Twin Vee PowerCats Co. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparative figures are for FY2021. This is an annual filing, not a standalone fourth-quarter report. Twin Vee designs and manufactures powerboats, primarily gas-powered catamarans; it also develops electric boats through majority-owned Forza X1 and is developing a marine-service franchise business.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net sales | $31.99 million | $15.77 million |
| Gross profit / gross margin | $10.66 million / 33% | $6.28 million / 40% |
| Operating expenses | $16.68 million | $7.91 million |
| Loss from operations | $6.02 million | $1.63 million |
| Consolidated net loss | $5.79 million | $1.01 million |
| Basic and diluted loss per share | $0.76 | $0.19 |
| Cash used in operating activities | $4.15 million | $1.95 million |
- Revenue rose 103%; management attributed the increase to higher production capacity, stronger sales, and higher average revenue per boat. Units sold increased 59%, while average revenue per unit rose approximately 31%, reflecting pricing and model mix.
- Gross margin fell about 7 percentage points. The filing cites higher raw-material and component costs and a fourth-quarter inventory cycle-count adjustment of approximately $1.46 million.
- Operating expenses more than doubled, led by higher wages and staffing, public-company and professional costs, depreciation, and electric-boat research and development.
- At year-end, cash and cash equivalents were $23.50 million and marketable securities were $2.93 million. Working capital was $26.10 million; total assets were $38.23 million and total liabilities were $5.21 million. Management stated available cash was sufficient for at least 12 months from the filing date.
- Operating cash outflow was partly driven by a $2.21 million increase in inventory. Investing cash outflow was $0.20 million, including $3.37 million of property and equipment purchases offset by investment sales. Financing provided $20.87 million, principally from Twin Vee’s follow-on offering and Forza’s IPO.
- Debt included a $499,900 SBA EIDL loan at 3.75%, with a 30-year term and payments scheduled to begin in 2022. Operating lease liabilities were approximately $1.4 million. The filing reports no off-balance-sheet arrangements.
Material changes and business developments
- Gas-powered boats generated essentially all FY2022 revenue; Forza had no electric-boat sales. The franchise segment was not yet operating at scale.
- Dealer concentration remained material: the five largest dealers accounted for approximately 48% of FY2022 revenue, and one dealer accounted for 12%. The top five dealers represented 67% in FY2021.
- Twin Vee issued 2.5 million shares in an October 2022 offering for approximately $6.00 million in net proceeds. Forza’s August 2022 IPO generated approximately $14.93 million in net proceeds to the consolidated group, including noncontrolling interests; Twin Vee retained approximately 67% ownership of Forza.
- In December 2022, Twin Vee PowerCats, Inc. merged into the public company. The filing accounts for this as a recapitalization, not a business combination.
- After year-end, Twin Vee launched the LFG Marine monohull brand and reported first deliveries in January 2023.
Outlook, risks, and unusual items
- No formal company revenue or earnings guidance is provided. Management anticipated Forza electric-boat revenue beginning in late 2023 and planned further prototype work before commercial production.
- Forza’s planned North Carolina factory is expected to cost approximately $8 million for its initial 50,000-square-foot phase, with stated capacity of 550 units annually. A potential state grant of up to $1.37 million is conditional on investment and job-creation requirements; receipt is not assured. The existing Fort Pierce facility is near capacity, and Forza’s access to it is not guaranteed.
- Management cited inflation, higher labor and component costs, supply-chain delays, semiconductor availability, seasonal demand, interest rates, fuel prices, weather, and dealer financing as business risks. Twin Vee relies on one engine supplier and lacks long-term commitments from many suppliers.
- Floor-plan repurchase obligations could reach approximately $10.69 million, covering 67 units at year-end, versus $4.27 million and 24 units a year earlier. No repurchases occurred in either year.
- Forza’s electric-boat plans carry commercialization, consumer-adoption, battery safety and range, technology, service-network, direct-sales, and factory-execution risks. The filing notes prototype testing but no established commercial sales history.
- Management identified material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient accounting staff and expertise. Disclosure controls were deemed ineffective at December 31, 2022; remediation was underway but not yet demonstrated effective. The auditor gave an unqualified opinion on the financial statements but did not audit internal-control effectiveness.
- Unusual or nonrecurring items included $355,987 of employee-retention-credit income in 2022; FY2021 included $608,224 of PPP grant income and a $434,724 insurance recovery. FY2022 also included a reported $1.46 million inventory cycle-count adjustment.
Important facts for investors to verify
- Reconcile the consolidated net loss of $5.79 million with the $5.14 million loss attributed to Twin Vee shareholders and the reported $0.76 loss per share, particularly given Forza’s noncontrolling interest.
- Assess the sustainability of revenue growth and the gross-margin decline, including the inventory adjustment, higher input costs, and production mix.
- Confirm current cash, marketable-security values, cash burn, and funding needs against the stated 12-month liquidity outlook and planned Forza factory spending.
- Track Forza’s production readiness, launch timing, direct-sales and service arrangements, factory construction, and satisfaction of grant conditions.
- Monitor dealer concentration, floor-plan exposure, supplier and engine availability, and the company’s progress in remediating internal-control weaknesses.