Twin Vee (NASDAQ: VEEE) posts Q1 2026 loss and flags going concern, raises $5.8M
Twin Vee PowerCats reported Q1 2026 net sales of $3.96 million, up about 10% year over year, driven by dealer expansion and higher average selling prices per boat. However, gross margin fell to about 5% as launch costs for Bahama Boats and higher inventory reserves weighed on profitability.
The company posted a net loss of $2.09 million and an accumulated deficit of $36.1 million. Management disclosed substantial doubt about its ability to continue as a going concern without additional capital or stronger cash generation. To bolster liquidity, Twin Vee closed three equity offerings in the quarter, raising about $5.8 million and ending March 31, 2026 with $5.67 million in cash, cash equivalents and restricted cash.
The company also detailed a reincorporation to Nevada, a new long-term facility lease with a related party, and ongoing Nasdaq listing challenges tied to its share price, which it is addressing through reverse stock splits and an appeal process.
Positive
- None.
Negative
- Going concern uncertainty: continued operating losses, a $2.09 million Q1 2026 net loss and a $36.1 million accumulated deficit led management to state substantial doubt about the company’s ability to continue as a going concern without additional capital or improved cash generation.
- Nasdaq listing risk: the company fell below Nasdaq’s $1.00 bid price requirement, had already executed one reverse split in 2025, and is appealing a potential delisting while implementing another 1‑for‑37 reverse split to address compliance.
Insights
Revenue grew, but shrinking margins, cash burn and going‑concern risk dominate.
Twin Vee PowerCats increased Q1 2026 net sales to $3.96M, yet gross profit fell sharply to $0.20M as gross margin compressed to roughly 5%. Higher labor tied to the Bahama Boats relaunch and a larger inventory reserve drove most of the margin pressure.
The company recorded a Q1 net loss of $2.09M and has an accumulated deficit of $36.1M. Management explicitly states that these losses and expected near‑term cash shortfalls raise “substantial doubt” about its ability to continue as a going concern, a key risk factor for equity and lenders.
Liquidity improved after three equity offerings that raised about $5.8M, lifting cash, cash equivalents and restricted cash to $5.67M at March 31, 2026. However, operating cash outflow was $1.66M for the quarter, and the company also faces Nasdaq bid‑price compliance issues and reverse stock split execution. Subsequent filings and results for the remainder of 2026 will show whether margin recovery and cost controls offset ongoing cash burn.
Key Figures
Key Terms
going concern financial
reverse stock split financial
Economic Injury Disaster Loan financial
restricted stock units financial
warrants financial
Nasdaq Listing Rule 5550(a)(2) regulatory
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| (Mark One) | |
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| OR | |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _______________ to _______________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
|
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| The (The Nasdaq Capital Market) |
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an 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 | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of May 5, 2026 there were
TWIN VEE POWERCATS CO.
TABLE OF CONTENTS
| Page No. | ||
| PART I—FINANCIAL INFORMATION | 4 | |
| Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 4 |
| Condensed Consolidated Balance Sheets as of March 31, 2026 (Unaudited) and December 31, 2025 | 4 | |
| Condensed Consolidated Statements of Operations (Unaudited) for the Three Months ended March 31, 2026 and 2025 | 5 | |
| Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the Three Months ended March 31, 2026 and 2025 | 6 | |
| Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months ended March 31, 2026 and 2025 | 7 | |
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 8 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 |
| Item 4. | Controls and Procedures | 34 |
| PART II—OTHER INFORMATION | 36 | |
| Item 1. | Legal Proceedings | 36 |
| Item 1A. | Risk Factors | 36 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41 |
| Item 3. | Defaults Upon Senior Securities | 41 |
| Item 4. | Mine Safety Disclosures | 41 |
| Item 5. | Other Information | 41 |
| Item 6. | Exhibits | 42 |
| SIGNATURES | 43 | |
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments, and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control), and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. We 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” included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on February 27, 2026. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.
As a result of these and other factors, we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
NOTE REGARDING COMPANY REFERENCES
Throughout this Quarterly Report on Form 10-Q, “Twin Vee,” “the Company,” “we” and “our” refer to Twin Vee PowerCats Co.
3
PART I—FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TWIN VEE POWERCATS CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Unaudited | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable | — | |||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Deferred offering expenses | — | |||||||
| Note receivable, current portion | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use asset, net | — | |||||||
| Note receivable less current portion, net of discount | ||||||||
| Security deposit | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Contract liabilities | ||||||||
| Finance lease liabilities | ||||||||
| Operating lease liabilities | — | |||||||
| Total current liabilities | ||||||||
| Economic Injury Disaster Loan | ||||||||
| Finance lease liabilities - noncurrent | ||||||||
| Operating lease liabilities - noncurrent | — | |||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock: | — | — | ||||||
| Common stock: | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
|
All share numbers have been retrospectively adjusted for the one-for-37 reverse stock split effective May 4, 2026 and the one-for-ten reverse stock split effective April 7, 2025. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
4
TWIN VEE POWERCATS CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net sales | $ | $ | ||||||
| Cost of products sold (excluding depreciation & amortization) | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | ||||||||
| Salaries and wages | ||||||||
| Professional fees | ||||||||
| Loss on sale of property & equipment | — | |||||||
| Depreciation and amortization | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Other income | — | |||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest income | ||||||||
| Total other income | ||||||||
| Loss before income tax | ( | ) | ( | ) | ||||
| Income tax provision | — | — | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted loss per share of common stock | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of shares of common stock outstanding | ||||||||
| All share numbers have been retrospectively adjusted for the one-for-37 reverse stock split effective May 4, 2026 and the one-for-ten reverse stock split effective April 7, 2025. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
5
| TWIN VEE POWERCATS CO. AND SUBSIDIARIES | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Unaudited | ||||||||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Issuance of common stock | — | |||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
All share numbers have been retrospectively adjusted for the one-for-37 reverse stock split effective May 4, 2026 and the one-for-ten reverse stock split effective April 7, 2025.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
6
TWIN VEE POWERCATS CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Loss on sale of property & equipment | — | |||||||
| Amortization of right-of-use asset | ||||||||
| Change in inventory reserve | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Security deposit | — | |||||||
| Proceeds from sale of property & equipment | — | |||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from issuance of common stock, net of fees of $1,392,615 | — | |||||||
| Finance lease payments | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of the period | ||||||||
| Cash, cash equivalents and restricted cash at end of the period | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non-Cash Investing and Financing Activities | ||||||||
| Right of use asset - operating leases | $ | $ | — | |||||
| Reconciliation to the Condensed Consolidated Balance Sheets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
7
TWIN VEE POWERCATS CO.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (UNAUDITED)
March 31, 2026
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 April 20, 2023, the Company formed AquaSport Co., a wholly owned subsidiary incorporated 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. On May 28, 2025, the Company entered into a Mutual Release Agreement with the lessor, removing all obligations under the lease, and returning to the lessor all property, plant and equipment, brand name and all other leased assets.
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, it would market the Company’s new independent line of electric boats under
a new brand name (and new subsidiary). On November 26, 2024 (the “Closing Date”), pursuant to the terms of the Agreement and
Plan of Merger, dated as of August 12, 2024 (the “Merger Agreement”), by and between Twin Vee, Twin Vee Merger Sub, Inc. and
Forza, Merger Sub was merged with and into Forza (the “Merger”), with Forza surviving the Merger as a wholly-owned subsidiary
of Twin Vee. At the effective time of the Merger, (a) each outstanding share of common stock of Forza, par value $
On March 26, 2025, the Company formed Wizz Banger, Inc., a wholly owned subsidiary in the state of Florida in connection with the Company’s plan to develop an enhanced used boat marketplace.
On June 5, 2025, Twin Vee PowerCats Co. (the “Company”
or “Twin Vee”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), with Bahama Boat Works,
LLC (“Bahama Boat Works”), pursuant to which the Company acquired various tangible and intangible assets (the “Assets”)
from Bahama Boat Works relating to the Bahama boat brand (the “Bahama Boat Brand”). Total consideration includes a $
8
State of Nevada Reincorporation
On April 10, 2026, the Company completed its reincorporation from the State of Delaware to the State of Nevada. The move was approved by the Company’s stockholders at its annual meeting of stockholders in November 2025. This move has no impact on the accompanying condensed consolidated financial statements.
Going Concern
Our unaudited condensed consolidated financial statements for the three months ended March 31, 2026 were prepared under the assumption that we will continue as a going concern; however, we have incurred significant losses from operations to date and we expect our revenues will not increase sufficiently nor our expenses to decline sufficiently to achieve cash-flow breakeven in the short-term. These factors raise substantial doubt about our ability to continue as a going concern for one year after the condensed consolidated financial statements included in this Quarterly Report are issued.
