Thunder Power Holdings, Inc.(AIEV) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This part provides the company's unaudited financial statements, management's discussion and analysis, market risk disclosures, and internal controls Item 1. Unaudited Financial Statements This section presents the unaudited condensed financial statements and related notes for Feutune Light Acquisition Corporation Condensed Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit Condensed Balance Sheet Highlights | Metric | March 31, 2023 (Unaudited) ($) | December 31, 2022 ($) | | :-------------------------- | :------------------------- | :---------------- | | Cash | $378,130 | $546,632 | | Investments in Trust Account | $102,363,979 | $100,525,498 | | Total Assets | $102,860,923 | $101,240,621 | | Total Current Liabilities | $1,333,783 | $343,330 | | Total Liabilities | $4,842,144 | $3,832,932 | | Stockholders' Deficit | $(3,912,403) | $(2,797,902) | Condensed Statements of Operations This section outlines the company's financial performance, detailing revenues, expenses, and net income or loss Condensed Statements of Operations Highlights | Metric | For the Three Months Ended March 31, 2023 ($) | For the Period from January 19, 2022 (inception) through March 31, 2022 ($) | | :-------------------------------------- | :---------------------------------------- | :---------------------------------------------------------------------- | | Formation and operating costs | $137,000 | $551 | | Franchise tax expenses | $24,200 | - | | Loss from Operations | $(161,200) | $(551) | | Interest earned on investment in Trust | $1,092,899 | - | | Income before income taxes | $931,699 | $(551) | | Income taxes provision | $320,609 | - | | Net Income (Loss) | $611,090 | $(551) | - The company reported a net income of $611,090 for the three months ended March 31, 2023, a significant improvement from a net loss of $551 for the period from inception through March 31, 2022, primarily driven by interest earned on investments held in the Trust Account[13] Condensed Statements of Changes in Stockholders' Deficit This section tracks changes in stockholders' deficit, reflecting net income, redemptions, and other equity adjustments Changes in Stockholders' Deficit | Metric | Balance as of December 31, 2022 ($) | Net Income ($) | Accretion of carrying value to redemption value ($) | Balance as of March 31, 2023 ($) | | :-------------------------------------- | :------------------------------ | :--------- | :---------------------------------------------- | :--------------------------- | | Accumulated Deficit | $(2,798,202) | $611,090 | $(1,725,591) | $(3,912,703) | | Total Stockholders' Deficit | $(2,797,902) | $611,090 | $(1,725,591) | $(3,912,403) | - The accumulated deficit increased from $(2,798,202) at December 31, 2022, to $(3,912,703) at March 31, 2023, primarily due to the accretion of carrying value to redemption value, despite a net income for the period[16] Condensed Statements of Cash Flows This section summarizes cash flows from operating, investing, and financing activities over specific periods Condensed Statements of Cash Flows Highlights | Cash Flow Activity | For the Three Months Ended March 31, 2023 ($) | For the Period from January 19, 2022 (inception) through March 31, 2022 ($) | | :---------------------------------- | :---------------------------------------- | :---------------------------------------------------------------------- | | Net Cash Used in Operating Activities | $(400,420) | $(551) | | Net Cash Used in Investing Activities | $(745,582) | - | | Net Cash Provided by Financing Activities | $977,500 | $92,691 | | Net Change in Cash | $(168,502) | $92,140 | | Cash at end of period | $378,130 | $92,140 | - The company experienced a net decrease in cash of $168,502 for the three months ended March 31, 2023, primarily due to cash used in operating and investing activities, partially offset by financing activities[17] Notes to Condensed Financial Statements This section provides detailed explanations and disclosures supporting the condensed financial statements and accounting policies Note 1 — Organization and Business Operation This note describes the company's formation, purpose as a blank check company, IPO details, and going concern considerations - Feutune Light Acquisition Corporation is a blank check company formed on January 19, 2022, for the purpose of a business combination, specifically excluding targets based in China (including Hong Kong and Macau)[19] - The company completed its IPO on June 21, 2022, raising $97,750,000 from 9,775,000 public units and $4,988,750 from 498,875 private placement units[21][22] - As of March 31, 2023, the company had cash of $378,130 and a working capital deficit of $491,153, raising substantial doubt about its ability to continue as a going concern without completing a business combination or securing additional financing[33][39] - The company extended its business combination period by three months to June 21, 2023, through an aggregate $977,500 Extension Payment deposited into the Trust Account by the Sponsor and from working capital[26][27] Note 2 — Significant accounting policies This note outlines key accounting principles, including fair value measurements, equity classifications, and income tax treatment - The financial statements are prepared in conformity with US GAAP and SEC rules, with interim results not necessarily indicative of full-year results[40] - The