Flag Ship Acquisition Corporation(FSHP) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited interim financial statements and notes on the company's financial position UNAUDITED BALANCE SHEETS Unaudited Balance Sheets Summary | ASSETS / LIABILITIES | June 30, 2025 (US$) | December 31, 2024 (US$) | | :------------------- | :------------------ | :-------------------- | | Cash | 19,769 | 76,747 | | Cash and investments held in trust account | 72,281,179 | 70,799,136 | | Total Assets | 72,365,816 | 70,971,620 | | Promissory notes – related party | 930,351 | 677,851 | | Total Shareholders' deficit | (2,579,456) | (2,264,737) | UNAUDITED STATEMENTS OF OPERATIONS Unaudited Statements of Operations Summary | Metric | Three months ended June 30, 2025 (US$) | Three months ended June 30, 2024 (US$) | Six months ended June 30, 2025 (US$) | Six months ended June 30, 2024 (US$) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Formation, general and administrative expenses | (152,648) | (78,021) | (314,719) | (153,809) | | Interest and dividends earned on Trust Account | 742,274 | 97,945 | 1,482,043 | 97,945 | | NET INCOME (LOSS) | 589,626 | 19,924 | 1,167,324 | (55,864) | | Basic and diluted net income (loss) per ordinary shares subject to possible redemption | 0.07 | 0.01 | 0.13 | (0.03) | UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT Unaudited Statements of Changes in Shareholders' Deficit Summary | Item | Balance as of January 1, 2025 (US$) | Balance as of June 30, 2025 (US$) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Total Shareholders' deficit | (2,264,737) | (2,579,456) | Key Changes for Six Months Ended June 30, 2025: * Subsequent remeasurement of ordinary shares subject to redemption: $(739,769) for Q1 2025 and $(742,274) for Q2 2025. * Net income: $577,698 for Q1 2025 and $589,626 for Q2 2025. UNAUDITED STATEMENTS OF CASH FLOWS Unaudited Statements of Cash Flows Summary | Cash Flow Activity | Six months ended June 30, 2025 (US$) | Six months ended June 30, 2024 (US$) | | :----------------- | :----------------------------------- | :----------------------------------- | | Net income (loss) | 1,167,324 | (55,864) | | Net cash used in operating activities | (249,478) | (219,597) | | Net cash used in investing activities | - | (69,000,000) | | Net cash provided by financing activities | 192,500 | 69,209,013 | | NET CHANGE IN CASH | (56,978) | (10,584) | | CASH, END OF PERIOD | 19,769 | 105,626 | NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND BUSINESS BACKGROUND - The Company is a blank check company incorporated in the Cayman Islands on May 14, 2018, formed for the purpose of effecting a business combination, with an intention to focus on businesses connected to the Asian market[15][16] - The Initial Public Offering (IPO) was consummated on June 20, 2024, raising $69,000,000 from 6,900,000 units, with an additional $2,380,000 from a private placement to the Sponsor[18][19] - An amount of $69,000,000 from the IPO and private placement proceeds was placed in a Trust Account, to be invested in U.S. government treasury bills or money market funds[21] - The Company has until 12-15 months (extendable to 21-24 months) from the IPO closing to consummate a Business Combination[30] - On April 18, 2025, the Company entered into an Agreement and Plan of Merger with Great Future Technology Inc. (GFT) and GFT Merger Sub Limited, replacing a previous agreement with Great Rich Technologies Limited[35][36] - Management has determined that the potential mandatory liquidation if a business combination is not completed within the prescribed period raises substantial doubt about the Company's ability to continue as a going concern[42] NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES - The unaudited financial statements are prepared in accordance with U.S. GAAP for interim financial statements and Article 8 of Regulation S-X[43] - The Company is an "emerging growth company" and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[45][46] Trust Account Balances | Item | June 30, 2025 (US$) | December 31, 2024 (US$) | | :-------------------------------- | :------------------ | :-------------------- | | Cash and investments held in Trust Account | 72,281,179 | 70,799,136 | - Rights issued upon IPO and private placements are classified as equity under ASC 480[53] - Ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' equity section[57] - The fair value of the Company's financial assets and liabilities approximates their carrying amounts