Forza X1 Inc. (ticker: FX1) addressed recent executive resignations and detailed strategies to navigate economic and market challenges during its Year-End 2023 Investor Call. Executive Chairman and Interim CEO Joseph Visconti acknowledged the untimely departure of the CEO and CFO but emphasized the opportunities that arise from such changes.
Visconti outlined the company's focus on steering through tough economic times and the EV market's headwinds. He also highlighted the redesign of their outboard motor and the construction of a new factory, aiming for an October 2024 completion. Despite a competitive market with major players like Yamaha, Mercury, and Suzuki entering the EV space, Forza X1 is actively seeking partnerships to position its products competitively. The company is also addressing a NASDAQ delisting notice and may consider a reverse stock split if necessary.
Key Takeaways
- Forza X1 Inc. navigates leadership changes with the resignation of CEO Jim Leffew and CFO Carrie Gunnerson.
- The company is focusing on reducing costs, postponing long-term projects, and prioritizing near-term impacts.
- A new outboard motor design aims for increased durability and manufacturing efficiency.
- A new 60,000 square foot facility is under construction with an expected completion in October 2024.
- Forza X1 ended the year with cash and cash equivalents of approximately $9.8 million and working capital of around $12.8 million.
- The company is actively seeking strategic partnerships within the marine industry.
- Forza X1 is addressing a NASDAQ delisting notice and may consider a reverse stock split to comply with listing rules.
Company Outlook
- Forza X1 is optimistic about the potential of electric boats in the marine transportation industry.
- The company is adapting its business strategy to minimize cash burn and advance its final beta product.
Bearish Highlights
- Departures of key executives could impact company leadership and investor confidence.
- Increasing competition from established companies like Yamaha, Mercury, and Suzuki poses significant challenges.
Bullish Highlights
- Forza X1's redesign of the outboard motor and new factory construction show progress towards scalability and market readiness.
- The company's efforts to form strategic partnerships may enhance its market position.
Misses
- The company faces the risk of NASDAQ delisting due to the stock trading under $1 a share.
Q&A Highlights
- Joseph Visconti expressed confidence in obtaining a six-month extension from NASDAQ to address the delisting issue.
- The company remains committed to its vision of producing affordable electric boats despite market challenges.
InvestingPro Insights
Forza X1 Inc. (FX1) is at a critical juncture as it addresses leadership turnover and works towards strategic goals amidst a challenging economic landscape. Real-time data from InvestingPro provides a deeper look into the company's financial health and market performance, which could be crucial for investors following the company's recent developments.
InvestingPro Data:
- Market Cap (Adjusted): Forza X1 stands at a market capitalization of $7.52M, reflecting its current valuation in the market.
- P/E Ratio (Adjusted) last twelve months as of Q3 2023: The company's price-to-earnings ratio is -1.26, indicating that it is not generating positive earnings at the moment.
- Gross Profit Margin last twelve months as of Q3 2023: The gross profit margin stands at -1217.25%, highlighting significant challenges in profitability.
InvestingPro Tips:
- Forza X1 holds more cash than debt on its balance sheet, which could provide some financial flexibility in navigating current market headwinds.
- Analysts do not anticipate the company will be profitable this year, aligning with the company's own outlook on the challenges ahead.
These insights should be considered alongside the company's strategic initiatives, such as the redesigned outboard motor and new factory construction. The data underscores the importance of Forza X1's focus on reducing costs and minimizing cash burn, as it operates in a highly competitive space with negative profitability indicators.
For those looking for more comprehensive analysis, InvestingPro offers additional tips on Forza X1, including insights into stock volatility, gross profit margins, and long-term price performance. Access to these tips can be found at https://www.investing.com/pro/FRZA, and users can take advantage of an additional 10% off a yearly or biyearly Pro and Pro+ subscription with the coupon code PRONEWS24. There are 15 additional InvestingPro Tips available for Forza X1, providing investors with a well-rounded view of the company's financial and market position.
