought on behalf of Twin Vee does not apply to suits
to enforce a duty or liability created by the Securities Act of 1933, as amended, or the
Exchange Act.
Anti-Takeover Provisions
Twin Vee’s Certificate of Incorporation and
Twin Vee’s Bylaws contain provisions that may delay, defer, or discourage another party from acquiring control of it. Twin Vee expects
that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions
are also designed to encourage persons seeking to acquire control of Twin Vee to first negotiate with Twin Vee’s Board of Directors,
which Twin Vee believes may result in an improvement of the terms of any such acquisition in favor of Twin Vee’s stockholders. However,
they also give Twin Vee’s board of directors the power to discourage acquisitions that some stockholders may favor.
Section 203 of the Delaware General Corporation
Law. Twin Vee is subject to Section 203 of the DGCL. Subject to certain exceptions, Section 203 prevents a publicly held Delaware
corporation from engaging in a “business combination” with any “interested stockholder” for three years following
the date that the person became an interested stockholder, unless the interested stockholder attained such status with the approval of
the Twin Vee Board of Directors or unless the business combination is approved in a prescribed manner. A “business combination”
includes, among other things, a merger or consolidation involving us and the “interested stockholder” and the sale of more
than 10% of our assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of
Twin Vee’s outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.
Classified Board of Directors. Twin Vee’s
Certificate of Incorporation divides its board of directors into staggered three-year terms. In addition, Twin Vee’s Certificate
of Incorporation provides that directors may be removed, with or without cause, by the affirmative vote of the holders of at least 60%
of the voting power of all the then-outstanding shares of capital stock of Twin Vee, entitled to vote at an election of directors. Under
Twin Vee’s Certificate of Incorporation and Twin Vee’s Bylaws, any vacancy on the Twin Vee Board of Directors, including a
vacancy resulting from an enlargement of the Twin Vee Board of Directors, may be filled only by the affirmative vote of a majority of
Twin Vee’s directors then in office, even though less than a quorum of the Twin Vee Board of Directors. The classification of the
Twin Vee Board of Directors and the limitations on the ability of Twin Vee’s stockholders to remove directors and fill vacancies
could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of Twin Vee.
Authorized but Unissued Shares. The authorized
but unissued shares of Twin Vee Common Stock are available for future issuance without stockholder approval, subject to any limitations
imposed by the listing standards of the Nasdaq Stock Market. These additional shares may be used for a variety of corporate finance transactions,
acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock could make it more difficult
or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger, or otherwise.
Stockholder Action by Written Consent. Twin
Vee’s Certificate of Incorporation and Twin Vee’s Bylaws provide that any action required or permitted to be taken by Twin
Vee’s stockholders at an annual meeting or annual meeting of stockholders may only be taken if it is properly brought before such
meeting and may be taken by written consent in lieu of a meeting only if the action to be effected by such written consent and the taking
of such action by such written consent have been previously approved by the board of directors.
Annual Meetings of Stockholders. Twin Vee’s
Bylaws also provide that, except as otherwise required by law, annual meetings of the stockholders may only be called by the Twin Vee
Board of Directors.
Advance Notice Requirements for Stockholder Proposals
and Director Nominations. In addition, Twin Vee’s Bylaws establish an advance notice procedure for stockholder proposals to
be brought before an annual meeting of stockholders, including proposed nominations of candidates for election to the Twin Vee Board of
Directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance
notice and duration of ownership requirements and provide Twin Vee with certain information. Stockholders at an annual meeting may only
consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the Twin
Vee Board of Directors or by a qualified stockholder of record on the record date for the meeting, who is entitled to vote at the meeting
and who has delivered timely written notice in proper form to Twin Vee secretary of the stockholder’s intention to bring such business
before the meeting. These provisions could have the effect of delaying stockholder actions that are favored by the holders of a majority
of Twin Vee’s outstanding voting securities until the next stockholder meeting.
Amendment of Certificate of Incorporation or Bylaws.
The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend
a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws, as
the case may be, requires a greater percentage. Twin Vee’s Bylaws may be amended or repealed by a majority vote of the Twin Vee
Board of Directors or by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the then-outstanding shares
of Twin Vee’s capital stock entitled to vote in an election of directors, voting together as a single class.
Limitations on Liability and Indemnification of
Twin Vee’s Officers and Directors
Twin Vee’s Certificate of Incorporation and
Twin Vee’s Bylaws provide indemnification for Twin Vee’s directors and officers to the fullest extent permitted by the DGCL.
In addition, as permitted by Delaware law, Twin Vee’s Certificate of Incorporation includes provisions that eliminate the personal
liability of Twin Vee’s directors for monetary damages resulting from breaches of certain fiduciary duties as a director. The effect
of these provisions is to restrict Twin Vee’s rights and the rights of Twin Vee’s stockholders in derivative suits to recover
monetary damages against a director for breach of fiduciary duties as a director, except that a director will be personally liable for:
| |
● |
any breach of his duty of loyalty to Twin Vee or its stockholders; |
| |
● |
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
| |
● |
any transaction from which the director derived an improper personal benefit; or |
| |
● |
improper distributions to stockholders. |
These provisions may be held not to be enforceable
for violations of the federal securities laws of the United States.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL a stockholder who does not vote in
favor of certain mergers or consolidations and who is entitled to demand and has properly demanded appraisal of his or her shares in accordance
with, and who complies in all respects with the requirements of Section 262 of the DGCL will be entitled to an appraisal by the Court
of Chancery of the State of Delaware of the fair value of his or her shares. However, stockholders do not have appraisal rights if the
shares of stock they hold, at the record date for determination of stockholders entitled to receive notice of the meeting of stockholders
to act upon the merger or consolidation, are either (1) listed on a national securities exchange or (2) held of record by more than 2,000
holders. Further, no appraisal rights are available to stockholders of the surviving corporation if the merger did not require the vote
of the stockholders of the surviving corporation. Notwithstanding the foregoing, appraisal rights are available if stockholders are required
by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation,
(b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than
2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)–(c). Appraisal rights are also available
under the DGCL in certain other circumstances, including in certain parent-subsidiary corporation mergers and in certain circumstances
where the certificate of incorporation so provides.
Under the DGCL Twin Vee’s stockholders will
not have appraisal rights in connection with the Merger. Twin Vee’s Certificate of Incorporation does not provide appraisal rights
in any additional circumstance. As a result, no appraisal rights are available to holders of Twin Vee’s Common Stock in connection
with the Merger and the issuance of shares of Twin Vee Common Stock in the Merger.
Stockholders’ Derivative Actions
Under the DGCL, any of Twin Vee’s stockholders
may bring an action in Twin Vee’s name to procure a judgment in its favor, also known as a derivative action, provided that the
stockholder bringing the action is a holder of Twin Vee Common Stock at the time of the transaction to which the action relates or such
stockholder’s stock thereafter devolved by operation of law.
Transfer Agent and Registrar
The transfer agent and registrar for Twin Vee Common
Stock is Interwest Transfer Company, Inc. (also known as Direct Transfer LLC).
Trading Symbol and Market
Twin Vee Common Stock trades on The Nasdaq Capital
Market under the symbol “VEEE.”
DESCRIPTION OF FORZA CAPITAL STOCK
DESCRIPTION OF SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Forza has one class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is its common stock, par value
$0.001 per share (the “Forza Common Stock”).
General
The following is a description of the material terms
of the Forza Common Stock. This is a summary only and does not purport to be complete. It is subject to and qualified in its entirety
by reference to Forza’s Amended and Restated Certificate of Incorporation and Forza’s Amended and Restated Bylaws, each of
which are incorporated by reference as an exhibit to this Joint Proxy Statement/ Prospectus. Forza encourages you to read its Amended
and Restated Certificate of Incorporation, Forza’s Amended and Restated Bylaws and the applicable provisions of the Delaware
General Corporation Law, for additional information.
Common Stock
Forza has 100,000,000 shares of Forza Common Stock
authorized.
Holders of shares of Forza Common Stock are entitled
to one vote for each share held of record on all matters submitted to a vote of stockholders. Except as otherwise provided in Forza’s
Amended and Restated Certificate of Incorporation or as required by law, all matters to be voted on by Forza’s stockholders other
than matters relating to the election and removal of directors must be approved by a majority of the shares present in person or by proxy
at the meeting and entitled to vote on the subject matter or by a written resolution of the stockholders representing the number of affirmative
votes required for such matter at a meeting. The holders of Forza Common Stock do not have cumulative voting rights in the election of
directors.
Holders of shares of Forza Common Stock are entitled
to receive dividends when and if declared by the Forza Board of Directors out of funds legally available therefor, subject to any statutory
or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any
outstanding preferred stock.
Upon Forza’s dissolution or liquidation or the
sale of all or substantially all of Forza’s assets, after payment in full of all amounts required to be paid to creditors and subject
to any rights of preferred stockholders, the holders of shares of Forza Common Stock will be entitled to receive pro rata Forza’s
remaining assets available for distribution.
Holders of shares of Forza Common Stock do not have
preemptive, subscription, redemption, or conversion rights. There will be no redemption or sinking fund provisions applicable to the Forza
Common Stock.
Forum Selection
Forza’s Amended and Restated Certificate of
Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State
of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or
proceeding brought on Forza’s behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of Forza’s
directors, officers or other employees to Forza or its stockholders; (iii) any action asserting a claim against Forza, any director or
its officers or employees arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”), Forza’s
Amended and Restated Certificate of Incorporation or Forza’s Amended and Restated Bylaws; or (iv) any action asserting a claim against
Forza, any director or Forza’s officers or employees that is governed by the internal affairs doctrine, except, as to each of clauses
(i) through (iv) above, for any claim as to which the Court of Chancery determines that there is an indispensable party not subject to
the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery
within ten (10) days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court
of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. Forza’s Amended and Restated Certificate
of Incorporation further provides that the choice of the Court of Chancery as the sole and exclusive forum for any derivative action or
proceeding brought on behalf of the Corporation does not apply to suits to enforce a duty or liability created by the Securities Act of
1933, as amended, or the Exchange Act.
Anti-Takeover Provisions
Forza’s Amended and Restated Certificate of
Incorporation and Forza’s Amended and Restated Bylaws contain provisions that may delay, defer, or discourage another party from
acquiring control of Forza. Forza expects that these provisions, which are summarized below, will discourage coercive takeover practices
or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate
with the Forza Board of Directors, which Forza believe may result in an improvement of the terms of any such acquisition in favor of Forza
stockholders. However, they also give the Forza Board of Directors the power to discourage acquisitions that some stockholders may favor.
Section 203 of the Delaware General Corporation
Law. Forza is subject to Section 203 of the DGCL. Subject to certain exceptions, Section 203 prevents a publicly held Delaware corporation
from engaging in a “business combination” with any “interested stockholder” for three years following the date
that the person became an interested stockholder, unless the interested stockholder attained such status with the approval of the Forza
Board of Directors or unless the business combination is approved in a prescribed manner. A “business combination” includes,
among other things, a merger or consolidation involving Forza and the “interested stockholder” and the sale of more than 10%
of Forza’s assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of
Forza’s outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.
Classified Board of Directors. Forza’s
Amended and Restated Certificate of Incorporation divides the Forza Board of Directors into staggered three-year terms. In addition, Forza’s
Amended and Restated Certificate of Incorporation provides that directors may be removed, with or without cause, by the affirmative vote
of the holders of at least 60% of the voting power of all the then-outstanding shares of capital stock of Forza, entitled to vote at an
election of directors. Under Forza’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, any vacancy
on the Forza Board of Directors, including a vacancy resulting from an enlargement of the Forza Board of Directors, may be filled only
by the affirmative vote of a majority of Forza’s directors then in office, even though less than a quorum of the Forza Board of
Directors. The classification of the Forza Board of Directors and the limitations on the ability of Forza’s stockholders to remove
directors and fill vacancies could make it more difficult for a third party to acquire, or discourage a third party from seeking to acquire,
control of Forza.
Authorized but Unissued Shares. The authorized
but unissued shares of Forza Common Stock are available for future issuance without stockholder approval, subject to any limitations
imposed by the listing standards of the Nasdaq Stock Market or OTC Markets, as applicable. These additional shares may be used for a
variety of corporate finance transactions, acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved
Common Stock could make it more difficult or discourage an attempt to obtain control of Forza by means of a proxy contest, tender offer,
merger, or otherwise.
Stockholder Action by Written Consent. Forza’s
Amended and Restated Certificate of Incorporation and Forza’s Amended and Restated Bylaws provide that any action required or permitted
to be taken by Forza’s stockholders at an annual meeting or annual meeting of stockholders may only be taken if it is properly brought
before such meeting and may be taken by written consent in lieu of a meeting only if the action to be effected by such written consent
and the taking of such action by such written consent have been previously approved by the board of directors.
Annual Meetings of Stockholders. Forza’s
Bylaws also provide that, except as otherwise required by law, annual meetings of the stockholders may only be called by the Forza Board
of Directors.
Advance Notice Requirements for Stockholder Proposals
and Director Nominations. In addition, Forza’s Bylaws establish an advance notice procedure for stockholder proposals to be
brought before an annual meeting of stockholders, including proposed nominations of candidates for election to the Forza Board of Directors.
In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice and
duration of ownership requirements and provide Forza with certain information. Stockholders at an annual meeting may only consider proposals
or nominations specified in the notice of meeting or brought before the meeting by or at the direction of Forza’s board of directors
or by a qualified stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered
timely written notice in proper form to Forza’s secretary of the stockholder’s intention to bring such business before the
meeting. These provisions could have the effect of delaying stockholder actions that are favored by the holders of a majority of Forza’s
outstanding voting securities until the next stockholder meeting.
Amendment of Certificate of Incorporation or Bylaws.
The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend
a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws, as
the case may be, requires a greater percentage. Forza’s Bylaws may be amended or repealed by a majority vote of the Forza Board
of Directors or by the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of
capital stock of Forza entitled to vote in an election of directors, voting together as a single class.
Limitations on Liability and Indemnification of
Forza’s Officers and Directors
Forza’s Amended and Restated Certificate of
Incorporation and Forza’s Amended and Restated Bylaws provide indemnification for its directors and officers to the fullest extent
permitted by the DGCL. In addition, as permitted by Delaware law, Forza’s Amended and Restated Certificate of Incorporation includes
provisions that eliminate the personal liability of Forza’s directors for monetary damages resulting from breaches of certain fiduciary
duties as a director. The effect of these provisions is to restrict Forza’s rights and the rights of its stockholders in derivative
suits to recover monetary damages against a director for breach of fiduciary duties as a director, except that a director will be personally
liable for:
| |
● |
any breach of his duty of loyalty to Forza or its stockholders; |
| |
● |
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
| |
● |
any transaction from which the director derived an improper personal benefit; or |
| |
● |
improper distributions to stockholders. |
These provisions may be held not to be enforceable
for violations of the federal securities laws of the United States.
Dissenters’ Rights of Appraisal and Payment
Under the DGCL, a stockholder who does not vote in
favor of certain mergers or consolidations and who is entitled to demand and has properly demanded appraisal of his or her shares in accordance
with, and who complies in all respects with the requirements of Section 262 of the DGCL will be entitled to an appraisal by the Court
of Chancery of the State of Delaware of the fair value of his or her shares. However, stockholders do not have appraisal rights if the
shares of stock they hold, at the record date for determination of stockholders entitled to receive notice of the meeting of stockholders
to act upon the merger or consolidation, are either (1) listed on a national securities exchange or (2) held of record by more than 2,000
holders. Further, no appraisal rights are available to stockholders of the surviving corporation if the merger did not require the vote
of the stockholders of the surviving corporation. Notwithstanding the foregoing, appraisal rights are available if stockholders are required
by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation,
(b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than
2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)–(c). Appraisal rights are also available
under the DGCL in certain other circumstances, including in certain parent-subsidiary corporation mergers and in certain circumstances
where the certificate of incorporation so provides.
Under the DGCL, Forza’s stockholders are not
entitled to appraisal rights in connection with the Merger. Forza’s Amended and Restated Certificate of Incorporation does not provide
appraisal rights in any additional circumstance. As a result, no appraisal rights are available to holders of Forza Common Stock in connection
with the Merger.
Stockholders’ Derivative Actions
Under the DGCL, any of Forza’s stockholders
may bring an action in its name to procure a judgment in Forza’s favor, also known as a derivative action, provided that the stockholder
bringing the action is a holder of Forza Common Stock at the time of the transaction to which the action relates or such stockholder’s
stock thereafter devolved by operation of law.
Transfer Agent and Registrar
The transfer agent and registrar for Forza Common
Stock is Interwest Transfer Company, Inc. (also known as Direct Transfer LLC).
Trading Symbol and Market
Forza Common Stock trades on The Nasdaq Capital
Market under the symbol “FRZA.” However, Forza has received a letter from Nasdaq notifying it that due to its failure regain
compliance with the Nasdaq bid price requirement, the Forza Common Stock will be delisted.
COMPARISON OF RIGHTS OF HOLDERS OF TWIN VEE COMMON
STOCK AND FORZA X1, INC. COMMON STOCK
Twin Vee is incorporated under the laws of the State
of Delaware and, accordingly, the rights of its stockholders are governed by the DGCL. Forza is also incorporated under the laws of the
State of Delaware and, accordingly, the rights of its stockholders are governed by the DGCL. If the Merger is completed, Forza stockholders
will be entitled to become stockholders of Twin Vee, and their rights will be governed by the DGCL, the Certificate of Incorporation of
Twin Vee and the Bylaws of Twin Vee.
The following is a summary of the material differences
between the rights of Twin Vee stockholders and the rights of Forza stockholders under each company’s respective corporate law,
charter documents and bylaws. While Twin Vee and Forza believe that this summary covers the material differences between the two, this
summary may not contain all of the information that is important to you. This summary is not intended to be a complete discussion of the
respective rights of Twin Vee and Forza stockholders and is qualified in its entirety by reference to the DGCL and the various documents
of Twin Vee and Forza that are referred to in this summary. You should carefully read this entire Joint Proxy Statement/Prospectus and
the other documents referred to in this Joint Proxy Statement/Prospectus for a more complete understanding of the differences between
being a stockholder of Twin Vee and being a stockholder of Forza. Twin Vee has filed copies of its Certificate of Incorporation and Bylaws
with the SEC, which are exhibits to the registration statement of which this Joint Proxy Statement/Prospectus is a part, and will send
copies of these documents to you upon your request. Forza will also send copies of its documents referred to herein to you upon your request.
See the section entitled “Where You Can Find More Information” in this Joint Proxy Statement/Prospectus.
| |
|
|
| Authorized Capital |
The authorized capital stock of Twin Vee consists of 50,000,000 shares
of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. The Twin Vee Board
of Directors has the authority to provide for the issuance of preferred stock, in one or more series, and to fix the number of shares
and to designate the voting rights, preferences, special rights, limitations or restrictions of the shares of preferred stock without
further stockholder approval. The number of authorized shares of preferred stock may be increased or decreased by the affirmative vote
of a majority of shareholders, without a separate vote of the holders of preferred stock.
As of the date of this Joint Proxy Statement/Prospectus, 9,520,000 shares
of Twin Vee Common Stock were issued and outstanding. |
The authorized capital stock of Forza consists of 100,000,000 shares of
common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. The Forza Board of Directors
has the authority to provide for the issuance of preferred stock, in one or more series, and to fix the number of shares and to designate
the voting rights, preferences, special rights, limitations or restrictions of the shares of preferred stock without further stockholder
approval. The number of authorized shares of preferred stock may be increased or decreased by the affirmative vote of a majority of shareholders,
without a separate vote of the holders of preferred stock.
As of the date of this Joint Proxy Statement/Prospectus, 15,784,000 shares
of Forza Common Stock were issued and outstanding. |
| Amendment of Governing Documents |
The DGCL provides that the certificate of incorporation of a Delaware corporation
may be amended upon adoption by the board of directors of a resolution setting forth the proposed amendment and declaring its advisability,
followed by the affirmative vote of a majority of the outstanding shares entitled to vote. It also provides that a certificate of incorporation
may provide for a greater vote than would otherwise be required by the DGCL.
Twin Vee’s Certificate of Incorporation does not require a greater
vote that would otherwise be required by the DGCL to amend the certificate of incorporation. Twin Vee’s Certificate of Incorporation
provides that the bylaws of the corporation may be adopted, amended or repealed by: 1) the approval of a majority of the authorized number
of directors; or 2) the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of
all of the outstanding stock generally entitled to vote in the election of directors. |
The DGCL provides that the certificate of incorporation of a Delaware corporation
may be amended upon adoption by the board of directors of a resolution setting forth the proposed amendment and declaring its advisability,
followed by the affirmative vote of a majority of the outstanding shares entitled to vote. It also provides that a certificate of incorporation
may provide for a greater vote than would otherwise be required by the DGCL.
Forza’s Amended and Restated Certificate of Incorporation does not
require a greater vote that would otherwise be required by the DGCL to amend the certificate of incorporation. Forza’s Amended and
Restated Certificate of Incorporation provides that the bylaws of the corporation may be adopted, amended or repealed by: 1) the approval
of a majority of the authorized number of directors; or 2) the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the voting power of all of the outstanding stock generally entitled to vote in the election of directors. |
| Dividends |
Under Delaware law, a corporation may, subject to any restrictions contained
in its certificate of incorporation, pay dividends out of surplus and, if there is not surplus, out of net profits for the current and/or
the preceding fiscal year, unless the net assets of the corporation are less than the capital represented by issued and outstanding stock
having preferences on asset distributions. Surplus is defined under Delaware law as the excess of the net assets (essentially, the amount
by which total assets exceed total liabilities) over capital (essentially, the aggregate par value of the shares of the corporation having
a par value that have been issued plus consideration paid for shares without par value that have been issued), as such capital may be
adjusted by the board of directors.
Twin Vee has never paid a dividend on its Common Stock. |
Under Delaware law, a corporation may, subject to any restrictions contained
in its certificate of incorporation, pay dividends out of surplus and, if there is not surplus, out of net profits for the current and/or
the preceding fiscal year, unless the net assets of the corporation are less than the capital represented by issued and outstanding stock
having preferences on asset distributions. Surplus is defined under Delaware law as the excess of the net assets (essentially, the amount
by which total assets exceed total liabilities) over capital (essentially, the aggregate par value of the shares of the corporation having
a par value that have been issued plus consideration paid for shares without par value that have been issued), as such capital may be
adjusted by the board of directors.
Forza has never paid a dividend on its Common Stock. |
| Cumulative Voting |
Under Delaware law, stockholders of a Delaware corporation do not have
the right to cumulate their votes in the election of directors, unless such right is granted in the certificate of incorporation of the
corporation.
Twin Vee’s Certificate of Incorporation does not provide for cumulative
voting by its stockholders. |
Under Delaware law, stockholders of a Delaware corporation do not have
the right to cumulate their votes in the election of directors, unless such right is granted in the certificate of incorporation of the
corporation.
Forza’s Amended and Restated Certificate of Incorporation does not
provide for cumulative voting by its stockholders. |
| Number of Directors |
Delaware law provides that the number of directors shall be fixed by, or
in the manner provided in, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in
the number of directors shall be made only by amendment of the certificate.
Twin Vee’s Certificate of Incorporation provides that the number
of directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of directors constituting the board
of directors. The Twin Vee Board of Directors currently consists of six (6) directors. |
Delaware law provides that the number of directors shall be fixed by, or
in the manner provided in, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in
the number of directors shall be made only by amendment of the certificate.
Forza’s Amended and Restated Certificate of Incorporation provides
that the number of directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of directors constituting
the board of directors. The Forza Board of Directors currently consists of four (4) directors. |
| Classified Board of Directors |
Delaware law permits, but does not require, a Delaware corporation to provide
in its certificate of incorporation for a classified board of directors, dividing the board into up to three classes of directors with
staggered terms of office, with only one class of directors to be elected each year for a maximum term of three years.
Twin Vee’s Certificate of Incorporation provides that the Twin Vee
Board of Directors shall be divided into three classes and that each director shall serve a term ending on the date of the third annual
meeting of stockholders following the annual meeting of stockholders at which such director was elected. |
Delaware law permits, but does not require, a Delaware corporation to provide
in its certificate of incorporation for a classified board of directors, dividing the board into up to three classes of directors with
staggered terms of office, with only one class of directors to be elected each year for a maximum term of three years.
Forza’s Amended and Restated Certificate of Incorporation provides
that the Forza Board of Directors shall be divided into three classes and that each director shall serve a term ending on the date of
the third annual meeting of stockholders following the annual meeting of stockholders at which such director was elected. |
| Limitation of Liability/ Exculpation of Directors |
A Delaware corporation is permitted to adopt provisions in its certificate
of incorporation limiting or eliminating the liability of a director to a company and its shareholders for monetary damages for breach
of fiduciary duty as a director, provided that such liability does not arise from certain proscribed conduct, including breach of the
duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or liability
to the corporation based on unlawful dividends or distributions or improper personal benefit.
Twin Vee’s Certificate of Incorporation limits the liability of the
Twin Vee Board of Directors for monetary damages to the fullest extent permitted by Delaware law. |
A Delaware corporation is permitted to adopt provisions in its certificate
of incorporation limiting or eliminating the liability of a director to a company and its shareholders for monetary damages for breach
of fiduciary duty as a director, provided that such liability does not arise from certain proscribed conduct, including breach of the
duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or liability
to the corporation based on unlawful dividends or distributions or improper personal benefit.
Forza’s Amended and Restated Certificate of Incorporation limits
the liability of the Forza Board of Directors for monetary damages to the fullest extent permitted by Delaware law. |
| Indemnification of Directors and Officers |
Under the DGCL, the indemnification of directors and officers
is authorized to cover judgments, amounts paid in settlement and expenses arising out of non-derivative actions where the director or
officer acted in good faith and in, or not opposed to, the best interests of the corporation, and, in criminal cases, where the director
or officer had no reasonable cause to believe that his or her conduct was unlawful. Unless limited or denied by the corporation’s
certificate of incorporation, indemnification is required to the extent of a director’s or officer’s successful defense; such
indemnification will not be limited or denied in the Delaware Certificate. Additionally, under the DGCL, a corporation may reimburse directors
and officers for expenses incurred in a derivative action.
Twin Vee’s Certificate of Incorporation and Twin Vee’s Bylaws
provide for indemnification of the Twin Vee Board of Directors and Twin Vee’s officers to the fullest extent permitted by Delaware
law. |
Under the DGCL, the indemnification of directors and officers is authorized
to cover judgments, amounts paid in settlement and expenses arising out of non-derivative actions where the director or officer acted
in good faith and in, or not opposed to, the best interests of the corporation, and, in criminal cases, where the director or officer
had no reasonable cause to believe that his or her conduct was unlawful. Unless limited or denied by the corporation’s certificate
of incorporation, indemnification is required to the extent of a director’s or officer’s successful defense; such indemnification
will not be limited or denied in the Delaware Certificate. Additionally, under the DGCL, a corporation may reimburse directors and officers
for expenses incurred in a derivative action.
Forza’s Amended and Restated Certificate of Incorporation and Forza’s
Amended and Restated Bylaws provide for indemnification of the Forza Board of Directors and Forza’s officers to the fullest extent
permitted by Delaware law. |
| Consideration of Other Constituencies |
The DGCL provides that, in the performance of their duties to the corporation, directors are protected in relying in good faith upon the records of the corporation and information, opinions, reports, or statements presented to the corporation by any of the corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation. |
The DGCL provides that, in the performance of their duties to the corporation, directors are protected in relying in good faith upon the records of the corporation and information, opinions, reports, or statements presented to the corporation by any of the corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation. |
| Removal of Directors |
Under Delaware law, a majority of stockholders may remove a director with
or without cause except: (i) if the board of directors of a Delaware corporation is classified (i.e., elected for staggered terms), in
which case a director may only be removed for cause, unless the corporation’s certificate of incorporation provides otherwise; and
(ii) in the case of a corporation which possesses cumulative voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election
of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.
Twin Vee’s Certificate of Incorporation provides that a director
may be removed from office at any time, with or without cause, by the affirmative vote of at least sixty percent (60%) of the holders
of the outstanding voting capital stock. |
Under Delaware law, a majority of stockholders may remove a director with
or without cause except: (i) if the board of directors of a Delaware corporation is classified (i.e., elected for staggered terms), in
which case a director may only be removed for cause, unless the corporation’s certificate of incorporation provides otherwise; and
(ii) in the case of a corporation which possesses cumulative voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election
of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.
Forza’s Amended and Restated Certificate of Incorporation provides
that a director may be removed from office at any time, with or without cause, by the affirmative vote of at least sixty percent (60%)
of the holders of the outstanding voting capital stock. |
| Vacancies |
Under Delaware law, unless the certificate of incorporation or bylaws provide
otherwise, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by
a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
Under the Certificate of Incorporation of Twin Vee, vacancies on the Twin Vee Board of Directors or newly created directorships shall
be filled by the affirmative vote of a majority of the directors then in office, although less than a quorum, unless the Twin Vee Board
of Directors determines by resolution that any such vacancy or newly created directorship shall be filled by the stockholders.
|
Under Delaware law, unless the certificate of incorporation or bylaws provide
otherwise, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by
a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
Under the Amended and Restated Certificate of Incorporation of Forza, vacancies on the Forza Board of Directors or newly created directorships
shall be filled by the affirmative vote of a majority of the directors then in office, although less than a quorum, unless the Forza Board
of Directors determines by resolution that any such vacancy or newly created directorship shall be filled by the stockholders.
|
| Board Quorum and Vote Requirements |
Twin Vee’s Bylaws provide that at meetings of the Twin Vee Board of Directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business and that a vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board. |
Forza’s Amended and Restated Bylaws provide that at meetings of the Forza Board of Directors, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business and that a vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board. |
| Annual and Special Meetings of Stockholders |
Delaware law permits annual meetings of stockholders to be called by the
board of directors and any other persons specified by the certificate of incorporation or bylaws. Delaware law permits but does not require
that stockholders be given the right to call annual meetings.
Twin Vee’s Bylaws provide that annual meetings of stockholders shall
be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall be designated from time
to time by the Twin Vee Board of Directors and stated in the notice of the meeting and that special meetings of stockholders may be called
at any time by: (1) the direction of a majority of the board of directors, (2) the chairperson or the board of directors; (3) the chief
executive officer; or (4) the president (in the absence of a chief executive officer). |
Delaware law permits annual meetings of stockholders to be called by the
board of directors and any other persons specified by the certificate of incorporation or bylaws. Delaware law permits but does not require
that stockholders be given the right to call annual meetings.
Forza’s Amended and Restated Bylaws provide that annual meetings
of stockholders shall be held on such date, at such time, and at such place (if any) within or without the State of Delaware as shall
be designated from time to time by the Forza Board of Directors and stated in the notice of the meeting and that special meetings of stockholders
may be called at any time by: (1) the direction of a majority of the board of directors, (2) the chairperson or the board of directors;
(3) the chief executive officer; or (4) the president (in the absence of a chief executive officer). |
| Quorum for Stockholder Meetings |
Except as otherwise expressly provided by law or by Twin Vee’s Certificate
of Incorporation or Twin Vee’s Bylaws, at all meetings of the stockholders, no meeting of the stockholders shall be competent to
transact business unless the majority of the outstanding voting capital stock shall be represented at such meeting.
|
Except as otherwise expressly provided by law or by Forza’s Amended and Restated Certificate of Incorporation or Forza’s Amended and Restated Bylaws, at all meetings of the stockholders, no meeting of the stockholders shall be competent to transact business unless the majority of the outstanding voting capital stock shall be represented at such meeting. |
| Notice of Stockholder Meeting |
Twin Vee’s Bylaws provide that notice of each meeting of stockholders,
whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting. Every notice of a meeting of stockholders shall be in writing and shall state the place
(or the means of remote communications), date and hour of the meeting, the record date and in the case of a special meeting, the purpose(s)
for which the meeting is called.
|
Forza’s Amended and Restated Bylaws provide that notice of each meeting
of stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the
meeting to each stockholder entitled to vote at such meeting. Every notice of a meeting of stockholders shall be in writing and shall
state the place (or the means of remote communications), date and hour of the meeting, record date and in the case of a special meeting,
the purpose(s) for which the meeting is called.
|
| Action by Stockholders Without a Meeting |
Under Delaware law, unless a corporation’s certificate of incorporation
provides otherwise, any action which may be taken at a meeting of the stockholders of a corporation may be taken without a meeting and
without prior notice, by signed written consent of stockholders having the minimum number of votes that would be necessary to take such
action at a meeting.
Twin Vee’s Bylaws provide that any action required or permitted to
be taken at any meeting of the stockholders must be effectuated at a duly called annual or special meeting of stockholders and not by
written consent. |
Under Delaware law, unless a corporation’s certificate of incorporation
provides otherwise, any action which may be taken at a meeting of the stockholders of a corporation may be taken without a meeting and
without prior notice, by signed written consent of stockholders having the minimum number of votes that would be necessary to take such
action at a meeting.
Forza’s Amended and Restated Bylaws provide that any action required
or permitted to be taken at any meeting of the stockholders must be effectuated at a duly called annual or special meeting of stockholders
and not by written consent. |
| Corporate Opportunity |
Delaware law provides that contracts or transactions between a corporation
and one or more of its officers or directors or an entity in which they have an interest is not void or voidable solely because of such
interest or the participation of the director or officer in a meeting of the board or a committee which authorizes the contract or transaction
if: (i) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the
board or the committee, and the board or the committee in good faith authorizes the contract or transaction by the affirmative vote of
a majority of disinterested directors; (ii) the material facts as to the relationship or interest and as to the contract or transaction
are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in
good faith by a vote of the shareholders; or (iii) the contract or transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof or the shareholders. |
Delaware law provides that contracts or transactions between a corporation and one or more of its officers or directors or an entity in which they have an interest is not void or voidable solely because of such interest or the participation of the director or officer in a meeting of the board or a committee which authorizes the contract or transaction if: (i) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the board or the committee, and the board or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of disinterested directors; (ii) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a vote of the shareholders; or (iii) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the shareholders. |
| Interested Shareholder Combinations |
Delaware has a business combination statute, set forth in Section 203 of
the DGCL, which provides that any person who acquires 15% or more of a corporation’s voting stock (thereby becoming an “interested
shareholder”) may not engage in certain “business combinations” with the target corporation for a period of three years
following the time the person became an interested shareholder, unless (i) the board of directors of the corporation has approved, prior
to the interested shareholder’s acquisition of stock, either the business combination or the transaction that resulted in the person
becoming an interested shareholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested shareholder,
that person owns at least 85% of the corporation’s voting stock outstanding at the time the transaction is commenced (excluding
shares owned by persons who are both directors and officers and shares owned by employee stock plans in which participants do not have
the right to determine confidentially whether shares will be tendered in a tender or exchange offer), or (iii) the business combination
is approved by the board of directors and authorized by the affirmative vote (at an Special or annual meeting and not by written consent)
of at least two-thirds of the outstanding voting stock not owned by the interested shareholder.
For purposes of determining whether a person is the “owner”
of 15% or more of a corporation’s voting stock for purposes of Section 203 of the DGCL, ownership is defined broadly to include
the right, directly or indirectly, to acquire the stock or to control the voting or disposition of the stock. A business combination is
also defined broadly to include (i) mergers and sales or other dispositions of 10% or more of the assets of a corporation with or to an
interested shareholder, (ii) certain transactions resulting in the issuance or transfer to the interested shareholder of any stock of
the corporation or its subsidiaries, (iii) certain transactions which would result in increasing the proportionate share of the stock
of a corporation or its subsidiaries owned by the interested shareholder, and (iv) receipt by the interested shareholder of the benefit
(except proportionately as a shareholder) of any loans, advances, guarantees, pledges or other financial benefits.
These restrictions placed on interested shareholders by Section 203 of
the DGCL do not apply under certain circumstances, including, but not limited to, the following: (i) if the corporation’s original
certificate of incorporation contains a provision expressly electing not to be governed by Section 203; or (ii) if the corporation, by
action of its shareholders, adopts an amendment to its bylaws or certificate of incorporation expressly electing not to be governed by
Section 203, provided that such an amendment is approved by the affirmative vote of not less than a majority of the outstanding shares
entitled to vote and that such an amendment will not be effective until 12 months after its adoption (except for limited circumstances
where effectiveness will occur immediately) and will not apply to any business combination with a person who became an interested shareholder
at or prior to such adoption.
Twin Vee’s Certificate of Incorporation does not contain a provision
expressly electing not to be governed by Section 203 of the DGCL. |
Delaware has a business combination statute, set forth in Section 203 of
the DGCL, which provides that any person who acquires 15% or more of a corporation’s voting stock (thereby becoming an “interested
shareholder”) may not engage in certain “business combinations” with the target corporation for a period of three years
following the time the person became an interested shareholder, unless (i) the board of directors of the corporation has approved, prior
to the interested shareholder’s acquisition of stock, either the business combination or the transaction that resulted in the person
becoming an interested shareholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested shareholder,
that person owns at least 85% of the corporation’s voting stock outstanding at the time the transaction is commenced (excluding
shares owned by persons who are both directors and officers and shares owned by employee stock plans in which participants do not have
the right to determine confidentially whether shares will be tendered in a tender or exchange offer), or (iii) the business combination
is approved by the board of directors and authorized by the affirmative vote (at an Special or annual meeting and not by written consent)
of at least two-thirds of the outstanding voting stock not owned by the interested shareholder.
For purposes of determining whether a person is the “owner”
of 15% or more of a corporation’s voting stock for purposes of Section 203 of the DGCL, ownership is defined broadly to include
the right, directly or indirectly, to acquire the stock or to control the voting or disposition of the stock. A business combination is
also defined broadly to include (i) mergers and sales or other dispositions of 10% or more of the assets of a corporation with or to an
interested shareholder, (ii) certain transactions resulting in the issuance or transfer to the interested shareholder of any stock of
the corporation or its subsidiaries, (iii) certain transactions which would result in increasing the proportionate share of the stock
of a corporation or its subsidiaries owned by the interested shareholder, and (iv) receipt by the interested shareholder of the benefit
(except proportionately as a shareholder) of any loans, advances, guarantees, pledges or other financial benefits.
These restrictions placed on interested shareholders by Section 203 of
the DGCL do not apply under certain circumstances, including, but not limited to, the following: (i) if the corporation’s original
certificate of incorporation contains a provision expressly electing not to be governed by Section 203; or (ii) if the corporation, by
action of its shareholders, adopts an amendment to its bylaws or certificate of incorporation expressly electing not to be governed by
Section 203, provided that such an amendment is approved by the affirmative vote of not less than a majority of the outstanding shares
entitled to vote and that such an amendment will not be effective until 12 months after its adoption (except for limited circumstances
where effectiveness will occur immediately) and will not apply to any business combination with a person who became an interested shareholder
at or prior to such adoption.
Forza’s Amended and Restated Certificate of Incorporation does not
contain a provision expressly electing not to be governed by Section 203 of the DGCL. |
| Merger of Parent Corporation and Subsidiary Corporation |
Under the DGCL, unless the certificate of incorporation provides otherwise,
stockholders of the surviving corporation in a merger have no right to vote, except under limited circumstances. Specifically with regard
to the merger of a parent and its subsidiary, when: (1) at least 90% of the outstanding shares of each class of the stock of a corporation
or corporations of which class there are outstanding shares that, absent this subsection, would be entitled to vote on such merger, is
owned by a Delaware corporation or a foreign corporation, and (2) 1 or more of such corporations is a Delaware corporation, unless the
laws of the jurisdiction or jurisdictions under which the foreign corporation or corporations are organized prohibit such merger, the
parent corporation may either merge the subsidiary corporation or corporations into itself and assume all of its or their obligations,
or merge itself, or itself and 1 or more of such other subsidiary corporations, into 1 of the subsidiary corporations by executing, acknowledging
and filing a certificate of such ownership and merger setting forth a copy of the resolution of its board of directors to so merge and
the date of the adoption. However, if the parent corporation shall not own all the outstanding stock of all the subsidiary corporations,
parties to a merger as aforesaid, the resolution of the board of directors of the parent corporation shall state the terms and conditions
of the merger, including the securities, cash, property, or rights to be issued, paid, delivered or granted by the surviving corporation
upon surrender of each share of the subsidiary corporation or corporations not owned by the parent corporation, or the cancellation of
some or all of such shares. Any of the terms of the resolution of the board of directors to so merge may be made dependent upon facts
ascertainable outside of such resolution, provided that the manner in which such facts shall operate upon the terms of the resolution
is clearly and expressly set forth in the resolution. If the parent corporation be not the surviving corporation, the resolution shall
include provision for the pro rata issuance of stock of the surviving corporation to the holders of the stock of the parent corporation
on surrender of any certificates therefor, and the certificate of ownership and merger shall state that the proposed merger has been approved
by a majority of the outstanding stock of the parent corporation entitled to vote thereon at a meeting duly called and held after 20 days’
notice of the purpose of the meeting given to each such stockholder at the stockholder’s address as it appears on the records of
the corporation if the parent corporation is a Delaware corporation or state that the proposed merger has been adopted, approved, certified,
executed and acknowledged by the parent corporation in accordance with the laws under which it is organized if the parent corporation
is a foreign corporation. |
Under the DGCL, unless the certificate of incorporation provides otherwise, stockholders of the surviving corporation in a merger have no right to vote, except under limited circumstances. Specifically with regard to the merger of a parent and its subsidiary, when: (1) at least 90% of the outstanding shares of each class of the stock of a corporation or corporations of which class there are outstanding shares that, absent this subsection, would be entitled to vote on such merger, is owned by a Delaware corporation or a foreign corporation, and (2) 1 or more of such corporations is a Delaware corporation, unless the laws of the jurisdiction or jurisdictions under which the foreign corporation or corporations are organized prohibit such merger, the parent corporation may either merge the subsidiary corporation or corporations into itself and assume all of its or their obligations, or merge itself, or itself and 1 or more of such other subsidiary corporations, into 1 of the subsidiary corporations by executing, acknowledging and filing a certificate of such ownership and merger setting forth a copy of the resolution of its board of directors to so merge and the date of the adoption. However, if the parent corporation shall not own all the outstanding stock of all the subsidiary corporations, parties to a merger as aforesaid, the resolution of the board of directors of the parent corporation shall state the terms and conditions of the merger, including the securities, cash, property, or rights to be issued, paid, delivered or granted by the surviving corporation upon surrender of each share of the subsidiary corporation or corporations not owned by the parent corporation, or the cancellation of some or all of such shares. Any of the terms of the resolution of the board of directors to so merge may be made dependent upon facts ascertainable outside of such resolution, provided that the manner in which such facts shall operate upon the terms of the resolution is clearly and expressly set forth in the resolution. If the parent corporation be not the surviving corporation, the resolution shall include provision for the pro rata issuance of stock of the surviving corporation to the holders of the stock of the parent corporation on surrender of any certificates therefor, and the certificate of ownership and merger shall state that the proposed merger has been approved by a majority of the outstanding stock of the parent corporation entitled to vote thereon at a meeting duly called and held after 20 days’ notice of the purpose of the meeting given to each such stockholder at the stockholder’s address as it appears on the records of the corporation if the parent corporation is a Delaware corporation or state that the proposed merger has been adopted, approved, certified, executed and acknowledged by the parent corporation in accordance with the laws under which it is organized if the parent corporation is a foreign corporation. |
| Appraisal Rights |
Generally, pursuant to the DGCL, stockholders of a Delaware corporation
have appraisal rights in consolidations and mergers. The DGCL further provides that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders
of the surviving corporation. Even if appraisal rights would not otherwise be available under Delaware law in the cases described in the
preceding sentence, stockholders would have appraisal rights if they are required by the terms of the agreement of merger or consolidation
to accept for their stock anything other than: a) shares of stock of the surviving corporation; b) shares of any other corporation which
shares will be either listed on a national securities exchange or held of record by more than 2,000 stockholders; cash in lieu of fractional
shares; or d) a combination of such shares and cash.
Under Delaware law, any corporation may provide in its certificate of incorporation
that appraisal rights will also be available as a result of an amendment to its certificate of incorporation or the sale of all or substantially
all of the assets of the corporation.
However, pursuant to DGCL 262(b)(1), stockholders have no appraisal rights
in the event of a merger or consolidation of the corporation if the stock of the Delaware corporation is listed on a national securities
exchange, or if such stock is held of record by more than 2,000 stockholders.
Since Twin Vee shareholders are not entitled to appraisal rights with regard
to the issuance of Twin Vee Common Stock in the Merger. |
Generally, pursuant to the DGCL, stockholders of a Delaware corporation
have appraisal rights in consolidations and mergers. The DGCL further provides that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders
of the surviving corporation. Even if appraisal rights would not otherwise be available under Delaware law in the cases described in the
preceding sentence, stockholders would have appraisal rights if they are required by the terms of the agreement of merger or consolidation
to accept for their stock anything other than: a) shares of stock of the surviving corporation; b) shares of any other corporation which
shares will be either listed on a national securities exchange or held of record by more than 2,000 stockholders; cash in lieu of fractional
shares; or d) a combination of such shares and cash.
Under Delaware law, any corporation may provide in its certificate of incorporation
that appraisal rights will also be available as a result of an amendment to its certificate of incorporation or the sale of all or substantially
all of the assets of the corporation.
Pursuant to DGCL 262(b)(1), stockholders have no appraisal rights in the
event of a merger or consolidation of the corporation if the stock of the Delaware corporation is listed on a national securities exchange,
or if such stock is held of record by more than 2,000 stockholders. However, pursuant to DGCL 262(b)(3), in the event all of the stock
of a subsidiary Delaware corporation party to a merger effected under DGCL 253 or 267 is not owned by the parent immediately prior to
the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
Since Twin Vee is listed on Nasdaq, Forza shareholders are not entitled
to appraisal rights with regard to the Merger . |
| Corporate Taxes and Fees |
Delaware imposes annual franchise tax fees on all corporations incorporated
in Delaware. The annual fee ranges from a minimum tax of $175.00 to a maximum of $250,000, which is calculated using an equation based
on the number of shares authorized, the number of shares issued, and the gross assets of the corporation. |
Delaware imposes annual franchise tax fees on all corporations incorporated in Delaware. The annual fee ranges from a minimum tax of $175.00 to a maximum of $250,000, which is calculated using an equation based on the number of shares authorized, the number of shares issued, and the gross assets of the corporation. |
TWIN VEE ANNUAL MEETING PROPOSALS
TWIN VEE PROPOSAL NO. 1—APPROVAL OF THE ISSUANCE
OF SHARES OF TWIN VEE COMMON STOCK PURSUANT TO THE TERMS OF THE MERGER AGREEMENT
At the Twin Vee Annual Meeting, Twin Vee stockholders will be asked to approve
the issuance of shares of Twin Vee Common Stock pursuant to the Merger Agreement. Immediately following the Merger, it is expected that
the stockholders of Twin Vee and Forza would own approximately 64% and 36% , respectively of the Twin Vee Common Stock then outstanding.
