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spk02: Welcome to Forza X1 Incorporated third quarter 2022 investor call. As a reminder, this call is being recorded and all participants are in a listen-only mode. If anyone should need operator assistance during the conference, please press star zero on your telephone keypad. Your speaker for today's program is Jim Mathieu, president and CEO of Forza X1 Incorporated. Before I turn the call over to Jim, 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, financial position, business strategy, plans, 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 any of these terms or other similar expressions. The company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operation, 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 our filings with the Securities and Exchange Commission, which are available on our website at www.twinv.com. Should you not rely upon forward-looking statements, such as predictions of future events. We cannot assure you that the events and circumstances reflected in forward-looking statements will be achieved or occur. Finally, this conference call is being webcast. The webcast will be available in the investor relations section of our website at ir.forzax1.com for at least 90 days. Audio cast 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, 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. If you would like to ask a question, You may signal by pressing star 1 on your telephone keypad. I will now turn the call over to Jim Lefeu. Please go ahead.
spk00: Good afternoon. I would like to welcome everybody to the call today, and thank you for taking time out of your busy schedules. My name is Jim Lefeu, and I am the president and CEO of Forza X1. Forza is building an important and exciting business, and I would like to share our story. Because this is our first quarterly call, I will give a brief background on our company's mission while laying out our roadmap, including product development, industry partnerships, sales strategy, and factory construction. But first, I want to discuss the marine economy and how we think electrification, as in the auto industry, will fundamentally change the marine landscape. Forza X1's mission is to inspire and accelerate the adoption of sustainable recreational boating by producing stylish, fully integrated electric sport boats. We are focused on the creation, implementation, and sale of electric boats designed to use our electric propulsion technology and operating system. Our hulls are optimized for electric propulsion. Once the technology is operationalized for manufacturing, we believe Forza X1 boats will begin to mirror the adoption curves of other electric transportation products. Let me begin by providing context on the size of marine manufacturing in the U.S. and the state of the industry. New power boat retail unit sales in 2020 and 2021 reached approximately 300,000 units each year. The only time the industry has reached that number in the last 15 years. U.S. marine industry expenditures for boats, marine products and services totaled $56.6 billion last year, which was a record amount fueled by strong post-pandemic demand. Excitingly, part of what is fueling sales for the recreational boating industry is the uptick in first-time boat buyers. These new buyers accounted for 34% of total boat sales in 2021. Many Americans have realigned their disposable income dollars in favor of experiential pleasures, including boating. A few interesting facts about our industry. An estimated 100 million Americans go boating each year. Almost 40% of boaters have a household income of over $75,000. 95% of boats on the water in the U.S. are less than 26 feet. These boats can be trailered by a vehicle to local waterways. Also, 95% of boats sold in the U.S. are American-made. As of October of this year, new powerboat sales have declined year over year. so the effect of rising fuel prices and interest rates have begun to bite. The good news is that field inventory of boats is low over the last few years and well below pre-pandemic levels. Our focus at Forza is long-term. Our business model is built for the decades ahead. The marine industry is still extremely healthy, and we believe has significant tailwinds for the transition to electric. As the electric auto industry grows and battery technology improves, we expect marine electrification adoption to quickly follow suit. Being on the leading edge of any modern technology, of course, comes with challenges, but we are confident that the demand for electric boats will continue to grow as we have seen in other sectors. In other words, as people transition their gasoline vehicles to electric, they will demand the same advantages on the water, no fuel or exhaust, lower maintenance, and quieter experience. Most recreational boaters use their boats for short duration trips, such as an afternoon out on the water. And the vast network of inter-coastal waterways and inland lakes in the US will serve as the ideal geographic backdrop for our innovative electric products. What then do we think is the total addressable market for electric boats in the US? We believe it is potentially in the tens of thousands of units annually in the coming years, and we estimate a potential market of billions of dollars of revenue. At Forza, we believe the existing fleet of recreational boats cannot be repowered successfully with electric propulsion. Most boats in the 24 to 30 foot range are fiberglass deep V monohulls. These hulls are heavy and inefficient, And today's battery technology cannot push them as fast or as far as American consumers demand. That is why successful marine electrification will be driven by fully integrated designs, including a hull design to maximize the efficiencies of