UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

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: 001-40623

TWIN VEE POWERCATS CO.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	27-1417610 (I.R.S. Employer Identification No.)

3101 S US-1 Ft. Pierce, Florida (Address of Principal Executive Offices)	34982 (Zip Code)

(772) 429-2525

(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
Common Stock, par value $0.001 per share	VEEE	The Nasdaq Stock Market, LLC (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. Yes ☐ No ☒ Registrant became subject to such filing requirements on July 20, 2021.

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). Yes ☒ No ☐

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	☐
Non-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 ☐ No ☒

As of November 15, 2021, there were [7,000,000] shares of Common Stock, $0.001 par value per share, outstanding.

		Page No.

	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	3

	Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine months ended September 30, 2021 and 2020	4

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Nine months ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine months ended September 30, 2021 and 2020	6

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	26

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5.	Other Information	44

Item 6.	Exhibits	45

SIGNATURES		46

	●	General economic conditions, particularly in the U.S., affect our industry, demand for our products and our business, and results of operations.

	●	The COVID-19 global pandemic and other natural phenomena.

	●	Our ability to meet our manufacturing workforce needs is crucial to our results of operations and future sales and profitability.

	●	There is limited public information on our operating history.

	●	Interest rates and energy prices affect product sales

	●	Our annual and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond our control.

	●	We depend on our network of independent dealers, face increasing competition for dealers and have little control over their activities.

	●	Our success depends, in part, upon the financial health of our dealers and their continued access to financing.

	●	Unfavorable weather conditions may have a material adverse effect on our business, financial condition, and results of operations, especially during the peak boating season.

	●	A natural disaster, the effects of climate change, or disruptions at our manufacturing facility could adversely affect our business, financial condition and results of operations.

	●	If we fail to manage our manufacturing levels while still addressing the seasonal retail pattern for our products, our business and margins may suffer.

	●	We have a large, fixed cost base that will affect our profitability if our sales decrease.

	●	We may be required to repurchase inventory of certain dealers.

	●	Termination or interruption of informal supply arrangements could have a material adverse effect on our business or results of operations.

	●	We rely on one manufacturer to supply our engines and do not have any long terms commitments from such manufacturer

	●	Product liability, warranty, personal injury, property damage and recall claims may materially affect our financial condition and damage our reputation.

	●	Significant product repair and/or replacement due to product warranty claims or product recalls could have a material adverse impact on our results of operations.

	●	Demand in the powerboat industry is highly volatile.

	●	General economic conditions, particularly in the U.S., affect our industry, demand for our products and our business, and results of operations

	●	Our industry is characterized by intense competition, which affects our sales and profits.

	●	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.


	September 30,			December 31,
	2021			2020
				(Note 1)
ASSETS
Current Assets
Cash and cash equivalents	$	8,978,908		$	891,816
Accounts receivable		212,908			—
Marketable securities		2,998,181			—
Inventories		2,451,794			936,676
Due from affiliated companies		306,897			6,100
Prepaid expenses and other current assets		685,163			350
Total Current Assets		15,633,851			1,834,942

Marketable securities – non current		3,092,704			—
Property and equipment, net		2,230,729			1,365,029
Operating lease right of use asset		1,646,700			1,279,595
Security deposit		25,000			25,000
Total Assets	$	22,628,984		$	4,504,566

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,687,745		$	799,280
Accrued liabilities		492,205			142,936
Contract liability		162,637			6,784
Warranty reserve		75,000			75,000
Note payable - related party		—			27,850
Due to affiliated companies		115,043			92,843
Operating lease right of use liability		364,822			295,374
Total Current Liabilities		2,897,452			1,440,067

Paycheck Protection Program Loan		608,224			—
Economic Injury Disaster Loan		499,900			499,900
Operating lease liability - noncurrent		1,336,437			1,015,759
Total Liabilities		5,342,013			2,955,726

Commitments and contingencies (Note 10)

Stockholders’ equity:
Preferred stock: 10,000,000 authorized; $0.001 par value; no shares issued and outstanding		—			—
Common stock: 50,000,000 authorized; $0.001 par value; 7,000,000 and 4,000,000 shares issued and outstanding, respectively		7,000			4,000
Additional paid-in capital		18,486,995			2,551,387
Accumulated deficit		(1,207,024	)		(1,006,547	)
Total Stockholders’ Equity		17,286,971			1,548,840

Total Liabilities and Stockholders’ Equity	$	22,628,984		$	4,504,566


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Net sales	$	4,118,246		$	2,498,218		$	10,623,460		$	6,885,679
Cost of products sold		2,508,170			1,798,288			6,209,334			4,321,067
Gross profit		1,610,076			699,930			4,414,126			2,564,612

Operating expenses:
Selling, general and administrative		512,982			251,371			1,090,583			708,893
Salaries and wages		1,222,062			637,993			3,197,476			1,764,592
Research and design		61,091			—			61,091			—
Professional fees		105,384			25,056			217,592			104,519
Depreciation		31,091			33,068			132,089			95,954
Total operating expenses		1,932,610			947,488			4,698,831			2,673,958

