Welcome to the Twin Vee PowerCats Company First Quarter 2023 Investor Call. This call is being recorded and all participants are in a listen-only mode. Your speakers today are Joseph Visconti, President and CEO of Twin Vee PowerCats Company; Jim Leffew, President and CEO of Forza X1, Incorporated; and Carrie Gunnerson, CFO of Twin Vee PowerCats Company. Before I turn the call over to Joseph, please remember that certain statements made during this investor call are forward-looking statements under the Private Securities Litigation Reform Act of 1995. All statements on this call, except for historical facts, including those regarding future operations, financial position, business strategy, and management's plans, are forward-looking statements. These statements are often identified by terms such as beliefs, may, estimate, continue, anticipate, intend, should, plan, expect, predict, potential, or their negatives or similar expressions. The company has based these forward-looking statements on current expectations and projections about future events and financial trends that it believes may impact its financial condition, results of operations, business strategy, and financial needs. These forward-looking statements are subject to various risks, uncertainties, and assumptions, including those described in our filings with the Securities and Exchange Commission, available on our website at www.twinvee.com. You should not rely on these forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in these forward-looking statements will be realized. This conference call is being webcast, and the webcast will be accessible in the Investor Relations section of our website at ir.twinvee.com for at least 90 days. The audiocast quality may depend on your equipment, available bandwidth, and Internet traffic. If you experience poor audio quality, please use the telephone dial-in option. A question-and-answer session will follow the presentation. Please note that only those who have dialed in by telephone may ask questions. Those listening via webcast will not be able to submit questions and must call in instead. I will now turn the call over to Joseph Visconti.