For the year ended December 31, 2025, we incurred
a loss from operations of $
| ● | We have demonstrated improving recent recovery trends, with positive revenue growth and gross margins, however not to a level that yet supports a positive operating cash flow.
| |
| ● | We closed three equity offerings during the first quarter totaling 17,347,900 shares of common stock (468,862 shares of common stock adjusted for the subsequent May 4, 2026 1 for 37 reverse stock split) for total net proceeds of $5,800,025. | |
| ● | As
of March 31, 2026, we maintain a cash, cash equivalents and restricted cash balance of $ | |
| ● | During
the fourth quarter of 2025, we completed the sale of our Marion, North Carolina facility, generating $ | |
| ● | Management continues to implement cost controls, operational improvements, and revenue initiatives to further strengthen our financial position. |
Despite our ongoing efforts to mitigate these conditions, there can be no assurance that our expenses will not increase in future periods or that the cash generated from operations in future periods will be sufficient to satisfy our operating needs. If we need to raise additional capital to fund our continued operations, there can be no assurance that funding will be available on acceptable terms on a timely basis, or at all. The various ways that we could raise capital carry potential risks. Any additional sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to fill new orders and develop new products. As such, we cannot conclude that such plans will be effectively implemented within one year after the date that the condensed consolidated financial statements included in this Quarterly Report are filed with the SEC, and there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern. If we are unable to generate sufficient revenue from operations and/or raise capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate efforts to expand our dealer network or develop new models and may be forced to cease operations or liquidate assets.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of Twin Vee and its wholly owned subsidiaries as of March 31, 2026, Forza X1 and Wizz Banger, Inc., collectively referred to as the “Company”. All inter-company balances and transactions are eliminated in consolidation.
9
Basis of Presentation
The accompanying condensed consolidated financial statements and the related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”).
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 March 31, 2026 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2026 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, 2025, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2026.
In order to regain compliance with the minimum $
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 condensed 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 condensed consolidated balance sheets.
| Schedule of accounts receivable | ||||
| Total accounts receivable | ||||
| March 31, 2026 | $ | |||
| December 31, 2025 | $ | — |
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 March 31, 2026 and December 31, 2025, the Company had customer deposits of $
10
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 six 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 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 condensed 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.
Concentration of Credit and Business Risk
Financial instruments that potentially subject the
Company to concentration 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 $
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 March 31, 2026 and December 31, 2025, the Company
had cash, cash equivalents, and restricted cash of $
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 March 31, 2026 and December 31, 2025, included within restricted
cash on the Company’s condensed consolidated balance sheets is an irrevocable letter of credit for $
11
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 of 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 involve 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 March 31, 2026 and December 31, 2025, the provision for excess or obsolete
inventories is $
12
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. The Company utilizes the following depreciable lives:
| Schedule of property and equipment | ||||
| Depreciable Life | ||||
| in years | ||||
| Machinery and equipment | ||||
| Furniture and fixtures | ||||
| Leasehold improvements | ||||
| Software and website development | ||||
| Computer hardware and software | ||||
| Boat molds | ||||
| Vehicles | ||||
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.
Notes Receivable
The Company records long-term notes receivable at their principal amount, net of an original issue discount, which represents the difference between the stated principal and the present value of future cash flows discounted using the interest rate implicit in the loan. The discount is amortized to interest income over the term of the note using the effective interest method. Accrued interest is recorded as earned. Management evaluates notes receivable for collectability and records an allowance for credit losses when necessary based on expected credit losses, historical experience, and current conditions.
Product Warranty Costs
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 Company’s warranty liability is included in the accrued liabilities line item of the accompanying condensed consolidated balance sheets.
Advertising
Advertising and marketing costs are expensed as incurred.
During the three months ended March 31, 2026 and 2025, advertising costs incurred by the Company totaled $
13
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 condensed 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 three months ended March 31,
2026 and 2025, shipping and handling costs amounted to $
Leases
The Company is a lessee in multiple noncancelable operating and financing leases. If the contract provides the Company with the right to substantially all the economic benefits and the right to direct the use of the identified asset, it is generally considered to be or contain a lease. Right-of-Use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term. The ROU asset is also adjusted for any lease prepayments made, lease incentives received, and initial direct costs incurred.
The lease liability is initially and subsequently recognized based on the present value of its future lease payments. Variable payments are included in the future lease payments when those variable payments depend on an index or a rate. Increases (decreases) to variable lease payments due to subsequent changes in an index or rate are recorded as variable lease expense (income) in the future period in which they are incurred.
The discount rate used is the implicit rate in the lease contract, if it is readily determinable, or the Company’s incremental borrowing rate. The Company uses the incremental borrowing rate based on the information available at the commencement date for all leases. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms and in a similar economic environment.
The ROU asset for operating leases is subsequently measured throughout the lease term at the amount of the remeasured lease liability (i.e., present value of the remaining lease payments), plus unamortized initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received, and any impairment recognized. Operating leases with fluctuating lease payments: For operating leases with lease payments that fluctuate over the lease term, the total lease costs are recognized on a straight-line basis over the lease term. The ROU asset for finance leases is amortized on a straight-line basis over the lease term.
For all underlying classes of assets, the Company has elected the practical expedient to not recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less at lease commencement and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. Leases containing termination clauses in which either party may terminate the lease without cause and the notice period is less than 12 months are generally deemed short-term leases with lease costs included in short term lease expense. The Company recognizes short-term lease cost 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.
14
The Company is dependent on third-party equipment
manufacturers, distributors, and dealers for certain parts and materials utilized in the manufacturing process. During the three months
ended March 31, 2026, the Company purchased all engines (Mercury, Suzuki and Yamaha) for its boats under supplier agreements with three
vendors. Total purchases from these vendors were $
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 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 Issued and Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. ASU 2025-05 provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods and should be applied prospectively. Early adoption is permitted. The Company adopted the ASU, and the adoption had no material effect on the unaudited condensed consolidated financial statements and related disclosures.
Recently Issued But Not Yet Adopted Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense (“ASU 2024-03”), effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The Company is currently evaluating the potential impact the adoption of ASU 2024-03 will have on its future disclosures.
15
2. Inventories
At March 31, 2026 and December 31, 2025, inventories consisted of the following:
| Schedule of inventories | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Raw Materials | $ | $ | ||||||
| Work in Process | ||||||||
| Finished Product | ||||||||
| Total Inventory | $ | $ | ||||||
| Reserve for Excess and Obsolete | ( | ) | ( | ) | ||||
| Net inventory | $ | $ | ||||||
3. Property and Equipment
At March 31, 2026 and December 31, 2025, property and equipment consisted of the following:
| Schedule of property and equipment | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Leasehold improvements | ||||||||
| Software and website development | ||||||||
| Computer hardware and software | ||||||||
| Boat molds | ||||||||
| Vehicles | ||||||||
| Assets under construction | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation and amortization expense of property
and equipment for the three months ended March 31, 2026 and 2025 were $
4. Operating 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’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.
16
The Company leases its office and warehouse facilities,
and the land, which is 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. On March 12, 2026, the Company entered into a new 5-year lease through December 31, 2030. The base rent payment is $
At March 31, 2026 and December 31, 2025, supplemental balance sheet information related to the lease was as follows:
| Schedule of supplemental balance sheet information related to the lease | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Operating lease ROU asset | $ | $ | — | |||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Operating lease liabilities: | ||||||||
| Current portion | $ | $ | ||||||
| Non-current portion | ||||||||
| Total | $ | $ | ||||||
| Schedule of operating lease cost | ||||||||
| Three
Months Ended March 31, 2026 | Three
Months Ended March 31, 2025 | |||||||
| Operating lease cost | $ | $ | ||||||
| Operating lease cash payments | $ | $ | ||||||
At March 31, 2026, future minimum lease payments under the non-cancelable operating lease are as follows:
| Schedule of future minimum lease payments | ||||
| Year Ending December 31, | ||||
| 2026 (except for the three months ended March 31, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Total lease payment | ||||
| Less imputed interest | ( | ) | ||
| Total | $ |
| Schedule of discount rate and lease term | ||||
| March 31, | ||||
| 2026 | ||||
| Weighted average discount rate | % | |||
| Weighted average remaining lease term (years) | ||||
5. Finance Leases
Vehicle and Equipment Lease
The Company has various finance leases for two forklifts
and a copy machine. All leases were for 60-month terms at rates ranging from
17
Finance leases recorded in property and equipment, net on the condensed consolidated balance sheets were as follows:
| Schedule of Finance lease | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Cost | $ | $ | ||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Book Value | $ | $ | ||||||
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”).