company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[41][42] - Investments held in the Trust Account are classified as trading securities and measured at fair value, with gains and losses recognized as interest income[46] - Common stock subject to possible redemption is classified as temporary equity at its redemption value of $10.43 per share as of March 31, 2023, with changes in redemption value recognized immediately[52] - The company accounts for income taxes under ASC 740, recognizing deferred tax assets and liabilities, and has established a full valuation allowance due to significant uncertainty regarding future realization of deferred tax assets[61][112] - The Inflation Reduction Act of 2022 introduced a new 1% U.S. federal excise tax on certain stock repurchases (including redemptions) after December 31, 2022, which could impact the company's cash available for a business combination[66][67] Note 3 — Investments Held in Trust Account This note details the nature and value of investments held in the Trust Account, primarily U.S. Treasury Securities Investments Held in Trust Account | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------------- | :------------- | :---------------- | | Money market funds (U.S. Treasury Securities) | $102,363,979 | $100,525,498 | | Interest income (3 months ended March 31, 2023) | $1,092,899 | N/A | Note 4 — Initial Public Offering This note provides IPO details, including proceeds, public share redemption features, and common stock subject to redemption - The IPO on June 21, 2022, involved the sale of 9,775,000 Public Units at $10.00 each, generating $97,750,000[71] - Public Shares include a redemption feature, classifying them as temporary equity outside of permanent equity, with changes in redemption value recognized immediately[72][73] Common Stock Subject to Possible Redemption Reconciliation | Metric | As of March 31, 2023 ($) | As of December 31, 2022 ($) | | :-------------------------------------- | :------------------- | :---------------------- | | Gross proceeds | $97,750,000 | $97,750,000 | | Less: Proceeds allocated to Warrants | $(2,649,025) | $(2,649,025) | | Less: Proceeds allocated to Rights | $(1,270,750) | $(1,270,750) | | Less: Offering costs of Public Units | $(6,154,646) | $(6,154,646) | | Plus: Accretion to redemption value | $14,255,603 | $12,530,012 | | Common stock subject to possible redemption | $101,931,182 | $100,205,591 | Note 5 — Private Placement This note describes the private placement of units, including sales to the Sponsor, and associated transfer restrictions - The company sold 498,875 Private Placement Units at $10.00 per unit, generating $4,988,750, with the majority sold to the Sponsor[76] - Founder Shares and Private Shares are subject to agreements including voting in favor of a business combination and waiving redemption rights in certain scenarios[77] - Private Placement Units and underlying securities have transfer restrictions until 30 days after the business combination closing, with limited exceptions[78] Note 6 — Related Party Transactions This note details transactions with related parties, including Founder Shares acquisition and extension payments to the Trust Account - The Sponsor acquired 2,443,750 Class B common stock (Founder Shares) for $25,000, representing 20% of the common stock outstanding post-IPO[79][80] - Founder Shares granted to management and directors are subject to a performance condition (Business Combination consummation) for compensation expense recognition[83] - The Sponsor deposited $977,500 into the Trust Account on March 21, 2023, as an Extension Payment, enabling a three-month extension for the business combination period[86] - The Extension Payment was made via an unsecured, non-interest bearing promissory note to the Sponsor, convertible into Private Units at $10.00 per unit upon business combination closing[87] Note 7 — Commitments & Contingencies This note outlines potential COVID-19 impacts, registration rights for securities, and deferred underwriting fees - The company acknowledges potential negative effects of the COVID-19 pandemic on its financial position and search for a target company, though the specific impact is not yet determinable[91] - Holders of Founder Shares, Private Placement Units, and Working Capital Units are entitled to registration rights, requiring the company to register these securities for resale[92] - The company paid a $1,955,000 underwriting discount at IPO closing and owes a deferred fee of $3,421,250 to underwriters upon business combination closing[94] Note 8 — Stockholder's Equity This note details the company's capital structure, including common stock, rights, and warrants, and their accounting treatment - As of March 31, 2023, there were 558,875 shares of Class A Common Stock issued and outstanding (excluding 9,775,000 redeemable shares) and 2,443,750 shares of Class B Common Stock issued and outstanding[96][97] - Class B Common Stock automatically converts to Class A Common Stock on a one-for-one basis upon the initial Business Combination[99] - The company issued 10,273,875 Rights and 10,273,875 Warrants, with each Right exchangeable for one-tenth of a Class A Common Stock upon business combination, and each Warrant exercisable for one Class A Common Stock at $11.50[101][102][109] - Warrants are accounted for as equity instruments, with their fair value estimated using the Monte Carlo Model at approximately $2.7 million for IPO warrants and $0.1 million for Private Placement