due to their short-term nature, with cash and investments held in the trust account measured at Level 1 fair value[63][67] NOTE 3 – INITIAL PUBLIC OFFERING - On June 20, 2024, the Company sold 6,900,000 Public Units at $10.00 per unit, including the full exercise of the underwriter's over-allotment option[69] - Public shares contain a redemption feature, requiring them to be classified outside of permanent equity, with changes in redemption value recognized immediately[70][72] NOTE 4 – PRIVATE PLACEMENT - Simultaneously with the IPO, 238,000 Private Placement Units were sold to the Sponsor at $10.00 per unit[73] - These Private Placement Units are identical to the Public Units, except for certain registration rights and transfer restrictions[74] NOTE 5 – RELATED PARTY TRANSACTIONS - The Sponsor holds 1,963,000 Founder Shares, which are subject to transfer restrictions[75][76] - An unsecured promissory note to the Sponsor had an outstanding principal amount of $930,351 as of June 30, 2025, which is non-interest bearing and due by December 31, 2025, or upon consummation of the initial business combination[79][80] - The Company pays Whale Management Corporation (Sponsor) a monthly fee of $10,000 for general and administrative services, with an unpaid balance of $100,000 as of June 30, 2025[81] - Working Capital Loans may be provided by the Sponsor or affiliates to finance transaction costs, repayable without interest upon business combination or convertible into units; no borrowings existed as of June 30, 2025[82][83] - Related Party Extension Loans, if provided by the Sponsor for extending the business combination period, would be $230,000 per month, up to $2,070,000; no such loans were outstanding as of June 30, 2025[85] NOTE 6 – SHAREHOLDERS' EQUITY - The Company is authorized to issue 50,000,000 ordinary shares with $0.001 par value; 1,963,000 shares were issued and outstanding (excluding redeemable shares) as of June 30, 2025 and December 31, 2024[86] - Each right entitles the holder to receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination; rights will expire worthless if no business combination is completed[87][88] NOTE 7 – COMMITMENTS AND CONTINGENCIES - Holders of Founder Shares, Private Units, and Working Capital Loan securities are entitled to registration rights[90] - The underwriters received a cash underwriting discount of $1,380,000 and are entitled to a deferred underwriting fee of $1,725,000, payable upon the closing of a Business Combination[91] NOTE 8 – SEGMENT INFORMATION - The Company operates as a single operating segment, with the Chief Financial Officer identified as the chief operating decision maker (CODM)[93] - The CODM reviews key metrics such as general and administrative expenses and interest/dividends earned on Trust Account assets to assess performance and allocate resources[94][95] NOTE 9 – SUBSEQUENT EVENTS - The Company did not identify any subsequent events requiring adjustment or disclosure in the unaudited financial statements[97] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes the Company's financial condition, operational results, and liquidity, including its blank check status and proposed merger Overview - The Company is a blank check company formed to effect a business combination, which was incorporated on May 14, 2018[100] - Following its IPO in June 2024, $69,000,000 was placed in a Trust Account, to be used for a business combination or redeemed for public shareholders under specific conditions[102] - The Company has up to 21 months (or 24 months if an event occurs) from the IPO closing to complete its initial business combination, extendable by monthly deposits from the Sponsor[104] Proposed GFT Business Combination - On April 18, 2025, the Company entered into a Merger Agreement with Great Future Technology Inc. (GFT) and GFT Merger Sub Limited, which supersedes the previous GRT Merger Agreement[105][107] - Upon the merger, the Company will merge into GFT Merger Sub, becoming a wholly-owned subsidiary of GFT, and Company shares will be exchanged for GFT Class A ordinary shares[105][106] Results of Operations - The Company will not generate operating revenues until the completion of a business combination, with non-operating income derived from interest and dividends earned on the Trust Account[108] Net Income and Trust Account Interest/Dividends | Metric | Three months ended June 30, 2025 (US$) | Three months ended June 30, 2024 (US$) | Six months ended June 30, 2025 (US$) | Six