The terms of, reasons for and other aspects of the Merger Agreement, the issuance of the Twin Vee Common Stock pursuant to the Merger
Agreement and additional information are described elsewhere in this Joint Proxy Statement/Prospectus.
Vote Required
The affirmative vote of the holders of a majority
of the shares of Twin Vee Common Stock present in person or represented by proxy at the Twin Vee Annual Meeting and entitled to vote on
the subject matter is required for the approval of the issuance of shares of Twin Vee Common Stock pursuant to the terms of the Merger
Agreement.
Twin Vee Board of Directors Recommendation
THE TWIN VEE BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE APPROVAL OF THE ISSUANCE OF SHARES OF TWIN VEE COMMON STOCK PURSUANT TO THE TERMS OF THE MERGER AGREEMENT.
TWIN VEE PROPOSAL NO. 2—TWIN VEE ELECTION
OF DIRECTORS PROPOSAL
At the Twin Vee Annual Meeting,
Twin Vee stockholders will vote on the election of two Class III directors to serve for a three-year term. The Twin Vee Board of
Directors has unanimously nominated Joseph Visconti and Kevin Schuyler, whose terms of office expire in 2024, upon the recommendation
of Twin Vee’s nominating and corporate governance committee for re-election to the Twin Vee Board of Directors as Class III
directors. If elected at the Twin Vee Annual Meeting, each nominee would serve until the 2027 annual meeting of Twin Vee stockholders
and until his successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal.
The nominees have indicated that they are willing and able to continue to serve as directors. If any nominee becomes unavailable for election
as a result of an unexpected occurrence, shares that would have been voted for the nominee will instead be voted for the election of a
substitute nominee proposed by Twin Vee. It is Twin Vee’s policy to encourage directors and nominees for director to attend the
Twin Vee Annual Meeting.
Twin Vee stockholders should
understand, however, that if the Merger with Forza is completed, the election of Joseph Visconti and Kevin Schuyler will not be impacted
despite the fact that the Twin Vee Board of Directors will be reconstituted upon completion of the Merger, in accordance with the Merger
Agreement because Twin Vee expects that Joseph Visconti and Kevin Schuyler will serve on the board of directors of the combined company,
together with the remaining members of the Forza Board of Directors (Joseph Visconti, Marcia Kull, Kevin Schuyler, and Neil Ross).
Vote Required
The Class III directors
will be elected by a plurality of the affirmative votes cast in person or by proxy and entitled to vote on the election of directors at
the Twin Vee Annual Meeting. Accordingly, the two nominees receiving the highest number of affirmative votes will be elected. Stockholders
do not have cumulative voting rights in the election of directors. If you “WITHHOLD” authority to vote with respect
to one or both of the director nominees, your vote will have no effect on the election of such nominees. Broker non-votes will
have no effect on the election of nominees.
THE TWIN VEE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF JOSEPH VISCONTI AND KEVIN SCHUYLER AS CLASS III DIRECTORS PURSUANT TO
THIS TWIN VEE ELECTION OF DIRECTORS PROPOSAL.
Unless otherwise instructed,
it is the intention of the persons named in the accompanying Twin Vee proxy card to vote shares represented by properly executed proxy
cards “FOR” the election of each of Joseph Visconti and Kevin Schuyler.
TWIN VEE PROPOSAL NO. 3—RATIFICATION OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Twin Vee’s independent registered public accounting
firm for the fiscal year ended December 31, 2023 was the firm of Grassi & Co., CPAs, P.C. The Twin Vee Audit Committee has selected
Grassi & Co., CPAs, P.C. as Twin Vee’s independent registered public accounting firm for fiscal 2024.
A representative of Grassi & Co., CPAs, P.C. is
expected to be present either in person or via teleconference at the Twin Vee Annual Meeting and be available to respond to appropriate
questions, and will have the opportunity to make a statement if he or she desires to do so.
Vote Required
The affirmative vote of the holders of a majority
of the voting power of the Twin Vee Common Stock present in person or represented by proxy at the Twin Vee Annual Meeting and entitled
to vote on this matter will be required to approve the ratification of the appointment of Twin Vee’s independent registered public
accounting firm. Abstentions will be counted and will have the same effect as a vote against the proposal. Because this proposal is a
routine matter for which brokers have discretion, broker non-votes are not expected for this matter. Ratification of the appointment of
Grassi & Co., CPAs, P.C. by Twin Vee’s stockholders is not required by law, Twin Vee’s bylaws or other governing documents.
As a matter of policy, however, the appointment is being submitted to Twin Vee’s stockholders for ratification at the Twin Vee Annual
Meeting. If Twin Vee’s stockholders fail to ratify the appointment, the Twin Vee Audit Committee will reconsider whether or not
to retain that firm. Even if the appointment is ratified, the Twin Vee Audit Committee, in its discretion, may direct the appointment
of different independent auditors at any time during the year if they determine that such a change would be in Twin Vee’s best interest
and the best interests of its stockholders.
THE TWIN VEE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE SELECTION OF GRASSI
& CO., CPAS, P.C. AS ITS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR ITS FISCAL YEAR ENDING ON DECEMBER 31, 2024.
TWIN VEE AUDIT COMMITTEE REPORT1
The Twin Vee Audit Committee has reviewed and discussed
Twin Vee’s audited consolidated financial statements as of and for the year ended December 31, 2023 with the management of Twin
Vee and Grassi & Co., CPAs, P.C., Twin Vee’s independent registered public accounting firm. Further, the Twin Vee Audit Committee
has discussed with Grassi & Co., CPAs, P.C. the matters required by applicable requirements of the Public Company Accounting Oversight
Board (“PCAOB”) and the SEC, and other applicable regulations, relating to the firm’s judgment about the quality, not
just the acceptability, of Twin Vee’s accounting principles, the reasonableness of significant judgments and estimates, and the
clarity of disclosures in the consolidated financial statements.
The Twin Vee Audit Committee also has received the
written disclosures and the letter from Grassi & Co., CPAs, P.C. required by PCAOB Ethics and Independence Rule 3526, Communication
with Audit Committees Concerning Independence, which relate to Grassi & Co., CPAs, P.C.’s independence from Twin Vee, and
has discussed with Grassi & Co., CPAs, P.C. its independence from Twin Vee. The Twin Vee Audit Committee has also considered whether
the independent registered public accounting firm’s provision of non-audit services to Twin Vee is compatible with maintaining the
firm’s independence. The Twin Vee Audit Committee has concluded that the independent registered public accounting firm is independent
from Twin Vee and its management. The Twin Vee Audit Committee also considered whether, and determined that, the independent registered
public accounting firm’s provision of other non-audit services to Twin Vee was compatible with maintaining Grassi & Co., CPAs,
P.C.’s independence. The Twin Vee Audit Committee also reviewed management’s report on its assessment of the effectiveness
of Twin Vee’s internal control over financial reporting. In addition, the Twin Vee Audit Committee reviewed key initiatives and
programs aimed at strengthening the effectiveness of Twin Vee’s internal and disclosure control structure. The members of the Twin
Vee Audit Committee are not Twin Vee employees and are not performing the functions of auditors or accountants. Accordingly, it is not
the duty or responsibility of the Twin Vee Audit Committee or its members to conduct “field work” or other types of auditing
or accounting reviews or procedures or to set auditor independence standards. Members of the Twin Vee Audit Committee necessarily rely
on the information provided to them by management and the independent auditors. Accordingly, the Twin Vee Audit Committee’s considerations
and discussions referred to above do not constitute assurance that the audit of Twin Vee’s consolidated financial statements has
been carried out in accordance with the standards of the PCAOB or that Twin Vee’s auditors are in fact independent.
Based on the reviews, reports and discussions referred
to above, the Twin Vee Audit Committee recommended to the Twin Vee Board of Directors, and the Twin Vee Board of Directors approved, that
Twin Vee’s audited consolidated financial statements for the year ended December 31, 2023 and management’s assessment of the
effectiveness of Twin Vee’s internal control over financial reporting be included in Twin Vee’s Annual Report on Form 10-K
for the year ended December 31, 2023, for filing with the SEC. The Twin Vee Audit Committee has recommended, and the Twin Vee Board of
Directors has approved, subject to stockholder ratification, the selection of Grassi & Co., CPAs, P.C. as Twin Vee’s independent
registered public accounting firm for the year ending December 31, 2024.
| |
Submitted by the Twin Vee Audit Committee.
Kevin Schuyler
Bard Rockenbach
James Melvin
Neil Ross |
| |
|
| |
Members of the Twin Vee Audit Committee |
1 The material in this report is not
“soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of
Twin Vee under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
Fees Paid to the Twin Vee Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees
including expenses billed to Twin Vee for the years ended December 31, 2023 and 2022 by Twin Vee’s auditors:
| | |
Year ended | |
Year ended |
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Audit Fees | |
$ | 138,712 | | |
$ | 125,000 | |
| Audit-Related Fees | |
| 4,110 | | |
| 7,600 | |
| Tax Fees | |
| — | | |
| — | |
| All Other Fees | |
| — | | |
| 61,400 | |
| | |
$ | 142,822 | | |
| 194,000 | |
The Twin Vee Audit Committee has adopted procedures
for pre-approving all audit and non-audit services provided by the independent registered public accounting firm, including the fees and
terms of such services. These procedures include reviewing detailed back-up documentation for audit and permitted non-audit services.
The documentation includes a description of, and a budgeted amount for, particular categories of non-audit services that are recurring
in nature and therefore anticipated at the time that the budget is submitted. Twin Vee Audit Committee approval is required to exceed
the pre-approved amount for a particular category of non-audit services and to engage the independent registered public accounting firm
for any non-audit services not included in those pre-approved amounts. For both types of pre-approval, the Twin Vee Audit Committee considers
whether such services are consistent with the rules on auditor independence promulgated by the SEC and the PCAOB. The Twin Vee Audit Committee
also considers whether the independent registered public accounting firm is best positioned to provide the most effective and efficient
service, based on such reasons as the auditor’s familiarity with Twin Vee’s business, people, culture, accounting systems,
risk profile, and whether the services enhance its ability to manage or control risks, and improve audit quality. The Twin Vee Audit Committee
may form and delegate pre-approval authority to subcommittees consisting of one or more members of the Twin Vee Audit Committee, and such
subcommittees must report any pre-approval decisions to the Twin Vee Audit Committee at its next scheduled meeting. All of the services
provided by the independent registered public accounting firm in 2022 and 2023 were pre-approved by the Twin Vee Audit Committee.
TWIN VEE PROPOSAL NO. 4—ADOPTION AND APPROVAL
OF THE TWIN VEE REVERSE STOCK SPLIT PROPOSAL
The Twin Vee Board of Directors has adopted a resolution
setting forth a proposed amendment to Twin Vee’s Certificate of Incorporation to effect a reverse stock split of the issued and
outstanding shares of Twin Vee Common Stock, a copy of which is set forth in the certificate of amendment annexed to this Joint Proxy
Statement/Prospectus as Annex B-1 (the “Twin Vee Reverse Stock Split Amendment”), declared such amendment
advisable, and is recommending that its stockholders approve, such proposed amendment. Such amendment will be effected after stockholder
approval thereof only in the event the Twin Vee Board of Directors still deems it advisable. Holders of Twin Vee Common Stock are being
asked to approve the proposal that Article IV of its Certificate of Incorporation be amended to effect a reverse stock split of the
Twin Vee Common Stock at a ratio in the range of one (1) share of Twin Vee Common Stock for every two (2) shares of Twin Vee
Common Stock to one (1) share of Common Stock for every twenty (20) shares of Twin Vee Common Stock. If the Twin Vee Reverse
Stock Split is approved by its stockholders and if the Twin Vee Reverse Stock Split Amendment is filed with the Secretary of State of
the State of Delaware, the Twin Vee Certificate of Incorporation will be amended to effect the Twin Vee Reverse Stock Split by reducing
the outstanding number of shares of Twin Vee Common Stock. If the Twin Vee Board of Directors does not implement an approved Twin Vee
Reverse Stock Split prior to the one-year anniversary of the Twin Vee Annual Meeting, this vote will be of no further force and effect
and the Twin Vee Board of Directors will again seek stockholder approval before implementing any reverse stock split after that time.
The Twin Vee Board of Directors may abandon the proposed amendment to effect the Twin Vee Reverse Stock Split at any time prior to its
effectiveness, whether before or after stockholder approval thereof.
As of the Twin Vee Record Date, Twin Vee had [●]
shares of Twin Vee Common Stock outstanding. For purposes of illustration, if the Twin Vee Reverse Stock Split is effected at a ratio
of 1-for-10, the number of issued and outstanding shares of Twin Vee Common Stock after the Twin Vee Reverse Stock Split would be approximately
[●] shares. The Twin Vee Board of Directors’ decision as to whether and when to effect the Twin Vee Reverse Stock Split will
be based on a number of factors, including market conditions, existing and expected trading prices for the Twin Vee Common Stock, and
the continued listing requirements of the Nasdaq Capital Market. See below for a discussion of the factors that the Twin Vee Board of
Directors considered in determining the Twin Vee Reverse Stock Split Ratio range, some of which included, but was not limited to, the
following: the historical trading price and trading volume of the Twin Vee Common Stock; the expected impact of the Twin Vee Reverse Stock
Split on the trading market for the Twin Vee Common Stock in the short-term and long-term, and general market, economic conditions,
and other related conditions prevailing in Twin Vee’s industry.
The Twin Vee Reverse Stock Split, if effected, will
not change the number of authorized shares of Twin Vee Common Stock or Preferred Stock, or the par value of Twin Vee Common Stock or Preferred
Stock; however, effecting the Twin Vee Reverse Stock Split will provide for additional shares of authorized but unissued shares of Twin
Vee Common Stock. As of the date of this Joint Proxy Statement/Prospectus, Twin Vee’s current authorized number of shares of Twin
Vee Common Stock is sufficient to satisfy all of its share issuance obligations and current share plans and Twin Vee does not have any
current plans, arrangements or understandings relating to the issuance of the additional shares of authorized Twin Vee Common Stock that
will become available for issuance following the Twin Vee Reverse Stock Split.
Purpose and Background of the Twin Vee Reverse
Stock Split
The Twin Vee Board of Directors’ primary objective
in asking for authority to effect a reverse split is to increase the per-share trading price of Twin Vee Common Stock. If the Twin
Vee Board of Directors does not implement the Twin Vee Reverse Stock Split prior to the one-year anniversary of the date on which
the Twin Vee Reverse Stock Split is approved by its stockholders at the Twin Vee Annual Meeting, the authority granted in this proposal
to implement the Twin Vee Reverse Stock Split will terminate and the Twin Vee Reverse Stock Split will be abandoned.
As background, Twin Vee received
notice on May 10, 2024 from the Nasdaq Listing Qualifications Department (the “Staff”) of Nasdaq notifying it that
for the preceding 30 consecutive business days (March 28, 2024 through May 9, 2024), its 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 notice had
no immediate effect on the listing or trading of Twin Vee Common Stock and the Twin Vee Common Stock continues to trade on The Nasdaq
Capital Market under the symbol “VEEE.”
Twin Vee was given 180 days, or until November
6, 2024, to regain compliance with the Minimum Bid Price Requirement; provided that Nasdaq retains discretion to grant an additional 180-calendar day
grace period to determine that it has demonstrated an ability to maintain long-term compliance so long as Twin Vee (i) meets
the continued listing requirement for the market value of its publicly held shares and all other initial listing standards for Nasdaq,
with the exception of the Minimum Bid Price Requirement, and (ii) provides a written notice to the Staff of its intention to cure
the deficiency during the second grace period by effecting a reverse stock split. In the event that Twin Vee is unable to cure the deficiency,
and ultimately receive notice that Twin Vee Common Stock is being delisted, Nasdaq listing rules permit Twin Vee to appeal the delisting
determination by the Staff to a Nasdaq hearings panel. Accordingly, Twin Vee is hereby asking its stockholders to approve a reverse stock
split to, among other things, give Twin Vee the option to seek to regain compliance with the Minimum Bid Price Requirement.
The Twin Vee Board of Directors believes that the
failure of stockholders to approve the Twin Vee Reverse Stock Split Proposal could prevent it from maintaining compliance with the Minimum
Bid Price Requirement and could inhibit its ability to conduct capital raising activities, among other things. If Nasdaq delists the Twin
Vee Common Stock, then the Twin Vee Common Stock would likely become traded on an over-the-counter market such as those maintained
by OTC Markets Group Inc., which do not have the substantial corporate governance or quantitative listing requirements for continued trading
that Nasdaq has. In that event, interest in Twin Vee Common Stock may decline and certain institutions may not have the ability to trade
in the Twin Vee Common Stock, all of which could have a material adverse effect on the liquidity or trading volume of the Twin Vee Common
Stock. If the Twin Vee Common Stock becomes significantly less liquid due to delisting from Nasdaq, Twin Vee stockholders may not have
the ability to liquidate their investments in Twin Vee Common Stock as and when desired and Twin Vee believes its ability to maintain
analyst coverage, attractive investor interest, and have access to capital may become significantly diminished as a result.
If the stockholders approve the Twin Vee Reverse Stock
Split Proposal and the Twin Vee Board of Directors determines to implement the Twin Vee Reverse Stock Split, Twin Vee will file the Twin
Vee Reverse Stock Split Amendment to amend the existing provision of its Certificate of Incorporation to effect the Twin Vee Reverse Stock
Split. The text of the form of proposed amendment is set forth in the Twin Vee Reverse Stock Split Amendment, which is annexed to this
Joint Proxy Statement/Prospectus as Annex B-1.
The Twin Vee Reverse Stock Split will be effected
simultaneously for all issued and outstanding shares of Twin Vee Common Stock and the Twin Vee Reverse Stock Split Ratio will be the same
for all issued and outstanding shares of Twin Vee Common Stock. The Twin Vee Reverse Stock Split will affect all of its stockholders uniformly
and will not affect any stockholder’s percentage ownership interests in Twin Vee, except those stockholders who would have otherwise
received fractional shares will receive cash in lieu of such fractional shares determined in the manner set forth below under the heading
“Fractional Shares.” After the Twin Vee Reverse Stock Split, each share of the Twin Vee Common Stock will have the same voting
rights and rights to dividends and distributions and will be identical in all other respects to the Twin Vee Common Stock now authorized.
The Twin Vee Reverse Stock Split will not affect Twin Vee continuing to be subject to the periodic reporting requirements of the Exchange Act.
The Twin Vee Reverse Stock Split is not intended to be, and will not have the effect of, a “going private transaction” covered
by Rule 13e-3 under the Exchange Act.
The Twin Vee Reverse Stock Split may result in some
stockholders owning “odd-lots” of less than 100 shares of the Twin Vee Common Stock. Brokerage commissions and other
costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lots” of even multiples
of 100 shares. In addition, we will not issue fractional shares in connection with the Twin Vee Reverse Stock Split, and stockholders
who would have otherwise been entitled to receive such fractional shares will receive an amount in cash determined in the manner set forth
below under the heading “Fractional Shares.”
Following the effectiveness of the Twin Vee Reverse
Stock Split, if approved by the stockholders and implemented by Twin Vee, current stockholders will hold fewer shares of Twin Vee Common
Stock.
If the Twin Vee Board of Directors decides to implement
the Twin Vee Reverse Stock Split, Twin Vee would communicate to the public, prior to the Effective Time of the Twin Vee Reverse Stock
Split, additional details regarding the Twin Vee Reverse Stock Split (including the final Twin Vee Reverse Stock Split Ratio, as determined
by the Twin Vee Board of Directors). By voting in favor of the Twin Vee Reverse Stock Split, you are also expressly authorizing the Twin
Vee Board of Directors to determine not to proceed with, and to defer or to abandon, the Twin Vee Reverse Stock Split, in the Twin Vee
Board of Directors’ sole discretion. In determining whether to implement the Twin Vee Reverse Stock Split following receipt of stockholder
approval of the Twin Vee Reverse Stock Split, and which Twin Vee Reverse Stock Split Ratio to implement, if any, the Twin Vee Board of
Directors may consider, among other things, various factors, such as:
●Twin
Vee’s ability to maintain its listing on the Nasdaq Capital Market;
●the
historical trading price and trading volume of the Twin Vee Common Stock;
●the
then-prevailing trading price and trading volume of the Twin Vee Common Stock and the expected impact of the Twin Vee Reverse Stock
Split on the trading market for the Twin Vee Common Stock in the short and long term;
●which
Twin Vee Reverse Stock Split Ratio would result in the greatest overall reduction in Twin Vee’s administrative costs; and
●prevailing
general market and economic conditions.
Reasons for the Twin Vee Reverse Stock Split
To increase the per share price of Twin Vee Common
Stock. As discussed above, the primary objective for effecting the Twin Vee Reverse Stock Split, should the Twin Vee Board of Directors
choose to effect one, would be to increase the per share price of the Twin Vee Common Stock and regain compliance with the Nasdaq Minimum
Bid Price Requirement. The Twin Vee Board of Directors believes that, should the appropriate circumstances arise, effecting the Twin Vee
Reverse Stock Split, could, among other things, help it to appeal to a broader range of investors, generate greater investor interest
in Twin Vee, and improve the perception of Twin Vee Common Stock as an investment security. Twin Vee Common Stock is listed on the Nasdaq
Capital Market and the failure to comply with the $1.00 minimum bid price requirement may be cured by effecting the Twin Vee Reverse Stock
Split.
To potentially improve the liquidity of the Twin
Vee Common Stock. The Twin Vee Reverse Stock Split could allow a broader range of institutions to invest in the Twin Vee Common Stock
(namely, funds that are prohibited from buying stocks whose price is below certain thresholds), potentially increasing trading volume
and liquidity of the Twin Vee Common Stock and potentially decreasing the volatility of the Twin Vee Common Stock if institutions become
long-term holders of the Twin Vee Common Stock. The Twin Vee Reverse Stock Split could help increase analyst and broker interest
in the Twin Vee Common Stock as their policies can discourage them from following or recommending companies with low stock prices. Because
of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal
policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from
recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks
economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks generally represent a
higher percentage of the stock price than commissions on higher-priced stocks, a low average price per share of Twin Vee Common Stock
can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would
be the case if the share price were higher. Some investors, however, may view the Twin Vee Reverse Stock Split negatively since it reduces
the number of shares of Twin Vee Common Stock available in the public market. If the Twin Vee Reverse Stock Split Proposal is approved
and the Twin Vee Board of Directors believes that effecting the Twin Vee Reverse Stock Split is in Twin Vee’s best interest and
the best interest of its stockholders, the Twin Vee Board of Directors may effect the Twin Vee Reverse Stock Split, regardless of whether
its stock is at risk of delisting from Nasdaq Capital Market, for purposes of enhancing the liquidity of the Twin Vee Common Stock and
to facilitate capital raising.
To increase the number of additional shares issuable
under Twin Vee’s charter. A Twin Vee Reverse Stock Split will reduce the nominal number of shares of Twin Vee Common Stock outstanding
and the number of shares of Twin Vee Common Stock issuable on exercise or conversion, as applicable, of outstanding warrants or convertible
debentures, while leaving the number of shares issuable under its charter unchanged. A Twin Vee Reverse Stock Split will therefor effectively
increase the number of shares of the Twin Vee Common Stock that Twin Vee is able to issue. This effective increase will facilitate future
capital fundraising on its part. Some investors may find the Twin Vee Common Stock more attractive if the Twin Vee Reverse Stock Split
is effected with additional assurance that Twin Vee is unlikely to be limited in its ability to access needed capital by the number of
shares of Twin Vee Common Stock authorized for issuance. However, other investors may find the Twin Vee Common Stock a less attractive
investment with the knowledge that additional dilution of the Twin Vee Common Stock is possible.
Certain Risks Associated with a Twin Vee Reverse
Stock Split
Reducing the number of outstanding shares of the Twin
Vee Common Stock through the Twin Vee Reverse Stock Split Proposal is intended, absent other factors, to increase the per share market
price of the Twin Vee Common Stock. Other factors, however, such as Twin Vee’s financial results, market conditions, the market
perception of Twin Vee’s business and other risks, including those set forth below and in Twin Vee’s SEC filings and reports,
may adversely affect the market price of the Twin Vee Common Stock. As a result, there can be no assurance that the Twin Vee Reverse Stock
Split, if completed, will result in the intended benefits described above, that the market price of the Twin Vee Common Stock will increase
following the Twin Vee Reverse Stock Split or that the market price of the Twin Vee Common Stock will not decrease in the future.
The Twin Vee Reverse Stock Split May Not Result
in a Sustained Increase in the Price of the Twin Vee Common Stock. As noted above, the principal purpose of the Twin Vee Reverse Stock
Split Proposal is to maintain a higher average per share market closing price of the Twin Vee Common Stock of at least $1.00 per share
in order to regain compliance with Nasdaq’s Minimum Bid Price Requirement. However, the effect of the Twin Vee Reverse Stock Split
upon the market price of the Twin Vee Common Stock cannot be predicted with any certainty and Twin Vee cannot assure you that the Twin
Vee Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all.
The Twin Vee Reverse Stock Split May Decrease the
Liquidity of the Twin Vee Common Stock. The Twin Vee Board of Directors believes that the Twin Vee Reverse Stock Split may result
in an increase in the market price of the Twin Vee Common Stock, which could lead to increased interest in the Twin Vee Common Stock and
possibly promote greater liquidity for its stockholders. However, the Twin Vee Reverse Stock Split will also reduce the total number of
outstanding shares of Twin Vee Common Stock, which may lead to reduced trading and a smaller number of market makers for the Twin Vee
Common Stock.
The Twin Vee Reverse Stock Split May Result in
Some Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell.
If the Twin Vee Reverse Stock Split is implemented, it will increase the number of stockholders who own “odd lots” of
less than 100 shares of Twin Vee Common Stock. A purchase or sale of less than 100 shares of Twin Vee Common Stock (an “odd
lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service”
brokers. Therefore, those stockholders who own less than 100 shares of Twin Vee Common Stock following the Twin Vee Reverse Stock
Split may be required to pay higher transaction costs if they sell their Twin Vee Common Stock.
The Twin Vee Reverse Stock Split May Lead to a
Decrease in the Overall Market Capitalization of Twin Vee. The Twin Vee Reverse Stock Split may be viewed negatively by the market
and, consequently, could lead to a decrease in Twin Vee’s overall market capitalization. If the per share market price of the Twin
Vee Common Stock does not increase in proportion to the Twin Vee Reverse Stock Split Ratio, then Twin Vee’s value, as measured by
its market capitalization, will be reduced.
The Twin Vee Reverse Stock Split May Lead to Further
Dilution of the Twin Vee Common Stock. Since the Twin Vee Reverse Stock Split would reduce the number of shares of Twin
Vee Common Stock outstanding and the number of shares of Twin Vee Common Stock issuable on exercise or conversion, as applicable, of outstanding
warrants or options, while leaving the number of shares authorized and issuable under Twin Vee’s Certificate of Incorporation unchanged,
the Twin Vee Reverse Stock Split would effectively increase the number of shares of the Twin Vee Common Stock that Twin Vee would be able
to issue and could lead to dilution of the Twin Vee Common Stock in future financings.
Potential Anti-takeover Effects of the Twin Vee
Reverse Stock Split
Release No. 34-15230 of the staff of the SEC
requires disclosure and discussion of the effects of any action, including the proposals discussed herein, that may be used as an anti-takeover mechanism.
The relative increase in the number of shares of Twin Vee Common Stock available for issuance vis-à-vis the outstanding shares
of Twin Vee Common Stock, could, under certain circumstances, have an anti-takeover effect, although this is not the purpose or intent
of the Twin Vee Board of Directors. It could potentially deter takeovers, including takeovers that the Twin Vee Board of Directors has
determined are not in the best interest of Twin Vee’s stockholders, in that additional shares could be issued (within the limits
imposed by applicable law) in one or more transactions that could make a change in control or takeover more difficult. For example, Twin
Vee could issue additional shares so as to dilute the stock ownership or voting rights of persons seeking to obtain control without its
agreement. Similarly, the issuance of additional shares to certain persons allied with Twin Vee’s management could have the effect
of making it more difficult to remove its current management by diluting the stock ownership or voting rights of persons seeking to cause
such removal. The increase in the number of shares of authorized and unissued shares of Twin Vee Common Stock therefore may have the effect
of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts, the Twin
Vee Reverse Stock Split may limit the opportunity for Twin Vee’s stockholders to dispose of their shares at the higher price generally
available in takeover attempts or that may be available under a merger proposal.
Impact of a Twin Vee Reverse Stock Split If Implemented
A Twin Vee Reverse Stock Split would affect all holders
of Twin Vee Common Stock uniformly and would not affect any stockholder’s percentage ownership interests or proportionate voting
power. The other principal effects of the Twin Vee Reverse Stock Split will be that:
●the number of issued and outstanding shares
of Twin Vee Common Stock (and treasury shares), if any, will be reduced proportionately based on the final Twin Vee Reverse Stock Split
Ratio, as determined by the Twin Vee Board of Directors;
●based on the final Twin Vee Reverse Stock Split Ratio, the per share exercise
price or conversion price, as applicable, of all outstanding warrants will be increased proportionately and the number of shares of Twin
Vee Common Stock issuable upon the exercise or conversion, as applicable, of all outstanding warrants and convertible debentures will
be reduced proportionately; and
●the number of shares reserved for issuance pursuant
to any outstanding equity awards and any maximum number of shares with respect to which equity awards may be granted will be reduced proportionately
based on the final Twin Vee Reverse Stock Split Ratio.
The following table sets forth the approximate number
of shares of the Twin Vee Common Stock that would be outstanding immediately after the Twin Vee Reverse Stock Split based on the current
authorized number of shares of Twin Vee Common Stock at various exchange ratios, based on [●] shares of Twin Vee Common Stock actually
issued and outstanding as of [●], 2024. The table does not account for fractional shares that will be paid in cash.
| | |
Estimated
Number of
Shares of Twin Vee
Common Stock
Before Twin Vee Reverse
Stock Split | |
Estimated
Number of
Shares of Twin Vee
Common Stock
After Twin Vee Reverse
Stock Split on a
1-for-10 basis | |
Estimated
Number of
Shares of Twin Vee
Common Stock
After Twin Vee Reverse
Stock Split on a
1-for-20 basis |
| Authorized Twin Vee Common Stock | |
| 50,000,000 | | |
| 50,000,000 | | |
| 50,000,000 | |
| Shares of Twin Vee Common Stock issued and outstanding | |
| | | |
| | | |
| | |
| Shares of Twin Vee Common Stock issuable under outstanding options, RSUs, warrants, or reserved for issuance under existing plans | |
| | | |
| | | |
| | |
| Shares of Twin Vee Common Stock authorized but unissued (Authorized Twin Vee Common Stock minus issued and outstanding shares, shares issuable upon outstanding options, RSUs, warrants, and shares reserved for issuance under existing incentive plans) | |
| | | |
| | | |
| | |
Twin Vee is currently authorized to issue a maximum
of 50,000,000 shares of Twin Vee Common Stock. As of the Twin Vee Record Date, there were [●] shares of Twin Vee Common Stock
issued and outstanding. Although the number of authorized shares of Twin Vee Common Stock will not change as a result of the Twin Vee
Reverse Stock Split, the number of shares of Twin Vee Common Stock issued and outstanding will be reduced in proportion to the Twin Vee
Reverse Stock Split ratio selected by the Twin Vee Board of Directors. Thus, the Twin Vee Reverse Stock Split will effectively increase
the number of authorized and unissued shares of Twin Vee Common Stock available for future issuance by the amount of the reduction effected
by the Twin Vee Reverse Stock Split.
Following the Twin Vee Reverse Stock Split, the Twin
Vee Board of Directors will have the authority, subject to applicable securities laws, to issue all authorized and unissued shares without
further stockholder approval, upon such terms and conditions as the Twin Vee Board of Directors deems appropriate. Although Twin Vee considers
financing opportunities from time to time, it does not currently have any plans, proposals or understandings to issue the additional shares
that would be available if the Twin Vee Reverse Stock Split is approved and effected, but some of the additional shares underlie warrants
and convertible debentures, which could be exercised or converted after the Twin Vee Reverse Stock Split is effected.
Effects of the Twin Vee Reverse Stock Split
Management does not anticipate that Twin Vee’s
financial condition, the percentage ownership of Twin Vee Common Stock by management, the number of Twin Vee’s stockholders or any
aspect of its business will materially change as a result of the Twin Vee Reverse Stock Split. Because the Twin Vee Reverse Stock Split
will apply to all issued and outstanding shares of Twin Vee Common Stock and outstanding rights to purchase Twin Vee Common Stock or to
convert other securities into Twin Vee Common Stock, the proposed Twin Vee Reverse Stock Split will not alter the relative rights and
preferences of existing stockholders, except to the extent the Twin Vee Reverse Stock Split will result in fractional shares, as discussed
in more detail below.
The Twin Vee Common Stock is currently registered
under Section 12(b) of the Exchange Act, and Twin Vee is subject to the periodic reporting and other requirements of the
Exchange Act. The Twin Vee Reverse Stock Split will not affect the registration of the Twin Vee Common Stock under the Exchange Act
or the listing of the Twin Vee Common Stock on Nasdaq Capital Market (other than to the extent it facilitates compliance with Nasdaq Capital
Market continued listing standards). Following the Twin Vee Reverse Stock Split, the Twin Vee Common Stock will continue to be listed
on the Nasdaq Capital Market, although it will be considered a new listing with a new Committee on Uniform Securities Identification Procedures,
or CUSIP number.
The rights of the holders of the Twin Vee Common Stock
will not be affected by the Twin Vee Reverse Stock Split, other than as a result of the treatment of fractional shares as described below.
For example, a holder of 2% of the voting power of the outstanding shares of the Twin Vee Common Stock immediately prior to the effectiveness
of the Twin Vee Reverse Stock Split will generally continue to hold 2% of the voting power of the outstanding shares of the Twin Vee Common
Stock immediately after effecting the Twin Vee Reverse Stock Split. The number of stockholders of record will not be affected by the Twin
Vee Reverse Stock Split (except to the extent any are cashed out as a result of holding fractional shares). If approved and implemented,
the Twin Vee Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of the Twin
Vee Common Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots
are generally higher than the costs of transactions in “round lots” of even multiples of 100 shares. The Twin Vee Board
of Directors believes, however, that these potential effects are outweighed by the benefits of the Twin Vee Reverse Stock Split.
Effectiveness of the Twin Vee Reverse Stock Split.
The Twin Vee Reverse Stock Split, if approved by Twin Vee’s stockholders, would become effective upon the filing and effectiveness
of an amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware, which would take place at the
Twin Vee Board of Directors’ discretion. The exact timing of the filing of the Twin Vee Reverse Stock Split Amendment, if filed,
would be determined by the Twin Vee Board of Directors based on its evaluation as to when such action would be the most advantageous to
Twin Vee and its stockholders. In addition, the Twin Vee Board of Directors reserves the right, notwithstanding stockholder approval and
without further action by the stockholders, to elect not to proceed with the Twin Vee Reverse Stock Split at any time prior to filing
the Twin Vee Reverse Stock Split Amendment with the Secretary of State of the State of Delaware, if the Twin Vee Board of Directors, in
its sole discretion, determines that it is no longer in Twin Vee’s best interests or the best interests of its stockholders to proceed
with the Twin Vee Reverse Stock Split. If the Twin Vee Board of Directors does not implement the Twin Vee Reverse Stock Split prior to
the one-year anniversary of the date on which the Twin Vee Reverse Stock Split is approved by Twin Vee stockholders at the Twin Vee
Annual Meeting, the authority granted in this proposal to implement the Twin Vee Reverse Stock Split will terminate and the Twin Vee Reverse
Stock Split will be abandoned.
Effect on Par Value; Reduction in Stated Capital.
The proposed Twin Vee Reverse Stock Split will not affect the par value of Twin Vee’s stock, which will remain at $0.001 per
share of Twin Vee Common Stock and $0.001 per share of Twin Vee Preferred Stock. As a result, the stated capital on Twin Vee’s balance
sheet attributable to Twin Vee Common Stock, which consists of the par value per share of Twin Vee Common Stock multiplied by the aggregate
number of shares of Twin Vee Common Stock issued and outstanding, will be reduced in proportion to the Twin Vee Reverse Stock Split Ratio
selected by the Twin Vee Board of Directors. Correspondingly, Twin Vee’s additional paid-in capital account, which consists
of the difference between Twin Vee’s stated capital and the aggregate amount paid to Twin Vee upon issuance of all currently outstanding
shares of the Twin Vee Common Stock, will be increased by the amount by which the stated capital is reduced. Twin Vee’s stockholders’
equity, in the aggregate, will remain unchanged.
Book-Entry Shares. If the Twin
Vee Reverse Stock Split is effected, stockholders, either as direct or beneficial owners, will have their holdings electronically adjusted
by Twin Vee’s transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their
benefit, as the case may be) to give effect to the Twin Vee Reverse Stock Split. Banks, brokers, custodians or other nominees will be
instructed to effect the Twin Vee Reverse Stock Split for their beneficial holders holding Twin Vee Common Stock in street name. However,
these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing the Twin
Vee Reverse Stock Split and making payment for fractional shares. If a stockholder holds shares of Twin Vee Common Stock with a bank,
broker, custodian or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker, custodian
or other nominee. Twin Vee does not issue physical certificates to stockholders.
No Appraisal Rights. Under the Delaware General
Corporation Law, Twin Vee stockholders are not entitled to dissenters’ rights or appraisal rights with respect to the Twin Vee Reverse
Stock Split described in the Twin Vee Reverse Stock Split Proposal, and Twin Vee will not independently provide Twin Vee stockholders
with any such rights.
Fractional Shares. Twin Vee does not intend
to issue fractional shares in connection with the Twin Vee Reverse Stock Split. And, in lieu thereof, any person who would otherwise be
entitled to a fractional share of Twin Vee Common Stock as a result of the reclassification and combination following the effective time
of the Twin Vee Reverse Stock Split (after taking into account all fractional shares of Twin Vee Common Stock otherwise issuable to such
holder) shall be entitled to receive a cash payment equal to the number of shares of the Twin Vee Common Stock held by such stockholder
before the Twin Vee Reverse Stock Split that would otherwise have been exchanged for such fractional share interest multiplied by the
average closing sales price of the Twin Vee Common Stock as reported on the Nasdaq Capital Market for the ten days preceding the
effective time of the Twin Vee Reverse Stock Split. After the Twin Vee Reverse Stock Split is effected, a stockholder will have no further
interest in Twin Vee with respect to its fractional share interest and persons otherwise entitled to a fractional share will not have
any voting, dividend or other rights with respect thereto, except to receive the above-described cash payment. Stockholders should
be aware that under the escheat laws of various jurisdictions, sums due for fractional interests that are not timely claimed after the
effective time of the Twin Vee Reverse Stock Split may be required to be paid to the designated agent for each such jurisdiction. Stockholders
otherwise entitled to receive such funds, who have not received them, will have to seek to obtain such funds directly from the jurisdiction
to which they were paid.
Material U.S. Federal Income Tax Considerations
Related to the Twin Vee Reverse Stock Split
The following is a general summary of the material
U.S. federal income tax considerations to U.S. holders (as defined below) of the Twin Vee Reverse Stock Split. This discussion
is based upon current provisions of the Code, existing and proposed Treasury regulations promulgated under the Code (the “Treasury
Regulations”) and judicial authority and administrative interpretations, all as of the date of this document, and all of which are
subject to change, possibly with retroactive effect, and are subject to differing interpretations. Changes in these authorities may cause
the tax consequences to vary substantially from the consequences described below. Twin Vee has not sought and will not seek an opinion
of counsel or any rulings from the IRS with respect to any of the tax considerations discussed below. As a result, there can be no assurance
that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below.
This discussion is limited to U.S. holders (except
to the extent such discussion explicitly addresses non-U.S. holders) that hold Twin Vee Common Stock as “capital assets”
within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address any tax
consequences arising under the tax on net investment income or the alternative minimum tax, nor does it address any tax consequences arising
under the laws of any state, local or non-U.S. jurisdiction, U.S. federal estate or gift tax laws, or any tax treaties. Furthermore,
this discussion does not address all aspects of U.S. federal income taxation that may be applicable to U.S. holders in light
of their particular circumstances or to U.S. holders that may be subject to special rules under U.S. federal income tax laws,
including, without limitation:
●a bank, insurance company or other financial
institution;
●a tax-exempt or a governmental organization;
●a real estate investment trust;
●an S corporation or other pass-through entity
(or an investor in an S corporation or other pass-through entity);
●a regulated investment company or a mutual
fund;
●a dealer or broker in stocks and securities,
or currencies;
●a trader in securities that elects mark-to-market treatment;
●a holder of Twin Vee Common Stock that received
such stock through the exercise of an employee option, pursuant to a retirement plan or otherwise as compensation;
●a person who holds Twin Vee Common Stock as
part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or
risk reduction transaction;
●a corporation that accumulates earnings to
avoid U.S. federal income tax;
●a person whose functional currency is not the
U.S. dollar;
●a U.S. holder who holds Twin Vee Common
Stock through non-U.S. brokers or other non-U.S. intermediaries;
●a U.S. holder owning or treated as owning
5% or more of Twin Vee Common Stock;
●a person subject to Section 451(b) of
the Code; or
●a former citizen or long-term resident
of the United States subject to Section 877 or 877A of the Code.
If a partnership, or any entity (or arrangement) treated
as a partnership for U.S. federal income tax purposes, holds Twin Vee Common Stock, the tax treatment of a partner in such partnership
generally will depend on the status of the partner and the activities of the partnership and upon certain determinations made at the partner
level. Partnerships holding Twin Vee Common Stock and partners in such partnerships should consult their own tax advisors about the U.S. federal
income tax consequences of the Twin Vee Reverse Stock Split.
For purposes of this discussion, a “U.S. holder”
is a beneficial owner of shares of Twin Vee Common Stock that is for U.S. federal income tax purposes:
●an individual citizen or resident of the United States;
●a corporation (or any other entity taxable
as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state
thereof or the District of Columbia;
●an estate, whose income is subject to U.S. federal
income tax regardless of its source; or
●a trust (i) the administration of which
is subject to the primary supervision of a U.S. court and that has one or more United States persons that have the authority
to control all substantial decisions of the trust or (ii) that has made a valid election under applicable Treasury Regulations to
be treated as a domestic trust.
A “non-U.S. holder” is, for U.S. federal
income tax purposes, a beneficial owner of shares of Twin Vee Common Stock that is a not a U.S. holder or a partnership for U.S. federal
income tax purposes.
Tax Consequences of the Twin Vee Reverse Stock
Split Generally
The Twin Vee Reverse Stock Split should constitute
a “recapitalization” for U.S. federal income tax purposes. As a result, a U.S. holder of Twin Vee Common Stock generally
should not recognize gain or loss upon the Twin Vee Reverse Stock Split, except with respect to cash received in lieu of a fractional
share of Twin Vee Common Stock, as discussed below. A U.S. holder’s aggregate tax basis in the shares of Twin Vee Common Stock
received pursuant to the Twin Vee Reverse Stock Split should equal the aggregate tax basis of the shares of Twin Vee Common Stock surrendered
(excluding any portion of such basis that is allocated to any fractional share of Common Stock), and such U.S. holder’s holding
period in the shares of Twin Vee Common Stock received should include the holding period in the shares of Twin Vee Common Stock surrendered.
Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of Twin Vee Common Stock surrendered
to the shares of Twin Vee Common Stock received in a recapitalization pursuant to the Twin Vee Reverse Stock Split. U.S. holders
of shares of Twin Vee Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the
allocation of the tax basis and holding period of such shares.
Cash in Lieu of Fractional Shares
A U.S. holder of Twin Vee Common Stock that receives
cash in lieu of a fractional share of Twin Vee Common Stock pursuant to the Twin Vee Reverse Stock Split and whose proportionate interest
in us is reduced (after taking into account certain constructive ownership rules) should generally recognize capital gain or loss in an
amount equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the shares of Twin Vee
Common Stock surrendered that is allocated to such fractional share of Twin Vee Common Stock. Such capital gain or loss should be long-term capital
gain or loss if the U.S. holder’s holding period for Common Stock surrendered exceeds one year at the effective time of the
Twin Vee Reverse Stock Split. The deductibility of capital losses is subject to limitations. A U.S. holder that receives cash in
lieu of a fractional share of Twin Vee Common Stock pursuant to the Twin Vee Reverse Stock Split and whose proportionate interest in us
is not reduced (after taking into account certain constructive ownership rules) should generally be treated as having received a distribution
that will be treated first as dividend income to the extent paid out of Twin Vee’s current or accumulated earnings and profits,
and then as a tax-free return of capital to the extent of the U.S. holder’s tax basis in its Twin Vee Common Stock, with
any remaining amount being treated as capital gain. U.S. holders should consult their tax advisors regarding the tax effects to them
of receiving cash in lieu of fractional shares based on their particular circumstances.
Non-U.S. Holders
Generally, non-U.S. holders will not recognize
any gain or loss as a result of the Twin Vee Reverse Stock Split. In particular, gain or loss will not be recognized with respect to a
non-U.S. holder that receives cash in lieu of a fractional share of Twin Vee Common Stock and whose proportionate interest in us
is reduced (after taking into account certain constructive ownership rules) provided that (a) such gain or loss is not effectively
connected with the conduct of a trade or business by such non-U.S. holder in the United States (or, if certain income tax treaties
apply, is not attributable to a non-U.S. holder’s permanent establishment in the United States), (b) with respect
to a non-U.S. holder who is an individual, such non-U.S. holder is present in the United States for less than 183 days
in the taxable year of the Twin Vee Reverse Stock Split and other conditions are met, and (c) such non-U.S. holder complies
with certain certification requirements. If such gain is effectively connected with the non-U.S. holder’s conduct of a trade
or business in the U.S.,
and if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or
fixed base maintained by the non-U.S. holder in the United States, the non-U.S. holder will be taxed on a net income basis
at the regular tax rates and in the manner applicable to U.S. holders, and if the non-U.S. holder is a corporation, an additional
branch profits tax at a rate of 30%, or a lower rate as may be specified by an applicable income tax treaty, may also apply. If the non-U.S. holder
is an individual present in the United States for 183 days or more in the taxable year of the Twin Vee Reverse Stock Split and
certain other requirements are met, the non-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an
applicable income tax treaty between the United States and such holder’s country of residence) on the net gain from the exchange
of the shares of Twin Vee Common Stock, which may be offset by certain U.S.-source capital losses of the non-U.S. holder, if
any.