Hello everyone. I'm Joseph Visconti, President and CEO of Twin Vee PowerCats. I'm joined on the call with Carrie Gunnerson, Twin Vee's CFO; and Jim Leffew, the President and CEO of Forza X1, our electric boat company that Twin Vee is the majority shareholder. Good afternoon and thank you for joining our Q1 2023 financial call. Twin Vee designs, manufactures, and sells a range of catamaran sport boats from our factory located in Fort Pierce, Florida. For nearly 30 years, the Twin Vee brand has been synonymous with offshore catamaran boats and is considered by many to be the best riding boats on the water. In Q1 2023, Twin Vee continued the momentum gained through 2022. We achieved our sales and production goals for the quarter, including the design, manufacturing, and launch of additional new models. We opened new dealers, launched a new mono-hull boat brand named LFG Marine with a 22-foot center console. From the initial launch of this product, we received a large initial order from Freedom Boat Club. We are now in production on the second LFG model, a 22-foot dual console. Both of these LFG boats will now be built and branded as Aquasport boats, but we will discuss that later in the presentation. We received site plan approval for our nearly 30,000 square foot expansion. We continue to move ahead on connecting the back building and the front building. We've transitioned our lamination department 100% to the infusion process for hulls and decks. Infusion is a state-of-the-art lamination process that increases the quality of our build while refining the cost and controls. We have finalized OEM agreements with three leading outboard motor companies. Twin Vee can now offer Suzuki, Mercury, and Yamaha motors as we continue expanding our dealer footprint and target regions of the country where these motor companies have regional brand strength. We are approximately a month away from another new model entering production, our 280 GFX dual console. This 28-foot model is a new and exciting product for us. I believe it will expand our market share dramatically. Our biggest competitor does extremely well in the dual console cat market. Center consoles are traditionally fishing and offshore designs, and dual consoles are more of a day boat and appeal to regions such as the Great Lakes, Bays, and Inland Waterways. Historically, Twin Vee center consoles have been 95% of our production and sales. We feel good that our new 28 GFX DC will be a strong contender and begin to broaden our sales in the dual console catamaran sector. Our biggest dealer, OneWater Marine, who currently represents seven of our dealer locations, mostly in Florida, we're lucky to have OneWater; they're a great partner as they continue marketing and selling our boats. If you follow Twin Vee on social media, you would have seen that two weeks ago OneWater and Twin Vee co-hosted an open house at our Fort Pierce factory. We held an owner appreciation and sales event. Essentially, we had a mini boat show with seven Twin Vee's being showcased, from our 24-footer to our 400 GFX. We had approximately 200 guests throughout the day. We offered test rides at a local marina with a transport bringing guests back and forth. We had barbecue food, music, raffles, and factory tours. We showcased our lamination process. The weather was perfect. The event was a great success. OneWater sold four Twin Vee's, possibly eight boats from that event. I'm highlighting this to shine a light on just some of the outreach that we are doing in the face of some of the financial headwinds. We are very close to finalizing the implementation of our new comprehensive ERP system that will provide better controls including ordering, stocking, tracking, inventory levels, detailed build materials, which in turn provides tighter costing for our boats. Carrie Gunnerson, our CFO, and our team have been working around the clock to bring the system online. I want to thank Carrie and the team. We understand that the current state of the economy and federally increasing interest rates have slowed the demand for most recreational-based products. However, our top-line revenues for Q1 remained relatively strong due to restocking dealer inventory, stocking new dealers as they were brought online, and the launch of our LFG brand with the production of our 22-foot center console mono-hull. We remained vigilant with field inventory levels while we continue to push and drive our top-line revenue growth. Now let's discuss the big news. We entered into an agreement with Ebbtide Corporation to acquire Aquasport Boats and their manufacturing facility. The acquisition will include the Aquasport trademarks, 150,000 square foot manufacturing facility situated on 18.5 acres of land in White Bluff, Tennessee. All related tooling, equipment, and molds to initially build five Aquasport models ranging in size from 21 to 25 feet. Twin Vee and Ebbtide Corporation signed a lease option where Twin Vee funded $300,000 against the $3.1 million purchase price. We have the option to pay $22,000 per month in lease payments for five years with $16,000 of the $22,000 directly attributed to reducing the outstanding balance of the purchase price. Or we can simply purchase the Aquasport assets outright at any time over the next five years. We will take physical control of this property on June 1, 2023; the factory produced and sold Aquasport Boats until November of 2022 before manufacturing was halted at that facility. Aquasport Boats is an iconic brand in the mono-hull market. Aquasport has a rich history dating back to the 1960s. The brand was known for its high quality, rugged, versatile, family-friendly boats. Mono-hull boats are popular among many boaters who prefer the traditional look and feel of a single hull design. As we discussed on previous calls, we felt confident that industry acquisitions would present themselves as financial headwinds strengthened, and boat manufacturers with strong brand recognition would not make it. When we located this opportunity, we saw this as a huge opportunity and win for our team, and led by Jim Leffew, they worked around the clock to make this happen. With Jim's production background at Maverick Boat Group, where he was producing 1,700 boats a year, Jim offered to step in and initially launch Aquasport. Jim is on this call today for any related questions. There's also some synergies with Forza, specifically leveraging the size and location of this factory in Tennessee. We discussed this on the Forza Q1 call a week ago. As we transitioned, the two LFG models, the 22 center console and our just entering production the 22 dual console to Aquasport, we will re-launch Aquasport with seven models. We feel confident that with less than $2 million, we will have Aquasport up and running. This will include staffing, inventory, marketing, production, materials. But we're just getting our arms around the transaction as this happened a week ago, so we're excited about the opportunities with this Aquasport transaction. While markets are a bit choppy, our continued business objective is to not burn cash, remain prudent with our balance sheet, and continue to grow our business and, of course, deliver value to our shareholders. I want to thank you and I'd like to turn it over to Carrie Gunnerson, our CFO.

Thank you, Joseph. Good morning, everyone. Our net revenue for the three months ended March 31, 2023, was up 51% to approximately $8,877,000. We are pleased with the consistent growth that we've been able to achieve and maintain over the last year. Our gross profit for the three months ended March 31, 2023, was up 32% to $3,222,000. We continue to monitor the cost of our revenue and our purchase components, along with the dealer inventory, and adjust our sales prices and our discount structures accordingly. Our operating expenses for the three months ended March 31, 2023, increased approximately $2,109,000 to $5,591,000. Our operating expenses as a percent of sales for the year or for the three months ended March 31, 2023, were 63% compared to 59% in the prior year. However, when you look at just the gas-powered segment, our operating expenses as a percent of sales for the three months ended March 31, 2023, were 40% compared to 51% in the same period in 2022. So we're pleased to see the improvement of 11% year-on-year for the first quarter. Our net loss for the three months ended March 31, 2023, was approximately $1,828,000. Forza, our electric boat segment, reported a portion of that loss at $2,005,000. Forza spent considerable resources in the first quarter putting electric motors on several different boat models as part of our R&D efforts, so we do anticipate that their loss will decrease in the second quarter. Our core business, gas-powered boats, recorded net income of approximately $182,000 for the three months ended March 31, 2023, compared to a loss of approximately $626,000 in the same period of 2022. Further, when we look at our adjusted net income for the period, which excludes non-cash charges, our adjusted net income for our core business, the gas-powered boats, was approximately $265,000, and our EBITDA income was $364,000. So, the net loss that we experienced is definitely a reflection of the company's continued efforts into the electric boat division Forza. As we turn to the balance sheet, we had cash, cash equivalents, restricted cash, and marketable securities of approximately $21,023,000 at March 31, 2023. Our inventory value at that date was approximately $4,797,000, compared to $3,200,000 in the prior year. Our increased product offerings have definitely put upward pressure on our inventory levels. However, we're going to work to unlock some of that value as we move forward, and we think that our ERP system will lead to that end. We're also seeing lead times decrease for our component parts. So we do have some tools that we can use to unlock some of that inventory value. At this time, we believe our cash, cash equivalents, restricted cash, and marketable securities, along with cash produced in operations, will provide sufficient cash to finance ongoing operations. And with that, I'll turn the call back over to Joseph.