electric propulsion. This is exactly what we were doing at Forza. Our mission is the development, manufacturing, and sale of affordable and integrated electric boats for mass production to satisfy boater expectations. Now just a little more about our products, plans, and timelines. Our first Forza model, the FX1, is designed from the ground up as a fully integrated electric boat. Some other EV manufacturers are working on standalone elements of electrification, such as engines, batteries, or control systems. However, We are one of the only companies in the U.S. working on the entire electric value stream under one integrated framework. The first model we will be producing is the 25-foot FX1 dual console. When you create a new marine vessel, even at an accelerated pace, it can take a year or more to go from concept to plug to mold to final product. With the original work stemming from the vision and leadership of Forces Chairman Joseph Visconti, nearly two years ago, I am happy to report we are running the first fully built out FX1 electric prototype. The FX1 hull is a catamaran or dual hull design, which gives a stable and superior ride compared to a typical mono hull. A notable feature of the hull is that it is very energy efficient with less wetted surface, which reduces friction and drag and provides greater range for battery power. In addition to the intrinsically efficient design of dual hull, the fabrication methods utilized by Forza will contribute to the range and efficiency. All fiberglass parts will be built using strong yet lightweight engineered fabrics and cores, utilizing the latest in vacuum-infused closed molding techniques, thus decreasing hull weight over traditional model hulls. The second model we will be producing is the FX1 center console. This model will use the same hull as the dual console. The difference will be the deck layout and the arrangement, but the ride performance and range will be as we have already experienced on the existing dual console. In addition to the current FX1 designs, Forza engineers are also currently working on other hull platforms, including pontoon boats, deck boats, and electric-efficient monohull offerings. Now let's discuss the innovative Forza motor. We designed the motor to look very much like an internal combustion outboard engine, except it will be nearly maintenance-free, with no spark plugs or oil to change, and is expected to have a much longer service life. The average user will not know the outboard is even electric until they experience the absence of noise and fumes. There will be no oil slicks or gasoline sheen left behind because of their day on the water. Forza X1 has a robust and diverse team of mechanical and electrical engineers designing and building our products, led by Chief Engineer Dan Nord. To date, we have filed seven utility and design patents on our electric outboard. The motor and control system consists of over 250 parts, many of which will be fabricated in our state-of-the-art machine shop when our North Carolina factory is operational. We are also currently working on stacking electric motor designs to increase power output, among other unique features that will continue to push the boundaries of electric marine motors. As for our control systems, we have reimagined and modernized the helm through centralizing the standard controls. The FX1 switches, gauges, and control buttons are programmed into our 22-inch touchscreen, utilizing a customized graphical interface. We have partnered with industry leader Garmin to help design this high-tech command and control system. In addition to the normal functionality that one would find in the Garmin marine screen, such as GPS mapping, depth readings, heading indicators, and speed, the Garmin unit will also be capable of Forza's specific control and display for items such as state of battery charge, battery temperature, and amperage draw on the motor to reduce range anxiety and improve customer experience. The Garmin partnership features digital switching capabilities, which replaces traditional mechanical switches and circuit breakers. This system significantly reduces the size and length of cabling needed to distribute power throughout the boat, contribute to the lightweighting design goal, as well as reducing manufacturing costs for the company. Forza also has contracted with Osmosis Telematics, a leading provider of turnkey telematics solutions to the marine industry. Each FX1 boat will come standard with a communication unit designed to connect users through custom mobile and web applications to their boats over a cellular connection. The telematics platform will enable Forza to perform remote diagnostics for service, receive quicker feedback for product enhancements, and run over-the-air software updates. Another significant achievement for Forza has been securing a long-term supply agreement for lithium ion batteries suitable for use in the marine environment. We believe that will be a major factor that distinguishes us from other competitors in the field. Batteries are among the most expensive and hardest components to source. Our supplier, American Battery Solutions, will be manufacturing our batteries in the US and have proven to be engaged partners. As battery power density improves and as the market penetration increases, we will be on the forefront of changes in the industry due to our key relationships. Next, we will discuss our go-to-market sales and marketing strategy. Forza X1 will be executing a hybrid sales strategy involving a digital online solution combined with a traditional dealership model. Forza is developing a direct-to-consumer, all-digital web and app platform that will support personalized build specification and pricing, financing, scheduling of home delivery, training and