Notwithstanding the foregoing, with respect to a non-U.S. holder
that receives cash in lieu of a fractional share of Twin Vee Common Stock pursuant to the Twin Vee Reverse Stock Split and whose proportionate
interest in us is not reduced (after taking into account certain constructive ownership rules), the gain will be treated as a dividend
rather than capital gain to the extent of the non-U.S. holder’s ratable share of Twin Vee’s current or accumulated earnings
and profits as calculated for U.S. federal income tax purposes, then as a tax-free return of capital to the extent of (and in
reduction of) the non-U.S. holder’s aggregate adjusted tax basis in the shares, and any remaining amount will be treated as
capital gain.
Twin Vee will withhold U.S. federal income taxes
equal to 30% of any cash payments made to a non-U.S. holder as a result of the Reverse Stock Split that may be treated as a dividend,
unless such holder properly demonstrates that a reduced rate of U.S. federal income tax withholding or an exemption from such withholding
is applicable. For example, an applicable income tax treaty may reduce or eliminate U.S. federal income tax withholding, in which
case a non-U.S. holder claiming a reduction in (or exemption from) such tax must provide us with a properly completed IRS Form W-8BEN (or
other appropriate IRS Form W-8) claiming the applicable treaty benefit. Alternatively, an exemption generally should apply if the
non-U.S. holder’s gain is effectively connected with a U.S. trade or business of such holder, and such holder provides
us with an appropriate statement to that effect on a properly completed IRS Form W-8ECI.
Non-U.S. holders should consult their own tax
advisors regarding possible dividend treatment and should consult their own tax advisor regarding the U.S. federal, state, local,
and foreign income and other tax consequences of the Twin Vee Reverse Stock Split.
Information Reporting and Backup Withholding
Cash payments received by a U.S. holder of Twin
Vee Common Stock pursuant to the Twin Vee Reverse Stock Split may be subject to information reporting and may be subject to U.S. backup
withholding (currently at 24%) unless such holder provides proof of an applicable exemption or a correct taxpayer identification number
and otherwise complies with the applicable requirements of the backup withholding rules. In general, backup withholding and information
reporting will not apply to payment of cash in lieu of a fractional share of Twin Vee Common Stock to a non-U.S. holder pursuant
to the Twin Vee Reverse Stock Split if the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder,
and the applicable withholding agent does not have actual knowledge to the contrary. In certain circumstances the amount of cash paid
to a non-U.S. holder in lieu of a fractional share of Twin Vee Common Stock, the name and address of the beneficial owner and the
amount, if any, of tax withheld may be reported to the IRS. Any amount withheld under the U.S. backup withholding rules is not
an additional tax and will generally be allowed as a refund or credit against the holder’s U.S. federal income tax liability
provided that the required information is timely furnished to the IRS.
FATCA
Under the Foreign Account Tax Compliance Act (“FATCA”),
withholding taxes may apply to certain types of payments made to ‘‘foreign financial institutions’’ (as specially
defined in the Code) and certain other non-United States entities. Specifically, a 30% withholding tax may be imposed on dividends
on stock paid to a foreign financial institution or to a non-financial foreign entity, unless (1) the foreign financial institution
undertakes certain diligence and reporting, (2) the non-financial foreign entity either certifies it does not have any substantial
United States owners or furnishes identifying information regarding each substantial United States owner, or (3) the foreign
financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign
financial institution and is subject to the diligence and reporting requirements in clause (1) above, then, pursuant to an agreement
between it and the U.S. Treasury or an intergovernmental agreement between, generally, the jurisdiction in which it is resident and
the U.S. Treasury, it must, among other things, identify accounts held by certain United States persons or United States-owned foreign
entities, annually report certain information about such accounts and withhold 30% on payments to non-compliant foreign financial
institutions and certain other account holders.
Any cash paid to a non-U.S. holder as a result
of the Twin Vee Reverse Stock Split that is treated as dividend may be subject to withholding under FATCA unless the requirements set
forth above are satisfied (if applicable) and appropriate certifications are made. While withholding under FATCA would have applied also
to payments of gross proceeds from the sale or other disposition of Twin Vee Common Stock on or after January 1, 2019, proposed Treasury
Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury
Regulations until final Treasury Regulations are issued.
Interests of Directors and Executive Officers
Twin Vee directors and executive officers have no
substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares
of Twin Vee Common Stock.
Vote Required
The affirmative vote of a majority of the votes cast
by the holders of all shares of Twin Vee Common Stock present or represented and voting on the Twin Vee Reverse Stock Split Proposal at
the Twin Vee Annual Meeting is required to approve the Twin Vee Reverse Stock Split Proposal. Since abstentions are not considered votes
cast, they will have no effect on this proposal. Broker non-votes are not expected for this proposal because Twin Vee believes this
matter is a routine matter.
THE TWIN VEE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” APPROVAL OF
THE TWIN VEE REVERSE STOCK SPLIT PROPOSAL.
TWIN VEE PROPOSAL NO. 5—AMENDMENT TO THE TWIN
VEE POWERCATS CO. 2021 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER BY 1,000,000 SHARES
TO 3,171,800 SHARES
The Twin Vee 2021 Plan, as adopted, initially reserved
an aggregate of 2,000,000 shares of Twin Vee Common Stock for issuance under the Twin Vee 2021 Plan. The shares available for issuance
under the Twin Vee 2021 Plan increased by 171,800 shares pursuant to its evergreen provision since the date the Twin Vee 2021 Plan was
approved. The Twin Vee Board of Directors has approved, subject to stockholder approval, an amendment to the Twin Vee 2021 Plan to increase
the number of shares authorized for issuance thereunder by 1,000,000 shares of Twin Vee Common Stock to 3,171,800 shares. The
proposed Amendment No. 1 to the Twin Vee 2021 Plan (the “Twin Vee 2021 Plan Amendment”), is attached hereto as Annex D.
A summary of the Twin Vee 2021 Plan, as proposed to
be amended, is set forth below. This summary is qualified in its entirety by the full text of the Twin Vee 2021 Plan and the proposed
Twin Vee 2021 Plan Amendment.
Reasons for the Proposed Amendment
The Twin Vee Board of Directors recommends that stockholders
vote “FOR” the adoption of the Twin Vee 2021 Plan Amendment to increase the number of authorized shares. In making
such recommendation, the Twin Vee Board of Directors considered a number of factors, including the following:
● Equity-based compensation
awards are a critical element of Twin Vee’s overall compensation program. Twin Vee believes that its long-term incentive compensation
program aligns the interests of management, employees and the stockholders to create long-term stockholder value. The Twin Vee 2021
Plan Amendment will allow Twin Vee to continue to attract, motivate and retain its officers, key employees, non-employee directors
and consultants.
● Twin Vee believes
the current amount of shares remaining available for grant under the Twin Vee 2021 Plan are not sufficient in light of its compensation
structure and strategy, and that the additional shares being sought, plus future increases pursuant to the evergreen provision, will help
Twin Vee ensure that it continues to have a sufficient number of shares authorized and available for future awards issued under the Twin
Vee 2021 Plan Amendment.
Stockholders are asked to approve the Twin Vee 2021
Plan Amendment to satisfy Nasdaq requirements relating to stockholder approval of equity compensation and to qualify certain stock options
authorized under the Twin Vee 2021 Plan for treatment as incentive stock options under Section 422 of the Internal Revenue Code.
Share Usage and Key Data
Twin Vee manages its long-term stockholder dilution
by limiting the number of equity incentive awards granted annually. The Twin Vee Compensation Committee monitors Twin Vee’s annual
stock award Burn Rate and Overhang (each as defined below), among other factors, in its efforts to maximize stockholders’ value
by granting what, in the Committee’s judgment, are the appropriate number of equity incentive awards necessary to attract, reward,
and retain employees, non-employee directors and consultants. The table below illustrates Twin Vee’s Burn Rate and Overhang
under the Twin Vee 2021 Plan for the past three fiscal years with details of each calculation noted below the table.
| | |
2023 | |
2022 | |
2021 |
| | Burn Rate(1) | | |
| 1.75 | % | |
| 6.12 | % | |
| 10.29 | % |
| | Overhang(2) | | |
| 4.42 | % | |
| 5.88 | % | |
| 12.5 | % |
(1) Burn Rate is (number
of shares subject to equity awards granted during a fiscal year)/(total common shares outstanding for that fiscal year).
(2) Overhang is (number
of shares subject to outstanding awards at the end of a fiscal year + number of shares available for new awards under incentive plan)/(number
of shares subject to outstanding awards at the end of the fiscal year + number of shares available for new awards under incentive plan
+ total common shares outstanding for that fiscal year).
As of the Twin Vee Record Date, Twin Vee’s capital
structure consisted of [●] shares of Twin Vee Common Stock outstanding and no shares of preferred stock. The table below shows Twin
Vee’s potential dilution (referred to as “overhang”) levels based on its most recent Twin Vee Common Stock outstanding,
equity awards outstanding and Twin Vee’s request for 1,000,000 additional shares to be available pursuant to the Twin Vee 2021 Plan.
The 1,000,000 additional shares represent [●]% of Twin Vee’s outstanding shares as of the Twin Vee Record Date. The Twin Vee
Board of Directors believes that the additional shares requested represents a reasonable amount of potential equity dilution, which will
allow Twin Vee to continue awarding equity awards, an important component of its compensation program.
| | |
# Shares Outstanding
as of
[●]/2024 | |
% of Common
Shares
Outstanding
as of
[●]/2024 |
| New Share Reserve Proposal | |
| 1,000,000 | | |
| | % |
| Stock Options Outstanding under the Twin Vee 2021 Plan | |
| | | |
| | % |
| Shares Currently Remaining Available for Issuance under the Twin Vee 2021 Plan | |
| | | |
| | % |
| Total Awards Outstanding + Shares Currently Available for Issuance + New Share Reserve | |
| | | |
| | % |
| Common Shares Outstanding (together with Common Shares issuable upon exercise of outstanding warrants) as of 7/[●]/2024(1) | |
| | | |
| | |
(1) Consisting of: (i)
[●] shares of Twin Vee Common Stock outstanding; and (ii) [●] shares of Twin Vee Common Stock issuable upon exercise of outstanding
warrants.
Text of the Amendment
The proposed Twin Vee 2021 Plan Amendment is attached
hereto as Annex D. The proposed Twin Vee 2021 Plan Amendment increases the shares reserved for issuance of awards under
the Twin Vee 2021 Plan by 1,000,000 shares to [●] shares.
As of [●], 2024, Twin Vee has [●] shares
of Twin Vee Common Stock available for future issuance under the Twin Vee 2021 Plan (not including future increases under the Twin Vee
2021 Plan’s current evergreen provision). Twin Vee does not believe that the number of awards remaining available for grant under
the Twin Vee 2021 Plan is sufficient to enable Twin Vee to retain and recruit employees, officers, non-employee directors and other
individual service providers, and aligning and increasing their interests in Twin Vee’s success. Twin Vee estimates that with the
Twin Vee 2021 Plan Amendment, together with the evergreen provision providing for an annual increase each year, it will have a sufficient
number of shares of Twin Vee Common Stock to cover issuances under the Twin Vee 2021 Plan for [two] years.
In the event that Twin Vee’s stockholders do
not approve this proposal, the Twin Vee 2021 Plan Amendment will not become effective and awards will continue to be made under the Twin
Vee 2021 Plan to the limited extent that there are available shares of Twin Vee Common Stock to do so.
Summary of the Twin Vee 2021 Plan
The principal provisions of the Twin Vee 2021 Plan
are summarized below.
Administration
The Twin Vee 2021 Plan vests broad powers in a committee
to administer and interpret the Twin Vee 2021 Plan. The Twin Vee Board of Directors has initially designated the Twin Vee Compensation
Committee to administer the Twin Vee 2021 Plan. Except when limited by the terms of the Twin Vee 2021 Plan, the Twin Vee Compensation
Committee has the authority to, among other things: select the persons to be granted awards; determine the type, size and term of awards;
establish performance objectives and conditions for earning awards; determine whether such performance objectives and conditions have
been met; and accelerate the vesting or exercisability of an award. In its discretion, the Twin Vee Compensation Committee may delegate
all or part of its authority and duties with respect to granting awards to one or more of Twin Vee’s officers, subject to certain
limitations and provided applicable law so permits.
The Twin Vee Board of Directors may amend, alter or
discontinue the Twin Vee 2021 Plan and the Twin Vee Compensation Committee may amend any outstanding award at any time; provided, however,
that no such amendment or termination may adversely affect awards then outstanding without the holder’s permission. In addition,
any amendments seeking to increase the total number of shares reserved for issuance under the Twin Vee 2021 Plan or modifying the classes
of participants eligible to receive awards under the Twin Vee 2021 Plan will require ratification by Twin Vee’s stockholders in
accordance with applicable law. Additionally, as described more fully below, neither the Twin Vee Compensation Committee nor the Twin
Vee Board of Directors is permitted to reprice outstanding options or stock appreciation rights without shareholder consent.
Eligibility
Any of Twin Vee’s employees, directors, consultants,
and other service providers, or those of its affiliates, are eligible to participate in the Twin Vee 2021 Plan and may be selected by
the Twin Vee Compensation Committee to receive an award.
Vesting
The compensation committee determines the vesting
conditions for awards. These conditions may include the continued employment or service of the participant, the attainment of specific
individual or corporate performance goals, or other factors as determined in the compensation committee’s discretion (collectively,
“Vesting Conditions”).
Shares of Stock Available for Issuance
Subject to certain adjustments, the maximum number
of shares of Twin Vee Common Stock that initially could be issued under the Twin Vee 2021 Plan in connection with awards was 2,000,000,
which has been increased to 2,171,800 shares pursuant to the evergreen provision hereinafter described. In addition, the maximum number
of shares of Twin Vee Common Stock that may be issued under the Twin Vee 2021 Plan will automatically 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 Twin
Vee Common Stock equal to 4.5% of the total number of shares of Twin Vee Common Stock outstanding on December 31 of the preceding calendar
year; provided, however that the Twin Vee Board of Directors may act prior to January 1 of a given calendar year to provide that the increase
for such year will be a lesser number of shares of Twin Vee Common Stock. All available shares may be utilized toward the grant of any
type of award under the Twin Vee 2021 Plan. The Twin Vee 2021 Plan imposes a $250,000 limitation on the total grant date fair value of
awards granted to any non-employee director in his or her capacity as a non-employee director in any single calendar year. Twin Vee has
issued options to purchase an aggregate of 1,271,016 shares of Twin Vee Common Stock.
In the event of any merger, consolidation, reorganization,
recapitalization, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend
in kind, or other like change in capital structure (other than ordinary cash dividends), or other similar corporate event or transaction
that affects Twin Vee Common Stock, the compensation committee shall make adjustments to the number and kind of shares authorized by the
Twin Vee 2021 Plan and covered under outstanding Twin Vee 2021 Plan awards as it determines appropriate and equitable.
Shares subject to Twin Vee 2021 Plan awards that expire
without being fully exercised or that are otherwise forfeited, cancelled or terminated may again be made available for issuance under
the Twin Vee 2021 Plan. However, shares withheld in settlement of a tax withholding obligation, or in satisfaction of the exercise price
payable upon exercise of an option, will not again become available for issuance under the Twin Vee 2021 Plan.
Types of Awards
The following types of awards may be granted to participants
under the Twin Vee 2021 Plan: (i) incentive stock options, or ISOs; (ii) nonqualified stock options, or NQOs and together with
ISOs, options, (iii) stock appreciation rights, (iv) restricted stock, or (v) restricted stock units.
Stock Options. An option entitles the holder
to purchase from Twin Vee a stated number of shares of Twin Vee Common Stock. An ISO may only be granted to an employee of Twin Vee or
its eligible affiliates. The Twin Vee Compensation Committee will specify the number of shares of Twin Vee Common Stock subject to each
option and the exercise price for such option, provided that the exercise price may not be less than the fair market value of a share
of Twin Vee Common Stock on the date the option is granted. Notwithstanding the foregoing, if ISOs are granted to any 10% stockholder,
the exercise price shall not be less than 110% of the fair market value of Twin Vee Common Stock on the date the option is granted.
Generally, options may be exercised in whole or in
part through a cash payment. The compensation committee may, in its sole discretion, permit payment of the exercise price of an option
in the form of previously acquired shares based on the fair market value of the shares on the date the option is exercised, through means
of “net settlement,” which involves the cancellation of a portion of the option to cover the cost of exercising the
balance of the option or by such other means as it deems acceptable.
All options shall be or become exercisable in accordance
with the terms of the applicable award agreement. The maximum term of an option shall be determined by the Twin Vee Compensation Committee
on the date of grant but shall not exceed 10 years (5 years in the case of ISOs granted to any 10% stockholder). In the case
of ISOs, the aggregate fair market value (determined as of the date of grant) of Twin Vee Common Stock with respect to which such ISOs
become exercisable for the first time during any calendar year cannot exceed $100,000. ISOs granted in excess of this limitation will
be treated as non-qualified stock options.
Stock Appreciation Rights. A stock appreciation
right represents the right to receive, upon exercise, any appreciation in a share of Twin Vee Common Stock over a particular time period.
The base price of a stock appreciation right shall not be less than the fair market value of a share of Twin Vee Common Stock on the date
the stock appreciation right is granted. This award is intended to mirror the benefit the participant would have received if the Twin
Vee Compensation Committee had granted the participant an option. The maximum term of a stock appreciation right shall be determined by
the Twin Vee Compensation Committee on the date of grant but shall not exceed 10 years. Distributions with respect to stock appreciation
rights may be made in cash, shares of Twin Vee Common Stock, or a combination of both, at the compensation committee’s discretion.
Unless otherwise provided in an award agreement or
determined by the Twin Vee Compensation Committee, if a participant terminates employment with Twin Vee (or its affiliates) due to death
or disability, the participant’s unexercised options and stock appreciation rights may be exercised, to the extent they were exercisable
on the termination date, for a period of twelve months from the termination date or until the expiration of the original award term,
whichever period is shorter. If the participant terminates employment with Twin Vee (or its affiliates) for cause, (i) all unexercised
options and stock appreciation rights (whether vested or unvested) shall terminate and be forfeited on the termination date, and (ii) any
shares in respect of exercised options or stock appreciation rights for which we have not yet delivered share certificates will be forfeited
and we will refund to the participant the option exercise price paid for those shares, if any. If the participant’s employment terminates
for any other reason, any vested but unexercised options and stock appreciation rights may be exercised by the participant, to the extent
exercisable at the time of termination, for a period of ninety days from the termination date (or such time as specified by the compensation
committee at or after grant) or until the expiration of the original option or stock appreciation right term, whichever period is shorter.
Unless otherwise provided by the compensation committee, any options and stock appreciation rights that are not exercisable at the time
of termination of employment shall terminate and be forfeited on the termination date.
Restricted Stock. A restricted stock award
is a grant of shares of Twin Vee Common Stock, which are subject to forfeiture restrictions during a restriction period. The compensation
committee will determine the price, if any, to be paid by the participant for each share of Twin Vee Common Stock subject to a restricted
stock award. The restricted stock may be subject to Vesting Conditions. If the specified Vesting Conditions are not attained, the participant
will forfeit the portion of the restricted stock award with respect to which those conditions are not attained, and the underlying Twin
Vee Common Stock will be forfeited to us. At the end of the restriction period, if the Vesting Conditions have been satisfied, the restrictions
imposed will lapse with respect to the applicable number of shares. Unless otherwise provided in an award agreement or determined by the
compensation committee, upon termination a participant will forfeit all restricted stock that then remains subject to forfeiture restrictions.
Restricted Stock Units. Restricted stock units
are granted in reference to a specified number of shares of Twin Vee Common Stock and entitle the holder to receive, on the achievement
of applicable Vesting Conditions, shares of Twin Vee Common Stock. Unless otherwise provided in an award agreement or determined by the
Compensation committee, upon termination a participant will forfeit all restricted stock units that then remain subject to forfeiture.
Change in Control
In the event of a change in control, the compensation
committee may, on a participant-by-participant basis: (i) cause any or all outstanding awards to become vested and immediately exercisable
(as applicable), in whole or in part; (ii) cause any outstanding option or stock appreciation right to become fully vested and immediately
exercisable for a reasonable period in advance of the change in control and, to the extent not exercised prior to that change in control,
cancel that option or stock appreciation right upon closing of the change in control; (iii) cancel any unvested award or unvested
portion thereof, with or without consideration; (iv) cancel any award in exchange for a substitute award; (v) redeem any restricted
stock or restricted stock unit for cash and/or other substitute consideration with value equal to the fair market value of an unrestricted
share on the date of the change in control; (vi) cancel any outstanding option or stock appreciation right with respect to all Twin
Vee Common Stock for which the award remains unexercised in exchange for a cash payment equal to the excess (if any) of the fair market
value of the Twin Vee Common Stock subject to the option or stock appreciation right over the exercise price of the option or stock appreciation
right; (vii) impose vesting terms on cash or substitute consideration payable upon cancellation of an award that are substantially
similar to those that applied to the cancelled award immediately prior to the change in control, and/or earn-out, escrow, holdback or
similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection with the
change in control; (viii) take such other action as the compensation committee shall determine to be reasonable under the circumstances;
and/or (ix) in the case of any award subject to Section 409A of the Code, the compensation committee shall only be permitted
to use discretion to alter the settlement timing of the award to the extent that such discretion would be permitted under Section 409A
of the Code.
Repricing
Neither the Twin Vee Board of Directors nor the compensation
committee may, without obtaining prior approval of Twin Vee’s stockholders: (i) implement any cancellation/re-grant program
pursuant to which outstanding options or stock appreciation rights under the Twin Vee 2021 Plan are cancelled and new options or stock
appreciation rights are granted in replacement with a lower exercise per share; (ii) cancel outstanding options or stock appreciation
rights under the Twin Vee 2021 Plan with an exercise price per share in excess of the then current fair market value per share for consideration
payable in Twin Vee’s equity securities; or (iii) otherwise directly reduce the exercise price in effect for outstanding options
or stock appreciation rights under the Twin Vee 2021 Plan.
Miscellaneous
Generally, awards granted under the Twin Vee 2021
Plan shall be nontransferable except by will or by the laws of descent and distribution. No participant shall have any rights as a stockholder
with respect to shares covered by options or restricted stock units, unless and until such awards are settled in shares of Twin Vee
Common Stock. Twin Vee’s obligation to issue shares or to otherwise make payments in respect of Twin Vee 2021 Plan awards will be
conditioned on Twin Vee’s ability to do so in compliance with all applicable laws and exchange listing requirements. The awards
will be subject to Twin Vee’s recoupment and stock ownership policies, as may be in effect from time to time. The Twin Vee 2021
Plan will expire 10 years after it became effective.
New Plan Benefits
The grant of options and other awards under the Twin
Vee 2021 Plan is discretionary, and Twin Vee cannot determine now the number or type of options or other awards to be granted in the future
to any particular person or group other than the anticipated annual director grants.
Since it is not possible to determine the exact number
of awards that will be granted under the Twin Vee 2021 Plan, the awards granted during fiscal 2023 under the Twin Vee 2021 Plan to its
Named Executive Officers and certain groups of individuals are set forth in the following table.
| Name and position | |
Number of
RSUs
Granted | |
Number
of Shares
Underlying
Options
Granted |
| Joseph Visconti, Twin Vee’s Chief Executive Officer | |
| — | | |
| — | |
| Preston Yarborough, Twin Vee’s Vice President | |
| — | | |
| 25,000 | |
| Carrie Gunnerson, Twin Vee’s Former Chief Financial Officer | |
| — | | |
| 25,000 | |
| All Current Executive Officers as a Group(3) | |
| — | | |
| 25,000 | |
| All Current Non-employee Directors as a Group(7) | |
| — | | |
| — | |
| All Current Non-Executive Officer Employees as a Group(2) | |
| 53,663 | | |
| — | |
Material U.S. Federal Income Tax Consequences
The following is a brief description of the principal
federal income tax consequences, as of the date of this proxy statement, associated with the grant of awards under the Twin Vee 2021 Plan.
This summary is based on Twin Vee’s understanding of present United States federal income tax law and regulations. The summary does
not purport to be complete or applicable to every specific situation. Furthermore, the following discussion does not address foreign,
state or local tax consequences.
Options
Grant. There is generally no United States
federal income tax consequence to the participant solely by reason of the grant of incentive stock options or nonqualified stock options
under the Twin Vee 2021 Plan, assuming the exercise price of the option is not less than the fair market value of the shares on the date
of grant.
Exercise. If certain requirements are satisfied,
including the requirement that the participant generally must exercise the incentive stock option no later than three months following
the termination of the participant’s employment with Twin Vee, the exercise of an incentive stock option is not a taxable event
for regular federal income tax purposes. However, such exercise may give rise to alternative minimum tax liability on the part of the
participant (see “Alternative Minimum Tax” below). Upon the exercise of a nonqualified stock option, the participant will
generally recognize ordinary income in an amount equal to the excess of the fair market value of the shares at the time of exercise over
the amount paid by the participant as the exercise price. The ordinary income recognized in connection with the exercise by a participant
of a nonqualified stock option will be subject to both wage and employment tax withholding, and Twin Vee generally will be entitled to
a corresponding deduction.
The participant’s tax basis in the shares acquired
pursuant to the exercise of an option will be the amount paid upon exercise plus, in the case of a nonqualified stock option, the amount
of ordinary income, if any, recognized by the participant upon exercise thereof.
Qualifying Dispositions of Incentive Stock Option
Shares. If a participant disposes of shares of Twin Vee Common Stock acquired upon exercise of an incentive stock option in a taxable
transaction, and such disposition occurs more than two years from the date on which the option was granted and more than one year
after the date on which the shares were transferred to the participant pursuant to the exercise of the incentive stock option, the participant
will realize long-term capital gain or loss equal to the difference between the amount realized upon such disposition and the participant’s
adjusted basis in such shares (generally the option exercise price).
Disqualifying Dispositions of Incentive Stock Option
Shares. If a participant disposes of shares of Twin Vee Common Stock acquired upon the exercise of an incentive stock option (other
than in certain tax free transactions) within two years from the date on which the incentive stock option was granted or within one
year after the transfer of shares to the participant pursuant to the exercise of the incentive stock option, at the time of disposition
the participant will generally recognize ordinary income equal to the lesser of: (i) the excess of each such share’s fair market
value on the date of exercise over the exercise price paid by the participant or (ii) the participant’s actual gain. Any gain
in excess of that amount will be recognized as a capital gain. If the participant incurs a loss on the disposition (the total amount realized
is less than the exercise price paid by the participant), the loss will be a capital loss. Any capital gain or loss recognized on a disqualifying
disposition of shares of Twin Vee Common Stock acquired upon exercise of incentive stock will be short-term or long-term depending
on whether the shares of Twin Vee Common Stock were held for more than one year from the date such shares were transferred to the participant.
Dispositions of Nonqualified Stock Option Shares.
If a participant disposes of shares of Twin Vee Common Stock acquired upon exercise of a nonqualified stock option in a taxable transaction,
the participant will recognize capital gain or loss in an amount equal to the difference between the participant’s basis (as discussed
above) in the shares sold and the total amount realized upon disposition. Any such capital gain or loss will be short-term or long-term depending
on whether the shares of Twin Vee Common Stock were held for more than one year from the date such shares were transferred to the participant.
Alternative Minimum Tax. Alternative minimum
tax is payable if and to the extent the amount thereof exceeds the amount of the participant’s regular tax liability, and any alternative
minimum tax paid generally may be credited against future regular tax liability (but not future alternative minimum tax liability).
Alternative minimum tax applies to alternative minimum
taxable income. Generally, regular taxable income as adjusted for tax preferences and other items is treated differently under the alternative
minimum tax.
For alternative minimum tax purposes, the spread upon
exercise of an incentive stock option (but not a nonqualified stock option) will be included in alternative minimum taxable income, and
the taxpayer will receive a tax basis equal to the fair market value of the shares of Twin Vee Common Stock at such time for subsequent
alternative minimum tax purposes. However, if the participant disposes of the incentive stock option shares in the year of exercise, the
alternative minimum tax income cannot exceed the gain recognized for regular tax purposes, provided that the disposition meets certain
third-party requirements for limiting the gain on a disqualifying disposition. If there is a disqualifying disposition in a year
other than the year of exercise, the income on the disqualifying disposition is not considered alternative minimum taxable income.
There are no federal income tax consequences to Twin
Vee by reason of the grant of incentive stock options or nonqualified stock options or the exercise of an incentive stock option (other
than disqualifying dispositions). At the time the participant recognizes ordinary income from the exercise of a nonqualified stock option,
Twin Vee will be entitled to a federal income tax deduction in the amount of the ordinary income so recognized (as described above), provided
that it satisfies its reporting obligations described below. To the extent the participant recognizes ordinary income by reason of a disqualifying
disposition of the stock acquired upon exercise of an incentive stock option, and subject to the requirement of reasonableness, the provisions
of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation, Twin Vee generally will be entitled to a
corresponding deduction in the year in which the disposition occurs. Twin Vee is required to report to the Internal Revenue Service any
ordinary income recognized by any participant by reason of the exercise of a nonqualified stock option or by reason of a disqualifying
disposition of shares acquired pursuant to the exercise of an incentive stock option. Twin Vee is required to withhold income and employment
taxes (and pay the employer’s share of the employment taxes) with respect to ordinary income recognized by the participant upon
exercise of nonqualified stock options.
Stock Appreciation Rights
There are generally no tax consequences to the participant
or Twin Vee by reason of the grant of stock appreciation rights. In general, upon exercise of a stock appreciation rights award, the participant
will recognize taxable ordinary income equal to the excess of the stock’s fair market value on the date of exercise over the stock
appreciation rights’ base price, or the amount payable. Twin Vee is required to withhold income and employment taxes (and pay the
employer’s share of the employment taxes) with respect to ordinary income realized upon the exercise of a stock appreciation right.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting
obligation, Twin Vee generally will be entitled to a business expense deduction equal to the taxable ordinary income realized by the participant.
Restricted Stock
Unless a participant makes a Section 83(b) election,
as described below, with respect to restricted stock granted under the Twin Vee 2021 Plan, a participant receiving such an award will
not recognize U.S. taxable ordinary income until an award is vested and Twin Vee will not be entitled to a deduction at the time
such award is granted. While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize
compensation income equal to the amount of any dividends received by the participant, if any, with respect to the award, and Twin Vee
will be allowed a deduction in a like amount. When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture,
the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the
amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimed as a deduction for
federal income tax purposes by Twin Vee. Twin Vee is required to withhold income and employment taxes (and pay the employer’s share
of the employment taxes) with respect to the ordinary realized upon the vesting of a restricted stock grant. Upon disposition of the restricted
stock shares, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will
be short-term or long-term depending upon whether the participant held the shares for more than one year following the vesting
or cessation of the substantial risk of forfeiture.
In the case of a participant who receives a restricted
stock award that is unvested or otherwise subject to a substantial risk of forfeiture, if the participant files a Section 83(b) election
with the Internal Revenue Service within 30 days after the date of grant, the participant’s ordinary income and commencement
of holding period, and Twin Vee’s deduction, will be determined as of the date of grant. In such a case, the amount of ordinary
income recognized by such a participant and deductible by Twin Vee will be equal to the excess of the fair market value of the award as
of the date of grant over the amount paid, if any, by the participant for the award. Twin Vee is required to withhold income and employment
taxes (and pay the employer’s share of the employment taxes) with respect to the ordinary realized upon the filing of a Section 83(b) election.
If such election is made and a participant thereafter forfeits his or her award, no refund or deduction will be allowed for the amount
previously included in such participant’s income.
Subject to the requirement of reasonableness, the
provisions of Section 162(m) of the Code, and the satisfaction of a tax reporting obligation and any tax withholding condition,
Twin Vee generally will be entitled to a business expense deduction equal to the taxable ordinary income realized by the recipient.
Section 409A
If an award under the Twin Vee 2021 Plan is subject
to Section 409A of the Code but does not comply with the requirements of Section 409A of the Code, the taxable events as described
above (including the requirement to withhold income taxes) could apply earlier than described and could result in the imposition of additional
taxes, interest and penalties.
Potential Limitation on Company Deductions
Section 162(m) of the Code generally disallows
a tax deduction for compensation in excess of $1 million paid in a taxable year by a publicly held corporation to its chief executive
officer and certain other “covered employees”. The Twin Vee Board of Directors and the Twin Vee Compensation Committee intend
to consider the potential impact of Section 162(m) on grants made under the Twin Vee 2021 Plan but reserve the right to approve
grants of options and other awards for an executive officer that exceeds the deduction limit of Section 162(m).
Market Price of Shares
The closing price of Twin Vee Common Stock, as reported
on Nasdaq on [●], 2024, was $[●].
The following table provides information with respect
to the Twin Vee 2021 Plan, as of December 31, 2023, with respect to options outstanding under the Twin Vee 2021 Plan.
| Plan Category | |
Number of Securities to be Issued upon Exercise of Outstanding Equity Compensation Plan Options* | |
Weighted- Average Exercise Price of Outstanding Equity Compensation Plan Options | |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column)(1) |
| Equity compensation plans approved by security holders | |
| 1,271,016 | | |
| 3.99 | | |
| 291,734 | |
| Equity compensation plans not approved by security holders | |
| — | | |
| | | |
| | |
| Total | |
| 1,271,016 | | |
| 3.99 | | |
| 291,734 | |
(1) The maximum number of
shares of Twin Vee Common Stock that may be issued under the Twin Vee 2021 Plan will automatically 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 Twin
Vee Common Stock equal to 4.5% of the total number of shares of Twin Vee Common Stock outstanding on December 31 of the preceding calendar
year; provided, however that the Twin Vee Board of Directors may act prior to January 1 of a given calendar year to provide that the increase
for such year will be a lesser number of shares of Twin Vee Common Stock.
Interests of Directors and Executive Officers
Twin Vee’s directors and executive officers
have substantial interests in the matters set forth in this proposal since equity awards may be granted to them under the Twin Vee 2021
Plan.
Vote Required
To be approved, the Twin Vee 2021 Plan Amendment must
receive the affirmative vote of the holders of shares of Twin Vee Common Stock having a majority in voting power of the votes cast by
the holders of all of the shares of stock present or represented at the Annual Meeting and voting affirmatively or negatively on such
matter. Abstentions and broker non-votes are not considered votes cast and, accordingly, will have no effect on the vote with respect
to this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE AMENDMENT TO THE TWIN VEE POWERCATS CO. 2021 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED
FOR ISSUANCE THEREUNDER BY 1,000,000 SHARES TO 3,171,800 SHARES.
TWIN
VEE PROPOSAL NO. 6—ADJOURNMENT OF THE TWIN VEE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT
VOTES IN FAVOR OF TWIN VEE PROPOSAL NO. 1, TWIN VEE PROPOSAL NO. 4 AND/OR TWIN VEE PROPOSAL NO. 5
If
Twin Vee fails to receive a sufficient number of votes to approve Twin Vee Proposal No. 1,
Twin Vee Proposal No. 4 and/or Twin Vee Proposal No. 5, Twin Vee may propose to adjourn the
Twin Vee Annual Meeting, if a quorum is present, for the purpose of soliciting additional
proxies to approve Twin Vee Proposal No. 1, Twin Vee Proposal No. 4 and/or Twin Vee Proposal
No. 5. Twin Vee currently does not intend to propose adjournment of the Twin Vee Annual Meeting
if there are sufficient votes to approve Twin Vee Proposal No. 1, Twin Vee Proposal No. 4
and/or Twin Vee Proposal No. 5. If Twin Vee’s stockholders approve this proposal, the
Twin Vee Board of Directors could adjourn the Twin Vee Annual Meeting and any adjourned session
of the Twin Vee Annual Meeting and use the additional time to solicit additional proxies,
including the solicitation of proxies from Twin Vee’s stockholders that have previously
voted. Among other things, approval of this proposal could mean that, even if Twin Vee had
received proxies representing a sufficient number of votes to defeat Twin Vee Proposal No.
1, Twin Vee Proposal No. 4 and/or Twin Vee Proposal No. 5, it could adjourn the Twin Vee
Annual Meeting without a vote on such proposal and seek to convince its stockholders to change
their votes in favor of such proposals.
Vote Required
Approval of the proposal to adjourn the Twin Vee Annual
Meeting for the purpose of soliciting additional proxies requires the affirmative vote of the holders of a majority of the votes present,
in person or by proxy, and entitled to vote on the matter at the Twin Vee Annual Meeting.
Twin Vee Board of Directors Recommendation
THE TWIN VEE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THE ADJOURNMENT OF THE TWIN VEE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT
VOTES IN FAVOR OF TWIN VEE PROPOSAL NO. 1, TWIN VEE PROPOSAL NO. 4 AND/OR TWIN VEE PROPOSAL NO. 5.
FORZA ANNUAL MEETING PROPOSALS
FORZA PROPOSAL NO. 1—APPROVAL OF THE MERGER
AND THE MERGER AGREEMENT
At the Forza Annual Meeting, Forza stockholders will be asked to approve
the Merger and the Merger Agreement. Immediately following the Merger, it is expected that the stockholders of Twin Vee and Forza would
own approximately 64% and 36% , respectively of the Twin Vee Common Stock then outstanding and the security holders would own on a fully
diluted basis % and % , respectively of the Twin Vee securities then outstanding on a fully diluted basis . The terms, reasons for and
other aspects of the Merger Agreement, the issuance of the Twin Vee Common Stock pursuant to the Merger Agreement and additional information
are described elsewhere in this Joint Proxy Statement/Prospectus
Vote Required to Approve the Merger and The Merger Agreement
The affirmative vote of the holders of a majority
of the outstanding shares of Forza Common Stock on the Forza Record Date is required for the approval of the Merger and the Merger Agreement
under the DGCL. In addition, Forza is requiring that the holders of a majority of the voting power of the shares of Forza Common Stock
present in person or represented by proxy at the Forza Annual Meeting and entitled to vote on this matter, excluding Twin Vee, will be
required to approve the Merger and the Merger Agreement.
Forza Board of Directors’ Recommendation
THE FORZA BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” APPROVAL OF THE MERGER, THE MERGER AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED THEREIN.
FORZA PROPOSAL NO. 2—ELECTION OF DIRECTORS
At the Forza Annual Meeting,
Forza stockholders will vote on the election of one Class II director to serve for a three-year term. The Forza Board of Directors
has unanimously nominated Marcia Kull, whose term of office expires in 2024, upon the recommendation of Forza’s nominating and corporate
governance committee for re-election to the Forza Board of Directors as a Class II director. If elected at the Forza Annual
Meeting, the nominee would serve until the 2027 annual meeting of Forza’s stockholders and until her successor has been duly elected
and qualified, or, if sooner, until the director’s death, resignation or removal. The nominee has indicated that she is willing
and able to continue to serve as a director. If the nominee becomes unavailable for election as a result of an unexpected occurrence,
shares that would have been voted for the nominee will instead be voted for the election of a substitute nominee proposed by Forza. It
is Forza’s policy to encourage directors and nominees for director to attend the Forza Annual Meeting.
Forza stockholders should
understand, however, that if the Merger with Twin Vee is completed, it is anticipated that Marcia Kull will be appointed as a director
of the combined company and all Forza directors, other than Joseph Visconti, will resign as Forza board members.
Required Vote; Recommendation
of Forza Board of Directors
The Class II director
will be elected by a plurality of the affirmative votes cast in person or by proxy and entitled to vote on the election of directors at
the Forza Annual Meeting. Accordingly, the nominee receiving the highest number of affirmative votes will be elected. Forza stockholders
do not have cumulative voting rights in the election of directors. If you “WITHHOLD” authority to vote with respect
to the director nominee, your vote will have no effect on the election of such nominee. Broker non-votes will have no effect
on the election of the nominee.
THE FORZA BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE ELECTION OF MARCIA KULL AS A CLASS II DIRECTOR PURSUANT TO THIS FORZA ELECTION OF DIRECTORS
PROPOSAL.
Unless otherwise instructed, it is the intention
of the persons named in the accompanying Forza proxy card to vote shares represented by properly executed proxy cards “FOR”
the election of Marcia Kull.
FORZA PROPOSAL NO. 3—
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Forza’s independent registered public accounting
firm for the fiscal year ended December 31, 2023 was the firm of Grassi & Co., CPAs, P.C. The Forza Audit Committee has selected Grassi
& Co., CPAs, P.C. as Forza’s independent registered public accounting firm for fiscal 2024.
A representative of Grassi & Co., CPAs, P.C.is
expected to be present either in person or via teleconference at the Forza Annual Meeting and be available to respond to appropriate questions,
and will have the opportunity to make a statement if he or she desires to do so.
Vote Required
The affirmative vote of the holders of a majority
of the voting power of the shares of Forza Common Stock present in person or represented by proxy at the Forza Annual Meeting and entitled
to vote on this matter will be required to approve the ratification of the appointment of Forza’s independent registered public
accounting firm. Abstentions will be counted and will have the same effect as a vote against the proposal. Because this proposal is a
routine matter for which brokers have discretion, broker non-votes are not expected for this matter. Ratification of the appointment of
Grassi & Co., CPAs, P.C. by Forza’s stockholders is not required by law, Forza’s Bylaws or other governing documents.
As a matter of policy, however, the appointment is being submitted to Forza’s stockholders for ratification at the Forza Annual
Meeting. If Forza’s stockholders fail to ratify the appointment, the Forza Audit Committee will reconsider whether or not to retain
that firm. Even if the appointment is ratified, the Forza Audit Committee, in its discretion, may direct the appointment of different
independent auditors at any time during the year if they determine that such a change would be in Forza’s best interest and the
best interests of its stockholders.
THE FORZA BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE SELECTION OF GRASSI
& CO., CPAS, P.C. AS ITS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR ITS FISCAL YEAR ENDING ON DECEMBER 31, 2024.
FORZA AUDIT COMMITTEE REPORT1
The Forza Audit Committee has reviewed and discussed
Forza’s audited consolidated financial statements as of and for the year ended December 31, 2023 with the management of Forza and
Grassi & Co., CPAs, P.C., Forza’s independent registered public accounting firm. Further, the Forza Audit Committee has discussed
with Grassi & Co., CPAs, P.C. the matters required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”)
and the SEC, and other applicable regulations, relating to the firm’s judgment about the quality, not just the acceptability, of
Forza’s accounting principles, the reasonableness of significant judgments and estimates, and the clarity of disclosures in the
consolidated financial statements.
The Forza Audit Committee also has received the written
disclosures and the letter from Grassi & Co., CPAs, P.C. required by PCAOB Ethics and Independence Rule 3526, Communication
with Audit Committees Concerning Independence, which relate to Grassi & Co., CPAs, P.C.’s independence from Forza, and has
discussed with Grassi & Co., CPAs, P.C. its independence from Twin Vee. The Forza Audit Committee has also considered whether the
independent registered public accounting firm’s provision of non-audit services to Forza is compatible with maintaining the firm’s
independence. The Forza Audit Committee has concluded that the independent registered public accounting firm is independent from Forza
and its management. The Forza Audit Committee also considered whether, and determined that, the independent registered public accounting
firm’s provision of other non-audit services to us was compatible with maintaining Grassi & Co., CPAs, P.C.’s independence.
The Forza Audit Committee also reviewed management’s report on its assessment of the effectiveness of Forza’s internal control
over financial reporting. In addition, the Forza Audit Committee reviewed key initiatives and programs aimed at strengthening the effectiveness
of Forza’s internal and disclosure control structure. The members of the Forza Audit Committee are not Forza’s employees and
are not performing the functions of auditors or accountants. Accordingly, it is not the duty or responsibility of the Forza Audit Committee
or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence
standards. Members of the Forza Audit Committee necessarily rely on the information provided to them by management and the independent
auditors. Accordingly, the Forza Audit Committee’s considerations and discussions referred to above do not constitute assurance
that the audit of Forza’s consolidated financial statements has been carried out in accordance with the standards of the PCAOB or
that Forza’s auditors are in fact independent.
Based on the reviews, reports and discussions referred
to above, the Forza Audit Committee recommended to the Forza Board of Directors, and the Forza Board of Directors approved, that Forza’s
audited consolidated financial statements for the year ended December 31, 2023 and management’s assessment of the effectiveness
of Forza’s internal control over financial reporting be included in Forza’s Annual Report on Form 10-K for the year ended
December 31, 2023, for filing with the SEC. The Forza Audit Committee has recommended, and the Forza Board of Directors has approved,
subject to stockholder ratification, the selection of Grassi & Co., CPAs, P.C.as Forza’s independent registered public accounting
firm for the year ending December 31, 2024.
| |
Submitted by the Forza Audit Committee.
Kevin Schuler
Bard Rockenbach
James Melvin
Neil Ross
|
| |
Members of the Forza Audit Committee |
1 The material in this report is not
“soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of
Forza under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
Forza stockholders should understand, however,
that if the Merger with Twin Vee is completed, it is anticipated that Forza will no longer retain a separate auditor.
Fees Paid to the Forza Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees
including expenses billed to Forza for the years ended December 31, 2023 and 2022 by its auditors:
| | |
Year ended | |
Year ended |
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Audit Fees | |
$ | 97,613 | | |
$ | 57,272 | |
| Audit Related Fees | |
| 59,595 | | |
| — | |
| Tax Fees | |
| — | | |
| — | |
| All Other Fees | |
| — | | |
| — | |
| | |
$ | 157,208 | | |
$ | 57,272 | |
(1) These fees consist of services provided with regard to the Merger as
well as certain technology and travel expenses.