Full transcript - Forza X1 (FRZA) Q4 2023:
Operator: Welcome to the Forza X1 Inc. Year-End 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 Interim CEO of 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 its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, 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 its filings with the Securities and Exchange Commission, which are available on the company’s Investor Relations website at ir.forzax1.com. You should not rely upon forward-looking statements as prediction 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 at ir.forzax1.com for at least 90 days. Audiocast quality is subject to your equipment available bandwidth and Internet traffic. If you experience unsatisfactory audio quality, please use the telephone dial-in option. A question-and-answer session will follow the 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: Good morning, everybody. I want to welcome everyone to the call today. Thank you for taking the time out of your schedules. My name is Joseph Visconti. I'm the Executive Chairman and Interim CEO of Forza X1. Before I begin my presentation I want to speak on the recent news of the resignations of former CEO President Jim Leffew and our CFO, Carrie Gunnerson. Both of these resignations were untimely, but also unrelated. I understand the optics were not great. But for those of you that know me, you also know that I strongly believe and change brings opportunity. Jim Leffew and our team of Forza engineers were diligently to push our mission forward and I want to thank Jim for all of his efforts and we wish him the best of luck with his future endeavors. Carrie Gunnerson has graciously agreed to stay on through the audit period and 10-K process to ensure a smooth transition for our finance team in the hiring and onboarding of a new CFO. Carrie and I have worked together for nearly three years in both Forza and Twin Vee. I want to thank her for her contribution throughout her tenure and I wish her well. As a CEO of a micro-cap public company launching a disruptive product in increasingly crowded marketplace, especially when economic headwinds or EV headwinds continue to be challenging, a change of leadership provides us with an opportunity to re-evaluate our strategies while we're experiencing these headwinds with a fresh perspective to capitalize on emerging opportunities with the goal of driving sustainable growth as we launch our products. Although electric boat sales - although electric boat annual sales units have been relatively small in comparison to traditional boats with outboard combustible motors, we believe our products’ potential remains strong. As with automobiles, EV offers sustainability, convenience and reduce service cost. We see electric boats playing a significant role in the future of marine transportation and we firmly believe enforces mission of manufacturing, selling affordable family-friendly day boats. However, because of the current state of the recreational marine and EV space, both on the marine and EV side, our primary focus right now is to steer this company through these challenging times and emerge stronger on the other side. So where do we go from here? Our outboard motor has undergone while our team is exploring and open to all available options and opportunities within our industry we are currently reducing unnecessary expenditures. We are shelving longer-term projects and favor those with more near-term impact to reduce our expenditures and lengthen our runway. As of today, our outboard motor has undergone an extensive redesign. Our new design incorporates a simplified frame structure that uses stacked custom casings, castings, which are sealed for increased durability and corrosion protection. The overall shape of the motor and cowlings have been updated. And this redesign facilitates higher volume manufacturing processes such as thermal form and injection molding. Additionally, the motor cooling units have been re-engineered to optimize cooling flow rates to the inverter, which have yielded better run times, speed, range and aims to extend time on the water at first single charge. Our engineering team continuously improves the engine design, lower units and control systems for each iteration to help reduce overall weight and cost of the increased functionality. We are currently producing what we believe to be the final beta iteration of the equivalent of 140 horsepower outboard motor. On the parallel path, our Forza factory is under construction. I saw images yesterday of the building going vertical and the exterior walls are being assembled. We are constructing a state-of-the-art 60,000 square foot facility on our 11 acre property and Marion, North Carolina. We are shooting for an October 2024 completion date. So it's right around the corner. Before we look at what's ahead for us, let me provide an update on Forza’s cash position and current state. As of December 31, 2023, Forza had cash and cash equivalents of approximately $9,822,000. Forza had working capital of approximately $12,814,000 as of December 31, 2023. Last year our burn rate was approximately $600,000 per month and with recent cuts and reduction our burn is approximately $200,000, a month not including the construction cost of our new facility. We are also mindful of the increasing competition from players like Yamaha who recently acquired propulsion manufacturer named Torqeedo in January. Mercury we know, has launched a whole suite of EV outward motors and Suzuki, we believe will be announcing soon. These major players are entering the EV market and one of the reasons we believe in the electrification of the recreation of marine industry is that these large engine manufacturers have committed significant resources to developing their own electric motors for the marine EV space. However, we recognize that competing with the likes of Mercury, Yamaha, and Suzuki will require us to form strategic partnerships while I'm unable to give specifics, I can say that we are currently in talks with several key technical and financial players in the marine industry. These partnerships can potentially impact our trajectory with the goal of positioning our products, the Forza products along with other major marine manufacturers. From day one, our vision was to produce affordable electric boats and we continue to believe that the EV marine space will follow the automotive space. There is no straight line with success. We all know that. When introducing and manufacturing disruptive new products to a nascent market, there will always be challenges, but the number one rule is to not run out of money and cautiously and optimistically protect your capital. Finally, I do want to mention that we are addressing the delisting notice we received from NASDAQ a few months ago. Unfortunately, Forza continues to trade under $1 a share. Our team will request a six-month extension to comply with the continued listing rule to allow us more time to increase the stock price. However, if we are unable to get the stock over or the fact does not trade over $1 for a minimum of 10 consecutive business days, we will have to consider alternative methods with NASDAQ such as a reverse stock split. In conclusion, while we are adjusting our business to minimize cash burn, while pushing our final beta product forward, we are an agile group of innovators. We are not afraid to pivot and adapt based on current and projected near-term marketplace. And with that, I would like to open it up to questions.
Operator: [Operator Instructions] Our first questions come from the line of Frank Griffin with Forza X1 please proceed with your questions.
Frank Griffin: Good Morning, Joe. This is Frank from North Carolina. How are you doing?
Joseph Visconti: Good. How are you doing?
Frank Griffin: I'm fine. Congratulations on the 4% increase in your financials. That's great.
Joseph Visconti: I think you're looking at the Twin Vee. This is the Forza investor call. That was for the Twin Vee increased results.
Frank Griffin: Oh, the 4% increase was… okay concerning Forza, I just - I just wanted to be concerning the SEC and your delisting or we as a new company, is it a pretty good chance for getting extension and grace period for six months?
Joseph Visconti: Well, there's no guarantee. But Forza has the capital, the cash and typically companies that do apply for an extension are granted. Again there's no guarantee, but I'm being advised that there's a very good chance that NASDAQ grants these six months extensions.
Frank Griffin: Thank you very much and your continued hard work where you used to that. God bless you and thank you.
Joseph Visconti: Thank you, sir.
Operator: Thank you. [Operator Instructions] I'm showing no further questions in the queue. I'd like to pass the floor back over to Joseph Visconti for any closing remarks.
Joseph Visconti: I just want to thank everyone for their time today and if you have any additional questions, please email them to Glenn@ twinvee.com and we'll be happy to help you. Thank you again, everyone. Have a good day.
Operator: Thank you. This just concludes today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
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