Annual report [Section 13 and 15(d), not S-K Item 405]

Stockholders??? Equity

v3.25.1
Stockholders’ Equity
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
Stockholders’ Equity

13. Stockholders’ Equity

 

Twin Vee

 

Common Stock Issuance

 

On October 3, 2022, the Company issued and sold to ThinkEquity LLC, as the underwriter in a firm commitment underwritten public offering (the “Offering”) pursuant to the term of an underwriting agreement that the Company entered into with ThinkEquity LLC on September 28, 2022 (the “Underwriting Agreement”),an aggregate of 2,500,000 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $2.75 per share, for gross proceeds of $6,875,000, before deducting underwriting discounts, commissions and offering expenses. Pursuant to the Underwriting Agreement, the Company also issued to the underwriter, warrants to purchase up to 143,750 shares of common stock. The warrants will be exercisable at a per share exercise price of $3.4375.

 

On November 26, 2024, pursuant to the terms of the Merger Agreement with Forza and Merger Sub, Forza merged with and into Merger Sub, with Forza surviving the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of Forza common stock (other than any shares held by us), were converted into the right to receive 0.61166627 shares (the “Exchange Ratio”) of our common stock, any fractional shares to be rounded down to the nearest whole share of common stock, for an aggregate of 5,354,480 shares of our common stock. No cash proceeds were received related to this share issuance.

 

Common Stock Warrants

 

As of December 31, 2024, the Company had outstanding warrants to purchase an aggregate of 562,373 shares of common stock:

 

● warrants to purchase 150,000 shares of common stock at an exercise price of $7.50 per share that were issued to the representative of the underwriters on July 23, 2021, in connection with the Company’s IPO. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on July 20, 2026.

 

● warrants to purchase 143,750 shares of common stock at an exercise price of $3.4375 were issued to the representative of the underwriters on October 3, 2022, in connection with an underwritten public offering. These representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on September 28, 2027.

 

● warrants to purchase 105,501 shares of common stock at an exercise price of $10.22. These warrants were assumed by the Company on November 26, 2024 in connection with the Merger and were converted into a warrant to purchase the number of shares of Company common stock that the holder would have received if such holder had exercised such warrant to purchase shares of Forza common stock prior to the Merger . These representative’s warrants were originally issued in connection with Forza X1, Inc.’s initial public offering that closed on August 16, 2022, and are exercisable at any time and from time to time, in whole or in part, and expire on August 11, 2027.

 

● warrants to purchase 163,122 shares of common stock at an exercise price of $3.07. These warrants were assumed by the Company on November 26, 2024 in connection with the Merger and were converted into a warrant to purchase the number of shares of Company common stock that the holder would have received if such holder had exercised such warrant to purchase shares of Forza common stock prior to the Merger These representative’s warrants were originally issued in connection with Forza X1, Inc.’s public offering that closed on June 14, 2023, and are exercisable at any time and from time to time, in whole or in part, and expire on June 12, 2028.

 

There was no warrant activity during the year ended December 31, 2024.

 

Equity Compensation Plan

 

The Company maintains an equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the Plan. The number of awards under the Plan automatically increased on January 1, 2022. As of December 31, 2024, there were 948,089 shares remaining available for grant under this Plan.

 

Accounting for Stock-Based Compensation

 

Stock Compensation Expense

 

For the year ended December 31, 2024 and 2023, the Company recorded $417,375 and $557,479, respectively, of stock-based compensation expense, which is included in salaries and wages on the accompanying consolidated statement of operations.

 

Stock Options

 

Under the Company’s 2021 Stock Incentive Plan the Company has issued stock options. A stock option grant gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. The Company typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years.