The Forza Audit Committee has adopted procedures for
pre-approving all audit and non-audit services provided by the independent registered public accounting firm, including the fees and terms
of such services. These procedures include reviewing detailed back-up documentation for audit and permitted non-audit services. The documentation
includes a description of, and a budgeted amount for, particular categories of non-audit services that are recurring in nature and therefore
anticipated at the time that the budget is submitted. Forza Audit Committee approval is required to exceed the pre-approved amount for
a particular category of non-audit services and to engage the independent registered public accounting firm for any non-audit services
not included in those pre-approved amounts. For both types of pre-approval, the Forza Audit Committee considers whether such services
are consistent with the rules on auditor independence promulgated by the SEC and the PCAOB. The Forza Audit Committee also considers whether
the independent registered public accounting firm is best positioned to provide the most effective and efficient service, based on such
reasons as the auditor’s familiarity with our business, people, culture, accounting systems, risk profile, and whether the services
enhance our ability to manage or control risks, and improve audit quality. The Forza Audit Committee may form and delegate pre-approval
authority to subcommittees consisting of one or more members of the Forza Audit Committee, and such subcommittees must report any pre-approval
decisions to the Forza Audit Committee at its next scheduled meeting. All of the services provided by the independent registered public
accounting firm in 2022 and 2023 were pre-approved by the Forza Audit Committee.
FORZA PROPOSAL NO. 4—ADOPTION AND APPROVAL
OF THE FORZA REVERSE STOCK SPLIT PROPOSAL
The Forza Board of Directors has adopted a resolution
setting forth a proposed amendment to Forza’s Amended and Restated Certificate of Incorporation to effect a reverse stock split
of the issued and outstanding shares of Forza Common Stock, a copy of which is set forth in the certificate of amendment annexed to this
proxy statement as Annex B-2 (the “Forza Reverse Stock Split Amendment”), declared such amendment
advisable, and is recommending that Forza’s stockholders approve, such proposed amendment. Such amendment will be effected after
stockholder approval thereof only in the event the Merger is not completed and the Forza Board of Directors still deems it advisable.
Holders of Forza Common Stock are being asked to approve the proposal that Article IV of Forza’s Amended and Restated Certificate
of Incorporation be amended to effect a reverse stock split of the Forza Common Stock at a ratio in the range of one (1) share of
Forza Common Stock for every two (2) shares of Forza Common Stock to one (1) share of Forza Common Stock for every twenty (20) shares
of Forza Common Stock. If the Forza Reverse Stock Split is approved by Forza’s stockholders and if the Forza Reverse Stock Split
Amendment is filed with the Secretary of State of the State of Delaware, Forza’s Amended and Restated Certificate of Incorporation
will be amended to effect the Forza Reverse Stock Split by reducing the outstanding number of shares of Forza Common Stock. If the Forza
Board of Directors does not implement an approved Forza Reverse Stock Split prior to the one-year anniversary of this meeting or
the Merger is not completed by then, this vote will be of no further force and effect and the Forza Board of Directors will again seek
stockholder approval before implementing any reverse stock split after that time. The Forza Board of Directors may abandon the proposed
amendment to effect the Forza Reverse Stock Split at any time prior to its effectiveness, whether before or after stockholder approval
thereof and will not effect the Forza Reverse Stock Split if the Merger is completed.
As of the Forza Record Date, Forza had [●]
shares of Forza Common Stock outstanding. For purposes of illustration, if the Forza Reverse Stock Split is effected at a ratio of 1-for-10,
the number of issued and outstanding shares of Forza Common Stock after the Forza Reverse Stock Split would be approximately [●]
shares. The Forza Board of Directors’ decision as to whether and when to effect the Forza Reverse Stock Split will be based on
a number of factors, including market conditions, existing and expected trading prices for the Forza Common Stock, and possible relisted
requirements of the Nasdaq Capital Market in the event the Merger is not effected. See below for a discussion of the factors that the
Forza Board of Directors considered in determining the Forza Reverse Stock Split Ratio range, some of which included, but was not limited
to, the following: the historical trading price and trading volume of the Forza Common Stock; the expected impact of the Forza Reverse
Stock Split on the trading market for the Forza Common Stock in the short-term and long-term, and general market, economic conditions,
and other related conditions prevailing in our industry.
The Forza Reverse Stock Split, if effected, will not
change the number of authorized shares of Forza Common Stock or Preferred Stock, or the par value of Forza Common Stock or Preferred Stock;
however, effecting the Forza Reverse Stock Split will provide for additional shares of authorized but unissued shares of Forza Common
Stock. As of the date of this Joint Proxy Statement/ Prospectus, Forza’s current authorized number of shares of Forza Common Stock
is sufficient to satisfy all of our share issuance obligations and current share plans and we do not have any current plans, arrangements
or understandings relating to the issuance of the additional shares of authorized Forza Common Stock that will become available for issuance
following the Forza Reverse Stock Split.
Purpose and Background of the Forza Reverse Stock
Split
The Forza Board of Directors’ primary objective
in asking for authority to effect a reverse split is to increase the per-share trading price of Forza Common Stock. If the Forza
Board of Directors does not implement the Forza Reverse Stock Split prior to the one-year anniversary of the date on which the Forza
Reverse Stock Split is approved by our stockholders at the Forza Annual Meeting, the authority granted in this proposal to implement the
Forza Reverse Stock Split will terminate and the Forza Reverse Stock Split will be abandoned.
As background, Forza received
notice on October 4, 2024 from the Nasdaq Listing Qualifications Department (the “Staff”) of Nasdaq notifying it that
for the preceding 30 consecutive business days (August 22, 2023 through October 3, 2023), Forza 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
notice has no immediate effect on the listing or trading of Forza Common Stock and the Forza Common Stock will continue to trade on The
Nasdaq Capital Market under the symbol “FRZA.”
Forza was originally given 180 days, or until
April 1, 2024, to regain compliance with the Minimum Bid Price Requirement which was extended to September 30, 2024. On October 1, 2024,
Nasdaq provided written notification to Forza that the Forza Common Stock will be delisted.
The Forza Board of Directors believes that the
failure of stockholders to approve the Forza Reverse Stock Split Proposal could prevent Forza from relisting the Forza Common Stock on
the Nasdaq if the Merger is not effected and could inhibit its ability to conduct capital raising activities, among other things. Upon
delisting, the Forza Common Stock will become traded on an over-the-counter market such as those maintained by OTC Markets Group
Inc., which do not have the substantial corporate governance or quantitative listing requirements for continued trading that Nasdaq has.
In that event, interest in Forza Common Stock may decline and certain institutions may not have the ability to trade in the Forza Common
Stock, all of which could have a material adverse effect on the liquidity or trading volume of the Forza Common Stock. If the Forza Common
Stock becomes significantly less liquid due to delisting from Nasdaq, Forza stockholders may not have the ability to liquidate their
investments in the Forza Common Stock as and when desired and Forza believes its ability to maintain analyst coverage, attractive investor
interest, and have access to capital may become significantly diminished as a result.
If the stockholders approve the Forza Reverse Stock
Split Proposal and the Forza Board of Directors determines to implement the Forza Reverse Stock Split, Forza will file the Forza Reverse
Stock Split Amendment to amend the existing provision of the Amended and Restated Certificate of Incorporation to effect the Forza Reverse
Stock Split. The text of the form of proposed amendment is set forth in the Forza Reverse Stock Split Amendment, which is annexed to this
Joint Proxy Statement/Prospectus as Annex B-2.
The Forza Reverse Stock Split will be effected simultaneously
for all issued and outstanding shares of Forza Common Stock and the Forza Reverse Stock Split Ratio will be the same for all issued and
outstanding shares of Forza Common Stock. The Forza Reverse Stock Split will affect all of its stockholders uniformly and will not affect
any stockholder’s percentage ownership interests in Forza, except those stockholders who would have otherwise received fractional
shares will receive cash in lieu of such fractional shares determined in the manner set forth below under the heading “Fractional
Shares.” After the Forza Reverse Stock Split, each share of the Forza Common Stock will have the same voting rights and rights to
dividends and distributions and will be identical in all other respects to the Forza Common Stock now authorized. The Forza Reverse Stock
Split will not affect Forza continuing to be subject to the periodic reporting requirements of the Exchange Act. The Forza Reverse
Stock Split is not intended to be, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under
the Exchange Act.
The Forza Reverse Stock Split may result in some stockholders
owning “odd-lots” of less than 100 shares of the Forza Common Stock. Brokerage commissions and other costs of transactions
in odd-lots are generally higher than the costs of transactions in “round-lots” of even multiples of 100 shares.
In addition, we will not issue fractional shares in connection with the Forza Reverse Stock Split, and stockholders who would have otherwise
been entitled to receive such fractional shares will receive an amount in cash determined in the manner set forth below under the heading
“Fractional Shares.”
Following the effectiveness of the Forza Reverse Stock
Split, if approved by the stockholders and implemented by Forza, current stockholders will hold fewer shares of Forza Common Stock.
If the Forza Board of Directors decides to implement
the Forza Reverse Stock Split, Forza would communicate to the public, prior to the effective time of the Forza Reverse Stock Split, additional
details regarding the Forza Reverse Stock Split (including the final Forza Reverse Stock Split Ratio, as determined by the Forza Board
of Directors). By voting in favor of the Forza Reverse Stock Split, stockholders are also expressly authorizing the Forza Board of Directors
to determine not to proceed with, and to defer or to abandon, the Forza Reverse Stock Split, in the Forza Board of Directors’ sole
discretion. In determining whether to implement the Forza Reverse Stock Split following receipt of stockholder approval of the Forza Reverse
Stock Split, and which Forza Reverse Stock Split Ratio to implement, if any, the Forza Board of Directors may consider, among other things,
various factors, such as:
●Forza’s ability to engage in a relisting
on the Nasdaq Capital Market;
● the historical trading price and trading volume
of the Forza Common Stock;
● the then-prevailing trading price and
trading volume of the Forza Common Stock and the expected impact of the Forza Reverse Stock Split on the trading market for the Forza
Common Stock in the short and long term;
● which Forza Reverse Stock Split Ratio would
result in the greatest overall reduction in its administrative costs; and
● prevailing general market and economic conditions.
Reasons for the Forza Reverse Stock Split
To increase the per share price of Forza Common
Stock. As discussed above, the primary objective for effecting the Forza Reverse Stock Split, should the Forza Board of Directors
choose to effect one, would be to increase the per share price of Forza Common Stock and relist on Nasdaq in the event the Merger is
not effected, if the Forza Board of Directors, in its sole discretion deems it advisable, . The Forza Board of Directors believes that,
should the appropriate circumstances arise, effecting the Forza Reverse Stock Split, could, among other things, help it to appeal to
a broader range of investors, generate greater investor interest in Forza, and improve the perception of Forza Common Stock as an investment
security. Forza Common Stock is listed on the Nasdaq Capital Market; however, Forza has received a letter from Nasdaq notifying it that
due to its failure regain compliance with the Nasdaq bid price requirement, the Forza Common Stock will be delisted.
To potentially improve the liquidity of the Forza
Common Stock. A Forza Reverse Stock Split could allow a broader range of institutions to
invest in the Forza Common Stock (namely, funds that are prohibited from buying stocks whose price is below certain thresholds), potentially
increasing trading volume and liquidity of the Forza Common Stock and potentially decreasing the volatility of the Forza Common Stock
if institutions become long-term holders of the Forza Common Stock. A Forza Reverse Stock Split could help increase analyst and broker
interest in the Forza Common Stock as their policies can discourage them from following or recommending companies with low stock prices.
Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have
internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers
from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in
low-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on low-priced stocks
generally represent a higher percentage of the stock price than commissions on higher-priced stocks, a low average price per share
of Forza Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share
value than would be the case if the share price were higher. Some investors, however, may view a Forza Reverse Stock Split negatively
since it reduces the number of shares of Forza Common Stock available in the public market. If the Forza Reverse Stock Split Proposal
is approved and the Forza Board of Directors believes that effecting the Forza Reverse Stock Split is in its best interest and the best
interest of its stockholders, the Forza Board of Directors may effect the Forza Reverse Stock Split, for purposes of enhancing the liquidity
of the Forza Common Stock and to facilitate capital raising.
To increase the number of additional shares issuable
under Forza’s charter. A Forza Reverse Stock Split will reduce the nominal number of shares of Forza Common Stock outstanding
and the number of shares of Forza Common Stock issuable on exercise or conversion, as applicable, of outstanding warrants or convertible
debentures, while leaving the number of shares issuable under Forza’s charter unchanged. A Forza Reverse Stock Split will therefor
effectively increase the number of shares of the Forza Common Stock that we are able to issue. This effective increase will facilitate
future capital fundraising on Forza’s part. Some investors may find the Forza Common Stock more attractive if the Forza Reverse
Stock Split is effected with additional assurance that we are unlikely to be limited in our ability to access needed capital by the number
of shares of Forza Common Sock authorized for issuance. However, other investors may find the Forza Common Stock a less attractive investment
with the knowledge that additional dilution of the Forza Common Stock is possible.
Certain Risks Associated with a Forza Reverse Stock
Split
Reducing the number of outstanding shares of the Forza
Common Stock through the Forza Reverse Stock Split Proposal is intended, absent other factors, to increase the per share market price
of the Forza Common Stock. Other factors, however, such as Forza’s financial results, market conditions, the market perception of
our business and other risks, including those set forth below and in Forza’s SEC filings and reports, may adversely affect the market
price of the Forza Common Stock. As a result, there can be no assurance that the Forza Reverse Stock Split, if completed, will result
in the intended benefits described above, that the market price of the Forza Common Stock will increase following the Forza Reverse Stock
Split or that the market price of the Forza Common Stock will not decrease in the future.
The Forza Reverse Stock Split May Not Result
in a Sustained Increase in the Price of the Forza Common Stock. As noted above, the principal purpose of the Forza Reverse Stock
Split Proposal is to maintain a higher average per share market closing price of the Forza Common Stock in order to relist on Nasdaq.
However, the effect of the Forza Reverse Stock Split upon the market price of the Forza Common Stock cannot be predicted with any certainty
and Forza cannot assure that the Forza Reverse Stock Split will accomplish this objective for any meaningful period of time, or at all.
The Forza Reverse Stock Split May Decrease the
Liquidity of the Forza Common Stock. The Forza Board of Directors believes that the Forza Reverse Stock Split may result in an increase
in the market price of the Forza Common Stock, which could lead to increased interest in the Forza Common Stock and possibly promote greater
liquidity for our stockholders. However, the Forza Reverse Stock Split will also reduce the total number of outstanding shares of Forza
Common Stock, which may lead to reduced trading and a smaller number of market makers for the Forza Common Stock.
The Forza Reverse Stock Split May Result in Some
Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell.
If the Forza Reverse Stock Split is implemented, it will increase the number of Forza stockholders who own “odd lots”
of less than 100 shares of Forza Common Stock. A purchase or sale of less than 100 shares of Forza Common Stock (an “odd
lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service”
brokers. Therefore, those stockholders who own less than 100 shares of Forza Common Stock following the Forza Reverse Stock Split
may be required to pay higher transaction costs if they sell their Forza Common Stock.
The Forza Reverse Stock Split May Lead to a Decrease
in the Overall Market Capitalization of Forza. The Forza Reverse Stock Split may be viewed negatively by the market and, consequently,
could lead to a decrease in our overall market capitalization. If the per share market price of the Forza Common Stock does not increase
in proportion to the Forza Reverse Stock Split Ratio, then Forza’s value, as measured by its market capitalization, will be reduced.
The Forza Reverse Stock Split May Lead to Further
Dilution of the Forza Common Stock. Since the Forza Reverse Stock Split Proposal would reduce the number of shares of Forza Common
Stock outstanding and the number of shares of Forza Common Stock issuable on exercise or conversion, as applicable, of outstanding warrants
or convertible debentures, while leaving the number of shares authorized and issuable under Forza’s Amended and Restated Certificate
of Incorporation unchanged, the Forza Reverse Stock Split would effectively increase the number of shares of the Forza Common Stock that
we would be able to issue and could lead to dilution of the Forza Common Stock in future financings.
Potential Anti-takeover Effects of the Forza Reverse
Stock Split
Release No. 34-15230 of the staff of the SEC
requires disclosure and discussion of the effects of any action, including the proposals discussed herein, that may be used as an anti-takeover mechanism.
The relative increase in the number of shares of Forza Common Stock available for issuance vis-à-vis the outstanding shares
of Forza Common Stock, could, under certain circumstances, have an anti-takeover effect, although this is not the purpose or intent
of the Forza Board of Directors. It could potentially deter takeovers, including takeovers that the Forza Board of Directors has determined
are not in the best interest of Forza’s stockholders, in that additional shares could be issued (within the limits imposed by applicable
law) in one or more transactions that could make a change in control or takeover more difficult. For example, Forza could issue additional
shares so as to dilute the stock ownership or voting rights of persons seeking to obtain control without its agreement. Similarly, the
issuance of additional shares of Forza Common Stock to certain persons allied with Forza’s management could have the effect of making
it more difficult to remove its current management by diluting the stock ownership or voting rights of persons seeking to cause such removal.
The increase in the number of shares of authorized and unissued shares of Forza Common Stock therefore may have the effect of discouraging
unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts, the Forza Reverse Stock
Split may limit the opportunity for Forza’s stockholders to dispose of their shares at the higher price generally available in takeover
attempts or that may be available under a merger proposal.
Impact of a Forza Reverse Stock Split If Implemented
A Forza Reverse Stock Split would affect all holders
of Forza Common Stock uniformly and would not affect any stockholder’s percentage ownership interests or proportionate voting power.
The other principal effects of the Forza Reverse Stock Split will be that:
● the number of issued and outstanding shares
of Forza Common Stock (and treasury shares), if any, will be reduced proportionately based on the final Forza Reverse Stock Split Ratio,
as determined by the Forza Board of Directors;
● based on the final Forza Reverse Stock Split
Ratio, the per share exercise price or conversion price, as applicable, of all outstanding warrants and convertible debentures will be
increased proportionately and the number of shares of Forza Common Stock issuable upon the exercise or conversion, as applicable, of all
outstanding warrants and convertible debentures will be reduced proportionately; and
● the number of shares reserved for issuance
pursuant to any outstanding equity awards and any maximum number of shares with respect to which equity awards may be granted will be
reduced proportionately based on the final Forza Reverse Stock Split Ratio.
The following table sets forth the approximate number
of shares of the Forza Common Stock that would be outstanding immediately after the Forza Reverse Stock Split based on the current authorized
number of shares of Forza Common Stock at various exchange ratios, based on [●] shares of Forza Common Stock actually issued
and outstanding as of [●], 2024. The table does not account for fractional shares that will be paid in cash.
| | |
Estimated
Number of
Shares of Forza
Common Stock
Before Forza Reverse
Stock Split | |
Estimated
Number of
Shares of
Forza Common Stock
After Forza Reverse
Stock Split on a
1-for-10 basis | |
Estimated
Number of
Shares of Forza
Common Stock
After Forza Reverse
Stock Split on a
1-for-20 basis |
| Authorized Forza Common Stock | |
| 100,000,000 | | |
| 100,000,000 | | |
| 100,000,000 | |
| Shares of Forza Common Stock issued and outstanding | |
| | | |
| | | |
| | |
| Shares of Forza Common Stock issuable under outstanding options, warrants, or reserved for issuance under existing plans | |
| | | |
| | | |
| | |
| Shares of Forza Common Stock authorized but unissued (Authorized Forza Common Stock minus issued and outstanding shares, shares issuable upon outstanding options warrants, and shares reserved for issuance under existing incentive plans) | |
| | | |
| | | |
| | |
Forza is currently authorized to issue a maximum of
100,000,000 shares of Forza Common Stock. As of the Forza Record Date, there were [●] shares of Forza Common Stock issued and
outstanding. Although the number of authorized shares of Forza Common Stock will not change as a result of the Forza Reverse Stock Split,
the number of shares of Forza Common Stock issued and outstanding will be reduced in proportion to the ratio selected by the Forza Board
of Directors. Thus, the Forza Reverse Stock Split will effectively increase the number of authorized and unissued shares of Forza Common
Stock available for future issuance by the amount of the reduction effected by the Forza Reverse Stock Split.
Following the Forza Reverse Stock Split, the Forza
Board of Directors will have the authority, subject to applicable securities laws, to issue all authorized and unissued shares without
further stockholder approval, upon such terms and conditions as the Forza Board of Directors deems appropriate. Although Forza considers
financing opportunities from time to time, it does not currently have any plans, proposals or understandings to issue the additional shares
that would be available if the Forza Reverse Stock Split is approved and effected, but some of the additional shares underlie warrants
and convertible debentures, which could be exercised or converted after the Forza Reverse Stock Split is effected.
Effects of the Forza Reverse Stock Split
Management does not anticipate that Forza’s
financial condition, the percentage ownership of Forza Common Stock by management, the number of Forza stockholders or any aspect of Forza’s
business will materially change as a result of the Forza Reverse Stock Split. Because the Forza Reverse Stock Split will apply to all
issued and outstanding shares of Forza Common Stock and outstanding rights to purchase Forza Common Stock or to convert other securities
into Forza Common Stock the proposed Forza Reverse Stock Split will not alter the relative rights and preferences of existing stockholders,
except to the extent the Forza Reverse Stock Split will result in fractional shares, as discussed in more detail below.
The Forza Common Stock is currently registered
under Section 12(b) of the Exchange Act, and Forza is subject to the periodic reporting and other requirements of the
Exchange Act. The Forza Reverse Stock Split will not affect the registration of the Forza Common Stock under the Exchange Act
or the listing of the Forza Common Stock on Nasdaq Capital Market (other than to the extent it facilitates compliance with Nasdaq Capital
Market listing standards). Following the Forza Reverse Stock Split, the Forza Common Stock will continue to be traded on the OTC Markets,
although it will be considered a new listing with a new Committee on Uniform Securities Identification Procedures, or CUSIP number.
The rights of the holders of the Forza Common Stock
will not be affected by the Forza Reverse Stock Split, other than as a result of the treatment of fractional shares as described below.
For example, a holder of 2% of the voting power of the outstanding shares of the Forza Common Stock immediately prior to the effectiveness
of the Forza Reverse Stock Split will generally continue to hold 2% of the voting power of the outstanding shares of the Forza Common
Stock immediately after effecting the Forza Reverse Stock Split. The number of stockholders of record will not be affected by the Forza
Reverse Stock Split (except to the extent any are cashed out as a result of holding fractional shares). If approved and implemented, the
Forza Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of the Forza Common
Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally
higher than the costs of transactions in “round lots” of even multiples of 100 shares. The Forza Board of Directors believes,
however, that these potential effects are outweighed by the benefits of the Forza Reverse Stock Split.
Effectiveness of the Forza Reverse Stock Split.
The Forza Reverse Stock Split, if approved by Forza’s stockholders, would become effective upon the filing and effectiveness
of an amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which would
take place at the Forza Board of Directors’ discretion. The exact timing of the filing of the Forza Reverse Stock Split Amendment,
if filed, would be determined by the Forza Board of Directors based on its evaluation as to when such action would be the most advantageous
to Forza and its stockholders. In addition, the Forza Board of Directors reserves the right, notwithstanding stockholder approval and
without further action by the stockholders, to elect not to proceed with the Forza Reverse Stock Split at any time prior to filing the
Forza Reverse Stock Split Amendment with the Secretary of State of the State of Delaware, if the Forza Board of Directors, in its sole
discretion, determines that it is no longer in Forza’s best interests or the best interests of its stockholders to proceed with
the Forza Reverse Stock Split. If the Forza Board of Directors does not implement the Forza Reverse Stock Split prior to the one-year anniversary
of the date on which the Forza Reverse Stock Split is approved by Forza stockholders at the Forza Annual Meeting, the authority granted
in this proposal to implement the Forza Reverse Stock Split will terminate and the Forza Reverse Stock Split will be abandoned. In addition,
if the Merger is completed, the Forza Reverse Stock Split will be abandoned.
Effect on Par Value; Reduction in Stated Capital.
The proposed Forza Reverse Stock Split will not affect the par value of Forza’s stock, which will remain at $0.001 per share
of Forza Common Stock and $0.001 per share of Preferred Stock. As a result, the stated capital on Forza’s balance sheet attributable
to Forza Common Stock, which consists of the par value per share of Forza Common Stock multiplied by the aggregate number of shares of
Forza Common Stock issued and outstanding, will be reduced in proportion to the Forza Reverse Stock Split Ratio selected by the Forza
Board of Directors. Correspondingly, Forza’s additional paid-in capital account, which consists of the difference between its
stated capital and the aggregate amount paid to Forza upon issuance of all currently outstanding shares of the Forza Common Stock, will
be increased by the amount by which the stated capital is reduced. Forza’s stockholders’ equity, in the aggregate, will remain
unchanged.
Book-Entry Shares. If the Forza
Reverse Stock Split is effected, stockholders, either as direct or beneficial owners, will have their holdings electronically adjusted
by Forza’s transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their
benefit, as the case may be) to give effect to the Forza Reverse Stock Split. Banks, brokers, custodians or other nominees will be instructed
to effect the Forza Reverse Stock Split for their beneficial holders holding Forza Common Stock in street name. However, these banks,
brokers, custodians or other nominees may have different procedures than registered stockholders for processing the Forza Reverse Stock
Split and making payment for fractional shares. If a stockholder holds shares of Forza Common Stock with a bank, broker, custodian or
other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker, custodian or other nominee.
Forza does not issue physical certificates to stockholders.
No Appraisal Rights. Under the Delaware General
Corporation Law, Forza stockholders are not entitled to dissenters’ rights or appraisal rights with respect to the Forza Reverse
Stock Split described in the Forza Reverse Stock Split Proposal, and Forza will not independently provide Forza stockholders with any
such rights.
Fractional Shares. Forza does not intend
to issue fractional shares in connection with the Forza Reverse Stock Split. And, in lieu thereof, any person who would otherwise be
entitled to a fractional share of Forza Common Stock as a result of the reclassification and combination following the effective time
of the Forza Reverse Stock Split (after taking into account all fractional shares of Forza Common Stock otherwise issuable to such holder)
shall be entitled to receive a cash payment equal to the number of shares of the Forza Common Stock held by such stockholder before the
Forza Reverse Stock Split that would otherwise have been exchanged for such fractional share interest multiplied by the average closing
sales price of the Forza Common Stock as reported on the OTC Markets for the ten days preceding the effective time of the Forza
Reverse Stock Split. After the Forza Reverse Stock Split is effected, a stockholder will have no further interest in Forza with respect
to its fractional share interest and persons otherwise entitled to a fractional share will not have any voting, dividend or other rights
with respect thereto, except to receive the above-described cash payment. Stockholders should be aware that under the escheat laws
of various jurisdictions, sums due for fractional interests that are not timely claimed after the effective time of the Forza Reverse
Stock Split may be required to be paid to the designated agent for each such jurisdiction. Stockholders otherwise entitled to receive
such funds, who have not received them, will have to seek to obtain such funds directly from the jurisdiction to which they were paid.
Material U.S. Federal Income Tax Considerations
Related to the Forza Reverse Stock Split
The following is a general summary of the material
U.S. federal income tax considerations to U.S. holders (as defined below) of the Forza Reverse Stock Split. This discussion
is based upon current provisions of the Code, existing and proposed Treasury Regulations and judicial authority and administrative interpretations,
all as of the date of this document, and all of which are subject to change, possibly with retroactive effect, and are subject to differing
interpretations. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.
Forza has not sought and will not seek an opinion of counsel or any rulings from the IRS with respect to any of the tax considerations
discussed below. As a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary
to any of the conclusions set forth below.
This discussion is limited to U.S. holders (except
to the extent such discussion explicitly addresses non-U.S. holders) that hold Forza Common Stock as “capital assets”
within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address any tax
consequences arising under the tax on net investment income or the alternative minimum tax, nor does it address any tax consequences arising
under the laws of any state, local or non-U.S. jurisdiction, U.S. federal estate or gift tax laws, or any tax treaties. Furthermore,
this discussion does not address all aspects of U.S. federal income taxation that may be applicable to U.S. holders in light
of their particular circumstances or to U.S. holders that may be subject to special rules under U.S. federal income tax laws,
including, without limitation:
● a bank, insurance company or other financial
institution;
● a tax-exempt or a governmental organization;
● a real estate investment trust;
● an S corporation or other pass-through entity
(or an investor in an S corporation or other pass-through entity);
● a regulated investment company or a mutual
fund;
● a dealer or broker in stocks and securities,
or currencies;
● a trader in securities that elects mark-to-market treatment;
● a holder of Forza Common Stock that received
such stock through the exercise of an employee option, pursuant to a retirement plan or otherwise as compensation;
● a person who holds Forza Common Stock as part
of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk
reduction transaction;
● a corporation that accumulates earnings to
avoid U.S. federal income tax;
● a person whose functional currency is not the
U.S. dollar;
● a U.S. holder who holds Forza Common Stock
through non-U.S. brokers or other non-U.S. intermediaries;
● a U.S. holder owning or treated as owning
5% or more of Forza Common Stock;
●a person subject to Section 451(b) of
the Code; or
● a former citizen or long-term resident
of the United States subject to Section 877 or 877A of the Code.
If a partnership, or any entity (or arrangement) treated
as a partnership for U.S. federal income tax purposes, holds Forza Common Stock, the tax treatment of a partner in such partnership
generally will depend on the status of the partner and the activities of the partnership and upon certain determinations made at the partner
level. Partnerships holding Forza Common Stock and partners in such partnerships should consult their own tax advisors about the U.S. federal
income tax consequences of the Forza Reverse Stock Split.
For purposes of this discussion, a “U.S. holder”
is a beneficial owner of shares of Forza Common Stock that is for U.S. federal income tax purposes:
● an individual citizen or resident of the United States;
● a corporation (or any other entity taxable
as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state
thereof or the District of Columbia;
● an estate, whose income is subject to U.S. federal
income tax regardless of its source; or
● a trust (i) the administration of which
is subject to the primary supervision of a U.S. court and that has one or more United States persons that have the authority
to control all substantial decisions of the trust or (ii) that has made a valid election under applicable Treasury Regulations to
be treated as a domestic trust.
A “non-U.S. holder” is, for U.S. federal
income tax purposes, a beneficial owner of shares of Forza Common Stock that is a not a U.S. holder or a partnership for U.S. federal
income tax purposes.
Tax Consequences of the Forza Reverse Stock Split
Generally
The Forza Reverse Stock Split should constitute a
“recapitalization” for U.S. federal income tax purposes. As a result, a U.S. holder of Forza Common Stock generally
should not recognize gain or loss upon the Forza Reverse Stock Split, except with respect to cash received in lieu of a fractional share
of Forza Common Stock, as discussed below. A U.S. holder’s aggregate tax basis in the shares of Forza Common Stock received
pursuant to the Forza Reverse Stock Split should equal the aggregate tax basis of the shares of Forza Common Stock surrendered (excluding
any portion of such basis that is allocated to any fractional share of Forza Common Stock), and such U.S. holder’s holding
period in the shares of Forza Common Stock received should include the holding period in the shares of Forza Common Stock surrendered.
Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of Forza Common Stock surrendered
to the shares of Forza Common Stock received in a recapitalization pursuant to the Forza Reverse Stock Split. U.S. holders of shares
of Forza Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of
the tax basis and holding period of such shares.
Cash in Lieu of Fractional Shares
A U.S. holder of Forza Common Stock that receives
cash in lieu of a fractional share of Forza Common Stock pursuant to the Forza Reverse Stock Split and whose proportionate interest in
us is reduced (after taking into account certain constructive ownership rules) should generally recognize capital gain or loss in an amount
equal to the difference between the amount of cash received and the U.S. holder’s tax basis in the shares of Forza Common Stock
surrendered that is allocated to such fractional share of Forza Common Stock. Such capital gain or loss should be long-term capital
gain or loss if the U.S. holder’s holding period for Forza Common Stock surrendered exceeds one year at the effective time
of the Forza Reverse Stock Split. The deductibility of capital losses is subject to limitations. A U.S. holder that receives cash
in lieu of a fractional share of Forza Common Stock pursuant to the Forza Reverse Stock Split and whose proportionate interest in us is
not reduced (after taking into account certain constructive ownership rules) should generally be treated as having received a distribution
that will be treated first as dividend income to the extent paid out of Forza’s current or accumulated earnings and profits, and
then as a tax-free return of capital to the extent of the U.S. holder’s tax basis in Forza Common Stock, with any remaining
amount being treated as capital gain. U.S. holders should consult their tax advisors regarding the tax effects to them of receiving
cash in lieu of fractional shares based on their particular circumstances.
Non-U.S. Holders
Generally, non-U.S. holders will not recognize
any gain or loss as a result of the Forza Reverse Stock Split. In particular, gain or loss will not be recognized with respect to a non-U.S. holder
that receives cash in lieu of a fractional share of Forza Common Stock and whose proportionate interest in us is reduced (after taking
into account certain constructive ownership rules) provided that (a) such gain or loss is not effectively connected with the conduct
of a trade or business by such non-U.S. holder in the United States (or, if certain income tax treaties apply, is not attributable
to a non-U.S. holder’s permanent establishment in the United States), (b) with respect to a non-U.S. holder
who is an individual, such non-U.S. holder is present in the United States for less than 183 days in the taxable year of
the Forza Reverse Stock Split and other conditions are met, and (c) such non-U.S. holder complies with certain certification
requirements. If such gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S.,
and if an applicable income tax treaty so provides, the gain is attributable to a permanent establishment or fixed base maintained by
the non-U.S. holder in the United States, the non-U.S. holder will be taxed on a net income basis at the regular tax rates
and in the manner applicable to U.S. holders, and if the non-U.S. holder is a corporation, an additional branch profits tax
at a rate of 30%, or a lower rate as may be specified by an applicable income tax treaty, may also apply. If the non-U.S. holder
is an individual present in the United States for 183 days or more in the taxable year of the Forza Reverse Stock Split and
certain other requirements are met, the non-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an
applicable income tax treaty between the United States and such holder’s country of residence) on the net gain from the exchange
of the shares of Forza Common Stock, which may be offset by certain U.S.-source capital losses of the non-U.S. holder, if any.
Notwithstanding the foregoing, with respect to a non-U.S. holder
that receives cash in lieu of a fractional share of Forza Common Stock pursuant to the Forza Reverse Stock Split and whose proportionate
interest in Forza is not reduced (after taking into account certain constructive ownership rules), the gain will be treated as a dividend
rather than capital gain to the extent of the non-U.S. holder’s ratable share of Forza’s current or accumulated earnings
and profits as calculated for U.S. federal income tax purposes, then as a tax-free return of capital to the extent of (and in
reduction of) the non-U.S. holder’s aggregate adjusted tax basis in the shares, and any remaining amount will be treated as
capital gain.
Forza will withhold U.S. federal income taxes
equal to 30% of any cash payments made to a non-U.S. holder as a result of the Forza Reverse Stock Split that may be treated as a
dividend, unless such holder properly demonstrates that a reduced rate of U.S. federal income tax withholding or an exemption from
such withholding is applicable. For example, an applicable income tax treaty may reduce or eliminate U.S. federal income tax withholding,
in which case a non-U.S. holder claiming a reduction in (or exemption from) such tax must provide us with a properly completed IRS
Form W-8BEN (or other appropriate IRS Form W-8) claiming the applicable treaty benefit. Alternatively, an exemption generally
should apply if the non-U.S. holder’s gain is effectively connected with a U.S. trade or business of such holder, and
such holder provides us with an appropriate statement to that effect on a properly completed IRS Form W-8ECI.
Non-U.S. holders should consult their own tax
advisors regarding possible dividend treatment and should consult their own tax advisor regarding the U.S. federal, state, local,
and foreign income and other tax consequences of the Forza Reverse Stock Split.
Information Reporting and Backup Withholding
Cash payments received by a U.S. holder of Forza
Common Stock pursuant to the Forza Reverse Stock Split may be subject to information reporting and may be subject to U.S. backup
withholding (currently at 24%) unless such holder provides proof of an applicable exemption or a correct taxpayer identification number
and otherwise complies with the applicable requirements of the backup withholding rules. In general, backup withholding and information
reporting will not apply to payment of cash in lieu of a fractional share of Forza Common Stock to a non-U.S. holder pursuant to
the Forza Reverse Stock Split if the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. holder, and
the applicable withholding agent does not have actual knowledge to the contrary. In certain circumstances the amount of cash paid to a
non-U.S. holder in lieu of a fractional share of Forza Common Stock, the name and address of the beneficial owner and the amount,
if any, of tax withheld may be reported to the IRS. Any amount withheld under the U.S. backup withholding rules is not an additional
tax and will generally be allowed as a refund or credit against the holder’s U.S. federal income tax liability provided that
the required information is timely furnished to the IRS.
FATCA
Under the Foreign Account Tax Compliance Act (‘‘FATCA’’),
withholding taxes may apply to certain types of payments made to ‘‘foreign financial institutions’’ (as specially
defined in the Code) and certain other non-United States entities. Specifically, a 30% withholding tax may be imposed on dividends
on stock paid to a foreign financial institution or to a non-financial foreign entity, unless (1) the foreign financial institution
undertakes certain diligence and reporting, (2) the non-financial foreign entity either certifies it does not have any substantial
United States owners or furnishes identifying information regarding each substantial United States owner, or (3) the foreign
financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign
financial institution and is subject to the diligence and reporting requirements in clause (1) above, then, pursuant to an agreement
between it and the U.S. Treasury or an intergovernmental agreement between, generally, the jurisdiction in which it is resident and
the U.S. Treasury, it must, among other things, identify accounts held by certain United States persons or United States-owned foreign
entities, annually report certain information about such accounts and withhold 30% on payments to non-compliant foreign financial
institutions and certain other account holders.
Any cash paid to a non-U.S. holder as a result
of the Forza Reverse Stock Split that is treated as dividend may be subject to withholding under FATCA unless the requirements set forth
above are satisfied (if applicable) and appropriate certifications are made. While withholding under FATCA would have applied also to
payments of gross proceeds from the sale or other disposition of Forza Common Stock on or after January 1, 2019, proposed Treasury
Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury
Regulations until final Treasury Regulations are issued.
Interests of Directors and Executive Officers
Forza directors and executive officers have no substantial
interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of Forza
Common Stock.
Vote Required
The affirmative vote of a majority of the votes cast
by the holders of all shares of Forza Common Stock present or represented and voting on the Forza Reverse Stock Split Proposal at the
Forza Annual Meeting is required to approve the Forza Reverse Stock Split Proposal. Since abstentions are not considered votes cast, they
will have no effect on this proposal. Broker non-votes are not expected for this proposal because Forza believes this matter is a
routine matter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE “FOR” APPROVAL OF
THE FORZA REVERSE STOCK SPLIT PROPOSAL.
Forza stockholders should understand, however,
that if the Merger with Twin Vee is completed, the Forza Reverse Stock Split will not be effected.
FORZA
PROPOSAL NO. 5—ADJOURNMENT OF THE FORZA ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES
IN FAVOR OF PROPOSAL NO. 1 AND/OR PROPOSAL NO. 4
If Forza fails to receive a sufficient number
of votes to approve Forza Proposal No. 1 and/or Forza Proposal No. 4, Forza may propose to adjourn the Forza Annual Meeting, if a quorum
is present, for the purpose of soliciting additional proxies to approve Forza Proposal No. 1 and/or Forza Proposal No. 4. Forza currently
does not intend to propose adjournment of the Forza Annual Meeting if there are sufficient votes to approve Forza Proposal No. 3 and/or
Forza Proposal No. 4. If Forza’s stockholders approve this proposal, the Forza Board of Directors could adjourn the Forza Annual
Meeting and any adjourned session thereof and use the additional time to solicit additional proxies, including the solicitation of proxies
from Forza’s stockholders that have previously voted. Among other things, approval of this proposal could mean that, even if Forza
had received proxies representing a sufficient number of votes to defeat Forza Proposal No. 1 or Forza Proposal No. 4, it could adjourn
the Forza Annual Meeting without a vote on such proposal and seek to convince its stockholders to change their votes in favor of such
proposal.
Vote Required
Approval of the proposal to adjourn the Forza Annual
Meeting for the purpose of soliciting additional proxies requires the affirmative vote of the holders of a majority of the votes present,
in person or by proxy, and entitled to vote on the matter at the Forza Annual Meeting.
Board Recommendation
THE FORZA BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR” THE ADJOURNMENT OF THE FORZA ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT
VOTES IN FAVOR OF FORZA PROPOSAL NO. 1 AND/OR FORZA PROPOSAL NO. 4.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Twin Vee
Each of the related party transactions described below
was negotiated on an arm’s length basis. Twin Vee believes that the terms of such agreements are as favorable as those it could
have obtained from parties not related to it. The following are summaries of certain provisions of Twin Vee’s related party agreements
and are qualified in their entirety by reference to all of the provisions of such agreements. Because these descriptions are only summaries
of the applicable agreements, they do not necessarily contain all of the information that you may find useful. We therefore urge you to
review the agreements in their entirety. Copies of the forms of the agreements have been filed as exhibits to the Twin Vee 2023 Annual
Report and are available electronically on the website of the SEC at www.sec.gov.
In addition to the compensation arrangements, including
employment, termination of employment and change in control arrangements, with Twin Vee’s directors and executive officers, including
those discussed in “Twin Vee Executive Compensation” the following is a description of each transaction since January
1, 2022 or any currently proposed transaction in which:
| |
● |
Twin Vee has been or is to be a party to; |
| |
● |
the amount involved exceeded or exceeds $120,000 or 1% of the average of Twin Vee’s total assets as of the end of the last two completed fiscal years; and |
| |
● |
any of Twin Vee’s directors, executive officers or holders of more than 5% of Twin Vee’s outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest. |
For information on Twin Vee’s compensation arrangements,
including employment, termination of employment and change in control arrangements, with its directors and executive officers, see “Twin
Vee Executive Compensation”.
On December 5, 2022, pursuant
to the terms of the Agreement and Plan of Merger, dated as of September 8, 2022, by and between Twin Vee and Twin Vee PowerCats, Inc.
(“Twin Vee Inc.”), Twin Vee’s then parent corporation and owner of 4,000,000 shares of Twin Vee Common Stock, representing
76% of Twin Vee Common Stock, Twin Vee Inc. was merged with and into Twin Vee (the “Twin Vee Merger”). The Twin Vee Merger
became effective on December 5, 2022 at which time (a) the holders of Twin Vee Inc. Common Stock received in the Twin Vee Merger one share
of Twin Vee Common Stock in exchange for each 41.7128495 shares of Twin Vee Inc. Common Stock that they owned, for a maximum of 4,000,000
shares of Twin Vee Common Stock (no fractional shares of Twin Vee Common Stock were issued) and (b) the 4,000,000 shares of Twin Vee Common
Stock held by Twin Vee Inc. were cancelled and retired. Each holder of shares of Twin Vee Inc. Common Stock who would otherwise be
entitled to a fraction of a share of Twin Vee Common Stock (after aggregating all fractional shares of Twin Vee Common Stock that otherwise
would be received by such holder) received in lieu of such fraction of a share cash the dollar amount (rounded to the nearest whole cent),
without interest, determined by multiplying such fraction by $2.09, which was equal to the volume weighted average closing trading price
of a share of Twin Vee Common Stock for the five consecutive trading days ending immediately prior to December 5, 2022. After the Twin
Vee Merger, Twin Vee had approximately 9,520,000 shares of Twin Vee Common Stock outstanding, which is substantially the same as it was
immediately prior to the Twin Vee Merger. Joseph Visconti, Twin Vee’s Chief Executive Officer and Chairman of the Board, was the
largest stockholder of Twin Vee Inc. and received 2,243,916 shares of Twin Vee Common Stock upon consummation of the Twin Vee Merger in
exchange for the shares of Common Stock of Twin Vee Inc. that he owned, representing approximately 22% of Twin Vee’s outstanding
shares of Common Stock, and Preston Yarbrough, Twin Vee’s Vice President and Director of Product Development, was issued 38,357
shares of Twin Vee Common Stock upon consummation of the Twin Vee Merger in exchange for the shares of Common Stock of Twin Vee Inc. that
he owned.
Twin Vee leases its facility from Visconti Holdings, LLC, (“Visconti Holdings”)
an entity owned and controlled by Twin Vee’s Chief Executive Officer, President and Director, Joseph Visconti, pursuant to a lease
agreement (the “Lease Agreement”), dated January 1, 2021, by and among Twin Vee, Visconti Holdings, LLC and Twin Vee Powercats,
Inc., Twin Vee’s former majority shareholder company. The Lease Agreement currently has a 5-year term, with an option to renew for
an additional 5-year term. Twin Vee currently pays Visconti Holdings $33,075 per month plus applicable sales and use tax, which is currently
7% in St. Lucie County.
During the year ended December 31, 2023 and 2022,
Twin Vee received cash of $0 and $14,549 from its affiliate companies, and paid $57,659 and $303,250 to its affiliate
companies, respectively.
During the year ended December 31, 2022, Twin Vee
issued 20,000 shares valued at $52,400 for payment on behalf of its former majority shareholder company.
During the year ended December 31, 2023 and 2022 respectively,
Twin Vee received a monthly fee of $6,800 and 5,850 to provide management services and facility utilization to Forza.
During the year ended December 31, 2023 and 2022,
Twin Vee recorded management fees of $0 and $54,000 respectively, paid to Twin Vee, Inc. pursuant to a management agreement, dated January
1, 2021, with Twin Vee’s former majority shareholder company for various management services. The agreement provided for a monthly
$4,500 management fee, there was a term of one year that expired on December 31, 2022.
During the year ended December 31, 2023, Twin Vee
recorded $15,000 of professional fees, for consulting work for Twin Vee performed by Jim Leffew, the former Chief Executive Officer of
Forza.
In
connection with the closing of Forza’s initial public offering, Twin Vee entered into
a transition services agreement (the “Transition Services Agreement”) with Forza,
pursuant to which Twin Vee agreed to provide Forza, at Twin Vee’s cost, with certain
services, such as procurement, shipping, receiving, storage and use of Twin Vee’s facility
until Forza’ s new planned facility is completed. Forza’s ability to utilize
Twin Vee’s manufacturing capacity pending completion of its own facility will be subject
to its availability as determined by Twin Vee. The Transition Services Agreement operates
on a month-to-month basis. During the
six months ended June 30, 2024 and 2023, Twin Vee received a monthly fee of $46,670 and
$6,800, respectively, to provide management services and facility utilization to Forza.
This income for Twin Vee, and expense for Forza, has been eliminated in the condensed consolidated
financial statements.
During the years ended December 31, 2023 and 2022,
respectively, Twin Vee recorded $36,000 and $24,225 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, 2023 and 2022, respectively, Aqua Sport recorded
an expense of $50,000 and $0, for compensation for Mr. Leffew’s work to start up the Tennessee facility.