On May 28, 2025, the Company entered into a Mutual Release Agreement with the lessor, removing all obligations under the lease, and returning to the lessor all property, plant and equipment, brand name and all other leased assets. During the second quarter of 2025, the Company recorded the elimination of the assets and liabilities from its condensed consolidated balance sheet, recording a loss on termination of $57,903.
At March 31, 2026 and December 31, 2025, supplemental balance sheet information related to finance leases were as follows:
| Schedule of supplemental balance sheet of finance lease | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Finance lease liabilities: | ||||||||
| Current portion | $ | $ | ||||||
| Non-current portion | ||||||||
| Total | $ | $ | ||||||
At March 31, 2026, future minimum lease payments under the non-cancelable finance leases are as follows:
| Schedule of future minimum lease payments of finance lease | ||||
| Year Ending December 31, | ||||
| 2026 (except for the three months ended March 31, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total lease payment | ||||
| Less imputed interest | ( | ) | ||
| Total | $ |
| Schedule of summarize other supplemental information of finance lease | ||||
| March 31, | ||||
| 2026 | ||||
| Weighted average discount rate | % | |||
| Weighted average remaining lease term (years) | ||||
18
6. Accrued Liabilities
At March 31, 2026 and December 31, 2025, accrued liabilities consisted of the following:
| Schedule of accrued liabilities | ||||||||
| March 31, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued wages and benefits | $ | $ | ||||||
| Accrued interest | ||||||||
| Accrued operating expense | ||||||||
| Warranty Reserve | ||||||||
| Total | $ | $ | ||||||
7. Motor Floorplan Arrangements
On March 31, 2026 and December 31, 2025, the Company
had a line of credit with Wells Fargo and Yamaha Motor Finance for $
Interest on the Company’s 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 March 31, 2026 and December 31, 2025 the interest rate on the line of credit was approximately 1.9% and 1.2%, respectively.
Interest on the Company’s Yamaha line is calculated
on the average daily balance +4%, with a minimum prime at 8.0%. On March 31, 2026 and December 31, 2025, the interest rate was
On March 31, 2026 and December 31, 2025, the outstanding
motor balance with Wells Fargo was $
8. Notes Payable – SBA EIDL Loan
On April 22, 2020, the Company received an SBA Economic
Injury Disaster Loan (“EIDL”) in the amount of $
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.
| Schedule of minimum maturities | ||||
| Year ended December 31, | ||||
| 2026 (except for the three months ended March 31, 2026) | — | |||
| 2027 | — | |||
| 2028 | ||||
| 2029 | ||||
| 2030 and thereafter | ||||
| Total | $ |
19
9. Related Party Transactions
As discussed in Note 4, the Company has leased its Fort Pierce, Florida facilities from a company owned by its CEO.
10. 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 $
On April 21, 2025, Northpoint Commercial Finance LLC
(“Northpoint”) came into possession of certain Twin Vee and AquaSport inventory of United Marine and Storage LLC, a former
dealer of Twin Vee PowerCats. Northpoint requested Twin Vee PowerCats Co. to take possession of the inventory and to repurchase the inventory
in accordance with the Repurchase Agreement between Twin Vee PowerCats Co. and Northpoint. The Company was able to negotiate a condition
reduction on these repossessed boats which resulted in an obligation of $
Litigation
The Company is currently involved in various civil litigation in the normal course of business, including a class action suit, none of which are considered material.
Irrevocable line of credit
As of March 31, 2026 and December 31, 2025, the Company
had $
11. Stockholders’ Equity
During the first quarter of 2026, we completed three
equity offerings pursuant to which we agreed to issue and sell an aggregate of
February 2026 Offering
On February 19, 2026, we entered into a placement
agency agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors
in a best efforts public offering (the “February 2026 Offering”) an aggregate of
20
March 2026 Offering
On March 16, 2026, we entered into a placement agency
agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors in
a best efforts public offering (the “March 2026 Offering”) an aggregate of
March 2026 Offering B
On March 23, 2026, we entered into a placement agency
agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors in
a best efforts public offering (the “March 2026 Offering B”) an aggregate of
Common Stock Warrants
During the three months ended
March 31, 2026, the Company issued warrants in connection with equity offerings completed in February 2026 and March 2026 (collectively,
the “2026 Offerings”). The Company issued an aggregate of approximately
Each warrant is exercisable for one share of the Company’s common stock, is exercisable immediately upon issuance, and is subject to customary beneficial ownership limitations of 4.99% or 9.99%, at the election of the holder. The warrants are settled in shares of common stock and do not contain provisions that would require or permit net cash settlement by the Company.
The Company evaluated the warrants under the guidance in ASC 815-40, Contracts in Entity’s Own Equity, and determined that the warrants are indexed to the Company’s own stock and meet the criteria for equity classification. Accordingly, the warrants are recorded within additional paid-in capital and are not subject to subsequent remeasurement.
The warrants were issued with exercise prices that are nominal or otherwise represent instruments that are substantively equivalent to common stock, as substantially all of the consideration was received upfront. The Company evaluated the relative fair value of the warrants and determined that the incremental fair value attributable to the warrants was not material. Accordingly, substantially all of the proceeds from the 2026 Offerings were allocated to common stock and additional paid-in capital, with no material allocation to the warrants.
As of March 31, 2026 and
December 31, 2025, the Company had outstanding warrants to purchase an aggregate of
| ● | warrants
to purchase |
| ● | warrants
to purchase |
21
| ● | warrants
to purchase |
| ● | warrants
to purchase |
| ● | warrants
to purchase |
| ● | warrants
to purchase |
| ● | warrants
to purchase |
| ● | warrants
to purchase |
Equity Compensation Plan
The Company maintains an
equity compensation plan (the 2021 Stock Incentive Plan, or 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. As of March 31, 2026, there were
Accounting for Stock-Based Compensation
Stock Compensation Expense
For the three months ended March 31, 2026 and 2025,
the Company recorded $
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.
22
The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. No option grants were issued during the three months ended March 31, 2026 and 2025.
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 St. Louis Federal Reserve 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
| Schedule of option activity | ||||||||||||||||
| Options Outstanding | Weighted | |||||||||||||||
| Number of | Weighted Average | Average Remaining life | Grant Date Fair value of | |||||||||||||
| Options | Exercise Price | (years) | option | |||||||||||||
| Outstanding, January 1, 2026 | $ | |||||||||||||||
| Granted | — | — | ||||||||||||||
| Exercised | — | — | ||||||||||||||
| Expired | ( | ) | ( | ) | — | ( | ) | |||||||||
| Forfeited/canceled | — | — | ||||||||||||||
| Outstanding, March 31, 2026 | $ | |||||||||||||||
| Exercisable options, March 31, 2026 | $ | |||||||||||||||
| Options Outstanding | Weighted | |||||||||||||||
| Number of Options | Weighted Average Exercise Price | Average Remaining life (years) | Grant Date Fair value of option | |||||||||||||
| Outstanding, January 1, 2025 | $ | |||||||||||||||
| Granted | — | — | ||||||||||||||
| Exercised | — | — | ||||||||||||||
| Expired | ( | ) | ( | ) | — | ( | ) | |||||||||
| Forfeited/canceled | — | — | ||||||||||||||
| Outstanding, March 31, 2025 | $ | |||||||||||||||
| Exercisable options, March 31, 2025 | $ | $ | ||||||||||||||
At March 31, 2026,
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. There were 141 RSUs exercisable on March 31, 2026.
23
| Schedule of restricted stock options | ||||||||||||||||
| Restricted Stock Units Outstanding | ||||||||||||||||
| Number of | Weighted Average Grant – Date | Weighted Average Remaining life | Aggregate Intrinsic | |||||||||||||
| Units | Fair Value Price | (years) | Value | |||||||||||||
| Outstanding, January 1, 2026 | $ | $ | ||||||||||||||
| Granted | — | — | — | — | ||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited/canceled | ( | ) | ( | ) | — | ( | ) | |||||||||
| Outstanding, March 31, 2026 | $ | $ | ||||||||||||||
| Restricted Stock Units Outstanding | ||||||||||||||||
| Number of | Weighted Average Grant – Date | Weighted Average Remaining life | Aggregate Intrinsic | |||||||||||||
| Units | Fair Value Price | (years) | Value | |||||||||||||
| Outstanding, January 1, 2025 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Forfeited/canceled | ( | ) | ( | ) | — | — | ||||||||||
| Outstanding, March 31, 2025 | $ | $ | ||||||||||||||
Wizz Banger, Inc. Stock Options
On June 12, 2025, the Company’s wholly owned
subsidiary, Wizz Banger, Inc., granted stock options to certain members of its executive team under a newly adopted equity incentive plan.
The grant consisted of
The options are subject to 12-month cliff vesting, whereby no portion of the award vests unless the executive remains employed by the subsidiary for the full 12-month period following the grant date. Upon completion of the service period, 100% of the options will vest.
