Forza X1, Inc. (NASDAQ:FRZA), a Delaware-incorporated boat manufacturing company, has voluntarily made additional disclosures to its previously filed joint proxy statement/prospectus concerning its proposed merger with Twin Vee PowerCats Co. This development follows a letter received from the legal counsel of a purported Twin Vee shareholder, which claimed the original documents omitted material information regarding the merger's financial fairness.
The supplemental disclosures, released today, provide further details on the valuation analyses performed by Forza's financial advisor, Houlihan Capital, LLC. These analyses include the Market Approach using Forza's traded price and the 30-day Volume-Weighted Average Price (VWAP), which yielded an indicated equity value of Forza between $4.9 million and $6.0 million.
Additionally, Houlihan Capital calculated an exchange ratio range for the merger between approximately 0.5492 and 0.6705, with the agreed-upon exchange ratio falling within this range, deeming the merger fair from a financial standpoint to Twin Vee and its shareholders.
The supplemental disclosures also detailed the Black-Scholes model used to estimate the fair market values of Forza's warrants and options, which carry little value according to the terms of the merger. These convertible securities are set to convert to Twin Vee options and warrants at the exchange ratio.
Forza and Twin Vee believe the claims that prompted these supplemental disclosures are without merit and assert that no further disclosure is required beyond what was contained in the original joint proxy statement/prospectus. Nonetheless, they have provided these additional details to prevent potential legal disputes that could delay or adversely affect the merger's approval.
Investors and security holders have been advised to read the registration statement, the joint proxy statement/prospectus, and the supplemental disclosures carefully for a full understanding of the merger proposal. The documents are available free of charge on the SEC's website and from Forza and Twin Vee upon request.
The proposed merger remains subject to necessary regulatory approvals, shareholder approvals, and other customary closing conditions. The joint proxy statement/prospectus was mailed to Forza stockholders of record as of the close of business on October 4, 2024.
This report is based on a press release statement and contains forward-looking statements regarding the proposed merger. These statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those anticipated.
In other recent news, Forza X1 Inc., a ship and boat building company, has been notified of its delisting from The Nasdaq Stock Market LLC due to failure to meet the minimum bid price requirement. This comes alongside the departure of the company's president, Dan Norton, for which no successor has been announced. In a major development, Forza X1 and Twin Vee PowerCats Co. have decided to merge, combining Twin Vee's history in boat manufacturing with Forza's focus on electric boats. The goal is to create a more competitive entity with a strong balance sheet and no funded debt.
In a strategic shift, Forza X1 has paused the development and sales of its electric boats amid cost cuts. The company's burn rate has been reduced from $600,000 per month to approximately $230,000, with a target to reach less than $150,000 by the end of Q2 2024.
To enhance market reach and product offerings, Forza X1 is exploring joint ventures and collaborations. Furthermore, the company is investigating strategic alternatives to maximize shareholder value with minimal financial risk. These are the recent developments surrounding Forza X1 Inc.
InvestingPro Insights
As Forza X1, Inc. (NASDAQ:FRZA) navigates its proposed merger with Twin Vee PowerCats Co., InvestingPro data provides additional context to the company's financial situation. The company's market capitalization stands at a modest $3.62 million, reflecting its current valuation in the market. This aligns with the valuation range of $4.9 million to $6.0 million mentioned in the supplemental disclosures.
InvestingPro Tips highlight that Forza X1 holds more cash than debt on its balance sheet, which could be a positive factor in the merger negotiations. However, the company is also quickly burning through cash, a point that potential investors and Twin Vee shareholders may want to consider.
The stock's Price to Book ratio of 0.29 suggests that Forza X1 is trading below its book value, which could be relevant to the fairness assessment of the merger exchange ratio. This low valuation is further emphasized by an InvestingPro Tip indicating that the stock is trading at a low Price / Book multiple.
It's worth noting that InvestingPro offers 18 additional tips for Forza X1, providing a more comprehensive analysis for those interested in delving deeper into the company's financial health and market position.
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