In August 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 2023, the former
Chief Executive Officer 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, 2023 and 2022, the lease expense was $12,500 and $0, respectively, paid to
Mr. Leffew.
Indemnification
The information included under the heading “Information
Regarding Committees of the Twin Vee Board of Directors—Limitation of Liability and Indemnification” is hereby incorporated
by reference.
Twin Vee’s Policy Regarding
Related Party Transactions
The Twin Vee Board of Directors recognizes the fact
that transactions with related persons present a heightened risk of conflicts of interest and/or improper valuation (or the perception
thereof). The Twin Vee Board of Directors has adopted a written policy on transactions with related persons that is in conformity with
the requirements for issuers having publicly held Common Stock that is listed on the Nasdaq Stock Market. Under the policy:
| |
● |
any related person transaction, and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by the Twin Vee Audit Committee; and |
| |
● |
any employment relationship or transaction involving an executive officer and any related compensation must be approved by the Twin Vee Compensation Committee or recommended by the Twin Vee Compensation Committee to the Twin Vee Board of Directors for its approval. |
In connection with the review and approval or ratification
of a related person transaction:
| |
● |
management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction; |
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of Twin Vee’s agreements governing its material outstanding indebtedness that limit or restrict Twin Vee’s ability to enter into a related person transaction; |
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in Twin Vee’s applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with the Securities Act and the Exchange Act and related rules; and |
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act. |
In addition, Twin Vee’s related person transaction
policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related
person transaction involving a non-employee director, should consider whether such transaction would compromise the director’s status
as an “independent,” “outside,” or “non-employee” director, as applicable, under the rules and regulations
of the SEC, the Nasdaq Stock Market, and the Code.
Director Independence
The information included under the heading “Information
Regarding the Twin Vee Board of Directors and Corporate Governance—Director Independence” is hereby incorporated by reference.
Forza
Each of the related party transactions described below
was negotiated on an arm’s length basis. Forza believes that the terms of such agreements are as favorable as those it could have
obtained from parties not related to Forza. The following are summaries of certain provisions of Forza’s related party agreements
and are qualified in their entirety by reference to all of the provisions of such agreements. Because these descriptions are only summaries
of the applicable agreements, they do not necessarily contain all of the information that you may find useful. Forza therefore urges you
to review the agreements in their entirety. Copies of the forms of the agreements have been filed as exhibits to the Forza 2023 Annual
Report and are available electronically on the website of the SEC at www.sec.gov.
In addition to the compensation arrangements, including
employment, termination of employment and change in control arrangements, with Forza’s directors and executive officers, including
those discussed in the sections titled “Forza Executive Compensation,” the following is a description of each transaction
since January 1, 2022 or any currently proposed transaction in which:
| |
● |
Forza has been or is to be a party to; |
| |
|
|
| |
● |
the amount involved exceeded or exceeds $120,000 or 1% of the average of Forza’s total assets as of the end of the last two completed fiscal years; and |
| |
|
|
| |
● |
any of Forza’s directors, executive officers or holders of more than 5% of Forza’s outstanding capital stock, or any immediate family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material interest. |
For information on Forza’s compensation arrangements,
including employment, termination of employment and change in control arrangements, with our directors and executive officers, see the
section titled “Forza Executive Compensation”.
Joseph Visconti, Forza’s Executive Chairman
and Chief of Product Development is also the Chairman of the Board and Chief Executive Officer of Forza’s controlling shareholder,
Twin Vee. These shares are owned directly by Twin Vee. Mr. Visconti owns 24.455% of the outstanding stock of Twin Vee. Twin Vee. is the
owner of 7,000,000 shares of Forza Common Stock. As a controlling shareholder of Twin Vee, Mr. Visconti is deemed to have control over
the shares of Forza Common Stock owned by Twin Vee. Mr. Visconti disclaims beneficial ownership of these securities.
As of June 30, 2024, Forza had $18,384 due from affiliates
and at December 31, 2023, Forza had $201,848 due to affiliates. . Twin Vee funded Forza’s working capital needs, primarily for prototyping,
consulting services and payroll, prior to their $2,000,000 investment. On May 25, 2022, Twin Vee provided an additional $500,000 for ongoing
operating costs of Forza.
Pursuant to a management agreement with Twin Vee,
dated October 2021, and a subsequent agreement dated September 2022, for various management services, Forza paid $5,000 monthly through
August of 2021, and $6,800 monthly thereafter for management fee associated with the use of shared management resources. For the years
ended December 31, 2023 and 2022, Forza recorded management fees of $81,600 and $67,125, respectively, pursuant to this management
agreement.
Forza’s corporate headquarters is located at
Twin Vee’s premises. In addition to the above management fee, Forza has a month-to-month arrangement and pays rent to Twin Vee monthly,
based on the square footage Forza requires. For the year ended December 31, 2023, Forza recorded rent expense of $40,800, associated with
its month-to-month arrangement to utilize certain space at Twin Vee’s facility.
During the year ended December 31, 2023, Forza received
advances from affiliates of $542,553 and Forza repaid advancements to affiliates of $510,556.
Indemnification
The information included under the heading “Information
Regarding Committees of the Forza Board of Directors—Limitation of Liability and Indemnification” is hereby incorporated
by reference.
Assignment of Assets Agreement; Assignment of Intellectual
Property
Forza and Twin Vee have entered into an agreement
pursuant to which Twin Vee has assigned to Forza (i) certain technology, assets and property rights, and (ii) certain intellectual property
related to Twin Vee’s EV business.
Assignment of Land Contract
Forza and Twin Vee had entered into an assignment
of land contract pursuant to which Twin Vee had assigned to Forza a land purchase agreement that provides Forza with an option to acquire
14.5 acres of undeveloped land in Fort Pierce, Florida for $750,000. On December 6, 2021, Forza paid the $50,000 refundable deposit on
the land purchase agreement from Forza’s working capital. The land purchase agreement provided that Forza must diligently pursue
zoning change and site plan approval with St. Lucie County for the manufacturing facility within two hundred ten (210) days of the effective
date of the contract (the “Site Plan Contingency”). In the event Forza could not obtain the Site Plan Contingency by the 210-day
deadline, within three (3) business days after the expiration of the deadline, Forza could either (i) elect to terminate the land purchase
contract or (ii) waive the Site Plan Contingency and proceed to the closing. It was subsequently determined that the cost associated with
building Forza’s factory on the Fort Pierce, Florida site is prohibitive. As a result, on April 28, 2022, Twin Vee and Forza requested,
and were granted, a release and termination of the land purchase agreement for this vacant parcel of land.
Transition Services Agreement
Following
the completion of Forza’s initial public offering, Forza transitioned the management
agreement with Twin Vee from an agreement providing management services to a transition services
agreement under which Twin Vee provides Forza, at Twin Vee’s cost, with certain services,
such as procurement, shipping, receiving, storage and use of Twin Vee’s facility until
Forza’s new planned facility is completed. In addition, Forza began using the services
of Ms. Gunnerson for its accounting needs pursuant to the agreement. There is limited additional
manufacturing capacity at Twin Vee’s current facility for the manufacture of Forza’s
electric boats. As such, Forza’s ability to utilize Twin Vee’s manufacturing
capacity pending completion of Forza’s own facility will be subject to its availability
as determined by Twin Vee. The transition services agreement operates on a month-to-month
basis.
Forza’s Policy Regarding Related Party Transactions
The Forza Board of Directors recognizes the fact that
transactions with related persons present a heightened risk of conflicts of interest and/or improper valuation (or the perception thereof).
The Forza Board of Directors has adopted a written policy on transactions with related persons that is in conformity with the requirements
for issuers having publicly held Common Stock that is listed on the Nasdaq Stock Market. Under the policy:
| |
● |
any related person transaction, and any material amendment or modification to a related person transaction, must be reviewed and approved or ratified by the Forza Audit Committee; and |
| |
|
|
| |
● |
any employment relationship or transaction involving an executive officer and any related compensation must be approved by the Forza Compensation Committee or recommended by the Forza Compensation Committee to the Forza Board of Directors for its approval. |
In connection with the review and approval or ratification
of a related person transaction:
| |
● |
management must disclose to the committee or disinterested directors, as applicable, the name of the related person and the basis on which the person is a related person, the material terms of the related person transaction, including the approximate dollar value of the amount involved in the transaction, and all the material facts as to the related person’s direct or indirect interest in, or relationship to, the related person transaction; |
| |
|
|
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction complies with the terms of Forza’s agreements governing its material outstanding indebtedness that limit or restrict Forza’s ability to enter into a related person transaction; |
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction will be required to be disclosed in Forza’s applicable filings under the Securities Act or the Exchange Act, and related rules, and, to the extent required to be disclosed, management must ensure that the related person transaction is disclosed in accordance with the Securities Act and the Exchange Act and related rules; and |
| |
|
|
| |
● |
management must advise the committee or disinterested directors, as applicable, as to whether the related person transaction constitutes a “personal loan” for purposes of Section 402 of the Sarbanes-Oxley Act. |
In addition, Forza’s related person transaction
policy provides that the committee or disinterested directors, as applicable, in connection with any approval or ratification of a related
person transaction involving a non-employee director, should consider whether such transaction would compromise the director’s status
as an “independent,” “outside,” or “non-employee” director, as applicable, under the rules and regulations
of the SEC, the Nasdaq Stock Market, and the Code.
Director Independence
The information included under the heading “Information
Regarding the Forza Board of Directors and Corporate Governance—Director Independence” is hereby incorporated by reference.
CONFLICTS OF INTEREST
Any future transactions with officers, directors or
5% stockholders will be on terms no less favorable to Twin Vee than could be obtained from independent parties. Any affiliated transactions
must be approved by a majority of Twin Vee’s independent and disinterested directors who have access to Twin Vee’s counsel
or independent legal counsel at Twin Vee’s expense.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more
stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly
referred to as “householding,” potentially means extra convenience for stockholders and cost.
This year, a number of brokers with account holders
who are Twin Vee’s and Forza stockholders will be “householding” Twin Vee’s and Forza’s proxy materials,
as applicable. A single proxy statement will be delivered to multiple stockholders sharing an address unless contrary instructions have
been received from the affected stockholders. Once you have received notice from your broker that they will be “householding”
communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement
and annual report, please notify your broker, direct your written request to Twin Vee PowerCats Co., 3101 S. U.S. Highway 1, Fort Pierce,
Florida 34982, Attention: Investor Relations or Forza X1, Inc., 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, Attention: Investor
Relations, as applicable.
OTHER MATTERS
The Twin Vee Board of Directors knows of no other
matters that will be presented for consideration at the Twin Vee Annual Meeting. The Forza Board of Directors knows of no other matters
that will be presented for consideration at the Forza Annual Meeting. If any other matters are properly brought before the meetings, it
is the intention of the persons named in the accompanying proxies to vote on such matters in accordance with their best judgment.
APPRAISAL RIGHTS
No appraisal rights are available to holders of Twin
Vee Common Stock or Forza Common Stock in connection with the Merger in accordance with Section 262 of the DGCL.
FUTURE TWIN VEE STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals for inclusion
in next year’s proxy materials at the Twin Vee 2025 Annual Meeting of Stockholders (the “Twin Vee 2025 Annual Meeting”)
under SEC Rule 14a-8 must ensure that such proposals are received by the Corporate Secretary of Twin Vee not later than [●], 2025.
Such proposals must meet the requirements of the SEC to be eligible for inclusion in Twin Vee’s proxy materials for the Twin Vee
2025 Annual Meeting.
Generally, timely notice of any director
nomination or other proposal that any stockholder intends to present at the Twin Vee 2025 Annual Meeting, but does not intend to have
included in the proxy materials prepared by Twin Vee in connection with the Twin Vee 2025 Annual Meeting, must be delivered in writing
to the Corporate Secretary at Twin Vee PowerCats Co., 3101 S US Hwy 1, Fort Pierce, Florida 34982 not later than 45th day nor earlier
than 75th day before the first anniversary of the date Twin Vee first mails its proxy materials or notice of availability of proxy materials
for the preceding year’s annual meeting. Therefore, to be timely, Twin Vee must receive such notice no earlier than [●], 2025
and no later than [●], 2025. However, if the date of the Twin Vee 2025 Annual Meeting is advanced by more than 30 days or delayed
by more than 60 days from the date of the previous year’s annual meeting, Twin Vee must receive the notice not earlier than the
close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day
prior to such annual meeting or the 10th day following the day on which public announcement of the date of the Twin Vee 2025 Annual Meeting
is first made. In addition, the stockholder must comply with the requirements set forth in Twin Vee’s Bylaws and the stockholder’s
notice must set forth the information required by Twin Vee’s Bylaws with respect to each stockholder making the proposal or nomination
and each proposal or nomination that such stockholder intends to present at the Twin Vee 2025 Annual Meeting. In addition, the stockholder’s
notice must set forth the information required by Twin Vee’s Bylaws with respect to each stockholder making the proposal and each
proposal and nomination that such stockholder intends to present at the Twin Vee 2025 Annual Meeting. All proposals should be addressed
to the Corporate Secretary, Twin Vee PowerCats Co., 3101 S US Hwy 1, Fort Pierce, Florida 34982. In addition, to satisfying the foregoing
requirements, to comply with the universal proxy rules, Twin Vee stockholders who intend to solicit proxies in support of director nominees
other than Twin Vee’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act
no later than [●], 2025. If such meeting date is changed by more than 30 days before or after [●], 2025, then notice must
be provided by the later of 60 calendar days prior to the date of the Twin Vee 2025 Annual Meeting or the 10th calendar day following
the day on which public announcement of the date of the Twin Vee 2025 Annual Meeting is first made.
FUTURE FORZA STOCKHOLDER PROPOSALS
Stockholders who intend to present proposals for inclusion
in next year’s proxy materials at the Forza 2025 Annual Meeting of Stockholders (the “Forza 2025 Annual Meeting”) under
SEC Rule 14a-8 must ensure that such proposals are received by the Corporate Secretary of Forza not later than [●], 2025. Such proposals
must meet the requirements of the SEC to be eligible for inclusion in the proxy materials for the Forza 2025 Annual Meeting.
Generally, timely notice of any director
nomination or other proposal that any stockholder intends to present at the Forza 2025 Annual Meeting, but does not intend to have included
in the proxy materials prepared by Forza in connection with the Forza 2025 Annual Meeting, must be delivered in writing to the Corporate
Secretary at Forza X1, Inc., 3101 S US Hwy 1, Fort Pierce, Florida 34982 not later than 45th day nor earlier than 75th day before the
first anniversary of the date Forza first mails its proxy materials or notice of availability of proxy materials for the preceding year’s
annual meeting. Therefore, to be timely, Forza must receive such notice no earlier than [●], 2025 and no later than [●], 2025.
However, if the date of the Forza 2025 Annual Meeting is advanced by more than 30 days or delayed by more than 60 days from the date of
the previous year’s annual meeting, we must receive the notice not earlier than the close of business on the 120th day prior to
such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of the Forza 2025 Annual Meeting is first made. In addition, the stockholder
must comply with the requirements set forth in Forza’s Bylaws and the stockholder’s notice must set forth the information
required by Forza’s Bylaws with respect to each stockholder making the proposal or nomination and each proposal or nomination that
such stockholder intends to present at the Forza 2025 Annual Meeting. In addition, the stockholder’s notice must set forth the information
required by Forza’s Bylaws with respect to each stockholder making the proposal and each proposal and nomination that such stockholder
intends to present at the Forza 2025 Annual Meeting. All proposals should be addressed to the Corporate Secretary, Forza X1, Inc, 3101
S US Hwy 1, Fort Pierce, Florida 34982. In addition, to satisfying the foregoing requirements, to comply with the universal proxy
rules, stockholders who intend to solicit proxies in support of director nominees other than Forza’s nominees must provide notice
that sets forth the information required by Rule 14a-19 under the Exchange Act no later than [●], 2025. If such meeting date is
changed by more than 30 days before or after [●], 2025, then notice must be provided by the later of 60 calendar days prior to the
date of the Forza 2025 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the Forza
2025 Annual Meeting is first made.
LEGAL MATTERS
The validity of the Twin Vee Common Stock to be issued
to Forza stockholders pursuant to the Merger will be passed upon by Blank Rome LLP, New York, New York. In addition, certain U.S. federal
income tax consequences of the Merger will be passed upon by Blank Rome LLP, New York, New York.
EXPERTS
The
consolidated financial statements of Twin Vee as of December 31, 2023 and
2022 and for the two years ended December 31, 2023 and 2022 included elsewhere in this Joint Proxy Statement/Prospectus and the Registration
Statement have been so included in reliance on the report of Grassi & Co., CPAs, P.C., an independent registered public accounting
firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
The financial statements of Forza as of December
31, 2023 and 2022 and for the two years ended December 31, 2023 and 2022 included in this Joint Proxy Statement/Prospectus and the Registration
Statement have been so included in reliance on the reports of Grassi & Co., CPAs, P.C., an independent registered public accounting
firm appearing elsewhere herein given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Twin Vee has filed a registration statement with the
SEC under the Securities Act that registers the shares of Twin Vee Common Stock to be issued in the Merger to Forza stockholders and includes
this Joint Proxy Statement/Prospectus. The Registration Statement, including the attached exhibits and schedules, contains additional
relevant information about Twin Vee and Twin Vee Common Stock, Forza and the combined company. The rules and regulations of the SEC allow
us to omit some information included in the registration statement from this Joint Proxy Statement/Prospectus.
In addition, Twin Vee and Forza file annual, quarterly
and current reports, proxy statements and other information with the SEC under the Exchange Act. The SEC maintains an Internet site that
contains reports, proxy statements and other information about issuers, including Twin Vee and Forza, that file electronically with the
SEC. The address of that site is www.sec.gov.
You may obtain copies of the documents that Twin Vee
files with the SEC, free of charge, by going to Twin Vee’s website (www.twinvee.com) or by written or oral request to Investor
Relations, at 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, telephone: (772) 429-2525.
You may obtain copies of the documents that Forza
files with the SEC, free of charge, by going to Forza’s website (www.forzax1.com) or by written or oral request to Investor
Relations, at 3101 S. U.S. Highway 1, Fort Pierce, Florida 34982, telephone: (772) 429-2525.
Neither Twin Vee nor Forza have authorized anyone
to give any information or make any representation about the Merger or the companies that is different from, or in addition to, that contained
in this Joint Proxy Statement/Prospectus or in any of the materials that have been incorporated into this Joint Proxy Statement/Prospectus.
Therefore, if anyone distributes this type of information, you should not rely upon it. If you are in a jurisdiction where offers to exchange
or sell, or solicitations of offers to exchange or purchase, the securities offered by this Joint Proxy Statement/Prospectus or the solicitation
of proxies is unlawful, or you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this
Joint Proxy Statement/Prospectus does not extend to you. The information contained in this Joint Proxy Statement/Prospectus speaks only
as of the date of this Joint Proxy Statement/Prospectus unless the information specifically indicates that another date applies.
INDEX
TO FINANCIAL STATEMENTS
| |
Page |
| TWIN VEE FINANCIAL STATEMENTS |
|
| Report of Independent Registered Public Accounting
Firm |
F-2 |
| Consolidated Balance Sheets as of December 31,2023
and 2022 |
F-3 |
| Consolidated Statements of Operations for the years
ended December 31, 2023 and 2022 |
F-4 |
| Consolidated Statements of Stockholders’
Equity |
F-5 |
| Consolidated Statements of Cash Flows for the years
ended December 31, 2023 and 2022 |
F-6 |
| Notes to the Condensed Consolidated Financial Statements |
F-7 |
| Consolidated Balance Sheets as of June 30, 2024
(Unaudited) and December 31, 2023 |
F-26 |
| Consolidated Statements of Operations (Unaudited)
for the three and six months ended June 30, 2024 and 2023 |
F-27 |
| Consolidated Statements of Stockholders’
Equity (Unaudited) for the three and six months ended June 30, 2024 and 2023 |
F-28 |
| Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 2024 and 2023 |
F-29 |
| Notes to the Condensed Consolidated Financial Statements
(Unaudited) |
F-30 |
| |
|
| FORZA FINANCIAL STATEMENTS |
|
| Report of Independent Registered Public Accounting
Firm |
F-51 |
| Consolidated Balance Sheets as of December 31,2023
and 2022 |
F-52 |
| Consolidated Statements of Operations for the years
ended December 31, 2023 and 2022 |
F-53 |
| Consolidated Statements of Stockholders’
Equity |
F-54 |
| Consolidated Statements of Cash Flows for the years
ended December 31, 2023 and 2022 |
F-55 |
| Notes to the Condensed Consolidated Financial Statements |
F-56 |
| Consolidated Balance Sheets as of June 30, 2024
(Unaudited) and December 31, 2023 |
F-66 |
| Consolidated Statements of Operations (Unaudited)
for the three and six months ended June 30, 2024 and 2023 |
F-67 |
| Consolidated Statements of Stockholders’
Equity (Unaudited) for the three and six months ended June 30, 2024 and 2023 |
F-68 |
| Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 2024 and 2023 |
F-69 |
| Notes to the Condensed Consolidated Financial Statements
(Unaudited) |
F-70 |
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 Financial Statement
We
have audited the accompanying consolidated financial statements of Twin Vee Powercats Co. and Subsidiaries (the “Company”),
which comprise the consolidated balance sheets at December 31, 2023 and 2022, and the related consolidated statements of operations,
stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (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 at December 31, 2023 and 2022 and the results of its operations and its cash flows for
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 audit. 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 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. 606
GRASSI
& CO., CPAs, P.C.
We
have served as the Company’s auditor since 2020.
Jericho,
New York
March
27, 2024
| TWIN VEE POWERCATS CO. AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| | |
| |
|
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Assets | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 16,497,703 | | |
$ | 23,501,007 | |
| Restricted cash | |
| 257,530 | | |
| — | |
| Accounts receivable | |
| 80,160 | | |
| 14,167 | |
| Marketable securities | |
| 4,462,942 | | |
| 1,481,606 | |
| Inventories, net | |
| 4,884,761 | | |
| 4,008,332 | |
| Prepaid expenses and other current assets | |
| 463,222 | | |
| 882,417 | |
| Total current assets | |
| 26,646,318 | | |
| 29,887,529 | |
| | |
| | | |
| | |
| Marketable securities - non current | |
| — | | |
| 1,445,912 | |
| Property and equipment, net | |
| 12,293,988 | | |
| 5,535,902 | |
| Operating lease right of use asset | |
| 854,990 | | |
| 1,329,620 | |
| Security deposit | |
| 51,417 | | |
| 32,517 | |
| Total Assets | |
$ | 39,846,713 | | |
$ | 38,231,480 | |
| | |
| | | |
| | |
| Liabilities and Stockholders' Equity | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 2,399,026 | | |
$ | 2,065,680 | |
| Accrued liabilities | |
| 1,075,512 | | |
| 1,240,769 | |
| Contract liabilities | |
| 44,195 | | |
| 5,300 | |
| Finance lease liability | |
| 214,715 | | |
| — | |
| Operating lease right of use liability | |
| 482,897 | | |
| 479,314 | |
| Total current liabilities | |
| 4,216,345 | | |
| 3,791,063 | |
| | |
| | | |
| | |
| Economic Injury Disaster Loan | |
| 499,900 | | |
| 499,900 | |
| Finance lease liability - noncurrent | |
| 2,644,123 | | |
| — | |
| Operating lease liability - noncurrent | |
| 436,730 | | |
| 919,628 | |
| Total Liabilities | |
| 7,797,098 | | |
| 5,210,591 | |
| | |
| | | |
| | |
| Commitments and contingencies (Note 13) | |
| — | | |
| — | |
| | |
| | | |
| | |
| 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;
9,520,000 shares issued and outstanding | |
| 9,520 | | |
| 9,520 | |
| Additional paid-in capital | |
| 37,848,657 | | |
| 35,581,022 | |
| Accumulated deficit | |
| (14,346,984 | ) | |
| (7,154,808 | ) |
| Equity attributed to stockholders of Twin Vee PowerCats
Co, Inc. | |
| 23,511,193 | | |
| 28,435,734 | |
| Equity attributable to noncontrolling interests | |
| 8,538,422 | | |
| 4,585,155 | |
| Total stockholders’ equity | |
| 32,049,615 | | |
| 33,020,889 | |
| | |
| | | |
| | |
| Total Liabilities and Stockholders' Equity | |
$ | 39,846,713 | | |
$ | 38,231,480 | |
The accompanying notes are an integral part
of these consolidated financial statements
| TWIN VEE POWERCATS CO. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| | |
| |
|
| | |
Years Ended |
| | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Net sales | |
$ | 33,425,912 | | |
$ | 31,987,724 | |
| Cost of products sold | |
| 23,702,885 | | |
| 21,330,918 | |
| Gross profit | |
| 9,723,027 | | |
| 10,656,806 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Selling, general and administrative | |
| 3,734,406 | | |
| 2,759,625 | |
| Salaries and wages | |
| 13,929,580 | | |
| 11,457,569 | |
| Professional fees | |
| 1,249,388 | | |
| 966,037 | |
| Depreciation and amortization | |
| 1,353,383 | | |
| 553,750 | |
| Research and development | |
| 1,443,569 | | |
| 941,533 | |
| Total operating expenses | |
| 21,710,326 | | |
| 16,678,514 | |
| | |
| | | |
| | |
| Loss from operations | |
| (11,987,299 | ) | |
| (6,021,708 | ) |
| | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | |
| Dividend income | |
| 909,215 | | |
| — | |
| Other income | |
| 9,898 | | |
| 155,137 | |
| Interest expense | |
| (221,157 | ) | |
| (164,155 | ) |
| Interest income | |
| 48,370 | | |
| 75,401 | |
| Loss on disposal of assets | |
| — | | |
| (60,088 | ) |
| Unrealized gain on marketable securities | |
| 87,781 | | |
| (133,988 | ) |
| Realized gain on marketable securities | |
| 103,941 | | |
| — | |
| Employee Retention Credit income | |
| 1,267,055 | | |
| 355,987 | |
| Total other income | |
| 2,205,103 | | |
| 228,294 | |
| | |
| | | |
| | |
| Income before income tax | |
| (9,782,196 | ) | |
| (5,793,414 | ) |
| Income taxes provision | |
| — | | |
| — | |
| Net loss | |
| (9,782,196 | ) | |
| (5,793,414 | ) |
| Less: Net loss attributable to noncontrolling interests | |
| (2,590,020 | ) | |
| (656,162 | ) |
| Net loss attributed to stockholders
of Twin Vee PowerCats Co, Inc. | |
$ | (7,192,176 | ) | |
$ | (5,137,252 | ) |
| | |
| | | |
| | |
| Basic and dilutive loss per share
of common stock | |
$ | (0.76 | ) | |
$ | (0.67 | ) |
| Weighted average number of shares of common stock
outstanding | |
| 9,520,000 | | |
| 7,624,938 | |
The accompanying notes are an integral part
of these consolidated financial statements
| 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, December 31, 2021 | |
| — | | |
$ | — | | |
| 7,000,000 | | |
$ | 7,000 | | |
$ | 18,710,256 | | |
$ | (2,017,556 | ) | |
$ | — | | |
$ | 16,699,700 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common stock issued for payment on behalf of parent | |
| — | | |
| — | | |
| 20,000 | | |
| 20 | | |
| 52,380 | | |
| — | | |
| — | | |
| 52,400 | |
| Common stock issued for cash | |
| — | | |
| — | | |
| 2,500,000 | | |
| 2,500 | | |
| 5,999,337 | | |
| — | | |
| — | | |
| 6,001,837 | |
| Subsidiary share issuance | |
| — | | |
| — | | |
| — | | |
| — | | |
| 9,588,172 | | |
| — | | |
| 5,241,317 | | |
| 14,829,489 | |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,448,751 | | |
| — | | |
| — | | |
| 1,448,751 | |
| Merger of Twin Vee PowerCats, Inc. | |
| — | | |
| — | | |
| — | | |
| — | | |
| (217,874 | ) | |
| — | | |
| — | | |
| (217,874 | ) |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (5,137,252 | ) | |
| (656,162 | ) | |
| (5,793,414 | ) |
| Balance, December 31, 2022 | |
| — | | |
$ | — | | |
| 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 | |
The accompanying notes are an integral part
of these consolidated financial statements
| TWIN VEE POWERCATS CO. AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| | |
| |
|
| | |
Years Ended |
| | |
December 31, |
| | |
2023 | |
2022 |
| Cash Flows From Operating Activities | |
| | | |
| | |
| Net loss | |
$ | (9,782,196 | ) | |
$ | (5,793,414 | ) |
| | |
| | | |
| | |
| Adjustments to reconcile net loss to net cash used
in operating activities: | |
| | | |
| | |
| Stock based compensation | |
| 1,902,749 | | |
| 1,448,751 | |
| Depreciation and amortization | |
| 1,353,383 | | |
| 553,750 | |
| Loss on disposal of asset | |
| — | | |
| 60,088 | |
| Change of right-of-use asset | |
| 474,630 | | |
| 397,136 | |
| Net change in fair value of marketable securities | |
| (87,781 | ) | |
| 133,988 | |
| Change in inventory reserve | |
| 419,616 | | |
| — | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (65,993 | ) | |
| (9,030 | ) |
| Inventories | |
| (1,296,045 | ) | |
| (2,208,563 | ) |
| Prepaid expenses and other current assets | |
| 419,195 | | |
| 21,339 | |
| Accounts payable | |
| 333,346 | | |
| 864,819 | |
| Accrued liabilities | |
| (165,257 | ) | |
| 783,955 | |
| Operating lease liabilities | |
| (479,315 | ) | |
| (390,050 | ) |
| Contract liabilities | |
| 38,895 | | |
| (8,800 | ) |
| Net cash used in operating activities | |
| (6,934,773 | ) | |
| (4,146,031 | ) |
| | |
| | | |
| | |
| Cash Flows From Investing Activities | |
| | | |
| | |
| Security deposit | |
| (18,900 | ) | |
| (7,517 | ) |
| Realized gain on sale of marketable securities, available
for sale | |
| (103,941 | ) | |
| — | |
| Net (purchases) sales of investment in trading marketable
securities | |
| (1,343,702 | ) | |
| 3,002,591 | |
| Proceeds from sale of property and equipment | |
| — | | |
| 175,000 | |
| Purchase of property and equipment | |
| (5,162,478 | ) | |
| (3,365,679 | ) |
| Net cash used in investing activities | |
| (6,629,021 | ) | |
| (195,605 | ) |
| | |
| | | |
| | |
| Cash Flows From Financing Activities | |
| | | |
| | |
| Proceeds from issuance of common stock | |
| — | | |
| 6,001,836 | |
| Proceeds from Forza Issuance of common stock | |
| 6,996,015 | | |
| 14,934,989 | |
| Deferred offering costs | |
| (66,463 | ) | |
| — | |
| Forza stock repurchase | |
| (21,379 | ) | |
| — | |
| Advances from related parties | |
| — | | |
| (11,826 | ) |
| Repayment to related parties | |
| — | | |
| (57,659 | ) |
| Finance lease payments | |
| (90,153 | ) | |
| — | |
| Net cash provided by financing activities | |
| 6,818,020 | | |
| 20,867,340 | |
| | |
| | | |
| | |
| Net change in cash, cash equivalents and restricted
cash | |
| (6,745,774 | ) | |
| 16,525,705 | |
| Cash and cash equivalents at beginning of the year | |
| 23,501,007 | | |
| 6,975,302 | |
| Cash, cash equivalents and restricted cash at end
of the year | |
$ | 16,755,233 | | |
$ | 23,501,007 | |
| | |
| | | |
| | |
| Supplemental Cash Flow Information | |
| | | |
| | |
| Cash paid for income taxes | |
$ | — | | |
$ | — | |
| Cash paid for interest | |
$ | 235,519 | | |
$ | 150,399 | |
| | |
| | | |
| | |
| Non Cash Investing and Financing
Activities | |
| | | |
| | |
| Increase in the right-of-use asset and lease liability | |
$ | — | | |
$ | 176,226 | |
| Common stock issued for payment on behalf of parent | |
| — | | |
| 52,400 | |
| Right of use asset - finance leases | |
$ | 2,948,991 | | |
$ | — | |
| Reconciliation to the Consolidated Balance Sheets | |
| |
|
| Cash and cash equivalents | |
$ | 16,497,703 | | |
$ | 23,501,007 | |
| Restricted cash | |
| 257,530 | | |
| — | |
| Total cash, cash equivalents and restricted cash | |
$ | 16,755,233 | | |
$ | 23,501,007 | |
TWIN VEE POWERCATS CO. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 2023 and 2022
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 2023 and 2022, we anticipate focusing resources on this entity in the future.
Forza X1, Inc. was initially incorporated as Electra
Power Sports, Inc. on October 15, 2021, and subsequently changed its 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, that it would market the Company’s new independent line of electric boats
under a new brand name (and new subsidiary).
On April 20, 2023, the Company formed AquaSport
Co.(“AquaSport”), 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.
Merger
On December 5, 2022, pursuant to the terms of
the Agreement and Plan of Merger, dated as of September 8, 2022 (the “Merger Agreement”), by and between Twin Vee PowerCats
Co. and Twin Vee Powercats, Inc., a Florida corporation (“Twin Vee Inc.” or “TVPC”), TVPC was merged with and
into the Company (the “Merger”).
As Twin Vee Inc. did not meet the definition of
a business under ASC 805, the merger was not accounted for as a business combination. The Merger was accounted for as a recapitalization
of Twin Vee PowerCats, Co., effected through the exchange of TVPC shares for Twin Vee PowerCats, Co. shares, and the cancellation of
Twin Vee PowerCats, Co. shares held by Twin Vee Inc. Upon the effective date of the Merger, December 5, 2022, Twin Vee Co. accounted
for the Merger by assuming TVPC’s net liabilities. Twin Vee PowerCats, Co.’s financial statements reflect the operations
of TVPC. prospectively and will not be restated retroactively to reflect the historical financial position or results of operations of
TVPC.
Principles of Consolidation
The consolidated financial
statements include the accounts of Twin Vee and its wholly owned subsidiary, AquaSport, Fix My Boat, and controlling interest 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”).
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.
| Total accounts receivable | |
| | |
| January 1, 2022 | |
$ | 5,137 | |
| January 1, 2023 | |
$ | 14,167 | |
| December 31, 2023 | |
$ | 80,160 | |
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, 2023 and 2022, the Company had customer deposits of $44,195 and $5,300, respectively, which is
recorded as contract liabilities on the consolidated balance sheets. These deposits are refundable, we are uncertain when we will be
able to recognize as revenues.
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 nine 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.
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, 2023 and 2022, the Company had $15,868,574 and
$22,666,301, 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, 2023 and 2022, the Company had
cash and cash equivalents of $16,755,233 and $23,501,007, 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 31,2023 and 2022, included within restricted
cash on the Company’s consolidated balance sheets is an irrevocable letter of credit for $257,530 and $0, 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:
| |
● |
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, 2023 and 2022, the provision for excess or obsolete
inventories is $419,616 and $0, 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.
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
As required by the Financial Accounting Standard
Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 460, Guarantees, the Company is including
the following disclosure applicable to its product warranties.
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 following table shows the changes in the aggregate
product warranty liability for the years ended December 31, 2023 and 2022, respectively:
| | |
2023 | |
2022 |
| Balance as of the beginning of year | |
$ | 92,373 | | |
$ | 75,000 | |
| Less: Payments made | |
| (358,129 | ) | |
| (227,229 | ) |
| Add: Provision for current years warranty | |
| 458,650 | | |
| 244,602 | |
| Balance as of end of year | |
$ | 192,894 | | |
$ | 92,373 | |
Advertising
Advertising and marketing costs are expensed as
incurred. During the years ended December 31, 2023 and 2022, advertising costs incurred by the Company totaled $444,231 and $112,320,
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, 2023 and 2022, research and development costs
amounted to $1,157,585 and $941,533, 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, 2023,
and 2022, shipping and handling costs amounted to $718,635 and $179,998, respectively.
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, 2023, the Company purchased all engines for its boats under supplier agreements with three vendors. During the year ended
December 31, 2022, the Company purchased all engines for its boats under supplier agreements with one vendor. For the years ended December
31, 2023 and 2022, total purchases from these vendors were $9,252,915 and $5,020,973, respectively.
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, 2023 and 2022, respectively, the Company received $1,267,055 and $355,987, 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.
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 June 2016, the FASB issued Accounting Standards
Update (“ASU”) No. 2016-13, “Financial Instruments Credit Losses —Measurement of Credit Losses on Financial
Instruments.” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be
presented at the net amount expected to be collected, which includes the Company’s accounts receivable. This ASU is effective for
the Company for reporting periods beginning after December 15, 2022. The Company adopted this standard effective January 1, 2023, and
the adoption of this ASU did not have a significant impact on the consolidated financial statements.
The Company has considered all other recently
issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated
financial statements.
2. 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 | |
| | |
| As
of December 31, 2022 |
| | |
| Amortized
Cost | | |
| Gross
Unrealized Gains | | |
| Gross
Unrealized Losses | | |
| Fair
Value | |
| | |
| | | |
| | | |
| | | |
| | |
| Marketable
Securities | |
| | | |
| | | |
| | | |
| | |
| Corporate
Bonds | |
$ | 2,575,817 | | |
$ | — | | |
$ | (139,484 | ) | |
$ | 2,436,333 | |
| Certificates of Deposits | |
| 517,815 | | |
| | | |
| (26,630 | ) | |
| 491,185 | |
| Total marketable
securities | |
$ | 3,093,632 | | |
$ | — | | |
$ | (166,114 | ) | |
$ | 2,927,518 | |
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 and 2022 are as follows:
| | |
| |
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 Nonobservable Inputs (Level 3) |
| Marketable securities: | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | |
| Corporate Bonds | |
$ | 4,462,942 | | |
$ | — | | |
$ | 4,462,942 | | |
$ | — | |
| Total marketable securities | |
$ | 4,462,942 | | |
$ | — | | |
$ | 4,462,942 | | |
$ | — | |
| | |
| |
Fair Value Measurements Using | |
|
| | |
| |
| |
| |
|
| |
|
Balance as of December 31, 2022 |
|
Quoted Prices in Active Markets for Identical Assets (Level 1) |
|
Significant Other Observable Inputs (Level 2) |
|
Significant Nonobservable Inputs (Level 3) |
| Marketable securities: | |
| | | |
| | | |
| | | |
| | |
| Corporate Bonds | |
$ | 2,436,333 | | |
$ | — | | |
$ | 2,436,333 | | |
$ | — | |
| Certificates of Deposits | |
| 491,185 | | |
| 491,185 | | |
| — | | |
| — | |
| Total marketable securities | |
$ | 2,927,518 | | |
$ | — | | |
$ | 2,436,333 | | |
$ | — | |
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, 2023 and 2022 inventories consisted
of the following:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Raw Materials | |
$ | 5,001,512 | | |
$ | 3,628,978 | |
| Work in Process | |
| 96,721 | | |
| 246,734 | |
| Finished Product | |
| 206,144 | | |
| 132,620 | |
| Total Inventory | |
$ | 5,304,377 | | |
$ | 4,008,332 | |
| Reserve for Excess and Obsolete | |
| (419,616 | ) | |
| — | |
| Net inventory | |
$ | 4,884,761 | | |
$ | 4,008,332 | |
5. Property and Equipment
At December 31, 2023 and 2022, property and equipment
consisted of the following:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Machinery and equipment | |
$ | 2,692,473 | | |
$ | 1,977,482 | |
| Furniture and fixtures | |
| 40,299 | | |
| 20,335 | |
| Land | |
| 1,119,758 | | |
| — | |
| Leasehold improvements | |
| 1,228,860 | | |
| 950,132 | |
| Software and website development | |
| 300,935 | | |
| 148,693 | |
| Computer hardware and software | |
| 159,342 | | |
| 123,088 | |
| Boat molds | |
| 5,871,373 | | |
| 2,277,664 | |
| Vehicles | |
| 143,360 | | |
| 94,534 | |
| Electric prototypes and tooling | |
| 142,526 | | |
| 142,526 | |
| Assets under construction | |
| 2,977,894 | | |
| 859,839 | |
| | |
| 14,676,820 | | |
| 6,594,293 | |
| Less accumulated depreciation and amortization | |
| (2,382,832 | ) | |
| (1,058,391 | ) |
| | |
$ | 12,293,988 | | |
$ | 5,535,902 | |
Depreciation and amortization expense of property
and equipment for the year ended December 31, 2023 and 2022 is $1,353,383 and $553,750, respectively.
6. Leases – Related Party
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 $30,000 per month
including property taxes and the lease required a $25,000 security deposit. The base rent will increase five percent (5%) on the
anniversary of each annual term.
At December 31, 2023 and 2022, supplemental balance
sheet information related to leases were as follows:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease ROU asset | |
$ | 779,843 | | |
$ | 1,167,551 | |
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 414,364 | | |
$ | 393,069 | |
| Non-current portion | |
| 436,731 | | |
| 851,096 | |
| Total | |
$ | 851,095 | | |
$ | 1,244,165 | |
At December 31, 2023, future minimum lease payments
under the non-cancelable operating leases are as follows:
| Year Ending December 31, | |
| | |
| 2024 | |
$ | 416,745 | |
| 2025 | |
| 437,582 | |
| Total
lease payment | |
| 854,327 | |
| Less
imputed interest | |
| (3,232 | ) |
| Total | |
$ | 851,095 | |
The following summarizes other supplemental information about the Company’s
operating lease:
| | |
December 31, |
| | |
2023 |
| Weighted average discount rate | |
| 0.36 | % |
| Weighted average remaining lease term (years) | |
| 1.92 | |
7. 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 the Company’s 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 leases a warehouse facility, and the
land which are 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 is $7,517 per
month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The base rent
will increase three percent (3%) on October 15, 2023.
At December 31, 2023 and 2022, supplemental balance
sheet information related to leases were as follows:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease ROU asset | |
$ | 75,147 | | |
$ | 162,069 | |
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 68,532 | | |
$ | 86,245 | |
| Non-current portion | |
| — | | |
| 68,532 | |
| Total | |
$ | 68,532 | | |
$ | 154,777 | |
At December 31, 2023, future minimum lease payments
under the non-cancelable operating leases are as follows:
| Year
Ending December 31, | |
| | |
| 2024 | |
$ | 69,680 | |
| Less
imputed interest | |
| (1,148 | ) |
| Total | |
$ | 68,532 | |
The following summarizes other supplemental information about the Company’s
operating lease:
| | |
December 31, |
| | |
2023 |
| Weighted average discount rate | |
| 4 | % |
| Weighted average remaining lease term (years) | |
| 0.79 | |
8. Finance Leases
Vehicle and Equipment Lease
The Company has finance leases for a vehicle,
two forklifts, and a copy machine. The Company entered into the vehicle lease in February of 2023, with an asset value of $48,826, which
is recorded in net property and equipment on the consolidated balance sheet, it is a 60-month lease at a 3% interest rate.
At December 31, 2023 and 2022, the net book value was $40,688 and $0, respectively. The Company entered into the first forklift lease
in January of 2023, with an asset value of $43,579, which is recorded in net property and equipment on the consolidated balance sheet.
It is a 60-month lease at a 7.5% interest rate. At December 31, 2023 and 2022, the net book value was $37,042 and $0, respectively
The Company entered into the second forklift lease in July of 2023, with an asset value of $35,508, which is recorded in net property
and equipment on the consolidated balance sheet. It is a 60-month lease at a 5.0% interest rate. At December 31, 2023 and 2022,
the net book value was $34,239 and $0, respectively. The Company entered into the copier lease in July of 2023, with an asset value of
$14,245, which is recorded in net property and equipment on the consolidated balance sheet. It is a 60-month lease at a 7.0%
interest rate. At December 31, 2023 and 2022, the net book value was $13,566 and $0.
AquaSport lease
On April 20, 2023 Twin Vee incorporated AquaSport
Co., a wholly owned subsidiary, in the state of Florida in connection with its plan to lease the AQUASPORT™ boat brand and manufacturing
facility in White Bluff Tennessee. 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. will lease 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.
| |
|
December 31, | |
December 31, |
| |
|
2023 | |
2022 |
| Land | |
$ | 1,000,000 | | |
$ | — | |
| Building | |
| 100,000 | | |
| — | |
| Molds | |
| 2,000,000 | | |
| — | |
At December 31, 2023 and 2022, supplemental balance
sheet information related to finance leases were as follows:
| |
|
December
31, |
|
December
31, |
| |
|
2023 |
|
2022 |
| Finance lease liabilities: |
|
|
|
|
|
|
|
|
| Current portion |
|
$ |
214,715 |
|
|
$ |
— |
|
| Non-current portion |
|
|
2,644,123 |
|
|
|
— |
|
| Total |
|
$ |
2,858,838 |
|
|
$ |
— |
|
At December 31, 2023, future minimum lease payments
under the non-cancelable finance leases are as follows:
| Year
Ending December 31, | |
| | |
| 2024 | |
$ | 298,249 | |
| 2025 | |
| 298,248 | |
| 2026 | |
| 290,842 | |
| 2027 | |
| 292,927 | |
| Thereafter | |
| 1,987,354 | |
| Total
lease payment | |
| 3,167,620 | |
| Less
imputed interest | |
| (308,782 | ) |
| Total | |
$ | 2,858,838 | |
The following summarizes other supplemental information about the Company’s
finance lease:
| | |
December 31, |
| | |
2023 |
| Weighted average discount rate | |
| 3.03 | % |
| Weighted average remaining lease term (years) | |
| 4.34 | |
9. Accrued Liabilities
At December 31, 2023 and 2022, accrued liabilities
consisted of the following:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Accrued wages and benefits | |
$ | 343,511 | | |
$ | 333,976 | |
| Accrued interest | |
| 33,245 | | |
| 47,607 | |
| Accrued bonus | |
| — | | |
| 20,000 | |
| Accrued rebates | |
| — | | |
| 15,000 | |
| Accrued professional fees | |
| — | | |
| 89,500 | |
| Accrued operating expense | |
| 115,037 | | |
| 64,601 | |
| Accrued assets under construction | |
| 390,825 | | |
| — | |
| Accrued inventory | |
| — | | |
| 577,712 | |
| Warranty reserve | |
| 192,894 | | |
| 92,373 | |
| Total accrued liabilities | |
$ | 1,075,512 | | |
$ | 1,240,769 | |
10. Short-term Debt
On December 31, 2023 and 2022, the Company had
a line of credit with Wells Fargo and Yamaha Motor Finance for $1,250,000 and $1,250,000, 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, 2023 and 2022, our interest rate was 11.6% and 6.5%. Interest on our Yamaha line is calculated
on the average daily balance +4%, with a minimum prime at 8.0%. On December 31, 2023 and 2022, our interest rate was 16.8% and 0%, respectively.