The Company is recognizing compensation expense on
a straight-line bases over the vesting period. During the three months ended March 31, 2026, $
● Expected
Term:
● Expected
Volatility:
● Risk-Free
Interest Rate:
● Dividend Yield: 0%
● Fair
Value per Option: $
24
12. Customer Concentration
Significant dealers are those that account for greater than 10% of the Company’s revenues and purchases.
During the three months ended March 31, 2026, four
individual dealers each represented over
13. Income Tax
Income tax expense or benefit for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each period, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, it records a cumulative adjustment. Due to operating losses and the recognition of valuation allowances, the Company has no provision for current and deferred federal or state income taxes for the three months ended March 31, 2026 and 2025. The effective tax rate for each period differs from the statutory rate primarily as a result of having a full valuation allowance maintained against the deferred tax assets. As of March 31, 2026 and December 31, 2025, the Company continued to have a full valuation allowance against its U.S. federal and state deferred tax assets. Management regularly evaluates the realizability of its deferred tax assets. Adjustments are recorded to income during the period in which management makes the determination a deferred tax asset is more likely than not to be realized.
14. Segment
The Company reports segment information based on the “management” approach. The Company’s Chief Operating Decision Maker is its President and Chief Executive Officer. 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 operates in two reportable segments: (1) Twin Vee PowerCats, which designs, manufactures, and sells recreational and commercial powerboats; and (2) Wizz Banger, Inc., a development-stage subsidiary with plans to develop an innovative online marketplace leveraging artificial intelligence (AI) to transform how customers search for and purchase recreational marine assets.
While the Company manages Wizz Banger, Inc. as a distinct operating segment, it does not currently meet the quantitative thresholds for separate disclosure under ASC 280-10-50-12. Specifically, Wizz Banger, Inc. generates limited revenue and represents less than 10% of the Company’s condensed consolidated assets, revenues, and net loss. As a result, the financial results of Wizz Banger, Inc. are aggregated and presented within the consolidated results of Twin Vee PowerCats for segment reporting purposes.
The Company will continue to monitor the significance of Wizz Banger, Inc. and will present it as a separately reportable segment in future filings if it meets the quantitative criteria or if management concludes that separate presentation is necessary for a better understanding of the business.
15. Subsequent Events
Nasdaq Compliance
As previously disclosed, on April 2, 2026, the Company received written notice (the “Notification Letter”) from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it no longer satisfies the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days (collectively, the “Bid Price Rule”). Based on the closing bid price of the Company’s common stock for the thirty (30) consecutive business days from February 18, 2026 to March 31, 2026,
25
the Company no longer satisfies the Bid Price Rule. While companies are typically afforded a 180-calendar day compliance period to comply with the Bid Price Rule, the Notification Letter stated that, pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), the Company was not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) due to the fact that the Company effected a reverse stock split over the prior one-year period. The Company effected a 1-for-10 reverse stock split on April 7, 2025. The Notification Letter stated that the Company’s securities will be subject to delisting from Nasdaq unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”), which was timely requested and subsequently scheduled for May 7, 2026. Accordingly, any further suspension or delisting action by Nasdaq relating to the Bid Price Rule will be stayed pending the Panel’s decision.
During the appeal process with the Panel, the common stock will continue to be listed and trade on Nasdaq. There can be no assurance that the Panel will grant the Company’s request for continued listing or that the Company will be able to regain compliance and thereafter maintain its listing on Nasdaq.
The Company intends to actively monitor the closing bid price of its common stock and evaluate all available options to regain compliance with the applicable rules. To that end, on April 30, 2026, the Company filed a Certificate of Change with the Nevada Secretary of State (the “Certificate of Change”) to amend its Articles of Incorporation to effect a 1-for-37 reverse stock split of the Company’s authorized shares of common stock, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”), effective as of 12:01 a.m. Eastern Time on May 4, 2026 (the “Effective Time”), pursuant to Nevada Revised Statutes (“NRS”) 78.207.
State of Nevada Reincorporation
On April 10, the Company completed its reincorporation from the State of Delaware to the State of Nevada. The strategic move was approved by the Company’s stockholders at its annual meeting of stockholders in November as a proactive measure to reduce operational costs and support the Company’s long-term growth objectives.
Executive Compensation
On April 21, 2026, the Compensation
Committee of the Board of Directors (the “Committee”) of the Company approved an increase in the base salary of Preston Yarborough,
the Company’s Vice President, to $
Reverse Stock Split
On April 30, 2026, the Company filed a Certificate of Change with the Nevada Secretary of State to amend its Articles of Incorporation to effect a 1-for-37 reverse stock split of the Company’s authorized shares of common stock, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock, effective as of 12:01 a.m. Eastern Time on May 4, 2026, pursuant to NRS 78.207.
On April 10, 2026, the board of directors of the Company approved the Reverse Stock Split by unanimous written consent. Since the Reverse Stock Split was effectuated pursuant to NRS 78.207 by a proportionate decrease in both the authorized and issued and outstanding shares of the entire class, no stockholder approval of the Reverse Stock Split was required under the NRS. After the Effective Time, the common stock began trading under the existing trading symbol “VEEE” on the Nasdaq Capital Market on a reverse split-adjusted basis when the market opened on May 4, 2026. At the Effective Time, every 37 shares of common stock issued and outstanding automatically converted into one issued and outstanding share of common stock and the total number of shares of common stock authorized for issuance under the Articles of Incorporation was reduced by a corresponding proportion from approximately 19.6 million shares to approximately 0.5 million shares.
In addition,
as a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of common stock underlying the Company’s
outstanding equity awards and warrants. The total number of shares of the Company’s preferred stock authorized for issuance under
the Articles of Incorporation remained at
The Company has evaluated all events or transactions that occurred after March 31, 2026 through May 7, 2026, which is the date that the condensed consolidated financial statements were available to be issued. During this period, there were no additional material subsequent events.
26
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto. You should also review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and under Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.
All share amounts and exercise or conversion prices in this Quarterly Report on Form 10-Q have been adjusted retrospectively for our 1-for-10 reverse stock split (the “2025 Reverse Stock Split”), which was effective on April 7, 2025 and our 1-for-37 reverse stock split (the “2026 Reverse Stock Split” and together with the 2025 Reverse Stock Split, the “Reverse Stock Split”), which was effective on May 4, 2026.
OVERVIEW
Twin Vee PowerCats Co. (“Twin Vee”, “we”, “us” or the “Company”) is a designer, manufacturer and marketer of recreational and commercial power boats. We believe our company, founded in 1996, has been an innovator in the recreational and commercial power catamaran industry. Our 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 home base operations in Fort Pierce, Florida is a 7.5-acre facility with several buildings totaling approximately 100,000 square feet, including a recently completed 30,000 square foot expansion which began in mid-2024. We currently employ approximately 75 people.
Our products are marketed under two brands: Twin Vee for our catamarans, or dual hull vessels, and Bahama Boats for our “V”-hull boats. Consumers can use our boats for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including transportation, eco tours, fishing and diving expeditions. We believe that the performance, quality and value of our boats position us to achieve our goal of increasing our market share and expanding the power-boat market. We currently primarily sell our boats through a network of 22 independent boat dealers across North America, the Caribbean and Central America who resell our boats to the end user Twin Vee customers. We continue efforts to recruit high quality boat dealers to join our network and seek to establish new dealers and distributors domestically and internationally to distribute our boats as we grow our production and introduce new models. Our boats are currently outfitted with gas-powered outboard combustion engines. During 2024, Forza X1, Inc. (“Forza”), our then minority owned electric boat subsidiary, determined to cease production of electric boats, and on November 26, 2024, Forza was merged into Twin Vee Merger Sub, Inc., our wholly-owned subsidiary, and became a wholly owned subsidiary.
Revenue from the sale of our boats accounted for nearly 100% of our net revenue in the first quarter of 2026 and 2025. Our boats are manufactured in Fort Pierce, Florida. We believe our company has been an innovator in the recreational and commercial power boat industry. We currently have 12 Twin Vee models in or nearing production ranging in size from 24-foot to 40-foot, and 9 monohull (Bahama) models in or nearing production ranging in size from 22-foot to 41-foot.
During the quarter ended March 31, 2026, four individual dealers each represented over 10% of our total sales and together represented 80% of total sales. During the quarter ended March 31, 2025, two individual dealers each represented over 10% of our total sales and together represented 54% of total sales.
Our unaudited condensed consolidated financial statements for the three months ended March 31, 2026 were prepared under the assumption that we will continue as a going concern; however, we have incurred significant losses from operations to date and we expect our expenses to increase in connection with our ongoing activities. These factors raise substantial doubt about our ability to continue as a going concern for one year after the condensed consolidated financial statements included in this Quarterly Report are issued.