Thank you, Carrie. At this time, I'd like to open it up for questions.

Thank you. We'll now be conducting a question-and-answer session. Our first question comes from the line of Paul Johnston.

Yes. Good morning. Good afternoon. Can you remind us what percentage of Forza Twin Vee owns at this point?

Thank you, Paul. Twin Vee owns approximately 69% of the outstanding shares of Forza, FRZA.

Okay. And I think in the Forza release you said that the cash burn is roughly $300,000 a month, so about $3.5 million annually. Is that roughly correct?

That is correct. So Jim, you're on the line, or Carrie, if you want to get into that in detail, but I think, so that's broken out with we've got kind of prototyping that that $300,000 plus is with prototyping. And as we transition from prototyping into production, that number will change. But I'm going to let Jim get into more detail on that.

Can I just jump in before Jim?

Sure.

We did use over $2 million in cash for Forza in the first quarter. And that's because of the actual boats and the motors that we were producing. So it was a very heavy R&D quarter in the first quarter. So I think the message we want you to take away is that we do not anticipate those expenses to be at that same level for the rest of the year. Jim?

Okay. No, go ahead. I'm sorry.

I was just going to say I agree with Carrie wholeheartedly there. And that's what I was going to add. So I don't think we are at $3.5 million on an annual basis on a burn rate to get back to your original question or assertion.

Right. Well, I guess what I was trying to understand is that Forza has a little over $10 million in cash. So even if it were $3.5 million a year, which sounds like it won't be, that's three years' worth of cash. I guess I'm just trying to understand what the disconnect here is because I think I apologize, I'm in the cut right now, but from memory there's about 10 million shares of Twin Vee outstanding. And at the current price of roughly $1.50, that's about a $15 million market cap, but there's $13 million of cash just with Twin Vee not counting Forza, so the enterprise value is like $2 million, not counting Forza, am I missing something here?

You're 100% correct. We are doing non-deal road shows. I think we're doing a great job getting the message out. We're doing press really getting press out updates. I mean, social media marketing. I mean, I am incredibly impressed with our team, what we accomplished over the past year speaking about Forza for a second, getting a boat motor propulsion control up and operational; if you've seen the mono-hull. So yes, if you took the components of Twin Vee, the cash in the bank, $12 million plus, a $36 million a year profitable business plus a 69% ownership in Forza, and you added those three components together and Twin Vee is trading at cash value, it does not make sense.

Well, right. Or another way to look at it is that obviously Forza has a lot of promise ahead of it, but even if you completely didn't count that and took it away, you've got Twin Vee doing whatever it is $30 million in sales and the enterprise value is $2 million. I just want to make sure that, well, why has someone not come in and bought a giant chunk of this? I don't get it.

I will leave stock picking to the professionals, and we are currently in a volatile market. Many small stocks appear to be oversold. However, we are engaging with investors who are actively accumulating and buying our stock. We are noticing increased trading volume for both Forza and Twin Vee. This presents an opportunity for those who are paying attention to our progress. I believe we are meeting and exceeding every expectation and goal we've set, especially during our IPO at Twin Vee. We have accomplished everything we aimed for, including launching new models and significantly increasing our dealership network beyond our initial projections. We now have over 30 dealers and achieved more than 100% growth in 2022. In the first quarter, we experienced a 51% growth, even in this choppy market. Our management team is focused and driving forward, making the current lower stock price just an opportunity for potential investors.

No, appreciate that. And so just want to make sure there isn't anything we're missing. And just on Twin Vee, have you or have any analysts made any kind of rough projections as to what kind of earnings per share there might be for 2023 or 2024?