On December 31, 2023 and 2022, the outstanding balance with Wells Fargo was $231,736 and $699,638, respectively. On December 31, 2023
and 2022, the outstanding balance with Yamaha Motor Finance was $210,674 and $0, respectively. The outstanding balances are included
in account payable on the consolidated balance sheet.
11. 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. Under the guidelines of the EIDL, the maximum term is 30 years; however,
terms are determined on a case-by-case basis based
on each borrower’s ability to repay and carry an interest rate of 3.75%. 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 must be 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.
A summary of the minimum maturities of term debt
follows for the years set forth below.
| Year
Ending December 31, | |
| | |
| 2024 | |
$ | — | |
| 2025 | |
| — | |
| 2026 | |
| — | |
| 2027 | |
| 6,611 | |
| 2028
and thereafter | |
| 493,289 | |
| Total | |
$ | 499,900 | |
12. Related Party Transactions
As discussed in note 6, the Company has leased
its facilities from a company owned by its CEO.
During the years ended December 31, 2023 and 2022,
respectively, we recorded $36,000 and $24,225 of professional fees, for consulting work for Twin Vee performed by Jim Leffew, the Chief
Executive Officer of Forza. Additionally, during the years ended December 31, 2023 and 2022, respectively, Aqua Sport recorded expense
of $50,000 and $0, for compensation for his work to start up the Tennessee facility.
During the years ended December 31, 2023 and 2022,
the Company received a monthly fee of $6,800 and $5,000, respectively, 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 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, 2023 and 2022, the lease expense was $20,000 and $10,036, respectively.
13. 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 $10,510,252 or 76 units, and $10,693,000 or
67 units, as of December 31, 2023, and December 31, 2022, respectively. The Company incurred no impact from repurchase events during
the years ended December 31, 2023 and December 31, 2022.
Short-term lease
In August of 2022, Forza signed a six-month lease
for a duplex, to be used by its employees to minimize travel expense as it started construction on its new manufacturing facility, for
$2,200 per month, on a property in Black Mountain, North Carolina. During the year ended December 31, 2023, the lease expense was
$4,400.
Litigation
The Company is currently involved in various civil
litigation in the normal course of business none of which is considered material.
14. 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 has 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.
Common Stock Warrants
As of December 31, 2023, the Company had outstanding
293,750 warrants. 150,000 warrants at a weighted-average 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 initial public offering that closed on July 23, 2021 (the
“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. 143,750 warrants at exercise price of $34,375 were issued in connection with the Offering. Warrants are exercisable
at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the commencement
of sales of the shares of common stock in this offering.
There was no warrant activity during the year
ended December 31, 2023.
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, 2023, there were shares remaining available for grant under this
Plan.
Accounting for Stock-Based Compensation
Stock Compensation Expense
For the year ended December 31, 2023 and 2022,
the Company recorded $1,902,749 and $1,448,751, 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 year ended December 31, 2023 and 2022:
| | |
| Year
ended | | |
| | |
| | |
| December
31, | | |
| | |
| | |
| 2023 | | |
| 2022 | |
| Expected term | |
| 5 years | | |
| 4.94
- 5 years | |
| Expected average volatility | |
| 35.91
- 51% | | |
| 49
- 55% | |
| Expected dividend yield | |
| — | | |
| — | |
| Risk-free interest rate | |
| 1.50 –4.72% | | |
| 0.72
- 1.00% | |
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%
| | |
Options Outstanding | |
Weighted | |
|
| | |
Number of | |
Weighted Average | |
Average Remaining life | |
Fair value |
| | |
Options | |
Exercise Price | |
(years) | |
of options |
| | |
| |
| |
| |
|
| Outstanding,
December 31, 2021 | | |
| 713,612 | | |
$ | 5.13 | | |
| 9.54 | | |
$ | 1,546,642 | |
| Granted | | |
| 583,083 | | |
| 2.88 | | |
| 10.00 | | |
| 791,177 | |
| Exercised | | |
| — | | |
| — | | |
| — | | |
| — | |
| Forfeited/canceled | | |
| (13,124 | ) | |
| (4.81 | ) | |
| (8.93 | ) | |
| (13,238 | ) |
| 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 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Exercisable
options, December 31, 2023 | | |
| 870,444 | | |
$ | 4.40 | | |
| 7.83 | | |
| | |
At December 31, 2023, 400,572 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.
| | |
Restricted Stock Units Outstanding | |
Weighted | |
|
| | |
Number of | |
Weighted Average Grant – Date | |
Average Remaining life | |
Aggregate Intrinsic |
| | |
Units | |
Fair Value Price | |
(years) | |
Value |
| | |
| |
| |
| |
|
| Outstanding,
December 31, 2022 | | |
| — | | |
$ | — | | |
| — | | |
$ | — | |
| Granted | | |
| 91,875 | | |
| 2.25 | | |
| 3.0 | | |
| 130,463 | |
| Exercised | | |
| — | | |
| — | | |
| | | |
| — | |
| Forfeited/canceled | | |
| (24,625 | ) | |
| (2.25 | ) | |
| | | |
| (34,968 | ) |
| Outstanding,
December 31, 2023 | | |
| 67,250 | | |
$ | 2.25 | | |
| 2.07 | | |
$ | 95,495 | |
Forza
Common Stock Warrants
As of December 31, 2023, Forza had outstanding
warrants to purchase shares of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued to
the representative of the underwriters on August 16, 2022 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 August 16, 2027. There was no warrant activity
during the year ended December 31, 2023.
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 will automatically increase on January 1, 2023. As of December 31, 2023, there were shares remaining available for grant under
this Plan. Stock based compensation expense is included in the consolidated statements of operations, under salaries and wages.
Accounting for Stock -Based Compensation
For the year ended December 31, 2023 and 2022,
Forza recorded $1,345,270 and $458,346, respectively, of stock-based compensation expense, which is included in salaries and
wages on the accompanying consolidated statement of operations.
Stock Options
Under Forza’s 2022
Stock Incentive Plan (the “Forza 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 Forza Plan, the contractual life of
the option grants may not exceed ten years.
Forza utilizes the Black-Scholes
model to determine fair value of stock option awards on the date of grant. Forza utilized the following assumptions for option grants
during the year ended December 31, 2023:
| |
|
|
Year
ended December 31, 2023 |
|
|
|
2022 |
|
| Expected term | |
| 5 years | | |
| 5 years | |
| Expected average volatility | |
| 108
- 113% | | |
| 110
- 113% | |
| Expected dividend yield | |
| — | | |
| — | |
| Risk-free interest rate | |
| 2.98 –4.72% | | |
| 2.98
– 3.62% | |
The expected volatility of the option is determined
using historical volatilities based on historical stock price of comparable boat manufacturing companies. Forza 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. Forza has never paid a dividend, and as such the dividend yield is 0.0%
| | |
Options Outstanding | |
Weighted | |
|
| | |
Number of | |
Weighted Average | |
Average Remaining life | |
Fair value of |
| | |
Options | |
Exercise Price | |
(years) | |
option |
| | |
| |
| |
| |
|
| Outstanding, December 31, 2021 | | |
| — | | |
$ | — | | |
| — | | |
$ | — | |
| Granted | | |
| 1,441,500 | | |
| 3.41 | | |
| 10.00 | | |
| 4,009,913 | |
| Exercised | | |
| — | | |
| — | | |
| | | |
| | |
| Forfeited/canceled | | |
| — | | |
| — | | |
| — | | |
| — | |
| 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 | | |
| | |
At December 31, 2023, Forza options are unvested
and expected to vest over the next three years.
15. 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, 2023, one individual dealer
had sales of over 10% of our total sales, and one customer represented 10% of total sales. During the year ended December 31, 2022,
one individual customer had sales of over 10% of our total sales and one customer represented 12% of total sales.
During the year ended December 31, 2023, we purchased
a substantial portion of materials from one third-party vendors. As of December 31, 2023, the amount due to the vendors was $396,828.
During the year ended December 31, 2022, we purchased a substantial portion of materials from two third-party vendors. As of December
31, 2022, the amount due to the vendors was $845,042. The Company believe there are other suppliers that could be substituted should
the supplier become unavailable or non-competitive.
16. 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 2022. 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:
Twin Vee
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Non-operating loss carryforward | |
$ | 7,725,000 | | |
$ | 4,976,000 | |
| Valuation allowance | |
| (7,725,000 | ) | |
| (4,976,000 | ) |
| Net deferred tax asset | |
$ | — | | |
$ | — | |
Forza X1
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Non-operating loss carryforward | |
$ | 875,000 | | |
$ | 532,000 | |
| Valuation allowance | |
| (875,000 | ) | |
| (532,000 | ) |
| 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 years ended December 31, 2023
and 2022, respectively the Twin Vee valuation allowance increased by approximately $2,749,000 and $1,176,000 and the Forza X1 valuation
allowance increased by approximately S343,000 and $532,000. 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:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| 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 2020 to 2022, are subject to review by the tax authorities.
17. 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, 2023 and 2022:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Numerator for basic and diluted net loss
per share: | |
| | | |
| | |
| Net loss | |
$ | (7,192,176 | ) | |
$ | (5,137,252 | ) |
| Denominator: | |
| | | |
| | |
| For basic net loss per share - weighted average common shares outstanding | |
| 9,520,000 | | |
| 7,624,938 | |
| Effect of dilutive stock options | |
| — | | |
| — | |
| For diluted net loss per share - weighted average common shares outstanding | |
| 9,520,000 | | |
| 7,624,938 | |
| Net loss per share -Basic: | |
| | | |
| | |
| Net loss per share | |
$ | (0.76 | ) | |
$ | (0.67 | ) |
| Net loss per share - Diluted: | |
| | | |
| | |
| Net loss per share | |
$ | (0.76 | ) | |
$ | (0.67 | ) |
For the years ended December 31, 2023 and 2022,
all potentially dilutive securities were antidilutive.
18. Segment
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 reported its financial performance
based on the following segments: Gas-powered Boats, Franchise and Electric Boats.
The Company evaluates the performance of its reportable
segments based on net sales and operating income. Net sales for business segments are generally based on the sale of boats and the sale
of franchises. Income (loss) from operations for each segment includes net sales to third parties, related cost of sales and operating
expenses directly attributable to the segment. Operating income for each segment excludes other income and expense. The Company does
not include intercompany transfers between segments for management reporting purposes.
The following table shows information by reportable
segments for the three and year ended December 31, 2023 and 2022:
| For the Year Ended December 31,
2023 | |
| |
| |
| |
|
| | |
| |
| |
Electric Boat | |
|
| | |
Gas-Powered Boats | |
Franchise | |
and
Development | |
Total |
| Net sales | |
$ | 33,388,794 | | |
$ | — | | |
$ | 37,118 | | |
$ | 33,425,912 | |
| Cost of products sold | |
| 23,545,248 | | |
| — | | |
| 157,637 | | |
| 23,702,885 | |
| Operating expense | |
| 15,234,159 | | |
| 3,253 | | |
| 6,472,914 | | |
| 21,710,326 | |
| Loss from operations | |
| (5,390,613 | ) | |
| (3,253 | ) | |
| (6,593,433 | ) | |
| (11,987,299 | ) |
| Other income (expense) | |
| 1,559,742 | | |
| (14,959 | ) | |
| 660,320 | | |
| 2,205,103 | |
| Net loss | |
$ | (3,830,871 | ) | |
$ | (18,212 | ) | |
$ | (5,933,113 | ) | |
$ | (9,782,196 | ) |
| For the Year Ended December 31,
2022 | |
| |
| |
| |
|
| | |
| |
| |
| |
|
| | |
| |
| |
Electric Boat | |
|
| | |
Gas-Powered Boats | |
Franchise | |
and
Development | |
Total |
| Net sales | |
$ | 31,988,756 | | |
$ | (1,032 | ) | |
$ | — | | |
$ | 31,987,724 | |
| Cost of products sold | |
| 21,097,148 | | |
| 1,027 | | |
| 232,743 | | |
| 21,330,918 | |
| Operating expense | |
| 13,274,952 | | |
| 35,399 | | |
| 3,368,163 | | |
| 16,678,514 | |
| Loss from operations | |
| (2,383,344 | ) | |
| (37,458 | ) | |
| (3,600,906 | ) | |
| (6,021,708 | ) |
| Other income (expense) | |
| 239,177 | | |
| (34,060 | ) | |
| 23,177 | | |
| 228,294 | |
| Net loss | |
$ | (2,144,167 | ) | |
$ | (71,518 | ) | |
$ | (3,577,729 | ) | |
$ | (5,793,414 | ) |
Property and equipment, net classified by business were as follows:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Gas-Powered Boats | |
$ | 8,825,027 | | |
$ | 4,694,607 | |
| Franchise | |
$ | — | | |
$ | — | |
| Electric-Boats | |
$ | 3,468,961 | | |
$ | 765,406 | |
19. Subsequent Events
The Company has evaluated all event or transactions
that occurred after December 31, 2023 through March 25, 2024, 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. For 2024, the maximum number of common stock shares that can
be issued will be 4,284,000.
On March 4, 2024, Mrs. Carrie Gunnerson, the Company’s
then Chief Financial Officer, provided the Company notice of her resignation as an executive officer of the Company and of Forza, effective
May 31, 2024. Mrs. Gunnerson informed the Company that she was resigning to pursue another opportunity and that her resignation was not
the result of any disagreement relating to the Company’s operations, policies or practices.
On March 6, 2024, Mr. James Leffew, Forza X1’s
then Chief Executive Officer, provided the Company notice of his resignation as an executive officer of the Company, effective June 2,
2024. Mr. Leffew informed Forza X1 that he was resigning from the Company as an executive officer to pursue another opportunity and that
his resignation was not the result of any disagreement relating to the Company’s operations, policies or practices.
| TWIN
VEE POWERCATS CO. AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED BALANCE SHEETS |
| (Unaudited) |
| |
|
June
30, |
|
December
31, |
| |
|
2024 |
|
2023 |
| |
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
13,927,460 |
|
|
$ |
16,497,703 |
|
| Restricted
cash |
|
|
210,876 |
|
|
|
257,530 |
|
| Accounts
receivable |
|
|
115,793 |
|
|
|
80,160 |
|
| Marketable
securities - available for sale |
|
|
995,208 |
|
|
|
4,462,942 |
|
| Inventories,
net |
|
|
4,147,507 |
|
|
|
4,884,761 |
|
| Prepaid
expenses and other current assets |
|
|
185,263 |
|
|
|
463,222 |
|
| Total
current assets |
|
|
19,582,107 |
|
|
|
26,646,318 |
|
| |
|
|
|
|
|
|
|
|
| Property
and equipment, net |
|
|
13,506,672 |
|
|
|
12,293,988 |
|
| Operating
lease right of use asset |
|
|
615,815 |
|
|
|
854,990 |
|
| Security
deposit |
|
|
48,709 |
|
|
|
51,417 |
|
| Total
Assets |
|
$ |
33,753,304 |
|
|
$ |
39,846,713 |
|
| |
|
|
|
|
|
|
|
|
| Liabilities
and Stockholders' Equity |
|
|
|
|
|
|
|
|
| Current
Liabilities: |
|
|
|
|
|
|
|
|
| Accounts
payable |
|
$ |
2,779,814 |
|
|
$ |
2,399,026 |
|
| Accrued
liabilities |
|
|
1,107,611 |
|
|
|
1,075,512 |
|
| Contract
liabilities - customer deposits |
|
|
6,175 |
|
|
|
44,195 |
|
| Finance
lease liability - current portion |
|
|
218,348 |
|
|
|
214,715 |
|
| Operating
lease right of use liability |
|
|
448,611 |
|
|
|
482,897 |
|
| Total
current liabilities |
|
|
4,560,560 |
|
|
|
4,216,345 |
|
| |
|
|
|
|
|
|
|
|
| Economic
Injury Disaster Loan |
|
|
499,900 |
|
|
|
499,900 |
|
| Finance
lease liability - noncurrent |
|
|
2,535,033 |
|
|
|
2,644,123 |
|
| Operating
lease liability - noncurrent |
|
|
218,560 |
|
|
|
436,730 |
|
| Total
Liabilities |
|
|
7,814,052 |
|
|
|
7,797,098 |
|
| |
|
|
|
|
|
|
|
|
| Commitments
and contingencies (Note 12) |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Stockholders'
equity: |
|
|
|
|
|
|
|
|
| Common
stock: 50,000,000 authorized; $0.001 par value; 9,520,000 shares issued and outstanding at June 30, 2024 and December 31, 2023 |
|
|
9,520 |
|
|
|
9,520 |
|
| Additional
paid-in capital |
|
|
38,592,684 |
|
|
|
37,848,657 |
|
| Accumulated
deficit |
|
|
(18,978,912 |
) |
|
|
(14,346,984 |
) |
| Equity
attributed to stockholders of Twin Vee PowerCats Co, Inc. |
|
|
19,623,292 |
|
|
|
23,511,193 |
|
| Equity
attributable to noncontrolling interests |
|
|
6,315,960 |
|
|
|
8,538,422 |
|
| Total
stockholders’ equity |
|
|
25,939,252 |
|
|
|
32,049,615 |
|
| |
|
|
|
|
|
|
|
|
| Total
Liabilities and Stockholders' Equity |
|
$ |
33,753,304 |
|
|
$ |
39,846,713 |
|
The accompanying notes
are an integral part of these unaudited condensed consolidated financial statements
| TWIN
VEE POWERCATS CO. AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
| (Unaudited) |
| |
|
Three
Months Ended June 30, |
|
Six
Months Ended June 30, |
| |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
| |
|
|
|
|
|
|
|
|
| Net
sales |
|
$ |
4,326,821 |
|
|
$ |
8,124,632 |
|
|
$ |
9,603,164 |
|
|
$ |
17,001,847 |
|
| Cost
of products sold |
|
|
4,124,481 |
|
|
|
7,188,917 |
|
|
|
9,123,511 |
|
|
|
14,456,574 |
|
| Gross
profit |
|
|
202,340 |
|
|
|
935,715 |
|
|
|
479,653 |
|
|
|
2,545,273 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Selling,
general and administrative |
|
|
755,959 |
|
|
|
914,430 |
|
|
|
1,449,912 |
|
|
|
1,937,120 |
|
| Salaries
and wages |
|
|
1,199,348 |
|
|
|
2,102,172 |
|
|
|
2,495,616 |
|
|
|
3,839,922 |
|
| Professional
fees |
|
|
452,367 |
|
|
|
417,305 |
|
|
|
707,692 |
|
|
|
715,022 |
|
| Impairment
of property & equipment |
|
|
1,674,000 |
|
|
|
— |
|
|
|
1,674,000 |
|
|
|
— |
|
| Depreciation
and amortization |
|
|
434,958 |
|
|
|
284,562 |
|
|
|
860,239 |
|
|
|
502,838 |
|
| Research
and development |
|
|
344,784 |
|
|
|
261,473 |
|
|
|
494,475 |
|
|
|
964,121 |
|
| Total
operating expenses |
|
|
4,861,416 |
|
|
|
3,979,942 |
|
|
|
7,681,934 |
|
|
|
7,959,023 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss
from operations |
|
|
(4,659,076 |
) |
|
|
(3,044,227 |
) |
|
|
(7,202,281 |
) |
|
|
(5,413,750 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividend
income |
|
|
182,941 |
|
|
|
252,889 |
|
|
|
396,671 |
|
|
|
487,399 |
|
| Other
(expense) income |
|
|
(6,029 |
) |
|
|
8,654 |
|
|
|
32,962 |
|
|
|
7,103 |
|
| Interest
expense |
|
|
(54,938 |
) |
|
|
(70,127 |
) |
|
|
(121,887 |
) |
|
|
(122,065 |
) |
| Interest
income |
|
|
5,302 |
|
|
|
16,543 |
|
|
|
7,879 |
|
|
|
38,973 |
|
| Unrealized
gain (loss) on marketable securities |
|
|
12,604 |
|
|
|
(4,957 |
) |
|
|
(2,944 |
) |
|
|
3,077 |
|
| Realized
gain on marketable securities |
|
|
0 |
|
|
|
— |
|
|
|
35,210 |
|
|
|
— |
|
| Employee
Retention Credit income |
|
|
— |
|
|
|
937,482 |
|
|
|
— |
|
|
|
1,267,055 |
|
| Total
other income |
|
|
139,880 |
|
|
|
1,140,484 |
|
|
|
347,891 |
|
|
|
1,681,542 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss
before income tax |
|
|
(4,519,196 |
) |
|
|
(1,903,743 |
) |
|
|
(6,854,390 |
) |
|
|
(3,732,208 |
) |
| Income
taxes provision |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Net
loss |
|
|
(4,519,196 |
) |
|
|
(1,903,743 |
) |
|
|
(6,854,390 |
) |
|
|
(3,732,208 |
) |
| Less:
Net loss attributable to noncontrolling interests |
|
|
(1,573,495 |
) |
|
|
(569,100 |
) |
|
|
(2,222,462 |
) |
|
|
(1,230,793 |
) |
| Net
loss attributed to stockholders of Twin Vee PowerCats Co, Inc. |
|
$ |
(2,945,701 |
) |
|
$ |
(1,334,643 |
) |
|
$ |
(4,631,928 |
) |
|
$ |
(2,501,415 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
and dilutive loss per share of common stock |
|
$ |
(0.31 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.49 |
) |
|
$ |
(0.26 |
) |
| Weighted
average number of shares of common stock outstanding |
|
|
9,520,000 |
|
|
|
9,520,000 |
|
|
|
9,520,000 |
|
|
|
9,520,000 |
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements
| TWIN
VEE POWERCATS CO. AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |
| (Unaudited) |
| | |
Common
Stock | |
Paid-in | |
Accumulated | |
Noncontrolling | |
|
| | |
Shares | |
Amount | |
Capital | |
Deficit | |
Interests | |
Total |
| | |
| |
| |
| |
| |
| |
|
| For
the three and six months ended June 30, 2023 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
December 31, 2022 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 35,581,022 | | |
$ | (7,154,808 | ) | |
$ | 4,585,155 | | |
$ | 33,020,889 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation | |
| — | | |
| — | | |
| 482,964 | | |
| — | | |
| — | | |
| 482,964 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| (1,166,772 | ) | |
| (661,693 | ) | |
| (1,828,465 | ) |
| Balance,
March 31, 2023 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 36,063,986 | | |
$ | (8,321,580 | ) | |
$ | 3,923,462 | | |
$ | 31,675,388 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Forza
share issuance | |
| | | |
| | | |
| 364,886 | | |
| | | |
| 6,564,666 | | |
| 6,929,552 | |
| Stock-based
compensation | |
| — | | |
| — | | |
| 489,361 | | |
| — | | |
| — | | |
| 489,361 | |
| Subsidiary
stock repurchase | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| — | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| (1,334,643 | ) | |
| (569,100 | ) | |
| (1,903,743 | ) |
| Balance,
June 30, 2023 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 36,918,233 | | |
$ | (9,656,223 | ) | |
$ | 9,919,028 | | |
$ | 37,190,558 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| For
the three and six months ended June 30, 2024 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
December 31, 2023 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 37,848,657 | | |
$ | (14,346,984 | ) | |
$ | 8,538,422 | | |
$ | 32,049,615 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation | |
| — | | |
| — | | |
| 426,283 | | |
| — | | |
| — | | |
| 426,283 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| (1,686,227 | ) | |
| (648,967 | ) | |
| (2,335,194 | ) |
| Balance,
March 31, 2024 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 38,274,940 | | |
$ | (16,033,211 | ) | |
$ | 7,889,455 | | |
$ | 30,140,704 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based
compensation | |
| — | | |
| — | | |
| 317,744 | | |
| — | | |
| — | | |
| 317,744 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| (2,945,701 | ) | |
| (1,573,495 | ) | |
| (4,519,196 | ) |
| Balance,
June 30, 2024 | |
| 9,520,000 | | |
$ | 9,520 | | |
$ | 38,592,684 | | |
$ | (18,978,912 | ) | |
$ | 6,315,960 | | |
$ | 25,939,252 | |
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements
| TWIN
VEE POWERCATS CO. AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
| |
|
Six
Months Ended June 30, |
| |
|
|
|
|
| |
|
2024 |
|
2023 |
| Cash
Flows From Operating Activities |
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(6,854,390 |
) |
|
$ |
(3,732,208 |
) |
| |
|
|
|
|
|
|
|
|
| Adjustments
to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Stock
based compensation |
|
|
744,027 |
|
|
|
972,325 |
|
| Depreciation
and amortization |
|
|
860,239 |
|
|
|
502,840 |
|
| Impairment
of property & equipment |
|
|
1,674,000 |
|
|
|
— |
|
| Change
of right-of-use asset |
|
|
239,176 |
|
|
|
236,712 |
|
| Net
change in fair value of marketable securities |
|
|
2,944 |
|
|
|
(3,077 |
) |
| Change
in inventory reserve |
|
|
289,072 |
|
|
|
— |
|
| Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts
receivable |
|
|
(35,633 |
) |
|
|
(555,966 |
) |
| Inventories |
|
|
448,182 |
|
|
|
(1,568,148 |
) |
| Prepaid
expenses and other current assets |
|
|
277,959 |
|
|
|
427,666 |
|
| Accounts
payable |
|
|
380,789 |
|
|
|
399,720 |
|
| Accrued
liabilities |
|
|
32,099 |
|
|
|
(48,279 |
) |
| Operating
lease liabilities |
|
|
(252,456 |
) |
|
|
(238,717 |
) |
| Contract
liabilities |
|
|
(38,020 |
) |
|
|
177,035 |
|
| Net
cash used in operating activities |
|
|
(2,232,013 |
) |
|
|
(3,430,097 |
) |
| |
|
|
|
|
|
|
|
|
| Cash
Flows From Investing Activities |
|
|
|
|
|
|
|
|
| Security
deposit |
|
|
2,706 |
|
|
|
(15,000 |
) |
| Realized
gain on sale of marketable securities, available for sale |
|
|
(35,210 |
) |
|
|
— |
|
| Net
sales of investment in trading marketable securities |
|
|
3,500,000 |
|
|
|
983,198 |
|
| Purchase
of property and equipment |
|
|
(3,715,351 |
) |
|
|
(1,623,867 |
) |
| Net
cash (used in) investing activities |
|
|
(247,855 |
) |
|
|
(655,669 |
) |
| |
|
|
|
|
|
|
|
|
| Cash
Flows From Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds
from Forza Issuance of common stock |
|
|
— |
|
|
|
6,996,015 |
|
| Deferred
offering costs |
|
|
— |
|
|
|
(66,463 |
) |
| Finance
lease payments |
|
|
(137,029 |
) |
|
|
(7,666 |
) |
| Net
cash (used in) provided by financing activities |
|
|
(137,029 |
) |
|
|
6,921,886 |
|
| |
|
|
|
|
|
|
|
|
| Net
change in cash, cash equivalents and restricted cash |
|
|
(2,616,897 |
) |
|
|
2,836,120 |
|
| Cash,
cash equivalents and restricted cash at beginning of the period |
|
|
16,755,233 |
|
|
|
23,501,007 |
|
| Cash,
cash equivalents and restricted cash at end of the period |
|
$ |
14,138,336 |
|
|
$ |
26,337,127 |
|
| |
|
|
|
|
|
|
|
|
| Supplemental
Cash Flow Information |
|
|
|
|
|
|
|
|
| Cash
paid for interest |
|
$ |
176,190 |
|
|
$ |
110,395 |
|
| |
|
|
|
|
|
|
|
|
| Non
Cash Investing and Financing Activities |
|
|
|
|
|
|
|
|
| Increase
in the right-of-use asset and lease liability |
|
$ |
31,572 |
|
|
$ |
2,899,238 |
|
| |
|
|
|
|
|
|
|
|
| Reconciliation
to the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
13,927,460 |
|
|
$ |
26,079,597 |
|
| Restricted
cash |
|
|
210,876 |
|
|
|
257,530 |
|
| Total
cash, cash equivalents and restricted cash |
|
$ |
14,138,336 |
|
|
$ |
26,337,127 |
|
TWIN VEE POWERCATS CO.
NOTES
TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2024
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 six months ended June 30, 2024. On July 23, 2024, Fix
My Boat, Inc. 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).
In an effort to retain cash and reduce expenditures
and as a result of current 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. As part of this decision, Forza 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, Forza recorded an impairment charge of $1,674,000 against the carrying cost of its partially constructed
building at June 30, 2024. Forza has evaluated any material liabilities resulting from this action and has determined that there are
no additional material liabilities to be recorded as of June 30, 2024.
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.
Merger
On December 5, 2022, pursuant to the terms of
the Agreement and Plan of Merger, dated as of September 8, 2022 (the “Merger Agreement”), by and between Twin Vee PowerCats
Co. and Twin Vee PowerCats, Inc., a Florida corporation (“TVPC”), TVPC was merged with and into the Company (the “Merger”).
As TVPC did not meet the definition of a business
under ASC 805, the merger was not accounted for as a business combination. The Merger was accounted for as a recapitalization of Twin
Vee PowerCats, Co., effected through the exchange of TVPC shares for Twin Vee PowerCats, Co. shares, and the cancellation of Twin Vee
PowerCats, Co. shares held by TVPC. Upon the effective date of the Merger, December 5, 2022, the Company accounted for the Merger by
assuming TVPC’s net liabilities. Twin Vee PowerCats, Co.’s financial statements reflect the operations of TVPC. prospectively
and were not restated retroactively to reflect the historical financial position or results of operations of TVPC.
Principles of Consolidation
The condensed consolidated
financial statements include the accounts of Twin Vee, its wholly owned subsidiaries as of June 30, 2024, AquaSport Co., and Fix My Boat,
Inc., and its publicly traded subsidiary, Forza X1, Inc. (“Forza X1” or “Forza”), 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 unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities
and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles
generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management,
the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal
recurring accruals) to present the financial position of the Company as of June 30, 2024 and the results of operations and cash flows
for the periods presented. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the operating
results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in
conjunction with the financial statements and related notes thereto for the year ended December 31, 2023, which are included in the Company’s
Annual Report on Form 10-K filed with the SEC on March 27, 2024.
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 income statement for the three and six months ended June 30, 2023 to be consistent with the accounting
treatment in 2024. This resulted in an increase in cost of products sold of $2,937,019 and $1,324,747 and a corresponding decrease in
operating expenses for the six and three months ended June 30, 2023, respectively.
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 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 condensed consolidated balance sheets.
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 June 30, 2024 and December 31, 2023, the Company had customer deposits of $6,175 and $44,195, respectively,
which is recorded as contract liabilities on the condensed consolidated balance sheets. These deposits are expected to be recognized
as revenue within a one-year period.
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 nine months. These floor plan interest costs are treated as a reduction
in the revenue recognized on the sale at an amount estimated at the time of sale.
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.
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 condensed 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 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 June 30, 2024 and December 31, 2023, the Company had
$12,837,154 and $15,868,574, respectively, in excess of FDIC insured limits.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash include
all highly liquid investments with original maturities of six months or less at the time of purchase. On June 30, 2024 and December 31,
2023, the Company had cash, cash equivalents and restricted cash of $14,138,337 and $16,755,233, respectively. Included within restricted
cash on the Company’s condensed consolidated balance sheets at June 30, 2024 and December 31, 2023 was cash deposited as collateral
for irrevocable letters of credit of $210,876 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 net 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:
| |
● |
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’s Accounts Receivable is derived
from third party financing arrangements that its dealers utilize to finance the purchase of its boats. This “floorplan financing”
is collateralized by the finished boat, and cash payment is received within 3-5 days of the finance company’s approval of the dealer’s
purchase. At the end of a reporting period, some payment(s) may not yet have been received from the financing company, which creates
a temporary account receivable that will be satisfied in just a few days. As such, the Company’s Accounts Receivable at any point
in time are 100% collectable, and no valuation adjustment is necessary. Therefore, there is no allowance for credit losses on the Company’s
balance sheet.
Inventories
Inventories are valued at the lower of cost and
net realizable value, with cost determined using the 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.
Provisions for excess and obsolete inventories at June 30, 2024 and December 31, 2023 were $708,688 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.
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. An impairment charge of $1,674,000 was recorded against
the Forza building under construction in the second quarter of 2024 based on a recent third-party appraisal.
Advertising
Advertising and marketing costs are expensed as
incurred, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
During the six months ended June 30, 2024 and 2023, advertising costs incurred by the Company totaled $127,580 and $241,702, respectively.
Research and Development
The Company expenses research and development
costs relating to new product development as incurred. For the six months ended June 30, 2024 and 2023, research and development costs
amounted to $494,475 and $964,121, respectively.
Shipping and Handling Costs
Shipping and handling costs include 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 been
transferred to a customer as a fulfillment cost. The Company includes shipping and handling costs, including cost billed to customers,
in cost of sales in the 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 six months ended June 30, 2024 and
2023, shipping and handling costs amounted to $204,778 and $395,767, respectively.
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 six months
ended June 30, 2024, the Company purchased all engines and certain composite materials for its boats under supplier agreements with five
vendors. Total purchases from these vendors were $3,289,093. During the six months ended June 30, 2023, the Company purchased all engines
from two vendors for its boats under supplier agreements. Total purchases from these vendors were $3,562,550.
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. The Company 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 three months ended June 30, 2024 and 2023, the Company recognized income related to the employee retention credit of $0
and $937,482, respectively. For the six months ended June 30, 2024 and 2023, the Company recognized income related to the employee retention
credit of $0 and $1,267,055, respectively.
Stock-Based Compensation
The Company recognizes stock-based compensation
costs for its restricted stock 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.
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 recovered 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.
ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024, with early adoption permitted. We are currently evaluating the impact ASU-2023-07 on our consolidated financial statements.
The Company has considered all other recently
issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial
statements.
2. Marketable securities
| |
|
As of June 30, 2024 |
| |
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses |
|
Fair Value |
| |
|
|
|
|
|
|
|
|
| Marketable Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Bonds |
|
$ |
1,002,050 |
|
|
$ |
12,697 |
|
|
$ |
(19,539 |
) |
|
$ |
995,208 |
|
| Total Marketable Securities |
|
$ |
1,002,050 |
|
|
$ |
12,697 |
|
|
$ |
(19,539 |
) |
|
$ |
995,208 |
|
| |
|
As of 12/31/2023 |
| |
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross
Unrealized
Losses |
|
Fair Value |
| |
|
|
|
|
|
|
|
|
| Marketable Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Bonds |
|
$ |
4,473,033 |
|
|
$ |
50,878 |
|
|
$ |
(60,969 |
) |
|
$ |
4,462,942 |
|
| Total Marketable Securities |
|
$ |
4,473,033 |
|
|
$ |
50,878 |
|
|
$ |
(60,969 |
) |
|
$ |
4,462,942 |
|
Assets and liabilities measured at fair value
on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of June 30, 2024 and December 31, 2023 are as follows:
| |
|
Fair Value Measurements Using |
| |
|
Balance as of
June 30, 2024 |
|
Quoted Prices in
Active Markets
for
Identical Assets
(Level 1) |
|
Significant Other
Observable Inputs
(Level 2) |
|
Significant
Nonobservable
(Level 3) |
| Marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Corporate Bonds |
|
$ |
995,208 |
|
|
$ |
— |
|
|
$ |
995,208 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total marketable securities |
|
$ |
995,208 |
|
|
$ |
— |
|
|
$ |
995,208 |
|
|
$ |
— |
|
| | |
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,
commercial paper and certificates of deposits are measured based on quotes from market makers for similar items in active markets.
3. Inventories
At June 30, 2024 and December 31, 2023,
inventories consisted of the following:
| |
|
June 30, |
|
December 31, |
| |
|
2024 |
|
2023 |
| Raw
Materials |
|
$ |
4,535,681 |
|
|
$ |
5,001,512 |
|
| Work
in Process |
|
|
235,336 |
|
|
|
96,721 |
|
| Finished
Product |
|
|
85,178 |
|
|
|
206,144 |
|
| Total
Inventory |
|
$ |
4,856,195 |
|
|
$ |
5,304,377 |
|
| Reserve
for Excess and Obsolete |
|
|
(708,688 |
) |
|
|
(419,616 |
) |
| Net
inventory |
|
$ |
4,147,507 |
|
|
$ |
4,884,761 |
|
4. Property and Equipment
At June 30, 2024 and December 31, 2023, property
and equipment consisted of the following:
| |
|
June 30, |
|
December 31, |
| |
|
2024 |
|
2023 |
| Machinery
and equipment |
|
$ |
2,770,086 |
|
|
$ |
2,692,473 |
|
| Furniture
and fixtures |
|
|
40,299 |
|
|
|
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 |
|
|
169,854 |
|
|
|
159,342 |
|
| Boat
molds |
|
|
6,549,817 |
|
|
|
5,871,373 |
|
| Vehicles |
|
|
143,360 |
|
|
|
143,360 |
|
| Electric
prototypes and tooling |
|
|
142,526 |
|
|
|
142,526 |
|
| Assets
under construction |
|
|
4,272,131 |
|
|
|
2,977,894 |
|
| |
|
|
16,737,626 |
|
|
|
14,676,820 |
|
| Less
accumulated depreciation and amortization |
|
|
(3,230,954 |
) |
|
|
(2,382,832 |
) |
| |
|
$ |
13,506,672 |
|
|
$ |
12,293,988 |
|
Depreciation and amortization expense of property
and equipment for the three months ended June 30, 2024 and 2023 were $434,958 and $284,562, respectively. Depreciation and amortization
expense of property and equipment for the six months ended June 30, 2024 and 2023 were $860,239 and $502,838, respectively.
5. Leases – Related Party
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 the Company’s 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 used the U.S. Treasury rate of 0.36% at June 30, 2024 and December
31, 2023.
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. 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 $30,000 per month including property taxes and the lease required a $25,000 security deposit.
The base rent will increase five percent (5%) on the anniversary of each annual term.
At June 30, 2024 and December 31, 2023, supplemental
balance sheet information related to the lease was as follows:
| |
|
June 30, |
|
December 31, |
| |
|
2024 |
|
2023 |
| Operating lease ROU asset |
|
$ |
585,451 |
|
|
$ |
779,843 |
|
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Operating lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 425,538 | | |
$ | 414,363 | |
| Non-current portion | |
| 218,560 | | |
| 436,730 | |
| Total | |
$ | 644,098 | | |
$ | 851,095 | |
At June 30, 2024, future minimum lease payments
under the non-cancelable operating lease is as follows:
| Year Ending December 31, | |
|
| 2024 (excluding the six months ended June 30, 2024) | |
| 208,373 | |
| 2025 | |
| 437,582 | |
| Total lease payments | |
| 645,955 | |
| Less imputed interest | |
| (1,857 | ) |
| Total | |
$ | 644,098 | |
The following summarizes other supplemental information
about the Company’s operating lease:
| | |
June 30, |
| | |
2024 |
| Weighted average discount rate | |
| 0.36 | % |
| Weighted average remaining lease term (years) | |
| 1.42 | |
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 the Company’s 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 used the U.S. Treasury rate of 4% at December 31, 2022.
The Company leases a warehouse facility, and land
which are 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 is $7,517 per
month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The base rent
increased three percent (3%) on October 15, 2023.
At June 30, 2024 and December 31, 2023, supplemental
balance sheet information related to leases were as follows:
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Operating lease ROU asset | |
$ | 30,364 | | |
$ | 75,147 | |
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Operating lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 23,073 | | |
$ | 68,532 | |
| Non-current portion | |
| — | | |
| — | |
| Total | |
$ | 23,073 | | |
$ | 68,532 | |
At June 30, 2024, future minimum lease payments
under the non-cancelable operating leases are as follows:
| 2024 (excluding the six months ended June 30, 2024) | |
$ | 23,226 | |
| Total lease payment | |
$ | 23,226 | |
| Less imputed interest | |
| (153 | ) |
| Total | |
$ | 23,073 | |
The following summarizes other supplemental information about the Company’s
operating lease:
| | |
June 30, |
| | |
2024 |
| Weighted average discount rate | |
| 4 | % |
| Weighted average remaining lease term (years) | |
| 0.29 | |
7. Finance Leases
Vehicle and Equipment Lease
The Company has finance leases for a vehicle,
two forklifts, and a copy machine. The Company entered into the vehicle lease in February of 2023, with an asset value of $48,826, which
is recorded in net property and equipment on the balance sheet, it is a 60-month lease at a 3% interest rate. The Company entered into
the first forklift lease in January of 2023, with an asset value of $43,579, which is recorded in net property and equipment on the balance
sheet. It is a 60-month lease at a 7.5% interest rate. The Company entered into the second forklift lease in July of 2023, with an asset
value of $35,508, which is recorded in net property and equipment on the balance sheet. It is a 60-month lease at a 5.0% interest rate.
The Company entered into the copier lease in July of 2023, with an asset value of $14,245, which is recorded in net property and equipment
on the balance sheet. It is a 60-month lease at a 7.0% interest rate.
AquaSport lease
On April 20, 2023 Twin Vee incorporated AquaSport
Co., a wholly owned subsidiary, in the state of Florida in connection with its plan to lease the AQUASPORT™ boat brand and manufacturing
facility in White Bluff, Tennessee. On May 5, 2023, Twin Vee and AquaSport Co. entered into an agreement (the “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. will lease 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 Co.’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 Co.’s obligations under the Agreement
have been guaranteed by the Company.
Finance leases for AquaSport Co. are recorded
in property and equipment, net on the balance sheet.
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| | Land
| | |
$ | 1,000,000 | | |
$ | 1,000,000 | |
| | Building | | |
| 100,000 | | |
| 100,000 | |
| | Equipment | | |
| 2,000,000 | | |
| 2,000,000 | |
At June 30, 2024 and December 31, 2023, supplemental
balance sheet information related to finance leases were as follows:
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Finance lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 218,348 | | |
$ | 214,715 | |
| Non-current portion | |
| 2,535,033 | | |
| 2,644,123 | |
| Total | |
$ | 2,753,381 | | |
$ | 2,858,838 | |
At June 30, 2024, future minimum lease payments
under the non-cancelable finance leases are as follows:
| Year Ending
December 31, | |
|
| 2024
(excluding the six months ended June 30, 2024) | | |
$ | 149,186 | |
| 2025 | | |
| 298,248 | |
| 2026 | | |
| 296,030 | |
| 2027 | | |
| 292,928 | |
| 2028 | | |
| 2,023,534 | |
| Total
lease payment | | |
| 3,059,926 | |
| Less
imputed interest | | |
| (306,545 | ) |
| Total | | |
$ | 2,753,381 | |
The following summarizes other supplemental information about the Company’s
finance lease:
| | |
June 30, |
| | |
2024 |
| Weighted average discount rate | |
| 3.02 | % |
| Weighted average remaining lease term (years) | |
| 3.90 | |
8. Accrued Liabilities
At June 30, 2024 and December 31, 2023, accrued
liabilities consisted of the following:
| |
|
June 30, |
|
December 31, |
| |
|
2024 |
|
2023 |
| Accrued wages and
benefits |
|
$ |
216,845 |
|
|
$ |
343,511 |
|
| Accrued interest |
|
|
152,810 |
|
|
|
33,245 |
|
| Accrued bonus |
|
|
209,467 |
|
|
|
— |
|
| Accrued professional fees |
|
|
46,667 |
|
|
|
— |
|
| Accrued operating expense |
|
|
236,699 |
|
|
|
115,037 |
|
| Accrued construction expense |
|
|
— |
|
|
|
390,825 |
|
| Warranty
reserve |
|
|
245,123 |
|
|
|
192,894 |
|
| Total accrued liabilities |
|
$ |
1,107,611 |
|
|
$ |
1,075,512 |
|
9. Short-term Debt
On June 30, 2024 and December 30, 2023, the Company
had a line of credit with Wells Fargo and Yamaha Motor Finance for $1,250,000 and $1,250,000, respectively. On June 30, 2024 and December
31, 2023 the outstanding balance with Wells Fargo was $386,517 and $231,736, respectively. At June 30, 2024 and December 30, 2023, the
outstanding balance with Yamaha Motor Finance was $304,620 and $210,674, respectively. The outstanding balances are included in account
payable on the consolidated balance sheet.
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%, interest only monthly payments of $2,437 to begin
October 22, 2022, under the EIDL program, which is administered through the SBA. Under the guidelines of the EIDL, the maximum term is
30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay and carry an interest
rate of 3.75%. 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 must
be 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.
A summary of the minimum maturities of term debt
follows for the years set forth below.
| Year ended December 31, | |
|
| | |
|
| | 2024 | | |
| — | |
| | 2025 | | |
| — | |
| | 2026 | | |
| — | |
| | 2027 | | |
| 6,611 | |
| | 2028
and thereafter | | |
| 493,289 | |
| | Total | | |
$ | 499,900 | |
11. Related Party Transactions
As discussed in Note 5, the Company has leased
its Fort Pierce, Florida facilities from a company owned by its CEO.
During the six months ended June 30, 2024 and
2023, the Company received a monthly fee of $46,670 and $6,800, respectively, to provide management services and facility utilization
to Forza. This income for the Company, and expense for Forza, has been eliminated in the condensed 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 six months ended June 30, 2024 and 2023, the lease expense was $7,500 and $15,000, respectively.
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 $12,100,237 or 69 units, and $10,510,252 or
76 units, as of June 30, 2024 and December 31, 2023, respectively. The Company incurred no impact from repurchase events during
the six months ended June 30, 2024 and year ended December 31, 2023.
Litigation
The Company is currently involved in various civil
litigation in the normal course of business none of which is considered material.
Irrevocable line of credit
As of June 30, 2024, the Company had $210,876 of
restricted cash included in cash, cash equivalents and restricted cash. This amount represents a deposit to secure an irrevocable letter
of credit for a supplier contract with Yamaha. These deposits are held in an interest-bearing account. As of December 31, 2023, the Company
had $257,530 of restricted cash.