27
Recent Developments
During the first quarter of 2026, we completed three equity offerings pursuant to which we agreed to issue and sell an aggregate of 468,8620 shares of our common stock. The aggregate net proceeds to us from the offerings, after deducting the placement agent fees and expenses and our estimated offering expenses, were approximately $5,800,025.
February 2026 Offering
On February 19, 2026, we entered into a placement agency agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors in a best efforts public offering (the “February 2026 Offering”) an aggregate of 172,516 shares of our common stock at a public offering price of $17.39 per share. The shares were sold pursuant to a registration statement on Form S-1 (File No. 333-292661) filed with the Securities and Exchange Commission (the “SEC”) which became effective on February 13, 2026, and a prospectus, dated February 19, 2026. The February 2026 Offering closed on February 23, 2026. The net proceeds to us from the February 2026 Offering, after deducting the placement agent fees and expenses and our estimated offering expenses, were approximately $2,427,605.
March 2026 Offering
On March 16, 2026, we entered into a placement agency agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors in a best efforts public offering (the “March 2026 Offering”) an aggregate of 120,892 shares of our common stock at a public offering price of $14.06 per share. The shares were sold pursuant to a registration statement on Form S-3 (File No. 333-293911) filed with the SEC which became effective on March 5, 2026, and a prospectus, dated March 16, 2026. The March 2026 Offering closed on March 17, 2026. The net proceeds to us from the March 2026 Offering, after deducting the placement agent fees and expenses and our estimated offering expenses, were approximately $1,313,861.
March 2026 Offering B
On March 23, 2026, we entered into a placement agency agreement with ThinkEquity LLC, as sole placement agent, pursuant to which we agreed to issue and sell directly to various investors in a best efforts public offering (the “March 2026 Offering B”) an aggregate of 175,457 shares of our common stock at a public offering price of $14.21 per share. The shares were sold pursuant to a registration statement on Form S-3 (File No. 333-293911) filed with the SEC which became effective on March 5, 2026, and a prospectus, dated March 23, 2026. The March 2026 Offering B closed on March 24, 2026. The net proceeds to us from the March 2026 Offering B, after deducting the placement agent fees and expenses and our estimated offering expenses, were approximately $2,058,559.
Nasdaq Compliance
On April 2, 2026, we received written notice (the “Notification Letter”) from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that that the Company no longer satisfies the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days (collectively, the “Bid Price Rule”). Based on the closing bid price of our common stock for the thirty (30) consecutive business days from February 18, 2026 to March 31, 2026, we no longer satisfy the Bid Price Rule. While companies are typically afforded a 180-calendar day compliance period to comply with the Bid Price Rule, the Notification Letter stated that, pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), we were not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) due to the fact that we effected a reverse stock split over the prior one-year period. We effected a 1-for-10 reverse stock split on April 7, 2025. The Notification Letter stated that our securities will be subject to delisting from Nasdaq unless we timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”), which was so requested and subsequently scheduled for May 7, 2026. Accordingly, any further suspension or delisting action by Nasdaq relating to the Bid Price Rule will be stayed pending the Panel’s decision.
28
During the appeal process with the Panel, our common stock will continue to be listed and trade on Nasdaq. There can be no assurance that the Panel will grant our request for continued listing or that we will be able to regain compliance and thereafter maintain its listing on Nasdaq.
We intend to actively monitor the closing bid price of our common stock and evaluate all available options to regain compliance with the applicable rules. To that end, on April 30, 2026, we filed a Certificate of Change with the Nevada Secretary of State (the “Certificate of Change”) to amend our Articles of Incorporation to effect a 1-for-37 reverse stock split of our authorized shares of common stock, accompanied by a corresponding decrease in our issued and outstanding shares of common stock (the “Reverse Stock Split”), effective as of 12:01 a.m. Eastern Time on May 4, 2026 (the “Effective Time”), pursuant to Nevada Revised Statutes (“NRS”) 78.207.
State of Nevada Reincorporation
On April 10, we completed our reincorporation from the State of Delaware to the State of Nevada. The strategic move was approved by our stockholders at our annual meeting of stockholders in November as a proactive measure to reduce operational costs and support our long-term growth objectives.
Executive Compensation
On April 21, 2026, the compensation committee of our board of directors approved an increase in the base salary of Preston Yarborough, our Vice President, to $250,000 per annum, and on April 22, 2026, we entered into an amendment (the “Yarborough Amendment”) to the employment agreement, effective as of July 23, 2021, by and between us and Preston Yarborough, reflecting such increase in base salary.
Reverse Stock Split
On April 30, 2026, we filed a Certificate of Change with the Nevada Secretary of State to amend our Articles of Incorporation to effect a 1-for-37 reverse stock split of our authorized shares of common stock, accompanied by a corresponding decrease in our issued and outstanding shares of common stock, effective as of 12:01 a.m. Eastern Time on May 4, 2026, pursuant to NRS 78.207.
On April 10, 2026, our board of directors approved the Reverse Stock Split by unanimous written consent. Since the Reverse Stock Split was effectuated pursuant to NRS 78.207 by a proportionate decrease in both the authorized and issued and outstanding shares of the entire class, no stockholder approval of the Reverse Stock Split was required under the NRS. After the Effective Time, the common stock began trading under the existing trading symbol “VEEE” on the Nasdaq Capital Market on a reverse split-adjusted basis when the market opened on May 4, 2026. At the Effective Time, every 37 shares of common stock issued and outstanding automatically converted into one issued and outstanding share of common stock and the total number of shares of common stock authorized for issuance under the Articles of Incorporation was reduced by a corresponding proportion from approximately 19.6 million shares to approximately 0.5 million shares.
In addition, as a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares of common stock underlying outstanding equity awards and warrants. The total number of shares of our preferred stock authorized for issuance under the Articles of Incorporation remained at 10,000,000.
Results of Operations
Comparison of the Three Months Ended March 31, 2026 and 2025.
The following table provides certain selected financial information for the periods presented:
29
| Three Months Ended | ||||||||||||||||
| March 31, | ||||||||||||||||
| 2026 | 2025 | $ Change | % Change | |||||||||||||
| Net sales | $ | 3,964,706 | $ | 3,612,291 | $ | 352,415 | 10 | % | ||||||||
| Cost of products sold (excluding depreciation & amortization) | $ | 3,768,369 | $ | 3,075,177 | $ | 693,192 | 23 | % | ||||||||
| Gross profit | $ | 196,337 | $ | 537,114 | $ | (340,777 | ) | (63 | %) | |||||||
| Operating expenses | $ | 2,332,271 | $ | 2,216,208 | $ | 116,063 | 5 | % | ||||||||
| Loss from operations | $ | (2,135,934 | ) | $ | (1,679,094 | ) | $ | (456,840 | ) | 27 | % | |||||
| Other income | $ | 41,656 | $ | 68,854 | $ | (27,198 | ) | (40 | %) | |||||||
| Net loss | $ | (2,094,278 | ) | $ | (1,610,240 | ) | $ | (484,038 | ) | 30 | % | |||||
| Basic and dilutive loss per share of common stock | $ | (12.93 | ) | $ | (40.05 | ) | $ | 27.12 | (68 | %) | ||||||
| Weighted average number of shares of common stock outstanding | 161,925 | 40,201 | ||||||||||||||
Net Sales and Cost of Sales
Our net sales increased by $352,415, or 10%, to $3,964,706 for the three months ended March 31, 2026, from $3,612,291 for the three months ended March 31, 2025. This increase was due primarily to the success of our new dealer initiatives, which added 14 new dealer/locations during 2025. During the first quarter of 2026, we sold 21 boats at an average selling price of approximately $189,000 per unit, compared to 24 units in the first quarter of 2025 with an average selling price of approximately $151,000. The increase in the average sales price is primarily due to a change in the product mix of boats sold, specifically, the sale of a 35’ Bahama, versus no boat sales over 28’ in the first quarter of 2025.
Gross profit
Gross profit declined by $340,777, or 63%, to $196,337 for the three months ended March 31, 2026, from $537,114 for the three months ended March 31, 2025. Gross profit as a percentage of sales for the three months ended March 31, 2026 was 5.0% compared to 14.9% in the first quarter of 2025. The decline in gross profit of 9.9 percentage points, is primarily due to an increase in labor related to the completion and re-launch of the new Bahama Boat line of boats at the Palm Beach International Boat Show and a $173,409 non-cash inventory reserve increase related to excess inventory.
Operating Expenses
During the three months ended March 31, 2026 and 2025, total operating expenses were $2,332,271 and $2,216,208, respectively, an increase of $116,063, or 5%.