 

The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the years ended December 31, 2024 and 2023:

 

               
    Year Ended December 31   Year Ended December 31,
    2024   2023
Expected term     1.42-6.5 years        5 years  
Expected average volatility     39.1 – 49.6%       35.9 - 51%  
Expected dividend yield     —       —  
Risk-free interest rate     3.77 –4.55%       0.72 – 1.5-4.72%  

 

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%

 

                                 
    Options Outstanding      
    Number of   Weighted Average   Weighted Average Remaining life   Fair value
    Options   Exercise Price   (years)   of options
                 
Outstanding, December 31, 2022       1,283,571     $ 4.14       8.95     $ 2,324,581  
Granted       75,000       1.35       10.00       39,960  
Exercised       —        —                —   
Forfeited/canceled       (87,555 )     (3.65 )             (151,394 )
Outstanding, December 31, 2023       1,271,016     $ 3.99       8.04     $ 2,213,147  
Granted       1,352,458       2.19       5.16       266,500  
Exercised       —        —                —   
Forfeited/canceled       (484,303 )     (3.63 )             (770,996 )
Outstanding, December 31, 2024       2.139,171     $ 2.93       5.04     $ 1,708,651  
                                   
Exercisable options, December 31, 2024       1,177,766     $ 4.32       7.31        

 

At December 31, 2024, 961,405 share of Twin Vee options are unvested and expected to vest over the next four years.

 

Restricted Stock Units

 

Under the Company’s 2021 Stock Incentive Plan the Company has issued restricted stock units (“RSUs”). RSUs are granted with a fair value equal to the closing market price of our common stock on the business day of the grant date. An award may vest completely at a point in time (cliff-vest) or in increments over time (graded-vest). Generally, RSUs vest over three years.

 

                                 
    Restricted Stock Units Outstanding        
    Number of   Weighted Average Grant – Date   Weighted Average Remaining life   Aggregate Intrinsic
    Units   Fair Value Price   (years)   Value
                 
Outstanding, December 31, 2022       —     $ —       —     $ —  
Granted       91,875       2.25       3.00       71,955  
Exercised       —       —               —  
Forfeited/canceled       (24,625 )     (2.25 )             (34,968 )
Outstanding, December 31, 2023       67,250     $ 2.25       2.07     $ 36,987  
                                   
Granted       87,300       0.84       2.56       48,015  
Exercised       —       —               —  
Forfeited/canceled       (70,010 )     (1.32 )             (38,505 )
Outstanding, December 31, 2024       84,540     $ 1.56       1.57     $ 46,497  

 

Forza

 

On November 26, 2024, we consummated the Merger contemplated by the Merger Agreement. Each outstanding share of Forza Common Stock (other than any shares held by the Company), were converted into the right to receive 0.61166627 shares (the “Exchange Ratio”) of Twin Vee Common Stock, any fractional shares to be rounded down to the nearest whole share of common stock, for an aggregate of 5,354,480 shares of Twin Vee Common Stock. No cash proceeds were received related to this share issuance.

 

The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the year ended December 31, 2023:

 

         
    Year Ended December 31  
    2023  
Expected term     5 years    
Expected average volatility     108 - 113 %  
Expected dividend yield     —    
Risk-free interest rate     2.98 –4.72 %  

 

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%

 

                                 
    Options Outstanding   Weighted Average    
    Number of   Weighted Average   Remaining life    
    Options   Exercise Price   (years)   Fair value of option
                 
 Outstanding, December 31, 2022       1,441,500     $ 3.41       0.05     $ 4,009,913  
 Granted       518,000       0.70       9.76       287,835  
 Exercised       —       —                  
 Forfeited/canceled       (69,583 )     1.24       9.62       (40,248 )
Outstanding, December 31, 2023       1,889,917     $ 2.75       9.36     $ 4,257,500  
                                   
Exercisable options, December 31, 2023       611,250     $ 2.79       2.79          

 

Accounting for Stock -Based Compensation

 

Stock Compensation Expense - For the year-to-date period until the date of merger on November 26, 2024, the Company recorded $759,765 of stock-based compensation expense which is included in salaries and wages on the accompanying condensed statement of operations.

 

Forza’s 2022 Stock Incentive Plan (the “Plan”)- Forza has issued stock options. A stock option grant gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. Forza typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years.