Ladies and gentlemen, welcome to the Twin Vee PowerCats Company Second Quarter 2024 Investor Call. As a reminder, this call is being recorded. [Operator Instructions]. Your speakers for today's program are Chairman and CEO, Joseph Visconti and Chief Financial and Administrative Officer, Michael P. Dickerson.

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 believe, may, estimate, 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.twinvee.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 at ir.twinvee.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 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. [Operator Instructions]. I will now turn the call over to Joseph Visconti. Please go ahead, sir..

designing, building and selling innovative and best-in-class boats to appeal to a broad range of customers. We're confident that this merger represents the best path forward for both Twin Vee and Forza.

By combining our resources and strengths, we're creating a company that is better positioned to achieve our long-term goals and deliver exceptional value to our shareholders. We look forward to our shareholders receiving the S-4 and proxy statement when they are completed, so they can read more about this transaction in depth.

Now let me turn it over to our CFO, Mike Dickerson, who will give more financial details from the second quarter..

Thanks, Joseph, and good afternoon, everyone. I'd like to take a minute to walk through the Twin Vee consolidated financials and some discussion of our segments. On a consolidated basis, net sales were $4.3 million for the second quarter of 2024, a reduction of $3.8 million or 47% from the second quarter of 2023.

This reduction is similar to the 41% experienced in the first quarter of 2024, a result of the challenging end markets that we described in our earnings release and Joseph described for you earlier.

Even at these depressed levels, we've been able to maintain a positive gross margin of close to 5% through aggressive cost control and further rightsizing of our labor force.

Throughout the second quarter, the company has been reducing operating expenses through reductions in headcount, research and development and discretionary spending, partially offset by strategic upgrading of talent.

Included in operating expenses for the consolidated entity is $1.674 million related to a Forza asset impairment charge recognized in the second quarter of 2024, that I will speak more about in a minute.

Excluding the impact of this charge for the second quarter, overall consolidated operating expenses are down $793,000 or 20% compared to the second quarter of 2023. General and administrative expenses are down $158,000 or 17%. Salaries and wages are down $903,000 or 43% compared to the second quarter of 2023, respectively.

These overall reductions were achieved in both the Forza segment as well as the Gas Power or Twin Vee segment.

Research and development expenses were up $150,000 in the second quarter of 2024 compared to the same period of 2023 due to an inventory valuation adjustment at Forza of 176,000 to reserve for the value of R&D electric motors, partially offset by a reduction in R&D spend activity at Forza.

For the Twin Vee segment throughout the second quarter, the company has also been reducing operating expenses through headcount reductions, discretionary spending, partially offset by strategic upgrading of talent. For the second quarter, operating expenses are down $457,000 or 19% compared to the second quarter of 2023.

In terms of liquidity, at Forza, at the end of the first quarter, Joseph committed to reduce our burn rate considerably during the second quarter, and we've done just that. Forza ended the second quarter with $8.2 million of cash and cash equivalents. This compares to $9.95 million at the end of the first quarter.

Of this $1.75 million reduction, $1.3 million was used for additions to the new building construction. In other words, the noncapital investment reduction in cash was approximately $445,000 for the quarter or a burn rate of less than $150,000 a month.

We have continued to drive this burn rate lower and expect that as we exit the third quarter, we will be closer to $100,000 a month or better. At Twin Vee, the company ended the second quarter with $6.945 million of cash and cash equivalents. This compares to $7.428 million at the end of the first quarter.

Of this $483,000 reduction, $351,000 was used for capital additions, partially for new boat model molds and for the 30,000 square-foot building expansion project underway at Fort Pierce, Florida. In other words, the noncapital investment reduction in cash was only $132,000 for the entire quarter.

The last item I want to discuss with you is the impairment charge taken by Forza at the end of June. Related to the recently announced merger between Forza and Twin Vee. The company obtained an appraisal for its partially completed building in Marion, North Carolina.

The appraisal indicated that the carrying value of the building at the end of June was higher than market by $1.674 million leading the company to record an impairment charge of a similar amount.

We are evaluating the best course of action to achieve and maximize shareholder value, which may be attempting to sell the building as is, finish the building and market it for sale, finish the building and hold for better market conditions or finishing the shell of the building and delaying the completion of construction.

All of these possibilities are under consideration, viewed through the lens of maximizing shareholder value and conserving capital. With that, let me turn the call back over to Joseph for some concluding remarks..

Thank you, Mike. Twin Vee PowerCats and Aquasport boats have combined over 90 years of brand recognition and customer loyalty.

So, while the economic landscape presents challenges, we're confident that our commitment to these two incredible, storied and scalable brands allow us to offer various new and innovative products that will allow us to attract returning customers. And our focus on customer satisfaction will position us for continued growth and success.

We believe that Twin Vee is well prepared to navigate the current market conditions. And when we start seeing the next market upswing, we will be ready. We're excited about the opportunities that lie ahead, including our planned merger with Forza. We look forward to sharing our continued progress with you.

And I want to thank our investors, stakeholders, employees for their continued support. I also want to thank those of you on the call. I will now turn the call back over to the operator who will assist in taking any questions..

Operator:.

I want to thank you, everyone, for taking your time today, and we look forward to updating you with any further updates. Have a great day. Thank you..

Thank you. The conference of Twin Vee PowerCats Company has now concluded. Thank you for your participation. You may now disconnect your lines..