Forza X1, Inc. (NASDAQ:FRZA) Q1 2023 Earnings Call Transcript May 15, 2023

Operator: Welcome to the Forza X1 Inc., First Quarter 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 Chief of Product Development for 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 terminologies 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 our current expectations and projections about future events and financial trends that I believe may affect its financial condition, results of operation, 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 our filings with the Securities and Exchange Commission which are available on our Investor Relations website at ir.forzax1.com.

You should not rely upon forward-looking statements as predictions 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 on our Investor Relations website at ir.forzax1.com for at least 90 days. Audio cassette quality is subject to your equipment, available bandwidth and internet traffic. If you experience unsatisfactory audio quality, please use a telephone dial-in option. A question answer session will follow the formal presentation. Please note that only those that have dialed in via telephone may ask a question. Those listening via webcast will be unable to submit questions and must call in instead.

[Operator Instructions]. I will now turn the call over to Joseph Visconti.

Joseph Visconti: Thank you, how are you? My name is Joseph Visconti. I’m the Executive Chairman of Forza. I’d like to welcome everyone to the call today. Coming into 2023, our company’s mission remains the same to accelerate the adoption, sustainable recreational and commercialize electric boats. Our laser focus remains on designing, developing and mass producing and selling family, friendly, affordable electric boats are the largest segment of the recreational boat buyer markets. These are boaters that enjoy a full day of boating with the versatility of fishing, pulling your kids on a tube, wake surfing, cruising, pull your boat on a sandbar and enjoy the day with your friends and family. It’s day boating. Today, I’m going to do a brief overview and update on our major milestone accomplishments and then open it up for Q&A.

We’re proud to have Jim Leffew as our President and CEO. I offered to do the investor call today due to Jim’s non-stop hectic Forza schedule. Jim has been traveling around the clock, pushing our business forward and getting Forza closer to revenues and selling electric boats to end consumers. I want to thank Carrie Gunnerson, our Interim-CFO, and we have an extraordinary team of engineers led by our Chief Engineer, Dan Norton, and our Chief Marine Architect, Greg McLogan, plus many other talented engineers that we have come together with a wide range of skill sets to solve one of the greatest global challenges of our time, marine sustainability, cleaner oceans, lakes and waterways without sacrificing one of our country’s great pastimes and activities, being out on the water with our friends and family.

Over the past several months, we have made some pretty big strides. We’re currently producing multiple models of our electric boats for continued testing. I was out on our F-22, our Monohull 22 yesterday for three hours. The boat performed beautifully. The F-22 is currently reaching speeds of nearly 40 miles per hour. The boat will have over 100-kilowatt battery combined with our 180-horsepower peak outboard motor. This has enough power and battery for you and your family to spend the entire day on the water. Travel over 50 miles at lower speeds, pull your kids on a board, go fast, go slow, cruise, enjoy the day and when you’re done, you will pull the F-22 back onto the trailer like any other 22 foot boats, you’ll bring the boat back to your home or to a dock and you will plug the boat in and be able to charge that battery pack with our built-in fast charger to the recommended 85% or 90% and you’ll be able to use the boat the following day.

We are designing and developing these boats to have them become user friendly, affordable and family oriented. I am happy with the current state of development and our current pace of testing. There is no straight line in product development. But it’s very possible at Forza could be in a position and begin fulfilling orders and delivering boats to our customers by the end of this year. Today, Twin Vee PowerCats announced the acquisition of Aquasport. Aquasport and its 150,000 square foot manufacturing facility in White Block, Tennessee. This acquisition is a big deal. It’s a big opportunity for Twin Vee and Forza. Let me explain. First, the Aquasport brand has been a respected name in the marine industry for almost 60 years. Adding Aquasport to Twin Vee lineup will open up new markets add growth to our top line.

And instead of building the recently launched LFG Monohull Line model by model, boat by boat, which was possible over time now with Aquasport at the Aquasport acquisition, including the most equipment a supersize facility, Twin Vee will roll its two existing LFG models, the 22 CC and the 22 DC into the Aquasport branding name, along with five additional models ranging from 21 to 25 feet. This immediately gives Twin Vee, brand recognized company that’s been around for 60 years and seven models of Aquasport and the Monohull Line and a factory that was filled with new equipment and material. And we’re probably about a month away from ramping that factory out and being in production. Now here’s where the Aquasport acquisition gets interesting, and where we see that there’s some success with Forza.

So as we’ve seen the success of electrifying our 22 foot LFG now with the 22 foot Aquasport center console, Forza will have six additional models to electrify. The benefit of electrifying the Monohull is the single motor cost and performance. Remember the Twin Vee required two motors for peak performance because there’s a catamaran, the multi-hull. But a monohull boat requires a single motor. This keeps our costs down. And one of our main objectives as we continue to talk about as we roll out electric boats to consumers is to keep that cost in line with comparable gas powered boats within the same size and range. The Aquasport facility is extremely large, it’s 150,000 square feet, it’s almost three times the size of the Twin Vee factory, and Twin Vee can produce 500 boats out of its factory so that gives you an idea in proportion, how big this facility is that we just acquired.