Loss from operations		(322,534	)		(247,558	)		(284,705	)		(109,346	)

Other income (expense):
Other income		148			79,658			148			79,658
Interest expense		(50,315	)		(32,624	)		(85,468	)		(115,704	)
Loss on disposal of assets		—			—			(254,600	)		—
Gain from insurance recovery		—			—			434,724			—
Net change in fair value of marketable securities		(10,576	)		—			(10,576	)		—
Total other income (expenses)		(60,743	)		47,034			84,228			(36,046	)

Net loss	$	(383,277	)	$	(200,524	)	$	(200,477	)	$	(145,392	)

Basic and dilutive loss per share of common stock	$	(0.06	)	$	(0.05	)	$	(0.04	)	$	(0.04	)
Weighted average number of shares of common stock outstanding		6,282,700			4,000,000			4,769,200			4,000,000


					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity

Balance at December 31, 2019		4,000,000	$	4,000	$	2,289,231	$	(2,177,624	)	$	115,607
Net income for the period		—		—		—		78,656			78,656
Balance at March 31, 2020		4,000,000	$	4,000	$	2,289,231	$	(2,098,968	)	$	194,263
Net loss for the period		—		—		—		(23,524	)		(23,524	)
Balance at June 30, 2020		4,000,000	$	4,000	$	2,289,231	$	(2,122,492	)	$	170,739
Net loss for the period		—		—		—		(200,524	)		(200,524	)
Balance, September 30, 2020		4,000,000	$	4,000	$	2,289,231	$	(2,323,016	)	$	(29,785	)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Capital		Deficit			Equity

Balance at December 31, 2020		4,000,000	$	4,000	$	2,551,387	$	(1,006,547	)	$	1,548,840
Net income for the period		—		—		—		131,949			131,949
Balance at March 31, 2021		4,000,000	$	4,000	$	2,551,387	$	(874,598	)	$	1,680,789
Net income for the period		—		—		—		50,851			50,851
Balance at June 30, 2021		4,000,000	$	4,000	$	2,551,387	$	(823,747	)	$	1,731,640
Common stock issued for cash		3,000,000		3,000		15,849,037		—			15,852,037
Stock-based compensation		—		—		86,571		—			86,571
Net loss for the period		—		—		—		(383,277	)		(383,277	)
Balance, September 30, 2021		7,000,000	$	7,000	$	18,486,995	$	(1,207,024	)	$	17,286,971

Schedule of Inventories
	September 30,		December 31,
	2021		2020
Raw Materials	$	2,072,464	$	763,633
Work in Process		288,913		173,043
Finished Product		90,417		—
Total Inventory	$	2,451,794	$	936,676

Schedule of property and equipment
	September 30,			December 31,
	2021			2020
Machinery and equipment	$	1,114,290		$	985,862
Furniture and fixtures		1,850			1,850
Leasehold improvements		553,072			228,875
Software and website development		113,120			113,120
Computer hardware and software		67,118			49,967
Boat molds		612,279			126,000
Electric prototypes and tooling		163,696			146,232
		2,625,425			1,651,906
Less accumulated depreciation and amortization		(394,696	)		(286,877	)
	$	2,230,729		$	1,365,029


Year Ending December 31,
2021 (excluding the nine months ended September 30, 2021)	$	90,000
2022		373,800
2023		396,900
2024		416,745
2025		437,582
Total lease payment		1,715,027
Less imputed interest		(13,768	)
Total	$	1,701,259

Schedule of operating lease cost
	September 30, 2021
Weighted average discount rate		0.36	%
Weighted average remaining lease term (years)		4.25

Schedule of Minimum Maturities
Year
2021	$	—
2022		1,846
2023		9,459
2024		9,820
2025		10,195
2026 and thereafter		501,566


	Options Outstanding				Weighted Average
	Number of		Weighted Average		Remaining life
	Options		Exercise Price		(years)		Fair value of option

Outstanding, December 31, 2020		—	$	—		—	$	—
Granted		592,500		5.51		10.00		1,389,713
Exercised		—		—		—		—
Forfeited/canceled		—		—		—		—
Outstanding, September 30, 2021		592,500	$	5.51		9.73	$	—

Exercisable options, September 30, 2021		29,194	$	5.80		9.69

	Three Months Ended												Years Ended
	September 30,												December 31,
	2021			2020			$ Change			% Change			2020			2019			$ Change			% Change
Cash provided by (used in) operating activities	$	(743,435	)	$	(290,529	)	$	(452,906	)		156	%	$	640,253		$	(152,259	)	$	792,512			(521	%)
Cash used in investing activities	$	(7,323,287	)	$	(177,045	)	$	(7,146,242	)		4,036	%	$	(200,452	)	$	(675,740	)	$	475,288			(70	%)
Cash provided by financing activities	$	16,153,814		$	518,462		$	15,635,352			3,016	%	$	236,441		$	1,019,824		$	(783,383	)		(77	%)
Net Change in Cash	$	8,087,092		$	50,888		$	8,036,204			15,792	%	$	676,242		$	191,825		$	484,417			253	%

	●	Seasonal consumer demand for our products;
	●	Discretionary spending habits;
	●	Changes in pricing in, or the availability of supply in, the powerboat market;
	●	Failure to maintain a premium brand image;
	●	Disruption in the operation of our manufacturing facilities;
	●	Variations in the timing and volume of our sales;
	●	The timing of our expenditures in anticipation of future sales;
	●	Sales promotions by us and our competitors;
	●	Changes in competitive and economic conditions generally;
	●	Consumer preferences and competition for consumers’ leisure time;
	●	Impact of unfavorable weather conditions;
	●	Changes in the cost or availability of our labor; and
	●	Increased fuel prices.