warrants[107][108] Note 9 — Income Taxes This note provides details on the income tax provision, including current and deferred taxes, and a valuation allowance Income Tax Provision (Benefit) | Category | For the Three Months Ended March 31, 2023 ($) | | :------------------------ | :---------------------------------------- | | Current Federal | $211,295 | | Current State | $90,555 | | Deferred Federal | $(11,439) | | Deferred State | $(4,902) | | Change in valuation allowance | $35,100 | | Total Income Tax Provision | $320,609 | - The company's taxable income primarily consists of interest earned on investments in the Trust Account, resulting in an income tax provision of $320,609 for the three months ended March 31, 2023[111] - A full valuation allowance has been established against deferred tax assets due to significant uncertainty regarding their future realization[112] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, and future outlook, highlighting the company's blank check status and liquidity Special Note Regarding Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations[115] - The company disclaims any obligation to update or revise forward-looking statements unless required by applicable securities law[115] Overview This section provides a general overview of the company's purpose as a blank check company seeking a business combination - Feutune Light Acquisition Corporation is a blank check company formed to effect a business combination, specifically excluding targets based in China (including Hong Kong and Macau)[116] - The company expects to incur significant costs in its acquisition plans and cannot assure the successful completion of a business combination[117] Permission Required from the PRC Authorities for our Business Combination and Relevance of PRC Regulations. This section clarifies that the company does not require permission from PRC authorities for its operations or business combination - The company, being a Delaware corporation with no operations in China and U.S. citizen officers/directors, is not required to obtain permission from Chinese authorities for its operations or business combination[119] - The company does not consider itself a 'domestic [Chinese] company' under the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies, as it does not meet the criteria for Chinese operational activities or senior management[120] Certain Potential Restrictions or Negative Impacts This section discusses potential negative perceptions or regulatory scrutiny impacting business combination efforts - Despite management's limited ties to China, the perception from potential target companies or the market regarding past affiliations of management/sponsor members could negatively impact the search for a non-China/non-Hong Kong-based target[122] - The presence of Hong Kong citizens and U.S. permanent residents among the Sponsor's members could subject a proposed business combination with a U.S. business in a regulated industry to U.S. foreign investment regulations and CFIUS review, potentially delaying or blocking the transaction[123] Recent Developments This section highlights recent events, including the extension of the business combination period and changes in accounting firm - The company extended its business combination period by three months to June 21, 2023, through a $977,500 Extension Payment from the Sponsor[124][125] - The board and Audit Committee authorized the dismissal of Marcum LLP and engagement of MaloneBailey, LLP as the new independent registered public accounting firm, effective April 25, 2023[127] - The company has until June 21, 2023 (or December 21, 2023, with maximum extensions) to consummate its initial Business Combination[128] Results of Operations This section analyzes the company's financial performance, noting the absence of operating revenues and impact of interest income - The company has not generated operating revenues to date, with activities limited to organizational efforts and IPO preparation/search for a target[129] Net Income (Loss) Comparison | Period | Net Income (Loss) ($) | | :-------------------------------------- | :---------------- | | Three months ended March 31, 2023 | $611,090 | | Inception (Jan 19, 2022) through March 31, 2022 | $(551) | Liquidity and Capital Resources and Going Concern This section discusses the company's cash position, working capital, and substantial doubt about its ability to continue as a going concern - As of March 31, 2023, the company had cash of $378,130 and a working capital deficit of $491,153[133] - Substantially all funds in the Trust Account are intended for the Business Combination, with interest available for taxes; funds outside the Trust Account are for identifying and evaluating targets[134][135] - The company's ability to continue as a going concern is in substantial doubt due to potential insufficient funds for operations prior to a business combination or the need for additional financing if a significant number of public shares are redeemed[137][139] Off-Balance Sheet Financing Arrangements This section confirms the absence of any off-balance sheet financing arrangements as of the reporting date - As of March 31, 2023, the company has no obligations, assets, or liabilities considered off-balance sheet arrangements[140] Contractual Obligations This section outlines the company's contractual commitments, including registration rights and deferred underwriting fees - The