Twin Vee PowerCats Co. (NASDAQ:VEEE), a Florida-based boat manufacturer, has voluntarily provided supplemental disclosures to its previously filed joint proxy statement/prospectus regarding its proposed merger with Forza X1, Inc. The additional information comes in response to a letter received on Monday (NASDAQ:MNDY) from legal counsel representing a purported Twin Vee shareholder, which claimed that the original disclosures omitted material information concerning the merger's valuation analyses.
The supplemental disclosures, which Twin Vee asserts are not legally necessary, aim to eliminate the potential for litigation that could delay or adversely affect the merger's approval. They provide detailed insights into the valuation methodologies used by Twin Vee's financial advisor, Houlihan Capital, LLC, particularly regarding the market approach and the valuation of Forza.
Houlihan Capital's analysis included a range of indicated equity values for Forza between $4.9 million and $6.0 million. The exchange ratio for the merger was calculated by considering the value of Twin Vee’s forfeited shares in Forza and dividing Forza’s post-forfeiture equity value by Twin Vee's share price as of July 31, 2024. This calculation led to an exchange ratio range between approximately 0.5492 and 0.6705, which falls within the terms agreed upon in the merger agreement.
The Black-Scholes model was employed to estimate the fair market values of Forza's warrants and options, considering factors such as time to expiration, risk-free rate, and volatility. These convertible securities were found to carry minimal value and did not significantly impact the fairness of the transaction.
Twin Vee and Forza urge investors and security holders to read the registration statement and the joint proxy statement/prospectus, along with any other relevant documents filed with the SEC, as they contain important information about the proposed merger. These documents are available free of charge on the SEC's website and from Twin Vee and Forza upon request.
The merger proposal, subject to regulatory and shareholder approvals, is detailed in the joint proxy statement/prospectus sent to Twin Vee stockholders on or about October 14, 2024. This report is based on a press release statement.
In other recent news, Twin Vee PowerCats Co. has seen significant developments. The company reported a 47% year-over-year drop in net sales to $4.3 million in their recent Q2 earnings call, while maintaining a positive gross margin and ending the quarter with a robust liquidity position, holding $6.945 million in cash. Amid these financial results, Twin Vee PowerCats announced a strategic merger with Forza, aiming to form a more competitive entity. Both companies plan to further decrease operating expenses and focus on growth and customer satisfaction.
In addition to the merger, Twin Vee PowerCats has appointed Carol Hindsman as its new Chief Technology Officer. Hindsman is set to lead the development of the company's Pro-Direct Platform, a new initiative designed to transform the boat-buying experience. The platform is expected to offer a seamless online marketplace similar to automotive industry standards, providing customers with tools for online ordering, financing options, and real-time access to dealer inventory.
InvestingPro Insights
As Twin Vee PowerCats Co. (NASDAQ:VEEE) navigates its proposed merger with Forza X1, Inc., recent InvestingPro data provides additional context for investors. The company's market capitalization stands at a modest $4.68 million, reflecting its current position in the boat manufacturing industry.
Two key InvestingPro Tips are particularly relevant to the merger situation. First, Twin Vee "holds more cash than debt on its balance sheet," which could be a strategic advantage during the merger process. Second, the company is "trading at a low Price / Book multiple" of 0.24, suggesting potential undervaluation that may have factored into the merger negotiations.
The company's revenue for the last twelve months as of Q2 2024 was $26.03 million, with a concerning revenue growth decline of -24.74% over the same period. This financial performance may have influenced the decision to pursue the merger as a strategic move for growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Twin Vee PowerCats Co., providing a deeper understanding of the company's financial health and market position as it approaches this significant corporate action.
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