Forza X1 - Q4 2023

Executive Summary

• Q4 2023 capped a pre‑revenue year; FY 2023 net sales were $0.037M and Q4 net sales were approximately $0.019M (derived from FY minus nine months), with FY net loss of $5.93M and Q4 net loss of ~$1.40M; cash at year‑end was $9.82M.
• Management reduced monthly cash burn to ~$200K entering 2024 (from ~$600K in 2023) and targeted October 2024 to complete the new 60,000 sq ft Marion, NC facility, positioning for potential scale once demand improves.
• Strategic highlights included a formal A.I. autonomy partnership (NeuBoat/Avikus), continued propulsion/system testing, and a 100‑unit dealer order with OneWater (~$12M potential revenue), though broader EV/marine demand softened and large OEMs (Mercury, Yamaha, Suzuki) intensified competition.
• Governance/market risks emerged: CEO and CFO resigned in March 2024, and Nasdaq minimum bid price non‑compliance could necessitate action (e.g., reverse split) if the stock doesn’t regain compliance.
• No Wall Street consensus (S&P Global) was available for FRZA for Q4 2023; estimate comparisons are therefore unavailable.*

What Went Well and What Went Wrong

What Went Well

• Announced Autonomous A.I Technology partnership (NeuBoat/Avikus) to enable 360° situational awareness, advanced route planning, smart autopilot, and autonomous self‑docking—enhancing safety and appeal to next‑gen boaters.
• Outboard motor redesign improved durability/corrosion protection, manufacturability (thermoform/injection), and cooling circuits—yielding better runtime, speed, and range; propulsion system passed safety‑critical testing and progressed toward endurance tests.
• Secured initial 100‑boat order with OneWater (~$12M expected revenue) and showcased products at major industry venues; set plan to demonstrate in California early 2024.

What Went Wrong

• Demand headwinds: EV adoption slowed, marine industry saw lower recreational demand; management decided to slow testing/production and tighten spending.
• Competitive pressure increased with Mercury launching electric outboards and Yamaha acquiring Torqeedo; Suzuki likely to enter—raising the bar for performance and capital access.
• Heightened risk profile: FY net loss widened YoY to $5.93M (from $3.63M), working capital declined by year‑end, and Nasdaq non‑compliance persisted, with potential reverse split under consideration.

Transcript

Operator (participant)

Welcome to the Forza X1, Inc. year-end 2023 investor call. As a reminder, this call is being recorded, and all participants are in a listen-only mode. Your speaker for today's program is Joseph Visconti, Executive Chairman and Interim CEO of Forza X1, Inc. Before I turn the call over to Joseph, please remember that certain statements made during this investor call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements on this call, other than statements of historical facts, including statements regarding the company's future operations and financial position, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as believes, may, estimates, continue, anticipates, intends, should, plan, expects, predict, potential, or the negative of these terms or other similar expressions.

The company has based these forward-looking statements largely on its current expectations of projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties and assumptions described, including those set forth in its filings with the Securities and Exchange Commission, which are available on the company's investor relations website at ir.forzax1.com. You should not, you should not rely upon forward-looking statements as prediction of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Finally, this conference call is being webcast. The webcast will be available at ir.forzax1.com for at least 90 days. Audiocast quality is subject to your equipment, available bandwidth, and internet traffic.

If you experience unsatisfactory audio quality, please use the telephone dial-in option. The question and answer session will follow the presentation. Please note that only those who have dialed in via telephone may ask a question. Those listening via the webcast will be unable to submit questions. If you would like to ask a question, you may signal by pressing star one on your telephone keypad. I will now turn the conference over to Joseph Visconti.

Joseph Visconti (Executive Chairman and Interim CEO)

Good morning, everybody. I want to welcome everyone to the call today. Thank you for taking the time out of your schedules. My name is Joseph Visconti. I'm the Executive Chairman and Interim CEO of Forza X1. Before I begin my presentation, I want to speak on the recent news of the resignations of former CEO and President Jim Leffew, and our CFO, Carrie Gunnerson. Both of these resignations were untimely, but also unrelated. I understand the optics were not great, but for those of you that know me, you also know that I strongly believe in change brings opportunity. Jim Leffew and our team of Forza engineers worked diligently to push our mission forward, and I want to thank Jim for all of his efforts, and we wish him the best of luck with his future endeavors.

Carrie Gunnerson has graciously agreed to stay on through the audit period and 10-K process to ensure a smooth transition for our finance team in the hiring and onboarding of a new CFO. Carrie and I have worked together for nearly three years in both Forza and Twin Vee. I want to thank her for her contribution throughout her tenure, and I wish her well. As a CEO of a microcap public company launching a disruptive product in an increasingly crowded marketplace, especially when economic, you know, headwinds or EV headwinds continue to be challenging, a change of leadership provides us with an opportunity to reevaluate our strategies while we're experiencing these headwinds with a fresh perspective to capitalize on emerging opportunities, with the goal of driving sustainable growth as we launch our products.

