PONO CAPITAL(PONO) - 2024 Q1 - Quarterly Report

Financial Performance - AERWINS Technologies Inc. reported a net income of $8,926,531 for the three months ended March 31, 2024, compared to a net loss of $7,801,544 for the same period in 2023, representing a positive variance of $16,728,075 or 214.4%[150] - Net income for the three months ended March 31, 2024, was $8,926,531, representing a $12,415,162 or 355.9% increase from a net loss of $3,488,631 for the same period in 2023[157] - The company reported a net cash used in continuing operating activities of $(380,797) for the three months ended March 31, 2024, compared to $810,374 for the same period in 2023[193] - Net cash used in operating activities was $380,797 for the three months ended March 31, 2024, compared to $3,230,216 for the same period in 2023[194] - Net cash provided by financing activities amounted to $542,000 for the three months ended March 31, 2024, primarily from proceeds from issuance of shares[196] Operational Changes - General and administrative expenses decreased by $2,954,502 or 82.6%, from $3,574,882 in Q1 2023 to $620,380 in Q1 2024, primarily due to reduced consulting and professional service fees related to the business combination with Pono[155] - The company discontinued non-core operations, including drone photography services and the manned air mobility business, leading to a focus on developing an FAA-compliant Manned Air Vehicle (MAV)[144] - The company’s total operating expenses for Q1 2024 were $620,380, a significant decrease from $3,574,882 in Q1 2023, reflecting a strategic shift in operations[150] Future Plans - AERWINS plans to market and sell MAVs primarily in the United States, China, and Europe starting in 2027, with a focus on establishing a dealer distribution network[148] - The company aims to achieve profitability by controlling costs and improving operating efficiency in the mass production of MAVs[149] - The company plans to redesign its MAV and commence production to generate sufficient revenue, but faces challenges in raising additional funds[169] Financial Liabilities and Assets - As of March 31, 2024, the company had $163,275 in cash compared to $2,072 as of December 31, 2023, with a working capital deficit of $4,305,916[164] - The accumulated deficit as of March 31, 2024, was $63,484,844, raising substantial doubt about the company's ability to continue as a going concern[168] - Total liabilities as of March 31, 2024, were $8,966,839, down from $19,547,304 as of December 31, 2023[170] - The company raised $542,000 in cash from the sale of common stock to meet liquidity needs[165] Bankruptcy and Legal Matters - A.L.I. Technologies Inc. filed for voluntary bankruptcy on December 27, 2023, following the discontinuation of its operations, with a bankruptcy trustee appointed on January 10, 2024[144] - A.L.I. filed for bankruptcy on December 27, 2023, leading to a deconsolidation of $11,058,790 in net liabilities[161][162] - The company expects no distributions from A.L.I.'s liquidation following its bankruptcy proceedings[161] Financing Activities - The company entered into a Purchase Agreement with Lind Global to issue up to $6,000,000 in secured convertible promissory notes for a purchase price of $5,000,000, along with warrants to purchase 56,016 shares of common stock[174] - The first tranche of the financing included a Convertible Note with a purchase price of $2,100,000 and a principal amount of $2,520,000, while the second tranche included a Convertible Note with a purchase price of $1,400,000 and a principal amount of $1,680,000[175] - The Convertible Notes have a maturity date of April 12, 2025, and May 23, 2025, respectively[176] - The conversion price of the Convertible Notes is set at the lesser of $9.00 or 90% of the lowest VWAP during the 20 trading days prior to conversion, with a floor price of $18.176[177] Revenue and Income Recognition - Other income increased significantly to $9,546,911 in Q1 2024, compared to $86,251 in Q1 2023, marking a variance of $9,460,660 or 10,968.8%[150] - Total other income increased by $9,460,660 or 10,968.8% from $86,251 for the three months ended March 31, 2023, to $9,546,911 for the three months ended March 31, 2024[156] - Revenue recognition follows ASC Topic 606, with a consumption tax of 10% on gross sales[206] Shareholder and Compensation Matters - The company accounts for share-based compensation using the fair value method as per ASC 718[209] - Warrant liabilities are recorded at fair value and subject to re-measurement at each reporting period[208]