service, all in an easy-to-use and frictionless manner. In addition, Forza is thrilled to confirm that we have entered into a strategic partnership with OneWater Marine. in which Forza and OneWater will partner to create a distribution channel for our integrated electric products. OneWater Marine is one of the largest and fastest growing pre-marine retailers in the United States and operates a total of 98 retail locations, 12 distribution centers or warehouses, and multiple online marketplaces in 20 states. This will give our customers who desire a more traditional boat buying experience the ability to engage one-on-one with One Water representatives, experience test rides, and importantly, pursue trade-in opportunities. This multi-channel sales approach will enable us to further our reach, sell more boats, and engage more customers. Next, we will discuss our planned factory construction. Forrester has selected North Carolina as the site of its future state-of-the-art factory. The announcement was delivered on July 28th by Governor Roy Cooper. We believe the factory will be the first of its kind in the U.S., a manufacturing and product development center specifically designed for fully integrated electric boats. In addition to traditional marine manufacturing fiberglass work, we will have a machine shop, upholstery shop, wire harness fabrication area, electric engine assembly section, and an engineering design and test center. The state of North Carolina was chosen by CNBC as the best place to do business in the country in 2022. They are aggressively promoting manufacturing, especially in the EV space. The local community of McDowell County has also enthusiastically embraced us and will provide training and infrastructure support and hiring resources to help ensure our success. The initial clearing of the land for the factory is expected to begin this month. and the target completion date is Q4 of 2023. In the meantime, we have leased a temporary space near the factory, which will be used as an engine and controls engineering and test center. For the next several months, all prototype work and assembly work will be undertaken at Twin Bees headquarters in Fort Pierce, Florida, while the engines will be fabricated in North Carolina. The factory is ultimately designed for construction in two phases of approximately 60,000 square feet each. When finished, the facility will be capable of producing 1,000 units a year. All aspects of manufacturing will be vertically integrated under one roof. As you can see, the Forza X1 mission is exciting and important. Our amazing team of engineers will continue to innovate. Our management team is experienced. and our board of directors is second to none. Joseph Visconti, Kevin Shuler, Neil Ross, and Marcia Cole bring a variety of significant experience and success to our governance. Our latest addition to the board, Marcia Cole, is as accomplished as anyone in the marine industry, having served in executive management roles for Genmar, Falvo Penta, and as president of Torquedo. She has a particular affinity for and specializes in bringing innovative products to market. We are thrilled to have her serve on our board. We are really excited to lead this industry's transition to electric. Our mission to inspire the adoption of sustainable recreational boating is critical and timely. We have an excellent team, and we are in a strong financial position with $13.9 million of cash in the bank, and we are honored to have you along for the journey. We look forward to significant updates on each of our calls coming up. With that, I will open this up to any questions you may have.
spk02: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, It may be necessary to pick up the handset before pressing the star keys. Our first question is from Calvid Horry with Horry Capital. Please proceed.
spk01: Hi, good afternoon. How long is that $14 million going to last you? In other words, what is your quarterly burn rate?
spk00: Okay, thanks for the question. Current burn rate is approximately, we just stepped it up a little bit with some new hiring and building of more prototypes. So we're averaging about $300,000 a month right now. We expect to get to the revenue stage in about 12 months. We are specifically building our factory in phases and we expect our cash in the bank currently to last approximately two years or well past the revenue and income stage.
spk01: Is it too early to estimate what your quarterly breakeven revenue level is?
spk00: I think it is because as we develop and iterate on our design, we are getting costs down every time we do something new. So if you can imagine, as you build prototypes, you're doing one-offs and you're spending money for tooling. So as we get into more and more volume, we believe those costs will come down and we have great expectations for what our profitability levels will be, but it's a little too early to say them at this point in time.
spk01: Okay, great. Thanks for the answers.
spk00: You bet.
spk02: As a reminder to star one on your telephone keypad if you would like to ask a question and we will just pause for a brief moment to pull for questions. There are no more questions at this time. I would like to turn the conference back over to Jim for closing comments.
spk00: Okay, thank you very much. In conclusion, we just would like to thank everyone for joining us on the call today. We have a fantastic opportunity in front of us, and we're excited by the prospects. We feel very confident that electric is coming to the marine world, and we feel like we're well positioned to be the leader in supporting that transition. So thank you again very much for joining us today.
spk02: Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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