So the new Aquasport Tennessee facility in the short-term will be a phased approach. Twin Vee can sublease a section of the Aquasport plant to Forza. Forza can begin building the fiberglass portion of the Forza electric boats at the Tennessee facility, while we continue to build and assemble the Forza motors in our tech center in Old Fort, North Carolina. We will then ship the completed Forza motors from Old Fort to the Tennessee plant for final rigging. And we understand there’s a little bit of logistics, but this gives Forza an additional $8 million in capital that we would have spent building the new facility ASAP and by this, I mean that the Tennessee plant is large enough to get Forza its own sealed off private section to begin building electric boats, while we also are ramping up the Aquasport brand in another section of the plant.

Of course, we will continue to build our price North Carolina state-of-the-art factory in North McDowell County. This is very meaningful to us. Our plant North Carolina factory will ultimately be the factory and the location that allows Forza to build and ship over 1000 electric boats per year. But based on the least risky strategy to get Forza revenue positive and reduce the burn and possibly even get to profitability as we ramp production of Forza boats, what makes the most sense for our company and to slow the burn on our current $10 million cash position is to piggyback off this Aquasport factory, not spend the $8 million for the new factory today. Get boats you know starting to produce boats to end consumers as we think we can by the end of the year.

I want to be really clear about this. There is no misunderstanding Forza is not stopping the construction of our McDowell County, North Carolina, Forza factory, we are simply doing a slight pivot to take advantage of the infrastructure and investment that the Aquasport factory offers and Forza can conserve our current capital. Until Forza revenue is positive, and the market timing is more optimistic. We are excited about the North Carolina state-of-the-art factory being designed and constructed from the ground up dedicated building electric boats at mass scale as we continue to grow our business and launch additional models and additional boats to tasks. Of course, we will keep you up to date and informed. I want to go over a couple of highlights.

Our 22-foot electric including that we’re building. We are building that particular boat with carbon fiber and Kevlar to lighten the hull, so we’ll let you know how that goes. We are currently finalizing plants to electrify our 22-foot dual console boat. We built a dual console for L F G, which is in our rigging department in Fort Pierce, Florida. We are also going to electrify that boat under the Forza brand. Forza has received inquiries from various global companies. And we continue seeking and making relationships around the world with our propulsion system. We’ve kind of talked, kind of between the lines about very large company one of the largest boat builders in the world that we’ve been working with to possibly have our Forza propulsion system be the propulsion system for that company.

We can we signed NDA, we can’t get into names, but that is moving along very nicely. We are also continuing to work on our more powerful proprietary motor as you know we currently have 180-horsepower peak power outboard motor. We are getting close to our 300 horsepower. This is our second electric motor that would enhance both performance and increase maximum range. Once prototype work is completed the all-new 300 horsepower electric motor we rigged and put on one of our existing boats. I want to really push everybody to come and spend some time with us at our facilities, whether it’s in Fort Pierce, or in North Carolina or within a couple months at the Aquasport factory in Tennessee. We post videos, we post pictures, it’s hard to really understand what we’ve done.

Our team works around the clock, and we have not burned a lot of cash. I think to date, we’ve gone through $5 million. We’ve designed our outboard motor from the ground up including everything from the cowling to the frame to lower unit to the cooling system. And we are making it happen. We set out this mission to be the company that led marine electrification. We’ve always said that we wanted to be the company that would be mass producing these boats. There’s some great companies building electric boats around the world, onesies, twosies 10 here, but from day one, our goal and our vision is to be that company that produces mass scale electric boats, family, friendly, affordable. So please take the time and come and visit us. There’s a reason that we have investors that own 5%, 6%, 8%, or more of our company.

Each one of those investors came to the factory walked around, met with management shook our hands looked us in the eye and realized what we are doing, and they see the future with our company. So, again, we invite you and look forward to meeting you. And I want to open it up for Q&A now.

Operator: Q – unidentified Analyst A – Joseph Visconti

Joseph Visconti: Thank you. I’d like to go over this. We currently have a little bit over $10 million in cash. Our monthly burn is 140,000 hours per month for payroll. Our current rent is $8,000 a month. And the past three months, we’ve had some heavy prototype expenses around $700,000 over a three month period. But if you aggregate our prototyping out over a 12-month period, it’s more around $120,000. So with D&O insurance, and the cash burn, we’re a little bit under 300,000 hours per month. Think about that in terms of what we’ve accomplished. And we still have the $10 million in the bank. So we’re excited about the future. We’re going to continue to work around the clock and make this company reality and mass produce affordable boats. So I want to thank everybody, please get down to the factory and see us and we’re looking forward to seeing you soon. Thanks again.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.