13. Stockholders’ Equity
Twin Vee
Common Stock Warrants
As of June 30, 2024, the Company had outstanding
warrants to purchase 150,000 shares of common stock issuable at a weighted-average 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 initial public offering
that closed on July 23, 2021 (the “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.. On October 3, 2022, pursuant to the terms of an underwriting agreement entered
into on September 28, 2022 with ThinkEquity LLC, the Company issued to the underwriter warrants to purchase up to 143,750 shares of common
stock. The warrants are exercisable at a per share price of $3.4375. There was no warrant activity during the six months ended June 30,
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 units, 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, 2024. As of June 30, 2024, there were 411,383 shares remaining
available for grant under this Plan.
Accounting for Stock -Based Compensation
Stock Compensation Expense
For the three months ended June 30, 2024 and 2023,
the Company recorded $133,928 and $148,198, respectively, of stock-based compensation expense. For the six months ended June 30, 2024
and 2023, the Company recorded $267,070 and $289,255, respectively, of stock-based compensation expense. Stock-based compensation expense
is included in salaries and wages on the accompanying condensed 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 six months ended June 30, 2024 and 2023:
| | |
| Six
months ended | |
| | |
|
June
30, | |
| | |
| 2024 | | |
| 2023 | |
| Expected term | |
| 5.78 years | | |
| 4.94 - 5 years
| |
| Expected average volatility | |
| 83.3 | % | |
| 49 - 50% | |
| Expected dividend yield | |
| — | | |
| — | |
| Risk-free interest rate | |
| 4.3 | % | |
| 1.50 – 2.96% | |
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%
| | |
Options Outstanding | |
Weighted Average | |
|
| | |
Number of
Options | |
Weighted Average
Exercise Price | |
Remaining life
(years) | |
Grant Date Fair
value of option |
| | |
| |
| |
| |
|
| | Outstanding,
December 31, 2023 | | |
| 1,271,016 | | |
$ | 3.99 | | |
| 8.04 | | |
| 2,213,147 | |
| | Granted | | |
| 700,000 | | |
| 0.64 | | |
| — | | |
| 99,898 | |
| | Exercised | | |
| — | | |
| — | | |
| — | | |
| — | |
| | Expired | | |
| (263,897 | ) | |
| (3.91 | ) | |
| — | | |
| (458,074 | ) |
| | Forfeited/canceled | | |
| (112,263 | ) | |
| (2.92 | ) | |
| — | | |
| (140,048 | ) |
| | Outstanding,
June 30, 2024 | | |
| 1,594,856 | | |
$ | 2.60 | | |
| 8.26 | | |
| 1,714,923 | |
| | | | |
| | | |
| | | |
| | | |
| | |
| | Exercisable
options, June 30, 2024 | | |
| 740,520 | | |
$ | 4.51 | | |
| 6.67 | | |
| | |
At June 30, 2024, 854,336 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 fair value equal
to the closing market price of the Company’s 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.
| | |
Restricted Stock Units Outstanding | |
Weighted | |
|
| | |
Number of | |
Weighted Average
Grant – Date | |
Average
Remaining life | |
Aggregate Intrinsic |
| | |
Units | |
Fair Value Price | |
(years) | |
Value |
| | |
| |
| |
| |
|
| | Outstanding,
December 31, 2023 | | |
| 67,250 | | |
$ | 2.25 | | |
| 2.07 | | |
$ | 36,651 | |
| | Granted | | |
| 87,300 | | |
| 0.84 | | |
| — | | |
| 47,579 | |
| | Exercised | | |
| — | | |
| — | | |
| — | | |
| — | |
| | Forfeited/canceled | | |
| (23,337 | ) | |
| (1.60 | ) | |
| | | |
| (12,719 | ) |
| | Outstanding,
June 30. 2024 | | |
| 131,213 | | |
$ | 1.43 | | |
| 2.33 | | |
$ | 71,511 | |
Forza
Common Stock Warrants
Forza had outstanding warrants to purchase 172,500 shares
of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued to the representative of the underwriters
on August 16, 2022 in connection with Forza’s IPO. Forza also had outstanding warrants to purchase 306,705 shares of common stock
issuable at a weighted-average exercise price of $1.88 per share that were issued to the representative of the underwriters on June 14,
2023 in connection with Forza’s secondary offering. The representative’s warrants are exercisable at any time and from time
to time, in whole or in part, and expire on August 16, 2027 and June 16, 2028, respectively. There was no warrant activity during the
six months ended June 30, 2024.
Equity Compensation Plan
Forza maintains an equity
compensation 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 Forza Board
of Directors which has been appointed by the Forza Board of Directors to administer the Forza 2022 Stock Incentive Plan (the “Forza
Plan”). The number of awards under the Plan automatically increased on January 1, 2024 and will automatically increase on January
1, 2025. As of June 30, 2024, there were 1,448,714 shares remaining available for grant under this Plan. Stock based compensation
expense is included in the Statements of Operations, under salaries and wages.
Accounting for Stock
-Based Compensation
For the six months ended June 30, 2024 and 2023,
Forza recorded $476,956 and $682,980, respectively, of stock-based compensation expense. Stock-based compensation expense is included
in salaries and wages on the accompanying condensed statement of operations.
Stock Options
Under the Forza 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 Forza Plan, the contractual life of the option grants may not exceed ten years.
Forza utilizes the Black-Scholes
model to determine fair value of stock option awards on the date of grant. Forza utilized the following assumptions for option grants
during the three months ended June 30, 2024:
| |
|
Six
Months Ended |
| |
|
June
30, |
| |
|
2024 |
| 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. Forza 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. Forza has never paid a dividend, and as such the dividend yield is 0.0%.
| |
|
Options
Outstanding |
|
Weighted
Average |
|
|
| |
|
Number of |
|
Weighted Average |
|
Remaining life |
|
Grant Date |
| |
|
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 |
|
|
$ |
2.72 |
|
|
|
9.36 |
|
|
$ |
4,257,500 |
|
| |
Granted |
|
|
|
— |
|
|
|
— |
|
|
|
0 |
|
|
|
|
|
| |
Exercised |
|
|
|
— |
|
|
|
— |
|
|
|
0 |
|
|
|
|
|
| |
Forfeited/canceled |
|
|
|
(521,843 |
) |
|
|
1.50 |
|
|
|
8.97 |
|
|
|
(2,079,516 |
) |
| |
Outstanding,
June 30, 2024 |
|
|
|
1,368,074 |
|
|
$ |
2.72 |
|
|
|
8.52 |
|
|
$ |
2,177,984 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Exercisable
options, June 30, 2024 |
|
|
|
411,500 |
|
|
$ |
3.39 |
|
|
|
8.34 |
|
|
|
— |
|
14. Customer Concentration
Significant dealers are those that account for
greater than 10% of the Company’s revenues and purchases.
During the six months ended June 30, 2024, four individual dealers represented
over 10% of the Company’s total sales, and combined they represented 49% of total sales. During the six months ended June
30, 2023, one individual dealer represented over 10% of the Company’s total sales and represented 44% of total sales.
15. Segment
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 reported its financial performance
based on the following segments: Gas-powered Boats, Franchise and Electric Boats.
The Company evaluates the performance of its reportable
segments based on net sales and operating income. Net sales for business segments are generally based on the sale of boats and the sale
of franchises. Income (loss) from operations for each segment includes net sales to third parties, related cost of sales and operating
expenses directly attributable to the segment. Operating income for each segment excludes other income and expenses. The Company does
not include intercompany transfers between segments for management reporting purposes.
The following table shows information by reportable
segments for the three and six months ended June 30, 2024 and 2023:
For the three months ended June 30, 2024
| |
|
Gas-Powered
Boats |
|
Franchise |
|
Electric
Boat and Development |
|
Total |
| Net
sales |
|
$ |
4,326,821 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
4,326,821 |
|
| Cost
of products sold |
|
|
4,097,640 |
|
|
|
— |
|
|
|
26,841 |
|
|
|
4,124,481 |
|
| Operating
expense |
|
|
1,943,927 |
|
|
|
927 |
|
|
|
2,916,563 |
|
|
|
4,861,416 |
|
| Loss
from operations |
|
|
(1,714,746 |
) |
|
|
(927 |
) |
|
|
(2,943,404 |
) |
|
|
(4,659,076 |
) |
| Other
income (expense) |
|
|
22,733 |
|
|
|
5,297 |
|
|
|
111,850 |
|
|
|
139,880 |
|
| Net
loss |
|
$ |
(1,681,419 |
) |
|
$ |
(6,224 |
) |
|
$ |
(2,831,554 |
) |
|
$ |
(4,519,196 |
|
For the three months ended June 30, 2023
| |
|
Gas-Powered
Boats |
|
Franchise |
|
Electric
Boat and Development |
|
Total |
| Net
sales |
|
$ |
8,124,632 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,124,632 |
|
| Cost
of products sold |
|
|
7,148,121 |
|
|
|
— |
|
|
|
40,796 |
|
|
|
7,188,917 |
|
| Operating
expense |
|
|
2,400,942 |
|
|
|
278 |
|
|
|
1,578,722 |
|
|
|
3,979,942 |
|
| Loss
from operations |
|
|
(1,424,431 |
) |
|
|
(278 |
) |
|
|
(1,619,518 |
) |
|
|
(3,044,227 |
) |
| Other
income (expense) |
|
|
1,008,741 |
|
|
|
(4,122 |
) |
|
|
135,865 |
|
|
|
1,140,484 |
|
| Net
loss |
|
$ |
(415,690 |
) |
|
$ |
(4,400 |
) |
|
$ |
(1,483,653 |
) |
|
$ |
(1,903,743 |
) |
For the six months ended June 30, 2024
| |
|
Gas-Powered
Boats |
|
Franchise |
|
Electric
Boat and Development |
|
Total |
| Net
sales |
|
$ |
9,603,164 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,603,164 |
|
| Cost
of products sold |
|
|
9,067,098 |
|
|
|
— |
|
|
|
56,413 |
|
|
|
9,123,511 |
|
| Operating
expense |
|
|
3,478,677 |
|
|
|
927 |
|
|
|
4,202,330 |
|
|
|
7,681,934 |
|
| Loss
from operations |
|
|
(2,942,611 |
) |
|
|
(927 |
) |
|
|
(4,258,743 |
) |
|
|
(7,202,281 |
) |
| Other
income (expense) |
|
|
93,835 |
|
|
|
(5,297 |
) |
|
|
259,352 |
|
|
|
347,890 |
|
| Net
loss |
|
$ |
(2,848,776 |
) |
|
$ |
(6,224 |
) |
|
$ |
(3,999,391 |
) |
|
$ |
(6,854,391 |
) |
For the six months ended June 30, 2023
| |
|
Gas-Powered
Boats |
|
Franchise |
|
Electric
Boat and Development |
|
Total |
| Net
sales |
|
$ |
17,001,847 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,001,847 |
|
| Cost
of products sold |
|
|
14,365,837 |
|
|
|
— |
|
|
|
90,737 |
|
|
|
14,456,574 |
|
| Operating
expense |
|
|
4,299,093 |
|
|
|
1,399 |
|
|
|
3,658,531 |
|
|
|
7,959,023 |
|
| Loss
from operations |
|
|
(1,663,083 |
) |
|
|
(1,399 |
) |
|
|
(3,749,268 |
) |
|
|
(5,413,750 |
) |
| Other
income (expense) |
|
|
1,429,242 |
|
|
|
(8,184 |
) |
|
|
260,484 |
|
|
|
1,681,542 |
|
| Net
loss |
|
$ |
(233,841 |
) |
|
$ |
(9,583 |
) |
|
$ |
(3,488,784 |
) |
|
$ |
(3,732,208 |
) |
Property and equipment, net, classified by business were as follows:
| |
|
June
30,
2024 |
|
December
31,
2023 |
| Gas-Powered
Boats |
|
$ |
8,941,665 |
|
|
$ |
8,825,027 |
|
| Franchise |
|
$ |
— |
|
|
$ |
— |
|
| Electric-Boats |
|
$ |
4,565,007 |
|
|
$ |
3,468,961 |
|
16. Subsequent Events
The Company has evaluated all events or transactions
that occurred after June 30, 2024 through August 15, 2024, which is the date that the condensed consolidated financial statements were
available to be issued. During this period, there were no material subsequent events requiring recognition or disclosure, other than
those described below.
In an effort to retain cash and reduce expenditures
and as a result of current market conditions, on July 11, 2024, the Board of Directors of Forza determined to discontinue and wind down
Forza’s 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 the Company. As part of this decision, Forza 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 has 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 as of June 30, 2024.
On July 12, 2024, the Company appointed
Karl Zimmer as President of Twin Vee PowerCats Co.
On August 12, 2024,
the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Forza and Twin Vee Merger Sub,
Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which, among other things,
subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Forza will merge 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 the Company), will be converted into the right to receive 0.61166627 shares (the “Exchange
Ratio”) of the Company’s common stock, any fractional shares to be rounded down to the nearest whole share of common
stock, for an aggregate of 5,355,000 shares of the Company’s common stock. Each outstanding stock option exercisable for shares
of Forza common stock that is outstanding at the Effective Time, whether vested or unvested, will be assumed by the Company and converted
into a stock option to purchase the number of shares of Company common stock that the holder would have received if such holder had exercised
such stock option for shares of Forza common stock prior to the Merger and exchanged such shares for Company common stock in accordance
with the Exchange Ratio. Each outstanding warrant to purchase shares of Forza common stock will be assumed by Company and 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 for shares of Forza common stock prior to the Merger and exchanged such shares for shares of Company common stock in accordance
with the Exchange Ratio, subject to adjustment for any reverse stock split. In addition, at the Effective Time the 7,000,000 shares of
Forza common stock held by the Company will be cancelled.
The Merger Agreement
contains customary representations, warranties and covenants made by the Company and Forza, including covenants relating to the obligation
to call an annual meeting of its stockholders, as applicable, to approve the adoption of the Merger Agreement, in the case of Forza,
or the issuance of the shares of the Company’s common stock constituting the merger consideration pursuant to the Merger Agreement
(the “Share Issuance”) in the case of Twin Vee, indemnification of directors and officers, non-solicitation obligations related
to alternative business combination proposals, Twin Vee’s and Forza’s conduct of their respective businesses between the
date of signing the Merger Agreement, the closing of the Merger, and its non-solicitation obligations related to alternative business
combination proposals. Under the Merger Agreement, each of the Company and Forza has agreed to use its reasonable best efforts to obtain
as promptly as practicable all consents required to be obtained from any governmental authority or other third party that are necessary
or advisable to consummate the transactions contemplated by the Merger Agreement.1
The completion of the
Merger by each of the Company and Forza is subject to customary conditions, including (1) (A) adoption of the Merger Agreement by Forza’s
stockholders (which approval shall include a majority of the shares present in person or by proxy at the Forza annual meeting excluding
shares held by the Company) and (B) approval of the Share Issuance by the Company’s shareholders, (2) authorization for listing
on the Nasdaq Capital Market of the shares of the Company’s common stock to be issued in the Merger, subject to official notice
of issuance, (3) effectiveness of the registration statement on Form S-4 for the Twin Vee common stock to be issued in the Merger, and
(4) the absence of any order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion
of the Mergers illegal. Each party’s obligation to complete the Mergers is also subject to certain additional customary conditions,
including subject to certain exceptions, the accuracy of the representations and warranties of the other party and performance in all
material respects by the other party of its obligations under the Merger Agreement. The Company, in its capacity as a principal stockholder
of Forza, has agreed to vote the shares of Forza common stock held by it for the approval and adoption of the Merger only if a majority
of the other stockholders of Forza present in person or by proxy at the Forza annual meeting vote to approve and adopt the Merger.
The Merger Agreement
contains certain termination rights for both Forza and the Company. In addition, either the Company or Forza may terminate the Merger
Agreement if the Merger is not consummated by December 1, 2024.
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To The Board of Directors and the Stockholders
of
Forza X1, Inc.
Fort Pierce, Florida
Opinion on the Financial Statement
We have audited the accompanying financial statements
of Forza X1, Inc. (the “Company”), which comprise the balance sheets at December 31, 2023 and 2022, and the related statements
of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2023 and 2022 and the results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
Substantial Doubt Regarding the Company’s
Ability to Continue as a Going Concern
The accompanying financial statements have been
prepared assuming that Forza X1, Inc., will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s
operating loss and negative cash from operations raise substantial doubt about its ability to continue as a going concern. Management’s
evaluation of the events and conditions, and management’s plans regarding those matters, are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.606
/s/ GRASSI & CO., CPAs, P.C.
We have served as the Company’s auditor since 2021.
Jericho, New York
March 27, 2024
FORZA X1, INC.
Balance Sheets
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| ASSETS | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 9,821,531 | | |
$ | 12,767,199 | |
| Marketable securities - available for sale | |
| 2,981,720 | | |
| — | |
| Inventories | |
| 493,460 | | |
| — | |
| Prepaid expenses and other current assets | |
| 73,508 | | |
| 519,735 | |
| Total Current Assets | |
| 13,370,219 | | |
| 13,286,934 | |
| | |
| | | |
| | |
| Operating lease right of use asset | |
| 75,147 | | |
| 162,069 | |
| Security deposit | |
| 7,517 | | |
| 7,517 | |
| Property and equipment, net | |
| 3,468,961 | | |
| 765,406 | |
| Total Assets | |
$ | 16,921,844 | | |
$ | 14,221,926 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 86,820 | | |
$ | 99,028 | |
| Accrued liabilities | |
| 462,381 | | |
| 92,767 | |
| Due to affiliated companies | |
| 201,848 | | |
| 169,851 | |
| Finance leases - current portion | |
| 17,313 | | |
| — | |
| Operating lease right of use liability | |
| 68,532 | | |
| 86,245 | |
| Contract liabilities - customer deposits | |
| 5,700 | | |
| 5,300 | |
| Total Current Liabilities | |
| 842,594 | | |
| 453,191 | |
| | |
| | | |
| | |
| Finance leases - noncurrent | |
| 58,717 | | |
| — | |
| Operating lease liability - noncurrent | |
| — | | |
| 68,532 | |
| Total Liabilities | |
| 901,311 | | |
| 521,723 | |
| | |
| | | |
| | |
| Commitments (Note 10) | |
| — | | |
| — | |
| | |
| | | |
| | |
| Stockholders' Equity: | |
| | | |
| | |
| Common stock: 100,000,000 authorized; $0.001 par value; 15,784,000
and 10,450,000 shares issued: 15,754,774 and 10,450,000 outstanding, respectively | |
| 15,784 | | |
| 10,450 | |
| Treasury stock, at cost, 29,226 and 0 shares, respectively | |
| (21,379 | ) | |
| — | |
| Additional paid in capital | |
| 26,046,873 | | |
| 17,777,385 | |
| Accumulated deficit | |
| (10,020,745 | ) | |
| (4,087,632 | ) |
| Total Stockholders' Equity | |
| 16,020,533 | | |
| 13,700,203 | |
| | |
| | | |
| | |
| Total Liabilities
and Stockholders' Equity | |
$ | 16,921,844 | | |
$ | 14,221,926 | |
The accompanying notes are an integral part of
these financial statements
FORZA
X1, INC.
Statements
of Operations
| | |
Year
Ended December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Net
sales - related party | |
$ | 37,118 | | |
$ | — | |
| Cost
of sales - related party | |
| 33,744 | | |
| — | |
| Cost
of sales | |
| 123,893 | | |
| 232,744 | |
| Gross
loss | |
| (120,519 | ) | |
| (232,744 | ) |
| | |
| | | |
| | |
| Operating
expenses: | |
| | | |
| | |
| Selling,
general and administrative | |
| 1,112,920 | | |
| 473,900 | |
| Salaries
and wages | |
| 3,279,195 | | |
| 1,770,126 | |
| Research
and development | |
| 1,540,903 | | |
| 957,220 | |
| Professional
fees | |
| 353,996 | | |
| 159,304 | |
| Depreciation | |
| 185,900 | | |
| 59,965 | |
| Total
operating expenses | |
| 6,472,914 | | |
| 3,420,515 | |
| | |
| | | |
| | |
| Loss
from operations | |
| (6,593,433 | ) | |
| (3,653,259 | ) |
| | |
| | | |
| | |
| Other
income (expense): | |
| | | |
| | |
| Interest
expense | |
| (3,694 | ) | |
| (3,286 | ) |
| Interest
income | |
| 1,401 | | |
| 14,752 | |
| Dividend
income | |
| 507,794 | | |
| 43,294 | |
| Unrealized
gain on marketable securities | |
| 50,878 | | |
| — | |
| Realized
gain on marketable securities | |
| 103,941 | | |
| — | |
| Loss
on the sale of assets | |
| — | | |
| (31,582 | ) |
| Total
other income | |
| 660,320 | | |
| 23,178 | |
| | |
| | | |
| | |
| Income
before income tax | |
| (5,933,113 | ) | |
| (3,630,081 | ) |
| Income
taxes provision | |
| — | | |
| — | |
| Net
loss | |
$ | (5,933,113 | ) | |
$ | (3,630,081 | ) |
| | |
| | | |
| | |
| Basic
and diluted loss per common share | |
$ | (0.44 | ) | |
$ | (0.44 | ) |
| | |
| | | |
| | |
| Weighted
average common shares outstanding basic and diluted | |
| 13,365,613 | | |
| 8,332,735 | |
FORZA X1, INC.
Statements of Stockholders'
Equity
| For the Years Ended
December 31, 2023 and 2022 | |
| |
| |
| |
|
| | |
| |
| |
| |
Additional | |
| |
Total |
| | |
Common Stock | |
Treasury | |
Paid-in | |
(Accumulated | |
stockholders’ |
| | |
Shares | |
Amount | |
Stock | |
Capital | |
Deficit) | |
Equity |
| Balance, January 1, 2022 | |
| 7,000,000 | | |
$ | 7,000 | | |
$ | — | | |
$ | 1,993,000 | | |
$ | (457,551 | ) | |
$ | 1,542,449 | |
| Capital contributions from Twin Vee | |
| — | | |
| — | | |
| — | | |
| 500,000 | | |
| — | | |
| 500,000 | |
| Common stock issued for cash | |
| 3,450,000 | | |
| 3,450 | | |
| — | | |
| 14,826,039 | | |
| — | | |
| 14,829,489 | |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| 458,346 | | |
| — | | |
| 458,346 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,630,081 | ) | |
| (3,630,081 | |
| Balance December 31, 2022 | |
| 10,450,000 | | |
$ | 10,450 | | |
$ | — | | |
$ | 17,777,385 | | |
$ | (4,087,632 | ) | |
$ | 13,700,203 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, January 1, 2023 | |
| 10,450,000 | | |
$ | 10,450 | | |
$ | — | | |
$ | 17,777,385 | | |
$ | (4,087,632 | ) | |
$ | 13,700,203 | |
| Common stock issued for cash | |
| 5,334,000 | | |
| 5,334 | | |
| — | | |
| 6,924,218 | | |
| — | | |
| 6,929,552 | |
| Stock repurchase | |
| (29,226 | ) | |
| — | | |
| (21,379 | ) | |
| — | | |
| — | | |
| (21,379 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| 1,345,270 | | |
| — | | |
| 1,345,270 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (5,933,113 | ) | |
| (5,933,113 | |
| Balance, December 31, 2023 | |
| 15,754,774 | | |
$ | 15,784 | | |
$ | (21,379 | ) | |
$ | 26,046,873 | | |
$ | (10,020,745 | ) | |
$ | 16,020,533 | |
FORZA
X1, INC.
Statements
of Cash Flows
| | |
The
Years Ended |
| | |
| |
|
| | |
December
31, 2023 | |
December
31, 2022 |
| | |
| |
|
| Cash
Flows From Operating Activities | |
| | | |
| | |
| Net
loss | |
$ | (5,933,113 | ) | |
$ | (3,630,081 | ) |
| Adjustments
to reconcile net loss: | |
| | | |
| | |
| Depreciation | |
| 185,900 | | |
| 59,965 | |
| Change
in fair value of marketable securities, available for | |
| (50,878 | ) | |
| | |
| Stock
based compensation | |
| 1,345,270 | | |
| 458,346 | |
| Change
of right-of-use asset | |
| 86,922 | | |
| (162,069 | ) |
| Loss
on disposal of assets | |
| — | | |
| 31,582 | |
| Change
in inventory reserve | |
| 351,158 | | |
| — | |
| Inventories | |
| (844,618 | ) | |
| — | |
| Prepaid
expenses and other current assets | |
| 446,227 | | |
| (431,258 | ) |
| Security
deposits | |
| — | | |
| (7,517 | ) |
| Accounts
payable | |
| (12,208 | ) | |
| 85,695 | |
| Accrued
liabilities | |
| 369,614 | | |
| 57,639 | |
| Contract
liabilities - customer deposits | |
| 400 | | |
| 5,300 | |
| Operating
lease liabilities | |
| (94,954 | ) | |
| 154,777 | |
| Net
cash used in operating activities | |
| (4,150,280 | ) | |
| (3,377,621 | ) |
| | |
| | | |
| | |
| Cash
Flows From Investing Activities | |
| | | |
| | |
| Net
purchases of investment in trading marketable securities | |
| (2,826,901 | ) | |
| — | |
| Realized
gain on sale of marketable securities, available for | |
| (103,941 | ) | |
| | |
| Purchase
of property and equipment | |
| (2,797,050 | ) | |
| (606,726 | ) |
| Net
cash used in investing activities | |
| (5,727,892 | ) | |
| (606,726 | ) |
| | |
| | | |
| | |
| Cash
Flows From Financing Activities | |
| | | |
| | |
| Proceeds
from issuance of common stock | |
| 6,996,015 | | |
| 15,231,350 | |
| Deferred
offering costs | |
| (66,463 | ) | |
| (296,361 | ) |
| Stock
repurchase | |
| (21,379 | ) | |
| — | |
| Capital
contributions from Twin Vee | |
| — | | |
| 500,000 | |
| Finance
lease | |
| (7,666 | ) | |
| — | |
| Repayments
of advances from affiliates | |
| (510,556 | ) | |
| (1,099,468 | ) |
| Advances
from affiliates | |
| 542,553 | | |
| 612,740 | |
| Net
cash provided by financing activities | |
| 6,932,504 | | |
| 14,948,261 | |
| | |
| | | |
| | |
| Net
change in cash and cash equivalents | |
| (2,945,668 | ) | |
| 10,963,914 | |
| Cash
and cash equivalents at beginning of year | |
| 12,767,199 | | |
| 1,803,285 | |
| Cash
and cash equivalents at end of year | |
$ | 9,821,531 | | |
$ | 12,767,199 | |
| | |
| | | |
| | |
| Supplemental
Cash Flow Information | |
| | | |
| | |
| Cash
paid for interest | |
$ | 3,694 | | |
$ | 3,286 | |
| | |
| | | |
| | |
| Non
Cash Investing and Financing Activities | |
| | | |
| | |
| Right
of use asset - finance leases | |
$ | 92,405 | | |
| — | |
| Right
of use asset | |
| — | | |
$ | 183,106 | |
The accompanying notes are
an integral part of these financial statements.
FORZA X1, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2023 and 2022
Forza X1, Inc. (“Forza”) was initially incorporated as
Electra Power Sports, Inc. on October 15, 2021, but subsequently changed its name to Forza X1, Inc. on October 29, 2021. Twin Vee, the
Company’s controlling shareholder, was incorporated in the State of Florida as Twin Vee Catamarans, Inc. on December 1, 2009, and
reincorporated in Delaware on April 7, 2021, as Twin Vee PowerCats Co. (“Twin Vee”).
Forza has a December 31st fiscal year-end.
| 2. |
Significant Accounting Policies |
Basis of Presentation
The accompanying financial statements are prepared
on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of American (“U.S.
GAAP”).
Revenue Recognition
The Company’s revenue is derived primarily
from the sale of boats, motors and trailers. The Company recognizes revenue when obligations under the terms of a contract are satisfied
and control over promised goods is transferred to the dealer or customer. For the majority of sales, this occurs when the product is
released to the carrier responsible for transporting it to a dealer or customer. 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 consideration
recognized represents the amount specified in a contract with a dealer or customer.
During the year ended December 31, 2023, the Company
sold the fiber glass porting of two FX1 model boats to Twin Vee, its controlling shareholder. It has been determined that our current
motor configuration is not large enough to power a boat the size of the FX1 model, as such they were sold at scrap value to Twin Vee.
Use of Estimates
The preparation of financial statements in conformity
with U.S. GAAP required management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual
results could differ from those estimates. Included in those estimates are assumptions about useful life of fixed assets.
Common Stock Split
On July 22, 2022, the Company filed an amendment
to its certificate of incorporation affecting a 1.076923077 forward stock split. All information in these financial statements gives
effect to the stock split.
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 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, 2023 and 2022, the Company had $12,539,519 and $12,446,216, respectively,
in excess of FDIC insured limits.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid
investments with original maturities of three months or less at the time of purchase. Cash equivalents was $9,821,531 and $12,767,199
as of December 31, 2023 and 2022, respectively.
Marketable Securities
Our 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.
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:
| |
● |
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.
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. Provisions have been made
to reduce excess or obsolete inventories to their net realizable value, at year ended December 31,2023 and 2022, respectively, the excess
or obsolete reserve was $351,158 and $0.
Property and Equipment
Property and equipment are stated at cost. Depreciation
is provided using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of property
and equipment range from three to seven 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.
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.
Research and Development
Research and development costs are expensed when
incurred. Such costs approximated $1,270,104, and $957,220 for the years ended December 31, 2023 and 2022, respectively.
Advertising Costs
Advertising and marketing costs are expensed as
incurred. Such costs approximated $99,034, and $11,177 for the years ended December 31, 2023, and 2022, respectively, and are included
in selling, general and administrative expenses in the accompanying statements of operations.
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.
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.
Treasury Stock
The Company accounts for treasury stock under the cost method and is
included as a component of stockholders’ equity. Treasury stock held by the Company may be reissued in the future. The Company’s
policy is to account for reissued shares as a reduction of treasury stock on a first-in, first-out basis.
Income Taxes
The Company is a C Corporation under the Internal
Revenue Code and a similar section of the state code.
All income tax amounts reflect the use of the
liability method under accounting for income taxes. Income taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes arising primarily from differences between financial and tax reporting
purposes.
Deferred income taxes, net of appropriate valuation
allowances, are determined using the tax rates expected to be in effect when the taxes are actually paid. Valuation allowances are recorded
against deferred tax assets when it is more likely than not that such assets will not be realized. When an uncertain tax position meets
the more likely than not recognition threshold, the position is measured to determine the amount of benefit or expense to recognize in
the financial statements.
In accordance with U.S GAAP, the Company follows
the guidance in FASB ASC Topic 740, Accounting for Uncertainty in Income Taxes. At December 31, 2023, 2022 and 2021, the Company does
not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying financial statements.
The Company’s income tax returns are subject
to review and examination by federal, state and local governmental authorities.
Recent Accounting Pronouncements
All newly issued accounting pronouncements not
yet effective have been deemed either immaterial or not applicable.
3. Liquidity
The Company has incurred a net loss of $5,933,113,
and $3,630,081 for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had cash and cash equivalents,
and working capital of $9,821,531 and $12,813,609, respectively, compared to $12,767,199 and $12,833,743, respectively, on December 31,
2022. In June of 2023 the Company completed its secondary public offering (the “Offering”), which increased its cash by $6,996,015.
In August of 2022 the Company completed its initial public offering that closed on August 16, 2022 (the “IPO”), which increased
its cash by $15,231,350. Losses have principally occurred as a result of the research and development efforts coupled with no operating
revenue.
The Company has no current source of revenue and
may seek additional equity and/or debt financing. A successful transition to attaining profitable operations is dependent upon achieving
a level of positive cash flows adequate to support the Company’s cost structure.
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern, as the Company cannot predict when it will generate revenue. A successful
transition to attaining profitable operations is dependent upon but does not include any adjustments that might be required should the
Company be unable to continue as a going concern. These financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
4. Marketable Securities
| |
As of December 31, 2023 |
| | |
Amortized Cost | |
Gross Unrealized Gains | |
Gross Unrealized Losses | |
Fair Value |
| | |
| |
| |
| |
|
| Marketable Securities | |
| | | |
| | | |
| | | |
| | |
| Corporate Bonds | |
$ | 2,930,842 | | |
$ | 50,878 | | |
$ | — | | |
$ | 2,981,720 | |
| Certificates of Deposits | |
| — | | |
| — | | |
| — | | |
| — | |
| Total marketable securities | |
$ | 2,930,842 | | |
$ | 50,878 | | |
$ | — | | |
$ | 2,981,720 | |
As of December 31, 2022 the Company did not have
marketable securities.
5. Fair Value Measurements
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.
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 and 2022 are as follows:
| | |
| |
Fair Value Based On | |
|
| | |
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 | |
| 2,981,720 | | |
| — | | |
| 2,981,720 | | |
| — | |
| Total marketable securities | |
$ | 2,981,720 | | |
$ | — | | |
$ | 2,981,720 | | |
$ | — | |
The Company’s investments in corporate bonds
are measured based on quotes from market makers for similar items in active markets.
| 6. |
Property and Equipment |
At December 31, 2023 and 2022, property and equipment
consisted of the following:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Building - construction in progress | |
| 2,347,966 | | |
| 10,031 | |
| Land | |
| 119,758 | | |
| — | |
| Equipment | |
| 325,377 | | |
| 59,806 | |
| Computer hardware and software | |
| 50,626 | | |
| 37,016 | |
| Software and website development | |
| 90,396 | | |
| 35,572 | |
| Furniture and fixtures | |
| 3,482 | | |
| — | |
| Vehicles | |
| 48,825 | | |
| — | |
| Prototype | |
| 142,526 | | |
| 142,526 | |
| Molds and Fixtures | |
| 574,416 | | |
| 528,966 | |
| | |
| 3,703,372 | | |
| 813,917 | |
| Less accumulated depreciation | |
| (234,411 | ) | |
| (48,511 | ) |
| | |
$ | 3,468,961 | | |
$ | 765,406 | |
Depreciation expense of property and equipment
of $185,900, and $59,965 for the year ended December 31, 2023 and 2022, respectively.
7. 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 the Company’s 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. We used the U.S. Treasury rate of 0.33% at October 31, 2022.
The Company leases a warehouse facility, and the
land which are 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 is $7,715 per
month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The base rent
increased three percent (3%) on October 15, 2023.
At December 31, 2023 and December 31, 2022, supplemental
balance sheet information related to leases were as follows:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease ROU asset | |
$ | 75,147 | | |
$ | 162,069 | |
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Operating lease liabilities: | |
| | | |
| | |
| Current portion | |
$ | 68,532 | | |
$ | 86,245 | |
| Non-current portion | |
| — | | |
| 68,532 | |
| Total lease liabilities | |
$ | 68,532 | | |
$ | 154,777 | |
At December 31, 2023, future minimum lease payments
under the non-cancelable operating leases are as follows:
| Years Ending December 31, | |
|
| 2024 | |
$ | 69,680 | |
| Total lease payment | |
| 69,680 | |
| Less imputed interest | |
| 133 | |
| Total | |
| 68,532 | |
The following summarizes other supplemental information about the Company’s
operating lease:
| | |
December 31, 2023 |
| Weighted average discount rate | |
| 4 | % |
| Weighted average remaining lease term (years) | |
| 0.71 | |
| | |
December 31, 2023 |
| Operating lease cost | |
$ | 83,360 | |
| Total lease cost | |
$ | 83,360 | |
8. Finance Leases
The Company has finance leases for a vehicle and
a forklift. The Company entered into the vehicle lease in February of 2023, with a recorded value of $48,826 in net property and
equipment. It is a 60-month lease at a 3.0% interest rate. The Company entered into the forklift lease in January of 2023,
with a recorded value of $43,579 in net property and equipment. It is a 60-month lease at a 7.5% interest rate. At the
twelve months ended December 31, 2023, the current and non-current portions of the lease liability were $17,313 and $58,717, respectively.
At December 31, 2023,
future minimum payments under the non-cancelable finance leases are as follows:
Years Ending December 31,
| 2024 | | |
$ | 20,950 | |
| 2025 | | |
| 20,950 | |
| 2026 | | |
| 20,950 | |
| 2027 | | |
| 20,945 | |
| 2028 | | |
| 875 | |
| Total lease payment | | |
$ | 84,675 | |
| Total Imputed interest | | |
| 8,645 | |
| Total | | |
$ | 76,030 | |
9. Accrued Liabilities
At December 31, 2023 and 2022,
accrued liabilities consisted of the following:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Accrued wages and benefits | |
$ | 59,177 | | |
| 56,581 | |
| Accrued operating expenses | |
| 403,204 | | |
| 36,186 | |
| Total | |
$ | 462,381 | | |
$ | 92,767 | |
For the year ended December 31, 2023, included
in accrued operating expenses was accrued expenses of $390,825, related to the construction of our new manufacturing facility.
10. Related Party Transactions
During the year ended December 31, 2023, the Company
recognized revenue of $37,118 related to the sale of a manufactured hull and deck to Twin Vee, the associated Cost of Goods sold were
$33,744.
As of December 31, 2023 and 2022, respectively,
the Company had a current liability of $201,848 and $169,851 due to Twin Vee.
During the years ended December 31, 2023 and 2022,
the Company repaid advances from Twin Vee of $510,556 and $1,099,468, respectively, and had advances from Twin Vee of $542,553 and $612,740,
respectively.
Associated with amounts advanced and due to Twin
Vee, for the years ended December 31, 2023 and 2022, the Company recorded interest expense of $543 and $3,286, respectively, based
on a rate of 6% interest on the Company’s average monthly balance.
Pursuant to a management agreement with Twin Vee,
dated October 2021, and a subsequent agreement dated September 2022, for various management services, the Company paid $5,000 monthly
through August of 2021, and $6,800 monthly thereafter for management fee associated with the use of shared management resources. The
September 2022 agreement expired on August 31, 2023, and was renewed for another year under the same terms. For the years ended December
31, 2023 and 2022, the Company recorded management fees of $81,600 and $67,200, respectively, pursuant to this management agreement which
was extended for an additional six months.
For the years ended December 31, 2023 and 2022
the Company recorded rent expense of approximately $37,400 and $20,386, respectively, associated with its month- to- month arrangement
to utilize certain space at Twin Vee’s facility. The Company incurred $850 per month for rent expense for approximately 1,000 square
feet, from January of 2021 through September 2022, and in October of 2022 the month-to-month rent was adjusted to $3,400 per month, as
the number of test boats had increased from 1 to 5, and the Company required 4,100 square feet of additional space. The Company’s
use of Twin Vee’s facilities does vary based on the number of prototype units on property and in process. The Company’s corporate
headquarters are located at Twin Vee’s location; however, a number of its employees and consultants work remotely.
In August of 2022, the Company 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
Company’s president, Jim Leffew, purchased the property, and the Company executed a new lease agreement with Mr. Leffew on the
same month-to-month terms. For the years ended December 31, 2023 and 2022, the lease expense was $20,000 and $10,000, respectively.
Litigation
The Company is currently not involved in a civil
litigation in the normal course of business.
11. Stockholders’ Equity
Common Stock Warrants
The Company had outstanding warrants to purchase 172,500 shares
of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued to the representative of the underwriters
on August 16, 2022 in connection with the Company’s IPO. The Company also had outstanding warrants to purchase 306,705 shares of
common stock issuable at a weighted-average exercise price of $1.88 per share that were issued to the representative of the underwriters
on June 14, 2023 in connection with the Company’s secondary offering. The representative’s warrants are exercisable at any
time and from time to time, in whole or in part, and expire on August 16, 2027 and June 16, 2028, respectively. There was no warrant
activity during the year ended December 31, 2023.
Treasury Stock
The Company accounts for treasury stock
under the cost method and is included as a component of stockholders’ equity. Treasury stock held by the Company may be reissued
in the future. The Company’s policy is to account for reissued shares as a reduction of treasury stock on a first-in, first-out
basis. The Company repurchased from shareholders 29,226 shares of treasury stock on October 4, 2023, for $21.379.
Equity Compensation Plan
The Company maintains
an equity compensation plan, the Forza X1, Inc. 2022 Stock Incentive Plan (the “2022 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 2022 Plan will automatically increase on January 1, 2024. As of December 31, 2023,
there were 80,333 shares remaining available for grant under the 2022 Plan. Stock based compensation expense is included in
the Statements of Operations, under salaries and wages.
Accounting for Stock -Based Compensation
Stock Compensation Expense -
For the years ended December 31, 2023 and 2022, the Company recorded $1,345,270 and $458,346, respectively, of stock-based
compensation expense which is included in salaries and wages on the accompanying statement of operations.
Pursuant to Forza’s
2022 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 2022 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 year ended December 31, 2023:
| | |
| Year
ended | |
| | |
| December
31, | |
| | |
| 2023 | | |
| 2022 | |
| Expected term | |
| 5 years | | |
| 5 years | |
| Expected average volatility | |
| 108
- 113 | % | |
| 110
- 113 | % |
| Expected dividend yield | |
| — | | |
| — | |
| Risk-free interest rate | |
| 2.98 –4.72 | % | |
| 2.98
– 3.62 | % |
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%
| | |
Options Outstanding | |
Weighted Average | |
|
| | |
Number of | |
Weighted Average | |
Remaining life | |
|
| | |
Options | |
Exercise Price | |
(years) | |
Fair value of option |
| | |
| |
| |
| |
|
| Outstanding, December 31, 2021 | | |
| — | | |
$ | — | | |
| — | | |
$ | — | |
| Granted | | |
| 1,441,500 | | |
| 3.41 | | |
| 10.00 | | |
| 4,009,913 | |
| Exercised | | |
| — | | |
| — | | |
| | | |
| | |
| Forfeited/canceled | | |
| — | | |
| — | | |
| — | | |
| — | |
| 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 | | |
| | |
12. 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 2023. In 2022, 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:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| | |
| |
|
| Non-operating loss carryforward | |
$ | 875,000 | | |
$ | 532,000 | |
| Valuation allowance | |
| (875,000 | ) | |
| (532,000 | ) |
| 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 year ended December 31, 2023,
the valuation allowance increased by approximately $443,000. The Company has net operating and economic loss carry-forwards of approximately
$1,507,000 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 statements of operations for the years ended December 31, 2023 and 2022 is as follows:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| 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 2020 to 2021, are subject to review by the tax authorities.
13. 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, for the year ended December 31, 2023 and for the year ended December 31,
2022:
| | |
December 31, | |
December 31, |
| | |
2023 | |
2022 |
| Numerator for basic and diluted net loss per share: | |
| | | |
| | |
| | |
| | | |
| | |
| Net loss | |
$ | (5,933,113 | ) | |
$ | (3,630,081 | ) |
| | |
| | | |
| | |
| Denominator: | |
| | | |
| | |
| For basic net loss per share - weighted average common shares outstanding | |
| 13,365,613 | | |
| 8,332,735 | |
| Effect of dilutive stock options | |
| — | | |
| — | |
| For diluted net loss per share - weighted average common shares outstanding | |
| 13,365,613 | | |
| 8,332,735 | |
| | |
| | | |
| | |
| Net loss per share -Basic: | |
| | | |
| | |
| Net loss per share | |
$ | (0.44 | ) | |
$ | (0.44 | ) |
| | |
| | | |
| | |
| Net loss per share - Diluted: | |
| | | |
| | |
| Net loss per share | |
$ | (0.44 | ) | |
$ | (0.44 | ) |
For the year ended December 31, 2023 and for
the year ended December 31, 2022, all potentially dilutive securities were antidilutive.
The Company has evaluated all event or transactions
that occurred after December 31,2023 through March 25, 2024, during this period, there were no material subsequent events other than
the ones listed below.
On January 1, 2024, the Company’s 2022 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, 2023 and ending on (and including) January 1, 2032, 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. For 2024, the maximum number of common stock shares
that can be issued will be 790,481.
On March 4, 2024, Mrs.
Carrie Gunnerson, the Company’s then Chief Financial Officer, provided the Company notice of her resignation as an executive officer
of the Company, effective May 31, 2024. Mrs. Gunnerson informed the Company that she was resigning from the Company as an executive officer
to pursue another opportunity and that her resignation was not the result of any disagreement relating to the Company’s operations,
policies or practices.
On March 6, 2024, Mr. James Leffew, the Company’s
then Chief Executive Officer, provided the Company notice of his resignation as an executive officer of the Company. Mr. Leffew informed
the Company that he was resigning from the Company as an executive officer and President, to pursue another opportunity and that his
resignation was not the result of any disagreement relating to the Company’s operations, policies or practices.
FORZA
X1, INC.
Condensed Balance Sheets
(Unaudited)
| |
|
June
30, |
|
December
31, |
| |
|
2024 |
|
2023 |
| |
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
| Current
Assets: |
|
|
|
|
|
|
|
|
| Cash
and cash equivalents |
|
$ |
8,188,879 |
|
|
$ |
9,821,531 |
|
| Marketable
securities - available for sale |
|
|
— |
|
|
|
2,981,720 |
|
| Inventories,
net |
|
|
273,076 |
|
|
|
493,460 |
|
| Due
from affiliates, net |
|
|
18,384 |
|
|
|
— |
|
| Prepaid
expenses and other current assets |
|
|
73,513 |
|
|
|
73,508 |
|
| Total
Current Assets |
|
|
8,553,852 |
|
|
|
13,370,219 |
|
| |
|
|
|
|
|
|
|
|
| Operating
lease right of use asset |
|
|
30,364 |
|
|
|
75,147 |
|
| Security
deposit |
|
|
7,517 |
|
|
|
7,517 |
|
| Property
and equipment, net |
|
|
4,565,008 |
|
|
|
3,468,961 |
|
| Total
Assets |
|
$ |
13,156,741 |
|
|
$ |
16,921,844 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
| Current
Liabilities: |
|
|
|
|
|
|
|
|
| Accounts
payable |
|
$ |
503,646 |
|
|
$ |
86,820 |
|
| Accrued
liabilities |
|
|
27,814 |
|
|
|
462,381 |
|
| Due
to affiliated companies, net |
|
|
— |
|
|
|
201,848 |
|
| Finance
leases - current portion |
|
|
24,535 |
|
|
|
17,313 |
|
| Operating
lease right of use liability |
|
|
23,073 |
|
|
|
68,532 |
|
| Contract
liabilities - customer deposits |
|
|
6,175 |
|
|
|
5,700 |
|
| Total
Current Liabilities |
|
|
585,243 |
|
|
|
842,594 |
|
| |
|
|
|
|
|
|
|
|
| Finance
leases - noncurrent |
|
|
73,400 |
|
|
|
58,717 |
|
| Total
Liabilities |
|
|
658,643 |
|
|
|
901,311 |
|
| |
|
|
|
|
|
|
|
|
| Commitments
(Note 9) |
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
| Stockholders'
Equity: |
|
|
|
|
|
|
|
|
Common
stock: 100,000,000 authorized; $0.001 par value; 15,784,000
shares issued and 15,754,774 shares outstanding |
|
|
15,784 |
|
|
|
15,784 |
|
| Treasury
stock, at cost, 29,226 |
|
|
(21,379 |
) |
|
|
(21,379 |
) |
| Additional
paid in capital |
|
|
26,523,829 |
|
|
|
26,046,873 |
|
| Accumulated
deficit |
|
|
(14,020,136 |
) |
|
|
(10,020,745 |
) |
| Total
Stockholders' Equity |
|
|
12,498,098 |
|
|
|
16,020,533 |
|
| |
|
|
|
|
|
|
|
|
| Total
Liabilities and Stockholders' Equity |
|
$ |
13,156,741 |
|
|
$ |
16,921,844 |
|
The accompanying notes are an integral part
of these unaudited condensed financial statements
FORZA
X1, INC.