Selling, general, and administrative expenses increased by approximately 44%, or $261,999, to $860,551 for the three months ended March 31, 2026, compared to $598,552 for the three months ended March 31, 2025. The increase was primarily due to an increase in both property taxes and Delaware franchise taxes as well as approximately $168,000 of penalties assessed by the Internal Revenue Service related to section 6721 and 6722 for the tax year 2022. The Company is actively seeking to resolve this disagreement with the IRS.
Salaries and wage related expenses decreased 8%, or $81,457, to $885,505 for the three months ended March 31, 2026, compared to $966,962 for the three months ended March 31, 2025. The decrease in salaries and wages is across the board, including salaries, director expenses, and benefits due to ongoing resource management.
Professional fees decreased by 18%, or $26,957, to $119,054 for the three months ended March 31, 2026, compared to $146,011 for the three months ended March 31, 2025. This decrease was due primarily to the reduction in legal fees following a change in our SEC attorney firm in late 2025.
30
Depreciation and amortization expense increased by 6%, or $25,489 to $467,161 for the three months ended March 31, 2026, as compared to $441,672 for the three months ended March 31, 2025. This increase is due to the capitalization of Ft. Pierce building expansion and the 5-axis C&C machine installed in late 2025.
Other income decreased by $27,198 to $41,656 for the three months ended March 31, 2026, as compared to $68,854 for the three months ended March 31, 2025. This decrease was due primarily to a reduction in dividend and interest income from lower cash and cash equivalent balances, partially offset by accrued interest income related to the Company’s note receivable on the former building in North Carolina.
Net Loss
Net loss for the three months ended March 31, 2026 was $2,094,278, as compared to $1,610,240 for the three months ended March 31, 2025, a change of $484,038 or 30%. The overall year-over-year increase in the reported loss for the period was primarily due to the reduction in gross margin and an increase in SG&A as described above. Basic and dilutive loss per share of Common Stock for the three months ended March 31, 2026, adjusted for the May 4, 2026 1 for 37 reverse stock split, was ($12.93), as compared to ($40.05) for the three months ended March 31, 2025, an improvement of 68%.
Liquidity
Going Concern
For the year ended December 31, 2025, we incurred a loss from operations of $8,781,299 and a net loss of $8,607,273. For the three months ended March 31, 2026, we incurred a loss from operations of $2,135,934 and a net loss of $2,094,278. As of March 31, 2026, we had accumulated deficits of $36,094,506. To address these conditions:
| ● |
We have demonstrated improving recent recovery trends, with positive revenue growth and gross margins, however not to a level that yet supports a positive operating cash flow. | |
| ● | We closed three equity offerings during the first quarter of 2026 totaling 17,347,900 shares of common stock (468,862 shares of common stock adjusted for the subsequent May 4, 2026 1 for 37 reverse stock split) for total net proceeds of $5,800,025. | |
| ● |
As of March 31, 2026, we maintain a cash, cash equivalents and restricted cash balance of $5,671,756. | |
| ● | During the fourth quarter of 2025, we completed the sale of our Marion, North Carolina facility, generating $500,000 in cash in the fourth quarter of 2025, and expected cash payments of $500,000 in 2026 and $3,250,000 in 2027, plus interest at 5%. | |
| ● | Management continues to implement cost controls, operational improvements, and revenue initiatives to further strengthen our financial position. |
Despite our ongoing efforts to mitigate these conditions, there can be no assurance that our expenses will not increase in future periods or that the cash generated from operations in future periods will be sufficient to satisfy our operating needs. If we need to raise additional capital to fund our continued operations, there can be no assurance that funding will be available on acceptable terms on a timely basis, or at all. The various ways that we could raise capital carry potential risks. Any additional sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to fill new orders and develop new products. As such, we cannot conclude that such plans will be effectively implemented within one year after the date that the condensed consolidated financial statements included in this Quarterly Report are filed with the SEC, and there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern. If we are unable to generate sufficient revenue from operations and/or raise capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate efforts to expand our dealer network or develop new models and may be forced to cease operations or liquidate assets.
31
A primary source of funds for the three months ended March 31, 2026 was net cash received from our three follow-on equity offerings closed during the first quarter of 2026, and revenue generated from operations. Our primary use of cash was related to funding our operations including capital improvements, and development of the Bahama Boat lineup.
During the three months ended March 31, 2026, the Company completed multiple equity offerings resulting in aggregate gross proceeds of $7,192,640 and aggregate net proceeds of $5,800,025, after deducting placement agent fees and expenses and the Company’s offering expenses.
In connection with these offerings, the Company issued as compensation to the placement agent warrants to purchase shares of its common stock. The warrants are exercisable immediately and are classified as equity instruments. As a result, the issuance of these warrants did not result in any remeasurement adjustments or impact to the Company’s statements of operations.
The Company intends to use the net proceeds from these offerings for working capital and general corporate purposes.
Selected Balance Sheet Information
The following table provides selected financial data about us as of March 31, 2026 and December 31, 2025.
| March 31, | December 31, | |||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||
| Cash and cash equivalents | $ | 5,456,639 | $ | 1,431,578 | $ | 4,025,061 | 281.2 | % | ||||||||
| Restricted cash | $ | 215,117 | $ | 215,117 | $ | — | 0.0 | % | ||||||||
| Current assets | $ | 9,597,334 | $ | 4,897,217 | $ | 4,700,117 | 96.0 | % | ||||||||
| Current liabilities | $ | 3,232,034 | $ | 2,244,513 | $ | 987,521 | 44.0 | % | ||||||||
| Working capital | $ | 6,365,300 | $ | 2,652,704 | $ | 3,712,596 | 140.0 | % | ||||||||
As of March 31, 2026, we had $5,671,756 of cash, cash equivalents, and restricted cash, total current assets of $9,597,334 and total assets of $23,217,086. Our total liabilities were $5,968,603. Our total liabilities were comprised of current liabilities of $3,232,034, which included accounts payable and accrued liabilities of $2,563,931, lease liabilities of $457,303 and contract liability of $210,800. Long term liabilities were $2,736,569. As of December 31, 2025, we had $1,646,695 of cash, cash equivalents, and restricted cash, total current assets of $4,897,217 and total assets of $16,234,369. Our total current liabilities were $2,244,513 and total liabilities were $2,766,558.
The accumulated deficit was $36,094,506 as of March 31, 2026 compared to accumulated deficit of $34,000,228 as of December 31, 2025.
Our working capital increased by $3,712,596 to $6,365,300 as of March 31, 2026, compared to $2,652,704 on December 31, 2025 primarily due to the three first quarter 2026 equity offerings totaling 17,347,900 shares, netting approximately $5,800,025 after fees and expenses, partially offset by continued operating losses incurred in the period.
Cash Flow
| Three Months Ended | ||||||||||||||||
| March 31, | ||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||
| Cash used in operating activities | $ | (1,661,001 | ) | $ | (1,736,276 | ) | $ | 75,275 | 4 | % | ||||||
| Cash used in investing activities | $ | (108,661 | ) | $ | (789,774 | ) | $ | 681,113 | 86 | % | ||||||
| Cash provided by (used in) financing activities | $ | 5,794,723 | $ | (54,806 | ) | $ | 5,849,529 | 10,673 | % | |||||||
32
Cash Flow from Operating Activities
For the three months ended March 31, 2026 net cash used in operating activities was $1,661,001, compared to $1,736,279 during the three months ended March 31, 2025. The use of cash in operating activities for the three months ended March 31, 2026 was due primarily to a $2,135,934 operating loss adjusted for non-cash depreciation and amortization of $467,161 and stock-based compensation of $74,925.
Cash Flow from Investing Activities
During the three months ended March 31, 2026, cash used in investing activities was $108,661, due to investments in property, plant and equipment, primarily related to contingent consideration capitalized as Bahama Boat Works boat hulls. This compares to use of cash in investing activities of $789,774 in the three months ended March 31, 2025 resulting from purchase of property and equipment.
Cash Flows from Financing Activities
For the three months ended March 31, 2026, net cash provided by financing activities was approximately $5,794,723 due primarily to the three first quarter 2026 equity offerings totaling 17,347,900 shares, netting approximately $5,800,025 after fees and expenses. For the three months ended March 31, 2025, net cash used in financing activities was approximately $54,806.
CRITICAL ACCOUNTING ESTIMATES
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We believe that several accounting policies are important to understanding our historical and future performance. We refer 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 we make the estimate, and different estimates—which also would have been reasonable—could have been used, which would have resulted in different financial results.
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our 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, we evaluate our 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 our consolidated financial statements contained herein contain a summary of our significant accounting policies. We consider the following accounting policies critical to the understanding of the results of our operations:
Revenue Recognition
The Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method. The Company did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial.