Our bank ThinkEquity has a report available. I don’t have it with me right now, so I hesitate to mention details without the report in front of me. However, you can check it out on Bloomberg, or I can send it to you if you'd like.

Sure. But are they projecting that you're going to make money or that you're going to lose money for 2023 and 2024?

We are making money. Are you? Twin Vee, we're profitable.

Right. On an annual basis that includes the consolidation of the Forza, I guess?

I don't understand the question, Paul.

The question is, do they project that you'll be profitable including the losses through for your ownership of Forza?

If you provide me with your email, I will look for that report after the call and send it over to you. What’s your email?

I'll write you offline. That's fine.

All right. I'm joseph@twinvee. If you want to just ping me, I'll grab the report and even follow up a call with you afterwards if that's okay.

I appreciate it. Yes. Appreciate it.

Thank you. Our next question comes from the line of Mike Powell. Please proceed with your questions.

Hey, thanks for taking the call. The prior caller asked some of the questions I was going to ask about Forza, but on the Aquasport transaction you just announced, can you share any financial economics you can disclose regarding what that means for Twin Vee in terms of revenue, EBITDA, incremental EBITDA, etc.?

We don't have any projections on that. We just completed the transaction about a week ago. We're just getting our arms around the assets. It's a 150,000 square foot facility. There's probably upwards of a couple hundred molds inside of the facility. I can have Jim elaborate on kind of a re-launch strategy if you'd like to hear that, but we can't talk about any financial projections at this time.

Or maybe what the business was doing prior to the sounds like a shutdown in November or something like that. I don't know the history of it, but what was it doing in revenues or whatever you can disclose.

I don't know revenues. I believe, and Jim, correct me if I'm wrong, I think two years ago, they produced like 150 units out of the facility.

Yes, it's hard to say exactly, because they were wrapped up with the Limestone Boat Company and also the Boca Bait brands. So when we start back up, we will exclusively focus on the Aquasport brands, and we have some internal targets for revenue to rebuild that brand over the next five years. I can suggest those to you. It's a shutdown plant right now, so we have to go in there and hire from the ground up and start over. So those projections are simply that, just projections. But I can give those to you if you'd like to hear.

Yes, that'd be great.

We're targeting between $10 million and $12 million in revenue after the first year of startup. We expect to get started sometime in July of this year, so about two months from now. A lot of that depends on the workforce we can put together in the Nashville area. It's a good plant. It's been a high production rate plant in the past. I believe back in the heyday of its boat-building years, it produced 17 boats a day. We obviously will have to upgrade some of the tooling for Aquasport. As many of you may know, Aquasport is a legacy brand that's been around for 60 years, but it's had a bad decade or two and is in need of a facelift. But the product is well received out there and we feel confident that we'll be able to rebuild the brand over the next several years. We're expecting to incrementally add about $10 million to $12 million every year from now until the fifth year. That's what our target is.

And will the customer know that Twin Vee owns Aquasport? Is there any kind of synergy between the two companies or will it be viewed as two completely separate independent brands?

I think it'll be looked at as two separate brands. I think some of the operators of the Aquasport brand over the last 10 years or so had not done it justice. I think we're a known saltwater brand entity in Twin Vee. I believe the market will look favorably on our acquisition of Aquasport and the Aquasport brand. We'll be able to rebuild its rightful place in the marketplace given time.

You mentioned that revenues could range from $10 million to $12 million annually, with increases expected each year for the next five years. Did I hear that correctly?

You did hear me right.

Okay. Sounds pretty substantial.

It sounds aggressive. But we feel like the brand can handle that and that'll be our target. We've got a lot of boat-building experience and we have many good people behind us. It's a matter of executing on our plans.

And what revenue level does it become profitable roughly?

Yes. I think we should look at a year and a half into it, around $18 million or so. I think that is the escape velocity point right there, and I believe we'll be self-sufficient after that rate. We should be able to really add to the profitability of Twin Vee after that.

Okay.

Again, these are generalizations and we still have a lot of work to do to vet this out.

Yes. I got your five-minute intro on the forward-looking statement, so you're covered. So just kidding. But appreciate you guys taking my questions.

Thank you.

Thank you. There are no further questions at this time. I would like to hand the call back over to Joseph Visconti for any closing remarks.

I want to thank everybody for joining the call today, and we're excited about the future, specifically with re-launching this Aquasport brand. Thank you for your support, everyone. If you have any other questions, you can ping me at joseph@twinvee, and we will follow up and get in touch with you. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.