Condensed Statements of Operations
(Unaudited)
| | |
Three
Months Ended June 30, | |
Six
Months Ended June 30, |
| | |
2024 | |
2023 | |
2024 | |
2023 |
| | |
| |
| |
| |
|
| Net
sales | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | |
| Cost
of sales | |
| 26,841 | | |
| 40,796 | | |
| 56,413 | | |
| 90,737 | |
| Gross
loss | |
| (26,841 | ) | |
| (40,796 | ) | |
| (56,413 | ) | |
| (90,737 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Operating
expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling,
general and administrative | |
| 247,464 | | |
| 334,315 | | |
| 524,516 | | |
| 688,977 | |
| Salaries
and wages | |
| 432,308 | | |
| 864,838 | | |
| 1,122,851 | | |
| 1,727,602 | |
| Research
and development | |
| 340,907 | | |
| 261,473 | | |
| 510,105 | | |
| 964,121 | |
| Professional
fees | |
| 158,077 | | |
| 69,867 | | |
| 251,106 | | |
| 193,907 | |
| Impairment
of property & equipment | |
| 1,674,000 | | |
| — | | |
| 1,674,000 | | |
| — | |
| Depreciation | |
| 63,807 | | |
| 48,230 | | |
| 119,752 | | |
| 83,926 | |
| Total
operating expenses | |
| 2,916,563 | | |
| 1,578,723 | | |
| 4,202,330 | | |
| 3,658,533 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss
from operations | |
| (2,943,404 | ) | |
| (1,619,519 | ) | |
| (4,258,743 | ) | |
| (3,749,270 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other
income (expense): | |
| | | |
| | | |
| | | |
| | |
| Interest
expense | |
| (813 | ) | |
| (1,493 | ) | |
| (3,938 | ) | |
| (1,784 | ) |
| Dividend
income | |
| 112,663 | | |
| 137,358 | | |
| 245,010 | | |
| 262,268 | |
| Realized
gain on marketable securities | |
| — | | |
| — | | |
| 18,280 | | |
| — | |
| Total
other income | |
| 111,850 | | |
| 135,865 | | |
| 259,352 | | |
| 260,484 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss
before income tax | |
| (2,831,554 | ) | |
| (1,483,654 | ) | |
| (3,999,391 | ) | |
| (3,488,786 | ) |
| Income
taxes provision | |
| — | | |
| — | | |
| — | | |
| — | |
| Net
loss | |
| (2,831,554 | ) | |
$ | (1,483,654 | ) | |
$ | (3,999,391 | ) | |
$ | (3,488,786 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Basic
and diluted loss per common share | |
| (0.18 | ) | |
$ | (0.13 | ) | |
$ | (0.25 | ) | |
$ | (0.32 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted
average common shares outstanding basic and diluted | |
| 15,754,774 | | |
| 11,446,391 | | |
| 15,754,774 | | |
| 10,950,863 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements
FORZA
X1, INC.
Condensed Statements of Stockholders' Equity
(Unaudited)
For
the Three and Six Months Ended June 30, 2024 and 2023
| | |
| |
| |
| |
Additional | |
| |
Total |
| | |
Common
Stock | |
Treasury | |
Paid-in | |
(Accumulated | |
Stockholders' |
| | |
Shares | |
Amount | |
Stock | |
Capital | |
Deficit) | |
Equity |
| Balance,
January 1, 2023 | |
| 10,450,000 | | |
$ | 10,450 | | |
$ | — | | |
$ | 17,777,385 | | |
$ | (4,087,632 | ) | |
$ | 13,700,203 | |
| Stock-based
compensation | |
| — | | |
| — | | |
| — | | |
| 341,163 | | |
| — | | |
| 341,163 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,005,132 | ) | |
| (2,005,132 | ) |
| Balance,
March 31, 2023 | |
| 10,450,000 | | |
| 10,450 | | |
| — | | |
| 18,118,548 | | |
| (6,092,764 | ) | |
| 12,036,234 | |
| Common
stock issued for cash | |
| 5,334,000 | | |
| 5,334 | | |
| — | | |
| 6,924,218 | | |
| — | | |
| 6,929,552 | |
| Stock-based
compensation | |
| — | | |
| — | | |
| — | | |
| 341,817 | | |
| — | | |
| 341,817 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,483,654 | ) | |
| (1,483,654 | ) |
| Balance,
June 30, 2023 | |
| 15,784,000 | | |
$ | 15,784 | | |
$ | — | | |
$ | 25,384,583 | | |
$ | (7,576,418 | ) | |
$ | 17,823,949 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
January 1, 2024 | |
| 15,754,774 | | |
$ | 15,784 | | |
$ | (21,379 | ) | |
$ | 26,046,873 | | |
$ | (10,020,745 | ) | |
$ | 16,020,533 | |
| Stock-based
compensation | |
| — | | |
| — | | |
| — | | |
| 293,141 | | |
| — | | |
| 293,141 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,167,837 | ) | |
| (1,167,837 | ) |
| Balance,
March 31, 2024 | |
| 15,754,774 | | |
| 15,784 | | |
| (21,379 | ) | |
| 26,340,014 | | |
| (11,188,582 | ) | |
| 15,145,837 | |
| Stock-based
compensation | |
| — | | |
| — | | |
| — | | |
| 183,815 | | |
| — | | |
| 183,815 | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,831,554 | ) | |
| (2,831,554 | ) |
| Balance,
June 30, 2024 | |
| 15,754,774 | | |
$ | 15,784 | | |
$ | (21,379 | ) | |
$ | 26,523,829 | | |
$ | (14,020,136 | ) | |
$ | 12,498,098 | |
The accompanying notes are an integral part
of these unaudited condensed financial statements
FORZA
X1, INC.
Condensed Statements of Cash Flows
(Unaudited)
| |
|
Six
Months Ended |
| |
|
June
30, 2024 |
|
June
30, 2023 |
| |
|
|
|
|
| Cash
Flows From Operating Activities |
|
|
|
|
|
|
|
|
| Net
loss |
|
$ |
(3,999,391 |
) |
|
$ |
(3,488,786 |
) |
| Adjustments
to reconcile net loss: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
119,752 |
|
|
|
83,926 |
|
| Impairment
of property & equipment |
|
|
1,674,000 |
|
|
|
— |
|
| Stock
based compensation |
|
|
476,956 |
|
|
|
682,980 |
|
| Change
of right-of-use asset |
|
|
44,783 |
|
|
|
43,033 |
|
| Change
in inventory reserve |
|
|
289,072 |
|
|
|
— |
|
| Inventories |
|
|
(68,688 |
) |
|
|
(521,960 |
) |
| Prepaid
expenses and other current assets |
|
|
(5 |
) |
|
|
360,927 |
|
| Accounts
payable |
|
|
416,826 |
|
|
|
(19,910 |
) |
| Accrued
liabilities |
|
|
(434,567 |
) |
|
|
18,777 |
|
| Operating
lease liabilities |
|
|
(45,459 |
) |
|
|
(42,356 |
) |
| Contract
liabilities - customer deposits |
|
|
475 |
|
|
|
500 |
|
| Net
cash used in operating activities |
|
|
(1,526,246 |
) |
|
|
(2,882,869 |
) |
| |
|
|
|
|
|
|
|
|
| Cash
Flows From Investing Activities |
|
|
|
|
|
|
|
|
| Net
redemptions of investment in available for sale securities |
|
|
3,000,000 |
|
|
|
— |
|
| Realized
gain on sale of marketable securities |
|
|
(18,280 |
) |
|
|
— |
|
| Purchase
of property and equipment |
|
|
(2,858,227 |
) |
|
|
(224,088 |
) |
| Net
cash provided by (used in) investing activities |
|
|
123,493 |
|
|
|
(224,088 |
) |
| |
|
|
|
|
|
|
|
|
| Cash
Flows From Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds
from issuance of common stock |
|
|
— |
|
|
|
6,996,015 |
|
| Deferred
offering costs |
|
|
— |
|
|
|
(66,463 |
) |
| Repayments
of finance lease |
|
|
(9,667 |
) |
|
|
(7,666 |
) |
| Repayments
of advances from affiliates |
|
|
(393,969 |
) |
|
|
(409,505 |
) |
| Advances
from affiliates |
|
|
173,737 |
|
|
|
343,697 |
|
| Net
cash (used in) provided by financing activities |
|
|
(229,899 |
) |
|
|
6,856,078 |
|
| |
|
|
|
|
|
|
|
|
| Net
change in cash and cash equivalents |
|
|
(1,632,652 |
) |
|
|
3,749,121 |
|
| Cash
and cash equivalents at beginning of period |
|
|
9,821,531 |
|
|
|
12,767,199 |
|
| Cash
and cash equivalents at end of period |
|
$ |
8,188,879 |
|
|
$ |
16,516,320 |
|
| |
|
|
|
|
|
|
|
|
| Supplemental
Cash Flow Information |
|
|
|
|
|
|
|
|
| Cash
paid for interest |
|
$ |
3,938 |
|
|
$ |
1,784 |
|
| |
|
|
|
|
|
|
|
|
| Non
Cash Investing and Financing Activities |
|
|
|
|
|
|
|
|
| Right
of use asset - finance leases |
|
$ |
31,572 |
|
|
|
92,405 |
|
The accompanying notes are an integral part
of these unaudited condensed financial statements
FORZA X1, INC.
NOTES TO THE UNAUDITED CONDENSED
FINANCIAL STATEMENTS
June 30,
2024
1. Organization and Summary of Significant Accounting Policies
Organization
Forza X1, Inc. (“Forza”
or the “Company”) was initially incorporated as Electra Power Sports, Inc. on October 15, 2021, but subsequently changed
its name to Forza X1, Inc. on October 29, 2021. The Company’s parent company was incorporated in the State of Florida as Twin Vee
Catamarans, Inc. on December 1, 2009, and reincorporated in Delaware on April 7, 2021, as Twin Vee PowerCats Co. (“Twin Vee”).
In an effort to retain cash and reduce expenditures
and as a result of current market conditions, on July 11, 2024, the Company’s Board of Directors determined to discontinue and
wind down the Company’s business related to the development and sale of electric boats utilizing its proprietary outboard electric
motor. The Company explored strategic alternatives, including a potential merger with Twin Vee PowerCats Co. As part of this decision,
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 has 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 as of June 30, 2024.
Basis of Presentation
The accompanying unaudited
condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”) for interim condensed financial statements and with the instructions to Quarterly Report on Form 10-Q and
Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain
all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial
statements.
In the opinion of the Company’s
management, the accompanying unaudited condensed financial statements contain all the adjustments necessary (consisting only of normal
recurring accruals) to present the financial position of the Company as of June 30, 2024 and the results of operations and cash flows
for the periods presented. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative
of the operating results for the full fiscal year or any future period. These unaudited condensed financial statements should be read
in conjunction with the financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s
Annual Report on Form 10-K filed with the SEC on March 27, 2024.
Revenue Recognition
The Company recognizes revenue
when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. Revenue is
measured as the amount of consideration it expects to receive in exchange for a product.
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 June 30, 2024 and December 31, 2023, the Company had customer deposits of $6,175 and
$5,700, respectively, which is recorded as contract liabilities on the condensed balance sheets. These deposits are not expected to be
recognized as revenue within a one-year period.
Use of Estimates
The preparation of financial
statements in conformity with accounting principles generally accepted in the United States “U.S. GAAP” requires management
to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those
estimates. Included in those estimates are assumptions about useful life of fixed assets.
Cash and Cash Equivalents
Cash and cash equivalents
include all highly liquid investments with original maturities of three months or less at the time of the purchase. On June 30, 2024
and December 31, 2023, the Company had cash and cash equivalents of $8,188,879 and $9,821,531, 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 net 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:
●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.
Concentrations of Credit and Business Risk
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.
At June 30, 2024 and December 31, 2023, the Company had $7,688,879 and $9,557,799, respectively, in excess of FDIC insured limits.
Inventories
Inventories, which are raw
materials for upcoming production, are valued at the lower of cost and net realizable value, with cost determined using the weighted
average cost method using 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 Goods Sold. Provisions have
been made to reduce excess or obsolete inventories to their net realizable value. Provisions for excess and obsolete inventories at June
30, 2024 and December 31, 2023, were $640,230 and $351,158, respectively.
2. Liquidity
As of June 30, 2024, the
Company had cash and cash equivalents and working capital of $8,188,879 and $7,968,609, respectively, compared to $9,821,531 and $12,527,625,
respectively, on December 31, 2023. On June 12, 2023 the Company completed a public offering that closed on June 14, 2023, which increased
its cash by $6,929,552. For the six months ended June 30, 2024 and 2023, the Company incurred a net loss of $3,999,391 and 3,488,786,
respectively. Losses have principally occurred as a result of the research and development efforts coupled with no operating revenue.
The Company has no current
source of revenue and may seek additional equity and/or debt financing. A successful transition to attaining profitable operations is
dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.
3. Marketable Securities
As of June 30, 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.
| | |
As of December 31, 2023 |
| | |
Amortized Cost | |
Gross Unrealized Gains | |
Gross Unrealized Losses | |
Fair Value |
| | |
| |
| |
| |
|
| Marketable Securities | |
| | | |
| | | |
| | | |
| | |
| Corporate Bonds | |
$ | 2,930,842 | | |
$ | 50,878 | | |
$ | — | | |
$ | 2,981,720 | |
| Total marketable securities | |
$ | 2,930,842 | | |
$ | 50,878 | | |
$ | — | | |
$ | 2,981,720 | |
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:
| | |
| |
Fair Value Based On |
| | |
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 | |
| 2,981,720 | | |
| — | | |
$ | 2,981,720 | | |
| — | |
| Total Marketable Securities | |
$ | 2,981,720 | | |
$ | — | | |
$ | 2,981,720 | | |
$ | — | |
The Company’s investments
in corporate bonds are measured based on quotes from market makers for similar items in active markets.
4. Property and Equipment
At June 30, 2024 and
December 31, 2023, property and equipment consisted of the following:
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Building - construction in progress | |
| 3,409,078 | | |
| 2,347,966 | |
| Land | |
| 119,758 | | |
| 119,758 | |
| Equipment | |
| 479,101 | | |
| 325,377 | |
| Computer hardware and software | |
| 51,587 | | |
| 50,626 | |
| Software and website development | |
| 90,396 | | |
| 90,396 | |
| Furniture and fixtures | |
| 3,483 | | |
| 3,483 | |
| Vehicles | |
| 48,826 | | |
| 48,825 | |
| Prototype | |
| 142,526 | | |
| 142,526 | |
| Molds and Fixtures | |
| 574,416 | | |
| 574,416 | |
| | |
| 4,919,171 | | |
| 3,703,373 | |
| Less accumulated depreciation | |
| (354,163 | ) | |
| (234,412 | ) |
| | |
$ | 4,565,008 | | |
$ | 3,468,961 | |
For the three months ended
June 30, 2024 and 2023, Depreciation Expense was $63,807 and $48,230, respectively. For the six months ended June 30, 2024 and 2023,
Depreciation Expense was $119,752 and $83,926, respectively.
5. 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 the Company’s 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 used the U.S. Treasury rate of 0.33% at October 15,
2022.
The Company leases a warehouse
facility, and the land upon which the warehouse is located which are 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 is $7,742 per month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security
deposit.
At June 30, 2024 and December
31, 2023, supplemental balance sheet information related to leases were as follows:
| |
|
June 30, 2024 |
|
December 31, 2023 |
| |
|
|
|
|
| Operating lease ROU asset |
|
$ |
30,364 |
|
|
$ |
75,147 |
|
| |
|
|
|
|
|
|
|
|
| Operating lease liabilities: |
|
|
|
|
|
|
|
|
| Current portion |
|
$ |
23,073 |
|
|
$ |
68,532 |
|
| |
|
$ |
23,073 |
|
|
$ |
68,532 |
|
At June 30, 2024, future
minimum lease payments under the non-cancelable operating leases are as follows:
| Years Ending December 31, 2024 (excluding the first six
months ended June 30, 2024) | |
| 23,226 | |
| Total lease payment | |
$ | 23,226 | |
| Total imputed interest | |
| (153 | ) |
| Total | |
$ | 23,073 | |
The following summarizes
other supplemental information about the Company’s operating lease:
| |
|
June 30, 2024 |
| Weighted average discount rate |
|
|
4 |
% |
| Weighted average remaining lease term (years) |
|
|
0.29 |
|
6. Finance Leases
The Company has finance leases
for a vehicle and two forklifts. The Company entered into the vehicle lease in February of 2023, with a recorded value of $48,826 in
net property and equipment. It is a 60-month lease at a 3.0% interest rate. The Company entered into the forklift lease in January of
2023, with a recorded value of $43,579 in net property and equipment. It is a 60-month lease at a 7.5% interest rate. The Company assumed
a forklift lease in March of 2024, with a recorded value of $33,393. It is a 60-month lease at a 5.0% interest rate. At June 30, 2024,
the current and non-current portions of the lease liability were $24,535 and $73,400 respectively.
At June 30, 2024, future
minimum payments under the non-cancelable finance leases are as follows:
Years Ending December 31,
| 2024 (excluding
the six months ended June 30, 2024) | | |
$ | 14,466 | |
| 2025 | | |
| 28,931 | |
| 2026 | | |
| 28,931 | |
| 2027 | | |
| 28,931 | |
| 2028 | | |
| 6,384 | |
| Total lease payment | | |
$ | 107,643 | |
| Total Imputed interest | | |
| (9,708 | ) |
| Total | | |
$ | 97,935 | |
7. Related Party Transactions
As of June 30, 2024, the
Company had a current asset of $18,384 compared to a current liability of $201,848 at December 31, 2023, due to affiliated companies.
During the six months ended
June 30, 2024 and 2023, the Company repaid advancements from affiliated companies of $393,969 and $409,505, respectively, and had advancements
from affiliated companies of $173,737 and $343,697, respectively.
Associated with amounts advanced
and due to Twin Vee, for the six months ended June 30, 2024 and 2023, the Company recorded interest expense of $1,543 and $519, respectively,
based on a rate of 6% interest on the Company’s average monthly balance.
Pursuant to a management
agreement dated September 2022, for various management services, the Company paid $6,800 monthly thereafter for management fee associated
with the use of shared management resources. The September 2022 agreement expired on August 31, 2023, and was renewed for another year
under the same terms. Under a management agreement dated April 8, 2024 for various management services, the Company pays a variable rate
for services rendered. For the six months ended June 30, 2024 and 2023, the Company recorded management fees of $280,555 and $40,800,
respectively, pursuant to this management agreement.
For the three months ended June 30, 2024 and 2023,
the Company recorded rent expense of approximately $0 and $20,400, respectively, associated with its month- to- month arrangement to
utilize certain space at Twin Vee’s facility. The Company’s use of Twin Vee’s facilities does vary based on the number
of prototype units on property and in process. The Company’s corporate headquarters are located at Twin Vee’s location; however,
a number of its employees and consultants work remotely.
In August of 2022, the Company
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 Company’s then president, James Leffew, purchased the property, and the Company executed a new lease agreement
with Mr. Leffew on the same month-to-month terms. This lease was terminated at the end of March 2024. For the three months ended June
30, 2024 and 2023, the lease expense was $0 and $7,500, respectively. For the six months ended June 30, 2024 and 2023, the lease expense
was $7,500 and $11,000, respectively.
8. Accrued Expenses
At June 30, 2024 and December
31, 2023, accrued liabilities consisted of the following:
| | |
June 30, | |
December 31, |
| | |
2024 | |
2023 |
| Accrued
wages and benefits | |
$ | 18,281 | | |
| 59,177 | |
| Accrued
operating expenses | |
| 9,533 | | |
| 403,204 | |
| Total accrues expenses | |
$ | 27,814 | | |
$ | 462,381 | |
9. Commitments and Contingencies
Litigation
The Company is currently
involved in civil litigation in the normal course of business, the Company does not consider this to be material.
10. Stockholders’ Equity
Common Stock Warrants
The Company had outstanding
warrants to purchase 172,500 shares of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued
to the representative of the underwriters on August 16, 2022 in connection with the Company’s initial public offering (the “IPO”).
The Company also had outstanding warrants to purchase 306,705 shares of common stock issuable at a weighted-average exercise price of
$1.88 per share that were issued to the representative of the underwriters on June 14, 2023 in connection with the Company’s secondary
offering. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on August
16, 2027 and June 16, 2028, respectively. There was no warrant activity during the three months ended June 30, 2024.
Equity Compensation Plan
The Company maintains an
equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and
nonqualified 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, 2023 and January 1, 2024. As of June 30, 2024, there were 1,448,714 shares remaining available
for grant under this Plan. Stock based compensation expense is included in the Condensed Statements of Operations, under salaries and
wages.
Accounting for Stock -Based Compensation
Stock Compensation
Expense - For the six months ended June 30, 2024 and 2023, the Company recorded $476,956 and $682,980, respectively, 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.
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 three months ended June 30, 2024:
| |
|
|
Three months ended |
|
| |
|
|
June 30, |
|
| |
|
|
2024 |
|
| 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%
| | |
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 | | |
$ | 2.72 | | |
| 9.36 | | |
$ | 4,257,500 | |
| Granted | | |
| — | | |
| — | | |
| 0 | | |
| | |
| Exercised | | |
| — | | |
| — | | |
| 0 | | |
| | |
| Forfeited/canceled | | |
| (521,843 | ) | |
| 1.50 | | |
| 8.97 | | |
| (2,079,516 | ) |
| Outstanding,
June 30, 2024 | | |
| 1,368,074 | | |
$ | 2.72 | | |
| 8.52 | | |
$ | 2,177,984 | |
| | | |
| | | |
| | | |
| | | |
| | |
| Exercisable
options, June 30, 2024 | | |
| 411,500 | | |
$ | 3.39 | | |
| 8.34 | | |
| | |
11. Subsequent Events
In an effort to retain cash and reduce expenditures
and as a result of current market conditions, on July 11, 2024, the Company’s Board of Directors determined to discontinue and
wind down the Company’s business related to the development and sale of electric boats utilizing its proprietary outboard electric
motor. The Company explored strategic alternatives, including a potential merger with Twin Vee PowerCats Co. As part of this decision,
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 has 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 as of June 30, 2024.
On August
12, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Twin Vee and Twin Vee Merger
Sub, Inc., a Delaware corporation and wholly owned subsidiary of Twin Vee (“Merger Sub”), pursuant to which, among other
things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, the Company will merge with and into
Merger Sub, with the Company 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 the Company’s common stock (other than any shares held by Twin Vee), will be 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 Twin Vee common stock, for an aggregate of 5,355,000 shares of Twin Vee common stock. Each outstanding stock option exercisable for
shares of the Company’s common stock that is outstanding at the Effective Time, whether vested or unvested, will be assumed by
Twin Vee and converted into a stock option to purchase the number of shares of Twin Vee common stock that the holder would have received
if such holder had exercised such stock option for shares of the Company’s common stock prior to the Merger and exchanged such
shares for Twin Vee common stock in accordance with the Exchange Ratio. Each outstanding warrant to purchase shares of the Company’s
common stock will be assumed by Twin Vee and converted into a warrant to purchase the number of shares of Twin Vee common stock that
the holder would have received if such holder had exercised such warrant for shares of the Company’s common stock prior to the
Merger and exchanged such shares for Twin Vee common stock in accordance with the Exchange Ratio, subject to adjustment for ant reverse
stock split. In addition, at the Effective Time the 7,000,000 shares of the Company’s common stock held by Twin Vee will be cancelled.
The completion
of the Merger by each of Twin Vee and the Company is subject to customary conditions, including (1) (A) adoption of the Merger Agreement
by the Company’s stockholders (which approval shall include a majority of the shares present in person or by proxy at the Company’s
annual meeting excluding shares held by us) and (B) approval of the Share Issuance by Twin Vee’s shareholders, (2) authorization
for listing on the Nasdaq Capital Market of the shares of Twin Vee’s common stock to be issued in the Merger, subject to official
notice of issuance, (3) effectiveness of the registration statement on Form S-4 for Twin Vee’s common stock to be issued in the
Merger, and (4) the absence of any order, injunction, decree or other legal restraint preventing the completion of the Merger or making
the completion of the Mergers illegal. Each party’s obligation to complete the Mergers is also subject to certain additional customary
conditions, including subject to certain exceptions, the accuracy of the representations and warranties of the other party and performance
in all material respects by the other party of its obligations under the Merger Agreement. Twin Vee, in its capacity as the Company’s
principal stockholder, has agreed to vote the shares of Forza common stock held by it for the approval and adoption of the Merger only
if a majority of the Company’s other stockholders present in person or by proxy at the Forza annual meeting vote to approve and
adopt the Merger.
The Merger
Agreement contains certain termination rights for both Twin Vee and the Company. In addition, either the Company or Twin Vee may terminate
the Merger Agreement if the Merger is not consummated by December 1, 2024.
The Company has evaluated
all events or transactions that occurred after June 30, 2024 through August 15, 2024, which is the date that the condensed financial
statements were available to be issued. During this period, there were no additional material subsequent events.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation
Law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that the person acted in good faith and in a manner the person reasonably
believed to be in Twin Vee’s best interests, and, with respect to any criminal action, had no reasonable cause to believe the person’s
actions were unlawful. The Delaware General Corporation Law further provides that the indemnification permitted thereunder shall not be
deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement,
a vote of stockholders or otherwise. The certificate of incorporation of the registrant provides for the indemnification of the registrant’s
directors and officers to the fullest extent permitted under the Delaware General Corporation Law. In addition, the bylaws of the registrant
to be in effect upon the completion of this offering require the registrant to fully indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative
or investigative) by reason of the fact that such person is or was a director or officer of the registrant, or is or was a director or
officer of the registrant serving at the registrant’s request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses (including attorney’s fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, to the fullest
extent permitted by applicable law.
Section 102(b)(7) of the Delaware General Corporation
Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except (i) for any breach
of the director’s duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) for payments of unlawful dividends or unlawful stock repurchases
or redemptions; or (iv) for any transaction from which the director derived an improper personal benefit. The registrant’s
certificate of incorporation to be in effect upon the completion of this offering provides that the registrant’s directors shall
not be personally liable to it or its stockholders for monetary damages for breach of fiduciary duty as a director and that if the Delaware
General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors,
then the liability of the registrant’s directors shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
As permitted by the Delaware General Corporation Law,
the registrant has entered into separate indemnification agreements with each of the registrant’s directors and certain of the registrant’s
officers which require the registrant, among other things, to indemnify them against certain liabilities which may arise by reason of
their status as directors, officers or certain other employees.
The registrant maintains insurance policies under
which its directors and officers are insured, within the limits and subject to the limitations of those policies, against certain expenses
in connection with the defense of, and certain liabilities which might be imposed as a result of, actions, suits or proceedings to which
they are parties by reason of being or having been directors or officers. The coverage provided by these policies may apply whether or
not the registrant would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation
Law.
Item 21. Exhibits and Financial Statement
Schedules
(a)
Exhibits
| |
|
| Exhibit
No. |
Description
of Exhibit |
| 2.1++ |
Agreement
and Plan of Merger, dated September 8, 2022, by and between Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc. (Incorporated by reference
to the Exhibit 2.1 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on September
9, 2022) |
| 2.2 |
Form
of Support Agreement, by and between Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc.’s directors, officers and certain stockholders
(Incorporated by reference to the Exhibit 2.2 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange
Commission on September 9, 2022) |
| 2.3++ |
Agreement
and Plan of Merger, dated August 12, 2024, by and between Twin Vee PowerCats Co., Forza X1, Inc. and Twin Vee Merger Sub, Inc. (Incorporated
by reference to the Exhibit 2.1 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission
on August 12, 2024) |
| 3.1 |
Articles
of Incorporation filed with the Secretary of State of the State of Florida, dated December 1, 2009 (Incorporated by reference to Exhibit
3.1 to the Company’s Registration Statement on Form S-1, File No. 333- 255134, filed with the Securities and Exchange Commission
on April 8, 2021) |
| 3.2 |
Articles
of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on January 22, 2016 (Incorporated
by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities
and Exchange Commission on April 8, 2021) |
| 3.3 |
Articles
of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on April 12, 2016 (Incorporated
by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities
and Exchange Commission on April 8, 2021) |
| 3.4 |
Article
of Conversion filed with the Secretary of State of the State of Florida, dated April 7, 2021 (Incorporated by reference to Exhibit 3.4
to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on
April 8, 2021) |
| 3.5 |
Certificate
of Conversion filed with the Secretary of State of the State of Delaware on April 7, 2021 (Incorporated by reference to Exhibit 3.5 to
the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on April
8, 2021) |
| 3.6 |
Certificate
of Incorporation filed with the Secretary of State of the State of Delaware on April 7, 2021 (Incorporated by reference to Exhibit 3.6
to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on
April 8, 2021) |
| 3.7 |
Bylaws
(Incorporated by reference to Exhibit 3.7 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with
the Securities and Exchange Commission on April 8, 2021) |
| 4.1 |
Specimen
Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A, File
No. 333-255134, filed with the Securities and Exchange Commission on July 2, 2021) |
| 4.2 |
Form
of Representative’s Warrant Agreement (Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on
Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on July 2, 2021) |
| 4.3 |
Description
of Securities of Twin Vee PowerCats Co. (Incorporated by reference to the Exhibit 4.3 to the Company’s Annual Report on Form 10-K,
File No. 001-40623, filed with the Securities and Exchange Commission on March 31, 2022) |
| 5.1* |
Opinion of Blank Rome LLP |
| 8.1* |
Opinion of Blank Rome LLP regarding certain tax matters |
| 10.1† |
Twin
Vee PowerCats Co. 2021 Stock Incentive Plan and form of Incentive Plan Option Agreement, Non- Qualified Stock Option Agreement, and Restricted
Stock Unit Agreement (Incorporated by reference to Exhibit 10.1 the Company’s Registration Statement on Form S-1, File No. 333-255134,
filed with the Securities and Exchange Commission on April 8, 2021) |
| 10.2+ |
Repurchase Agreement, by and among Twin Vee PowerCats, Inc., Twin Vee Catamarans, Inc. and Northpoint Commercial Finance LLC, dated May 18, 2016 (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 2, 2021) |
| 10.3 |
Inventory Blanket Repurchase Agreement by and between Twin Vee Catamarans, Inc. and Bank of the West, dated January 12, 2017 (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on April 8, 2021) |
| 10.4+ |
Inventory Financing Agreement, between GE Commercial Distribution Finance Corporation and Twin Vee Catamarans, Inc., dated January 28, 2010 (Incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 2, 2021) |
| 10.5 |
Lease Agreement, by and among Visconti Holdings, LLC, Twin Vee Catamarans, Inc. and Twin Vee PowerCats, Inc., dated January 1, 2021 (Incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on April 8, 2021) |
| 10.6 |
SBA Loan Authorization and Agreement, dated April 21, 2020, with Twin Vee PowerCats, Inc. (Incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1, File No. 333-255134, filed with the Securities and Exchange Commission on April 8, 2021) |
| 10.7† |
Twin Vee PowerCats Co. Amended and Restated 2021 Stock Incentive Stock Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 2, 2021) |
| 10.8† |
Employment Agreement, dated June 9, 2021, with Joseph Visconti (Incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 17, 2021) |
| 10.9† |
Employment Agreement, dated June 9, 2021, with Preston Yarborough (Incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 17, 2021) |
| 10.10† |
Paycheck Protection Program Second Draw Promissory Note, dated March 19, 2021 (Incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1/A, File No. 333-255134, filed with the Securities and Exchange Commission on June 17, 2021) |
| 10.11† |
Employment Agreement dated as of October 1, 2021 by and between Twin Vee PowerCats Co. and Carrie Gunnerson, Effective October 1, 2021 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-40623) filed with the Securities and Exchange Commission on October 4, 2021) |
| 10.12 |
Transition Services Agreement, dated August 16, 2022, by and between Forza X1, Inc. and Twin Vee PowerCats Co. (Incorporated by referenced to Exhibit 10.2 to the Company’s Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on August 18, 2022) |
| 10.14 |
Agreement, dated August 17, 2022, by and between Forza X1, Inc. and OneWater Marine, Inc. (Incorporated by referenced to Exhibit 10.1 to the Company’s Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on August 18, 2022) |
| 10.15† |
Amendment, dated August 22, 2022, to Employment Agreement, dated October 1, 2021, by and between Twin Vee PowerCats Co. and Carrie Gunnerson (Incorporated by referenced to Exhibit 10.1 to the Company’s Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on August 22, 2022) |
| 10.16† |
Amendment to Employment Agreement between Twin Vee PowerCats Co. and Joseph Visconti, effective as of October 20, 2022 (Incorporated by referenced to Exhibit 10.1 to the Company’s Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on October 21, 2022) |
| 10.17 |
Commercial Lease Agreement (with Option to Purchase), dated May 5, 2023, by and between, AquaSport Co., Ebbtide Corporation and Twin Vee PowerCats Co. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on May 9, 2023) |
| 10.18 |
Employment Agreement effective as of April 4, 2024 by and between Twin Vee PowerCats Co. and Michael Dickerson (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on April 5, 2024) |
| 10.19 |
Amendment to Employment Agreement by and between Twin Vee PowerCats Co. and Preston Yarsborough, dated June 27, 2024 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on July 2, 2024) |
| 10.20 |
Employment Agreement by and between Twin Vee PowerCats Co. and Karl J. Zimmer, dated July 12, 2024 (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on July 15, 2024) |
| 21.1 |
Subsidiaries of Registrant (Incorporated by reference to Exhibit 21.1 of the to the Current Report on Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on July 15, 2024) |
| 23.1* |
Consent of Independent Registered Public Accounting Firm |
| 23.2* |
Consent of Independent Registered Public Accounting Firm
|
| 23.3* |
Consent of Blank Rome, LLP (contained in Exhibit 5.1) |
| 24.1*** |
Power of Attorney (included on the signature page of this initial Registration Statement) |
| 99.1*** |
Consent of Houlihan |
| 99.2*** |
Consent of InteleK |
| 99.3*** |
Form of Twin Vee Proxy Card |
| 99.4*** |
Form of Forza Proxy Card |
| 97.1 |
Clawback Policy adopted on November 10, 2023 ((Incorporated by reference to the Exhibit 97.1 to the Company’s Annual Report on Form 10-K, File No. 001-40623, filed with the Securities and Exchange Commission on March 27, 2024) |
| 107*** |
Filing fee table |
| * |
Filed herewith. |
| ** |
To be filed by amendment. |
| † |
Management contract or compensatory plan or arrangement required to be identified pursuant to Item 15(a)(3) of this Annual Report. |
| + |
Certain portions of this exhibit indicated therein by [**] have been omitted in accordance with Item 601(b)(10) of Regulation S-K. |
| ++ |
Exhibits and Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish copies of any omitted exhibits and schedules upon request by the Securities and Exchange Commission. |
| *** |
Previously
filed |
| (a) |
The undersigned registrant hereby undertakes |
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration
Fee” table in the effective registration statement;
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
(2)
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4)
That, for the purpose of determining liability under the Securities Act of 1933, to any purchaser:
if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however , that no statement made in
a registration statement or prospectus that is part of the registration statement or made
in a document incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first use.
(5)
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
| (b) |
The undersigned registrant hereby undertakes as follows: |
(1)
That, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2)
That, every prospectus (i) that is filed pursuant to paragraph (c)(1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that,
for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
| (c) |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question |
| |
whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
| (d) |
The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into this prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
| (e) |
The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, as amended, the registrant
has duly caused this Amendment No. 1 Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Ft. Pierce in the State
of Florida on October 2, 2024.
| |
Twin Vee PowerCats Co. |
| |
(Registrant) |
| |
|
| |
/s/ Joseph C. Visconti |
| |
Joseph C. Visconti |
| |
Chairman of the Board and Chief Executive Officer |
Pursuant to the requirements of the Securities Act
of 1933, this registration statement has been signed below by the following persons on behalf of the registrant, Twin Vee PowerCats Co.,
in the capacities and on the date indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/ Joseph
C. Visconti |
|
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer) |
|
October 2, 2024 |
| Joseph C. Visconti |
|
|
|
|
| |
|
|
|
|
| /s/
Michael Dickerson |
|
Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer) |
|
October 2, 2024 |
| Michael Dickerson |
|
|
|
|
| |
|
|
|
|
| * |
|
Vice President and Director |
|
October 2, 2024 |
| Preston Yarborough |
|
|
|
|
| |
|
|
|
|
| * |
|
Director |
|
October 2, 2024 |
| Bard Rockenbach |
|
|
|
|
| |
|
|
|
|
| * |
|
Director |
|
October 2, 2024 |
| James Melvin |
|
|
|
|
| |
|
|
|
|
| * |
|
Director |
|
October 2, 2024 |
| Neil Ross |
|
|
|
|
| |
|
|
|
|
| * |
|
Director |
|
October 2, 2024 |
| Kevin Schuyler |
|
|
|
|
By: /s/.Joseph C. Visconti
Joseph C. Visconti attorney in fact
272
Exhibit 5.1
1271 Avenue of the Americas |New York, NY
10020
blankrome.com
October 2, 2024
The Board of Directors
Twin Vee PowerCats Co.
3101 S. US-1
Ft. Pierce, Florida 34982
| Re: |
Registration Statement on Form S-4
|
Dear Ladies and Gentlemen:
We have
represented Twin Vee PowerCats Co., a Delaware Corporation (the “Company”), in connection with the preparation
and filing of a registration statement on Form S-4 (File No. 333-281788) (the “Registration Statement”), by
the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933,
as amended (the “Securities Act”). The Registration Statement provides for the registration by the Company of
up to 5,355,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share, to be
issued upon consummation of the merger (the “Merger”) of Forza X1, Inc., a Delaware corporation (“Forza”),
with and into Twin Vee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Twin Vee (“Merger Sub”),
with Forza surviving the Merger, pursuant to that certain Agreement and Plan of Merger, dated August 12, 2024, by and among the Company,
Forza and Merger Sub (the “Merger Agreement”).
In connection
with this opinion, we have examined, the Registration Statement in the form filed with the Commission on the date hereof, the Merger Agreement,
the Company’s Certificate of Incorporation, the Company’s Bylaws, each as currently in effect, and original or certified copies
of such records of the Company and such agreements, certificates of public officials, certificates of officers or representatives of the
Company and others, and such other documents as we deem relevant and necessary as a basis for the opinion hereinafter expressed. In such
examination we have assumed the genuineness of all signatures on original documents and the conformity to original documents of all copies
submitted to us as conformed or photostat copies. As to various questions of fact material to such opinions, we have relied upon statements
or certificates of officials and representatives of the Company and others.
In rendering
this opinion, we have assumed that prior to the issuance of any of the Shares that all other approvals for the issuance of the Shares
referred to in the Registration Statement have become effective and that no shares of capital stock of the Company are issued or commitments
to issue capital stock made by the Company prior to effectiveness of the Merger Agreement, other than as expressly permitted by the Merger
Agreement.
On the
basis of the foregoing, and in reliance thereon, we are of the opinion that the Shares, when the Registration Statement has been declared
effective and the Shares have been issued and paid for in the manner contemplated by, and upon the terms and conditions set forth in the
Registration Statement and the Merger Agreement, will be validly issued, fully paid and nonassessable.
We are opining solely on all applicable
statutory provisions of Delaware corporate law, including the rules and regulations underlying those provisions, all applicable provisions
of the Delaware Constitution and all applicable judicial and regulatory determinations. This opinion is limited to the laws of the State
of Delaware as in effect on the
The Board of Directors
Twin Vee PowerCats Co.
October 2, 2024
Page 2
date hereof and we express no opinion with respect
to the laws of any other jurisdiction.
We hereby consent to the filing
of this opinion as an Exhibit to the Registration Statement. We also hereby consent to the use of our name as your counsel under “Legal
Matters” in the prospectus constituting part of the Registration Statement. In giving this consent, we do not thereby concede that
we come within the categories of persons whose consent is required by the Securities Act or the General Rules and Regulations promulgated
thereunder.
| |
Very truly yours, |
| |
| |
/s/ Blank Rome |
| |
BLANK ROME LLP |
1271
Avenue of the Americas |New York, NY 10020
blankrome.com
Exhibit 8.1
October 2, 2024
The Board of Directors
Twin Vee PowerCats Co.
3101 S. U.S. Highway 1
Ft. Pierce, Florida 34982
Dear Ladies and Gentlemen:
We have acted as counsel to Twin Vee PowerCats Co.,
a Delaware corporation (the “Company”), in connection with that certain Agreement and Plan of Merger, dated and entered into
as of August 12, 2024 (the “Merger Agreement”), by and among Forza X1, Inc., a Delaware corporation (“Forza”),
the Company, and Twin Vee Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”),
pursuant to which Forza will merge with and into Merger Sub, with Forza surviving the merger (collectively with the other transactions
described in the Merger Agreement, the “Merger”) and the filing of a Registration Statement on Form S-4 (as amended through
the date hereof, the “Registration Statement”).
In rendering our opinion, we have examined and, with
your consent, are expressly relying upon (without any independent investigation or review thereof) the truth and accuracy of the factual
statements, representations and warranties contained in (i) the Merger Agreement (including any exhibits and schedules thereto),
(ii) the Registration Statement (including the proxy statement/prospectus included therein), and (iii) originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records, agreements, documents, and other instruments. In such examination,
we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies,
and the authenticity of the originals of such latter documents. We have not, however, undertaken any independent investigation of any
factual matter set forth in any of the foregoing.
We have assumed that (i) the Merger will be effected
in accordance with the Merger Agreement and none of the material terms and conditions of the Merger Agreement have been or will be waived
or modified, (ii) the statements set forth in the Merger Agreement are true, correct and complete and will remain accurate and complete
at all times up to and including the effective time of the Registration Statement, (iii) any representations made in the Merger Agreement
“to the knowledge of,” or based on the belief or that are similarly qualified, are accurate and complete and will remain accurate
and complete at all times up to and including the effective time, in each case without such qualification, and (iv) there are no understandings
between any of the parties that would alter, or are inconsistent with, the terms or representations set forth in the Merger Agreement.
We also have assumed that the parties have complied with and, if applicable, will continue to comply with, the covenants contained in
the Merger Agreement.
Based upon the foregoing, and subject to the limitations,
qualifications, assumptions and caveats set forth herein and in the Registration Statement, it is our opinion that the discussion contained
in the Registration Statement under the caption “Certain U.S. Federal Income Tax Consequences of the Merger – General,”
insofar as such discussion summarizes U.S. federal income tax law or legal conclusions with respect thereto, is accurate in all material
respects as of the date hereof.
The opinion set forth in this letter is based on current
provisions of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder, and interpretations of the foregoing
as expressed in court decisions, applicable legislative history, and the administrative rulings and practices of the Internal Revenue
Service (the “IRS”), all as of the date hereof and all of which are subject to change (possibly with retroactive effect).
Changes in applicable law could adversely affect our opinion. We express no opinion other than as to the federal income tax laws of the
United States of America and do not express any opinion, either implicitly or otherwise, on any issue not expressly addressed above. Our
opinion is not binding upon the IRS or the courts, and there is no assurance that the IRS or a court will not take a contrary position.
1271
Avenue of the Americas |New York, NY 10020
blankrome.com
We are furnishing this opinion in connection with
the filing of the Registration Statement, and this opinion is not to be used, relied upon, circulated, quoted, or otherwise referred to
for any other purposes without our express written consent. No assurance can be given that future legislative, judicial, or administrative
changes, on either a prospective or retroactive basis, or future factual developments, would not adversely affect the accuracy of the
conclusion stated herein. This opinion is expressed as of the date hereof, and we are under no obligation to supplement or revise our
opinion to reflect any legal developments, changes in the federal income tax laws or the application or interpretation thereof, any factual
matters arising subsequent to the date hereof or the impact of any information, fact, document, certificate, record, representation, statement,
covenant, or assumption relied upon herein that becomes incorrect or untrue. In the event that any one or more of the matters referred
to herein or in the Registration Statement are untrue, inaccurate, or incomplete, our opinions shall be void and of no force or effect,
but only to the extent that such untruth, inaccuracy, or incompletion affects the accuracy of the opinions provided herein.
We hereby consent to the use of our name in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
| |
Very truly yours, |
| |
| |
/s/
Blank Rome |
| |
BLANK
ROME LLP |
EXHIBIT 23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
hereby consent to the inclusion in this Registration Statement on Form S-4 of our report, dated March 27, 2024, relating to the consolidated
financial statements of Twin Vee Powercats and Subsidiaries as of and for the years ended December 31, 2023 and 2022, included in the
Company’s Form 10-K filed with the Securities and Exchange Commission on March 27, 2024.
/s/
Grassi & Co., CPAs, P.C.
Jericho,
New York
October
2, 2024
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the inclusion in
this Registration Statement on Form S-4 of our report, dated March 27, 2024, relating to the financial statements of Forza X1, Inc. as
of the years ended December 31, 2023 and 2022. Our report includes an explanatory paragraph relating to substantial doubt about Forza
X1, Inc.’s ability to continue as a going concern. We also consent to the reference to our firm under the heading “Experts”
appearing therein.
/s/ Grassi & Co., CPAs, P.C.
Jericho, New York
October 2, 2024
Twin Vee PowerCats (NASDAQ:VEEE)
Historical Stock Chart
From Oct 2024 to Nov 2024
Twin Vee PowerCats (NASDAQ:VEEE)
Historical Stock Chart
From Nov 2023 to Nov 2024