Payment received for the future sale of a boat to a customer is recognized as a customer deposit, which is included in contract liabilities on the consolidated balance sheets. Customer deposits are recognized as revenue when control over promised goods is transferred to the customer.
33
Use of Estimates
The preparation of condensed consolidated 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, and warranty reserves.
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.
Product Warranty Costs
As required by FASB 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.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. We have adopted and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q,
34
is collected, recorded, processed, summarized, and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and Interim Chief Financial Officer concluded that, as of such a date, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting, related to not yet having 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 over internal controls.
Remediation Plan
Management has developed and is executing a remediation plan to address the previously disclosed material weaknesses, due to inadequate staffing levels. We have retained a full-time controller and are utilizing the services of experienced SEC reporting consultants as necessary. We are also actively recruiting for a full time Chief Financial Officer. We have also implemented a robust operating system and we are utilizing the assistance of outside advisors where appropriate.
To remediate the existing material weaknesses, additional time is required to demonstrate the effectiveness of the remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As of March 31, 2026, controls and procedures have been implemented to remediate the material weakness, however testing of controls continues.
Changes in Internal Control over Financial Reporting
Other than as set forth in this paragraph, there have been no changes in internal control over financial reporting during the three months ended March 31, 2026 that have materially affected or are reasonably likely to materially affect our control over financial reporting.
35
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Except as disclosed below and in our Annual Report on Form 10-K for the year ended December 31, 2025, we are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
On March 10, 2025, shareholders Nabeel Youseph and Marisa Hardyal-Youseph (“Plaintiffs”), who are former holders of common stock of Forza X1, Inc. (“Forza”), commenced an action in the Court of Chancery in the State of Delaware, captioned Youseph, et al. v. Visconti, et al., Case No. 2025-0262, by filing a putative class action complaint (the “Complaint”) against Defendants Joseph Visconti, Kevin Schuyler, Neil Ross, Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc. (collectively, “Defendants”), related to Forza’s merger with Twin Vee seeking an unspecified award of damages, plus interest, costs, and attorneys’ fees. Plaintiffs’ Complaint asserts claims (1) against Defendants for breach of fiduciary duty in their capacities as controlling shareholders of Forza, (2) against Messrs. Visconti, Schuyler, and Ross for breach of fiduciary duty in their capacities as directors of Forza, and (3) against Mr. Visconti for breach of fiduciary duty in his capacity as an officer of Forza. Defendants deny the allegations and intend to vigorously defend against the claims. At this time, as the matter is in the pleadings stage, the Company is unable to estimate or project the ultimate outcome of this matter.
ITEM 1A. RISK FACTORS.
Investing in our securities involves a high degree of risk. You should consider carefully the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto. If any of the following risks actually materializes, our operating results, financial condition and liquidity could be materially adversely affected. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, ”Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2025. Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Any failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a de-listing of our Common Stock.
The shares of our Common Stock are listed for trading on The Nasdaq Capital Market under the symbol “VEEE.” If we fail 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 our 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 our Common Stock and would impair your ability to sell or purchase our Common Stock when you wish to do so. In the event of a de-listing, we would take actions to restore our compliance with The Nasdaq Capital Market’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Common Stock to become listed again, stabilize the market price, improve the liquidity of our Common Stock, prevent our Common Stock from once again dropping below The Nasdaq Capital Market minimum bid price requirement, or prevent future non-compliance with The Nasdaq Capital Market’s listing requirements.
As previously disclosed, on April 2, 2026, Twin Vee PowerCats Co. (the “Company”) received written notice (the “Notification Letter”) from the staff of the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it no longer satisfies the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5550(a) (2) for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days (collectively, the “Bid Price Rule”). Based on the closing bid price of the Company’s common stock for the thirty (30) consecutive business days from February 18, 2026 to March 31, 2026,
36
the Company no longer satisfies the Bid Price Rule. While companies are typically afforded a 180-calendar day compliance period to comply with the Bid Price Rule, the Notification Letter stated that, pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(iv), the Company was not eligible for any compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) due to the fact that the Company effected a reverse stock split over the prior one-year period. The Company effected a 1-for-10 reverse stock split on April 7, 2025. The Notification Letter stated that the Company’s securities will be subject to delisting from Nasdaq unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”), which was timely requested and subsequently scheduled for May 7, 2026. Accordingly, any further suspension or delisting action by Nasdaq relating to the Bid Price Rule will be stayed pending the Panel’s decision. During the appeal process with the Panel, the Common Stock will continue to be listed and trade on Nasdaq. There can be no assurance that the Panel will grant the Company’s request for continued listing or that the Company will be able to regain compliance and thereafter maintain its listing on Nasdaq.
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 our 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 we were to be delisted from The Nasdaq Capital Market, our Common Stock would cease to be recognized as a covered security and we would be subject to regulation in each state in which we offer our securities.
The Company intends to actively monitor the closing bid price of its common stock and evaluate all available options to regain compliance with the applicable rules. To that end, on April 30, 2026, the Company filed a Certificate of Change with the Nevada Secretary of State to amend its Articles of Incorporation to effect a 1-for-37 reverse stock split of the Company’s authorized shares of common stock, accompanied by a corresponding decrease in the Company’s issued and outstanding shares of common stock, effective as of 12:01 a.m. Eastern Time on May 4, 2026, pursuant to NRS 78.207.
There can be no assurance that our increased stock price following the Reverse Stock Split will remain at a price that will be sufficient in order to meet any continued requirements and policies of Nasdaq or that our common stock will remain listed on Nasdaq.
While Nasdaq rules do not impose a specific limit on the number of times a listed company may effect a reverse stock split to maintain or regain compliance with the Bid Price Rule, Nasdaq has stated that a series of reverse stock splits may undermine investor confidence in securities listed on Nasdaq. Accordingly, if we fail to maintain compliance with the Bid Price Rule, Nasdaq may determine that it is not in the public interest to maintain the listing of our common stock, even if we should effect another reverse stock split for the purpose of regaining compliance with the Bid Price Rule.
In addition, Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that if a listed company that fails to meet the Bid Price Rule after effecting one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then we are not eligible for an 180-day compliance period.
Accordingly, we may fail to maintain compliance with the Bid Price Rule or the other Nasdaq listing requirements. Any non-compliance may be costly, divert our management’s time and attention, and could have a material adverse effect on our business, reputation, financing, and results of operation. A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of the common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, materially adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Additionally, the market price of our common stock may decline further, and stockholders may lose some or all of their investment.
There is substantial doubt about our ability to continue as a going concern.
For the year ended December 31, 2025, we incurred a loss from operations of $8,781,299 and a net loss of $8,607,273. For the three months ended March 31, 2026, we incurred a loss from operations of $2,135,934 and a net loss of $2,094,278. As of March 31, 2026, we had accumulated deficits of $36,094,506. To address these conditions:
37
| ● |
We have demonstrated improving recent recovery trends, with revenues and gross margins increasing compared to the prior year, however not to a level that yet supports a positive operating cash flow. | |
| ● | We closed three equity offerings during the first quarter totaling 17,347,900 shares of common stock for a total net proceeds of $5,800,025. | |
| ● |
As of March 31, 2026, we maintain a cash, cash equivalents and restricted cash balance of $5,671,756. | |
| ● | During the fourth quarter of 2025, we completed the sale of our Marion, North Carolina facility, generating $500,000 in cash in the fourth quarter of 2025, and expected cash payments of $500,000 in 2026 and $3,250,000 in 2027, plus interest at 5%. | |
| ● | Management continues to implement cost controls, operational improvements, and revenue initiatives to further strengthen our financial position. |
Despite our ongoing efforts to mitigate these conditions, there can be no assurance that our expenses will not increase in future periods or that the cash generated from operations in future periods will be sufficient to satisfy our operating needs. If we need to raise additional capital to fund our continued operations, there can be no assurance that funding will be available on acceptable terms on a timely basis, or at all. The various ways that we could raise capital carry potential risks. Any additional sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our stockholders. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business. If we do not succeed in raising additional funds on acceptable terms or at all, we may be unable to fill new orders and develop new products. As such, we cannot conclude that such plans will be effectively implemented within one year after the date that the financial statements included in this Report are filed with the SEC, and there is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern. If we are unable to generate sufficient revenue from operations and/or raise capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate efforts to expand our dealer network or develop new models and may be forced to cease operations or liquidate assets.
We depend on our network of independent dealers for our boats, face increasing competition for dealers, and have little control over their activities.