Although electric boat annual sales units have been relatively small in comparison to traditional boats with outboard combustible motors, we believe our product's potential remains strong. As with automobiles, EV offers sustainability, convenience, and reduced service costs. We see electric boats playing a significant role in the future of marine transportation, and we firmly believe in Forza's mission of manufacturing and selling affordable, family-friendly dayboats. However, because of the current state of the recreational marine and EV space, both on the marine and EV side, our primary focus right now is to steer this company through these challenging times and emerge stronger on the other side. So where do we go from here? Our outboard motor has undergone... While our team is exploring and open to all available options and opportunities within our industry, we are currently reducing unnecessary expenditures.

We are shelving longer-term projects in favor of those with more near-term impact to reduce our expenditures and lengthen our runway. As of today, our outboard motor has undergone an extensive redesign. Our new design incorporates a simplified frame structure that uses stacked custom castings, which are sealed for increased durability and corrosion protection. The overall shape of the motor and cowlings have been updated, and this redesign facilitates higher volume manufacturing processes such as thermoform and injection molding. Additionally, the motor cooling units have been re-engineered to optimize cooling flow rates to the inverter, which have yielded better run times, speed, range, and aims to extend time on the water for a single charge. Our engineering team continuously improves the engine design, lower units, and control systems for each iteration to help reduce overall weight and cost of the increased functionality.

We are currently producing what we believe to be the final beta iteration of the equivalent of a 140 hp outboard motor. On the parallel path, our Forza factory is under construction. I saw images yesterday of the building going vertical, and the exterior walls are being assembled. We are constructing a state-of-the-art 60,000 sq ft facility on our 11-acre property in Marion, North Carolina. We are shooting for an October 2024 completion date, so it's right around the corner. Before we look at what's ahead for us, let me provide an update on Forza's cash position and current state. As of December 31, 2023, Forza had cash and cash equivalents of approximately $9,822,000. Forza had working capital of approximately $12,814,000 as of December 31, 2023.

Last year, our burn rate was approximately $600,000 per month, and with recent cuts and reduction, our burn is approximately $200,000 a month, not including the construction cost of our new facility. We are also mindful of the increasing competition from players like Yamaha, who recently acquired propulsion manufacturer named Torqeedo in January. Mercury, we know, has launched a whole suite of EV outboard motors, and Suzuki, we believe, will be announcing soon. These major players are entering the EV market, and one of the reasons we believe in the electrification of the recreation and marine industry is that these large engine manufacturers have committed significant resources to developing their own electric motors for the marine EV space. However, we recognize that competing with the likes of Mercury, Yamaha, and Suzuki will require us to form strategic partnerships.

While I'm unable to give specifics, I can say that we are currently in talks with several key technical and financial players in the marine industry. These partnerships can potentially impact our trajectory with the goal of positioning our products, the Forza products, along with other major marine manufacturers. From day one, our vision was to produce affordable electric boats, and we continue to believe that the EV marine space will follow the automotive space. There is no straight line with success. We all know that when introducing and manufacturing disruptive new products to a nascent market, there will always be challenges, but the number one rule is to not run out of money and cautiously and optimistically protect your capital. Finally, I do want to mention that we are addressing the delisting notice we received from Nasdaq a few months ago.

Unfortunately, Forza continues to trade under $1 a share. Our team will request a six-month extension to comply with the continued listing rule to allow us more time to increase the stock price. However, if we are unable to get the stock over, or if the stock does not trade over $1 for a minimum of 10 consecutive business days, we will have to consider alternative methods with Nasdaq, such as a reverse stock split. In conclusion, while we are adjusting our business to minimize cash burn while pushing our final beta product forward, we are an agile group of innovators. We are not afraid to pivot and adapt based on current and projected near-term marketplace. And with that, I would like to open it up to questions.

Operator (participant)

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Frank Griffin with Forza X1. Please proceed with your questions.

Frank Griffin (Company Representative)

Good morning, Joe. This is Frank in North Carolina. How are you doing?

Joseph Visconti (Executive Chairman and Interim CEO)

Good. How are you doing?

Frank Griffin (Company Representative)

I'm fine. Congratulations on the 4% increase in your financial. That's great.

Joseph Visconti (Executive Chairman and Interim CEO)

I think you're looking at the Twin Vee. This is the Forza investor call. That was for the Twin Vee.

Frank Griffin (Company Representative)

There's a 4% increase? Okay. Okay, concerning Forza, I just, I just wanted to be, concerning the SEC and the delisting, are we, as a new company, is it a pretty good chance we'll get an extension and a grace period for six months?

Joseph Visconti (Executive Chairman and Interim CEO)

Well, there's no guarantee, but, you know, Forza has the capital, the cash, and typically, companies that do apply for an extension are granted. You know, again, there's no guarantee, but, you know, I'm being advised that there's a very good chance that they, that Nasdaq grants these six-month extensions.

Frank Griffin (Company Representative)

Thank you very much, and your continued hard work with you and your staff. God bless you and your family. Thank you.

Joseph Visconti (Executive Chairman and Interim CEO)

Thank you, sir.

Operator (participant)

Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. I'm showing no further questions in the queue. I'd like to pass the floor back over to Joseph Visconti for any closing remarks.

Joseph Visconti (Executive Chairman and Interim CEO)

I just want to thank everyone for their time today, and if you have any additional questions, please email them to [email protected], and we'll be happy to help you. Thank you again, everyone. Have a good day.

Operator (participant)

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