In a strategic move to conserve cash due to prevailing market conditions, Forza X1, Inc. has decided to cease the development and sales of its electric boats powered by proprietary technology. The decision, made by the company's Board of Directors on Thursday, aims to streamline operations and reduce cash outflows.
The Florida-based ship and boat manufacturing company, which trades on the Nasdaq Capital Market under the ticker NASDAQ:FRZA, is also considering a merger with Twin Vee PowerCats Co. as part of its strategic alternatives. This development follows a period of financial challenges that have necessitated a significant reduction in workforce, leaving Forza X1 with only five employees.
The downsizing is expected to bring about pre-tax charges under $100,000, primarily attributed to severance and other related benefits, which will likely be recognized in the third quarter of the fiscal year 2024. These costs will be mostly settled in cash. The wind-down process is projected to cut the company's monthly cash used in operating activities by over 50%, from approximately $403,000 per month to under $200,000.
Forza X1 has issued forward-looking statements regarding the anticipated financial impact of these changes. However, the company cautions that actual results might vary due to several factors, including the ability to achieve the expected cost reductions. These cautionary remarks are in line with the risk factors outlined in the company's most recent filings with the SEC.
The information disclosed here is based on a press release statement from Forza X1, Inc. The company has underscored the potential variability of future outcomes, underscoring the inherent uncertainty in such forward-looking predictions. The company has reaffirmed its commitment to keep stakeholders informed on any developments as they occur.
In other recent news, Forza X1, Inc. announced a strategic shift in response to the decreased demand for marine electric vehicles (EVs). Amid a challenging market, the company continues construction on its North Carolina facility due to pre-existing financial commitments.
It is also actively seeking strategic alternatives, including joint ventures with companies that have complementary technologies or market access, to maximize shareholder value with minimal financial risk. Forza X1 has successfully reduced its cash burn rate from $600,000 per month to approximately $230,000, with a target to reach less than $150,000 by the end of Q2 2024.
Despite facing a market slowdown in the marine EV sector, the company is committed to adjusting its business strategy to ensure long-term growth and success. These are the recent developments in the company's operations.
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