A significant portion of our sales are derived from our network of independent dealers. We typically manufacture our gas-powered boats based upon indications of interest received from dealers who are not contractually obligated to purchase any boats. While our dealers typically have purchased all of the boats for which they have provided us 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 we once experienced, and in the future could experience, excess inventory and costs. For the three months ended March 31, 2026, four individual dealers each represented over 10% of our total sales and together represented 80% of total sales. For the three months ended March 31, 2025, two individual dealers each represented over 10% of our total sales and together represented 54% of total sales. The loss of a significant dealer could have a material adverse effect on our financial condition and results of operations. The number of dealers supporting our products and the quality of their marketing and servicing efforts are essential to our 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. We face intense competition from other boat manufacturers in attracting and retaining dealers, affecting our ability to attract or retain relationships with qualified and successful dealers. Although our management believes that the quality of our products in the performance sport boat industry should permit us to maintain our relationships with our dealers and our market share position, there can be no assurance that we will be able to maintain or improve our relationships with our dealers or our 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 our 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 our network of dealers would have a material adverse effect on our business, financial condition, and results of operations.
38
The loss of one or a few dealers could have a material adverse effect on us.
A few dealers have in the past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several consecutive years. For the three months ended March 31, 2026, four individual dealers represented over 10% of our total sales and combined represented 80% of total sales. The loss of business from a significant dealer could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We rely on third-party suppliers in the manufacturing of our boats.
We depend on third-party suppliers to provide components and raw materials essential to the construction of our boats. During the three months ended March 31, 2026, we purchased all engines for our boats under supplier agreements with three vendors. While we believe that our relationships with our current suppliers are sufficient to provide the materials necessary to meet present production demand, we cannot assure you that these relationships will continue or that the quantity or quality of materials available from these suppliers will be sufficient to meet our future needs, irrespective of whether we successfully implement our growth strategy. We expect that our need for raw materials and supplies will increase. Our 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 us and other customers. Operational and financial difficulties that our suppliers may face in the future could adversely affect their ability to supply us with the parts and components we need, which could significantly disrupt our operations.
We have identified weaknesses in our internal controls, and we 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, we are subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. The requirements of these rules and regulations continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting.
As of March 31, 2026, we do not yet have effective disclosure controls and procedures, or internal controls over all aspects of our financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and in accordance with GAAP. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
We will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.
Management has developed and is executing a remediation plan to address the previously disclosed material weaknesses, due to inadequate staffing levels. We have retained a full-time controller and are utilizing the services of experienced SEC reporting consultants as necessary. We are also actively recruiting a full-time Chief Financial Officer. We have also selected and implemented a robust operating system and we are utilizing the assistance of outside advisors where appropriate. We cannot assure you 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 our business.
39
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our 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 our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our 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 our internal control over financial reporting that we will eventually be required to include in our 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 our reported financial and other information, which would likely have a negative effect on the market price of our Common Stock.
Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our 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 our business and operating results and cause a decline in the market price of our common stock.
We are currently, and may in the future be, subject to substantial litigation, regulatory actions, government investigations, proceedings and similar actions that could cause us to incur significant legal expenses and which could have a material adverse effect on our business, operating results or financial condition.
We are currently, and may in the future be, subject to substantial litigation, regulatory actions, government investigations, proceedings and similar actions including matters related to commercial disputes, intellectual property, employment, securities laws, disclosures, whistleblower, environmental, tax, accounting, class action, and product liability, as well as trade, regulatory and other claims related to our business and our industry. Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability or require us to change our business practices. Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, operating results or financial condition.
On March 10, 2025, shareholders Nabeel Youseph and Marisa Hardyal-Youseph (“Plaintiffs”), who are former holders of common stock of Forza X1, Inc. (“Forza”), commenced an action in the Court of Chancery in the State of Delaware, captioned Youseph, et al. v. Visconti, et al., Case No. 2025-0262, by filing a putative class action complaint (the “Complaint”) against Defendants Joseph Visconti, Kevin Schuyler, Neil Ross, Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc. (collectively, “Defendants”), related to Forza’s merger with Twin Vee seeking an unspecified award of damages, plus interest, costs, and attorneys’ fees. Plaintiffs’ Complaint asserts claims (1) against Defendants for breach of fiduciary duty in their capacities as controlling shareholders of Forza, (2) against Messrs. Visconti, Schuyler, and Ross for breach of fiduciary duty in their capacities as directors of Forza, and (3) against Mr. Visconti for breach of fiduciary duty in his capacity as an officer of Forza. Defendants deny the allegations and intend to vigorously defend against the claims. At this time, as the matter is in the pleadings stage, the Company is unable to estimate or project the ultimate outcome of this matter.
These securities class actions, shareholder derivative actions and other current or future litigation matters may be time-consuming, divert management’s attention and resources, cause us to incur significant defense and settlement costs or liability. We intend to vigorously defend against all such claims. Because of the potential risks, expenses and uncertainties of litigation, as well as claims for indemnity from various of the parties concerned, we may from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. While a certain amount of insurance coverage is available for expenses or losses associated with current or future lawsuits, this coverage may not be sufficient. Determining reserves for any litigation is a complex, fact-intensive process that is subject to judgment calls. It is possible that a resolution of one or more such proceedings could require us to make substantial payments to satisfy judgments, fines or penalties or to settle claims or proceedings, any of which could harm our business. Based on information currently available, we are unable to estimate reasonably a possible loss or range of possible losses, if any, with regard to the current securities class action; therefore, no litigation reserve has been recorded in our condensed consolidated balance sheet. Although we plan to defend against the securities class actions, shareholder derivative actions and other lawsuits vigorously, we cannot assure that the results of these actions, either individually or in the aggregate, will not have a material adverse effect on our business, operating results or financial condition.
40
We may be required to repurchase inventory of certain dealers.
Many of our dealers have floor plan financing arrangements with third-party finance companies that enable the dealers to purchase our products. In connection with these agreements, we have an obligation to repurchase our products from a finance company under certain circumstances, and we 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 us. Our obligation to repurchase a repossessed boat for the unpaid balance of our 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. As disclosed in the notes accompanying the financial statements included in this Quarterly Report, on April 21, 2025, Northpoint Commercial Finance LLC (“Northpoint”) requested that we take possession of and repurchase certain inventory consisting of six boats in accordance with the Repurchase Agreement between us and Northpoint. Prior to that date, we have not been obligated to repurchase any other boats under our dealers’ floor plan financing arrangements,
and we are not aware of any applicable laws regulating dealer relations which govern our 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 us to repurchase our products from our dealers under certain circumstances, and we 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. If we were obligated to repurchase a significant number of units under any repurchase agreement or under applicable dealer laws, our business, operating results and financial condition could be adversely affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
| (a) | Unregistered Sales of Equity Securities. |
We did not sell any equity securities during the three months ended March 31, 2026 in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC.
| (c) | Issuer Purchases of Equity Securities. |
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable.
ITEM 5. OTHER INFORMATION.
(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.
None.
(b) Changes to Procedures for Recommending Nominees to the Board of Directors
None.
(c) Insider Trading Arrangements
41
ITEM 6. EXHIBITS.
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index. The Exhibit Index is incorporated herein by reference.
EXHIBIT INDEX
| Exhibit No. | Description |
| 3.1 | Articles of Incorporation filed with the Secretary of State of the State of Nevada on April 10, 2026 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 333-25134, filed with the Securities and Exchange Commission on April 13, 2026) |
| 3.2 | Bylaws (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, File No. 333-25134, filed with the Securities and Exchange Commission on April 13, 2026) |
| 3.3 | Certificate of Change filed with the Secretary of State of the State of Nevada on April 30, 2026 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, File No. 333-25134, filed with the Securities and Exchange Commission on April 30, 2026) |
| 4.1 | Form of Placement Agent’s Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K/A, File No. 001-40623, filed with the Securities and Exchange Commission on February 24, 2026) |
| 4.2 | Form of Placement Agent’s Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on March 19, 2026) |
| 4.3 | Form of Placement Agent’s Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on March 25, 2026) |
| 10.1 | Lease Agreement, dated March 12, 2026, by and between Twin Vee PowerCats Co. and Visconti Holdings, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 333-25134, filed with the Securities and Exchange Commission on March 16, 2026) |
| 10.2 | Amendment to Employment Agreement by and between Twin Vee PowerCats Co. and Preston Yarborough, dated April 22, 2026 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 333-25134, filed with the Securities and Exchange Commission on April 23, 2026) |
| 31.1* | Certification by principal executive officer and principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1* | Certification by principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS* | InlineXBRL Instance Document |
| 101.SCH* | InlineXBRL Taxonomy Extension Schema Document |
| 101.CAL* | InlineXBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | InlineXBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | InlineXBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104* | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document) |
| * Filed or furnished herewith. |
42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TWIN VEE POWERCATS CO. | ||
| Date: May 7, 2026 | By: | /s/ Joseph C. Visconti |
| Joseph C. Visconti | ||
| Chairman, Chief Executive Officer, Interim Chief Financial Officer and President | ||
| (Principal Executive Officer, Principal Financial and Accounting Officer) | ||
43