company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities as of March 31, 2023, and December 31, 2022[141] - Holders of Founder Shares, Private Placement Units, and Working Capital Units are entitled to registration rights, with the company bearing the expenses for filing such registration statements[142] Critical Accounting Policies This section details significant accounting policies requiring management's judgment, such as fair value measurements and equity classification - Investments held in the Trust Account are classified as trading securities and measured at fair value, with changes recognized as interest income[145] - Offering costs directly related to the IPO are charged to shareholders' equity upon completion[146] - Warrants are accounted for as equity-classified instruments based on specific terms and authoritative guidance[147][148] - Common stock subject to possible redemption is classified as temporary equity at redemption value, with changes recognized immediately[149] - Income taxes are accounted for under ASC 740, including recognition of deferred tax assets/liabilities and a valuation allowance[150][151][152] Net Income (Loss) per Share This section explains the methodology for calculating net income (loss) per share, considering redeemable and non-redeemable common stock - Net income (loss) per share is determined by allocating undistributed income (loss) ratably between redeemable and non-redeemable common stock, with accretion to redemption value treated as deemed dividends[156] Recent Accounting Pronouncements This section assesses the potential impact of recently issued accounting pronouncements on the company's financial statements - Management does not believe any recently issued, but not yet effective, accounting pronouncements would materially affect the company's financial statements if currently adopted[157] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that the company has no applicable quantitative and qualitative disclosures about market risk - The company has no applicable quantitative and qualitative disclosures about market risk[158] Item 4. Controls and Procedures This section details the evaluation of disclosure controls and procedures, concluding their effectiveness, and reports no material changes Evaluation of Disclosure Controls and Procedures This section describes management's evaluation of disclosure controls and procedures, concluding their effectiveness with reasonable assurance - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2023, and concluded they were effective[159] - Disclosure controls and procedures provide reasonable, not absolute, assurance that objectives are met, acknowledging inherent limitations[160] - The report does not include an attestation report of internal controls from the independent registered public accounting firm due to the company's status as an emerging growth company[161] Changes in Internal Control over Financial Reporting This section reports that no material changes occurred in internal control over financial reporting during the fiscal quarter - There were no changes in internal control over financial reporting during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[162] PART II – OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings, nor have any been threatened against it - The company is not a party to any material legal proceedings, and no material legal proceedings have been threatened by or against it[163] Item 1A. Risk Factors This section highlights a new risk factor related to a potential 1% U.S. federal excise tax on stock redemptions - A new 1% U.S. federal excise tax, introduced by the Inflation Reduction Act of 2022, could be imposed on the company for stock redemptions after December 31, 2022[164][165] - The excise tax is imposed on the repurchasing corporation, not shareholders, and could reduce cash available for the initial Business Combination, though redemptions in connection with a liquidation are generally exempt[166][167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of equity securities and use of proceeds, primarily deposited into a Trust Account - On June 21, 2022, the company completed a private placement of 498,875 Private Placement Units to its Sponsor and US Tiger, generating gross proceeds of $4,988,750[168] - The net proceeds of $99,216,250 from the IPO and the Private Placement were placed in a Trust Account for the benefit of public stockholders and underwriters[170] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - There are no defaults upon senior securities[172] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[172] Item 5. Other Information The company reports no other information - No other information is reported[172] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q Key Exhibits Filed | No. | Description of Exhibit | | :-------- | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | 31.1* | Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2* | Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1* | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2* | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS* | Inline XBRL Instance Document | | 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | SIGNATURES This section contains the required signatures for the Quarterly Report on Form 10-Q, affirming its submission - The report was signed on May 15, 2023, by Yuanmei Ma, CFO of Feutune Light Acquisition Corporation, pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934[176][177]