	●	training new personnel;

	●	forecasting production and revenue;

	●	expanding our marketing efforts, including the marketing of a new powertrain that we intend to develop;

	●	controlling expenses and investments in anticipation of expanded operations;

	●	establishing or expanding design, manufacturing, sales and service facilities;

	●	implementing and enhancing administrative infrastructure, systems and processes; and

	●	addressing new markets.

	●	cease making, using, selling or offering to sell processes, goods or services that incorporate or use the third-party intellectual property;

	●	pay substantial damages;

	●	seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all;

	●	redesign our boats or other goods or services to avoid infringing the third-party intellectual property;

	●	establish and maintain alternative branding for our products and services; or

	●	find-third providers of any part or service that is the subject of the intellectual property claim.

	●	customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services; and

	●	third-party suppliers being unable to produce parts and components for our products in the same quantity or on the same timeline or being unable to deliver such parts and components as quickly as before or subject to price fluctuations, which could have a material adverse effect on our production or the cost of such production.

	●	Our operating and financial performance and prospects;
	●	Our quarterly or annual earnings or those of other companies in our industry compared to market expectations;
	●	Conditions that impact demand for our products;
	●	Future announcements concerning our business or our competitors’ businesses;
	●	The public’s reaction to our press releases, other public announcements, and filings with the SEC;
	●	The size of our public float;
	●	Coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;
	●	Market and industry perception of our success, or lack thereof, in pursuing our growth strategy;
	●	Strategic actions by us or our competitors, such as acquisitions or restructurings;
	●	Changes in laws or regulations that adversely affect our industry or us;
	●	Changes in accounting standards, policies, guidance, interpretations, or principles;
	●	Changes in senior management or key personnel;
	●	Issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;
	●	Changes in our dividend policy;
	●	Adverse resolution of new or pending litigation against us; and
	●	Changes in general market, economic, and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war, and responses to such events.

	●	our board of directors is divided into three classes, one class of which is elected each year by our stockholders with the directors in each class to serve for a three-year term;

	●	the authorized number of directors can be changed only by resolution of our board of directors;

	●	directors may be removed only by the affirmative vote of the holders of at least sixty percent (60%) of our voting stock, whether for cause or without cause;

	●	our bylaws may be amended or repealed by our board of directors or by the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of our stockholders;

	●	stockholders may not call special meetings of the stockholders or fill vacancies on the board of directors;

	●	our board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the board of directors and that, if issued, could operate as a “poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not approve;

	●	our stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors; and

	●	our stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder meeting.

Exhibit No.		Description
1.1		Underwriting Agreement between Twin Vee PowerCats Co. and ThinkEquity, a division of Fordham Financial Management, Inc. (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 26, 2021 (File No. 001-40623))
3.1		Articles of Incorporation filed with the Secretary of State of the State of Florida, dated December 1, 2009 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.2		Articles of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on January 22, 2016 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.3		Articles of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on April 12, 2016 (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.4		Article of Conversion filed with the Secretary of State of the State of Florida, dated April 7, 2021 (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.5		Certificate of Conversion filed with the Secretary of State of the State of Delaware on April 7, 2021 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.6		Certificate of Incorporation filed with the Secretary of State of the State of Delaware on April 7, 2021 (incorporated by reference to Exhibit 3.6 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.7		Bylaws (incorporated by reference to Exhibit 3.7 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
10.1		Twin Vee Powercats Co. Amended and Restated 2021 Stock Incentive Stock Plan (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S- 1, filed with the Securities and Exchange Commission on June 2, 2021 (File No. 333-255134))
10.2		Form of Stock Option Grant Notice, Option Agreement (Incentive Stock Option or Nonstatutory Stock Option) and Notice of Exercise under the Amended and Restated 2021 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission on June 2, 2021 (File No. 333-255134))

10.3		Employment Agreement dated as of October 1, 2021 by and between Twin Vee Powercats Co. and Carrie Gunnerson, Effective October 1, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 26, 2021 (File No. 001-40623))
31.1*		Certification by principal executive 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.
31.2*		Certification by 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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification by 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*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL 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)

	TWIN VEE POWERCATS CO.

Date: November 15, 2021	By:	/s/ Joseph C. Visconti
		Joseph C. Visconti
		Chairman and Chief Executive Officer
		(Principal Executive Offi cer)

Date: November 15, 2021	By:	/s/ Carrie Gunnerson
		Carrie Gunnerson
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by Twin Vee PowerCats Co.