Forza X1, Inc. (FRZA)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 delivered zero revenue and a net loss of $1.17M ($0.07 EPS), but operating expenses fell 38% YoY as management aggressively reduced SG&A, salaries/wages, and R&D; cash and equivalents were $9.95M as of March 31, 2024 .
• Management highlighted industry headwinds and slower EV-adoption, instituted capex reductions (excluding the new facility), hiring freeze and workforce optimization, and tight expense controls; cash burn was cut to ~$0.23M/month in Q1 with a target to be below $0.15M/month exiting Q2 .
• Facility construction in Marion, NC is continuing (walls up, roof to follow) due to contractual commitments and better shareholder value from completion; strategic alternatives (JVs, collaborations in battery/propulsion) are being explored to leverage technology while sharing risk .
• No formal revenue or margin guidance was issued; Wall Street consensus EPS and revenue for Q1 2024 via S&P Global were unavailable due to missing mapping. This lack of estimates plus management’s cautious tone and strategic review are key stock-reaction catalysts .

What Went Well and What Went Wrong

What Went Well

• Operating expenses decreased 38% YoY to $1.29M as management reduced SG&A, salaries/wages, and R&D; net loss improved 42% YoY to $1.17M, driven by lower opex and modest other income .
• Cash burn materially reduced to ~$0.23M/month in Q1, with explicit management target to bring burn below $0.15M/month exiting Q2: “our Q1 burn of approximately $230,000 per month with a target to reach less than $150,000 per month as we exit Q2 of 2024” .
• Facility progress continues: “Construction of the plant is going well. The exterior walls are currently being assembled with the roof to follow” — supporting asset value realization despite market conditions .

What Went Wrong

• No revenue was recognized in Q1 2024; gross loss of $29.6k persisted with continued prototype/production costs and no offsetting sales .
• Industry demand slowdown and slower-than-expected EV adoption weighed on the marine EV segment; management cited large competitors (Mercury, Yamaha, Suzuki) accelerating electric outboard offerings, intensifying competitive pressure .
• Nasdaq minimum bid deficiency remains unresolved with an extension through September 30, 2024, posing listing risk; going-concern uncertainty persists until revenue generation begins .

Financial Results

Income Statement Trends vs Prior Quarters and Estimates

Note: Wall Street consensus via S&P Global for FRZA Q1 2024 EPS and revenue was unavailable due to missing mapping.

Balance Sheet and Liquidity KPIs

Segment breakdown: Not applicable (pre-revenue, single focus on electric sport boats) .

Guidance Changes

No quantitative revenue/margin/tax guidance provided for Q1/Q2 2024 .

Earnings Call Themes & Trends

Management Commentary

• “The past year has seen a marked deceleration in the global demand for recreational marine vehicles… the global shift towards EV adoption has been much slower than initially anticipated” — Joseph Visconti, Executive Chairman & Interim CEO .
• “We have implemented measures that have reduced cash burn and conserved cash reserves… tightening our financial reins to mitigate impacts of reduced demand with a view toward long-term sustainability” .
• “Our Q1 burn of approximately $230,000 per month with a target to reach less than $150,000 per month as we exit Q2 of 2024” .
• “We are actively seeking strategic alternatives… exploring joint ventures… collaborate with technology firms in battery and propulsion to enhance product offerings while sharing development costs and risks” .
• On facility: “Construction of the plant is going well… exterior walls… roof to follow… commitments made over a year ago, and it would cost more to exit… completing the building allows better value realization” .

Q&A Highlights

• Cash burn and runway: Management clarified explicit burn-reduction targets (<$0.15M/month exiting Q2), driven by opex cuts and slowed testing/production pace .
• Facility continuation rationale: Continuing construction due to contractual commitments and better shareholder value from completion vs exit costs .
• Strategy pivot: Openness to JVs/collaborations to leverage technology with minimal financial risk; align with marine OEMs; pursue battery/propulsion partners .

(Note: Transcript content primarily reflects prepared remarks; limited evidence of multi-analyst Q&A in the provided transcript) .

Estimates Context

• S&P Global consensus EPS and revenue estimates for FRZA Q1 2024 were unavailable due to missing company mapping; no third-party “beat/miss” comparison can be made. With management slowing testing/production and emphasizing strategic alternatives, any future estimates (if coverage initiates) would likely need to reflect a slower commercialization timeline and reduced near-term opex profile .

Key Takeaways for Investors

• Near-term focus is cash preservation and burn reduction (<$0.15M/month target exiting Q2) amid pre-revenue status; cash of $9.95M and working capital of $10.18M provide runway management believes is sufficient for ~15 months from the 10-Q filing date .
• Strategic alternatives (JVs/collaborations) are the key path to monetize technology and mitigate risk; watch for partnership announcements with battery/propulsion firms or marine OEMs .
• Competitive intensity is rising (Mercury/Yamaha/Suzuki in EV outboards), making direct competition difficult; partnering may be the pragmatic route .
• Facility completion is intended to preserve asset value; while non-facility capex is curtailed, the NC plant progress could become an optionality lever (production capacity or monetization) .
• No revenue in Q1 and no quantitative revenue/margin guidance; trajectory hinges on testing milestones, partner deals, and commercialization decisions .
• Listing risk persists with Nasdaq minimum-bid deficiency extended to Sept 30, 2024; corporate actions (e.g., reverse split) may be considered to maintain listing — a potential stock event .
• Tactical trading: microcap dynamics, low/no coverage, and strategic review headlines can drive volatility; catalysts include JV announcements, facility milestones, or listing-compliance actions .