months ended June 30, 2024 (US$) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :----------------------------------- | :----------------------------------- | | Net income (loss) | 589,626 | 19,924 | 1,167,324 | (55,864) | | Interest and dividends earned on Trust Account | 742,274 | 97,945 | 1,482,043 | 97,945 | Liquidity, Capital Resources and Going Concern - Following the IPO and private placement, $69,000,000 was placed in the Trust Account, and the Company incurred $3,448,233 in transaction costs[111][112] Cash and Investments | Item | June 30, 2025 (US$) | | :-------------------------------- | :------------------ | | Cash and investments held in Trust Account | 72,281,179 | | Cash held outside Trust Account | 19,769 | - The Sponsor may provide Working Capital Loans, which are repayable upon a Business Combination or convertible into units; the Company also has an unsecured promissory note (2024 Note) from the Sponsor with $930,351 outstanding as of June 30, 2025[115][116] - The Company's ability to continue as a going concern is in substantial doubt due to the mandatory liquidation requirement if a business combination is not completed within the prescribed timeframe[117][118] Contractual Obligations - The Company has an agreement to pay the Sponsor a monthly fee of $10,000 for general and administrative services[119][122] - The underwriters are entitled to a deferred underwriting fee of $1,725,000, payable upon the closing of a Business Combination[121] - The 2024 Note from the Sponsor allows borrowing up to $1,000,000, is non-interest bearing, and is repayable upon the earlier of the initial business combination or December 31, 2025[124] - The Sponsor or its affiliates may make extension payments of $230,000 per month to extend the period for consummating a business combination[125] Critical Accounting Estimates - A critical accounting estimate for the Company's unaudited financial statements is the valuation of ordinary shares subject to possible redemption[126] Recent Accounting Pronouncements - Management does not believe that any recently issued, but not yet effective, accounting pronouncements would have a material effect on the Company's unaudited financial statements[127] Off-Balance Sheet Arrangements - As of June 30, 2025, the Company did not have any off-balance sheet arrangements[128] JOBS Act - The Company qualifies as an "emerging growth company" under the JOBS Act, allowing it to delay the adoption of new accounting standards and benefit from exemptions from certain reporting requirements[129][130] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES REGARDING MARKET RISK This section states that the Company is not subject to material market or interest rate risk due to its investment strategy - As of June 30, 2025, the Company was not subject to any material market or interest rate risk[131] - Net proceeds from the IPO, including amounts in the Trust Account, are invested in short-term U.S. government securities or money market funds, minimizing interest rate risk exposure[131] ITEM 4. CONTROLS AND PROCEDURES This section evaluates the effectiveness of the Company's disclosure controls and procedures and reports on changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - As of June 30, 2025, the Company's disclosure controls and procedures were deemed not effective due to material weaknesses[134] - Material weaknesses identified include inadequate segregation of duties within account processes due to limited personnel and insufficient written policies and procedures for accounting, IT, financial reporting, and record keeping[134] - Management plans to implement measures to improve controls, including enhancing review processes for complex securities and considering additional staff[134] Changes in Internal Control Over Financial Reporting - There were no changes in the Company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[136] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS This section confirms that the Company is not currently involved in any legal proceedings - The Company is not a party to any legal proceedings as of the filing date of this Form 10-Q[139] ITEM 1A. RISK FACTORS This section states that there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024[140] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details unregistered sales of equity securities, including private placement units, and the use of IPO and private placement proceeds for the Trust Account - The Company completed its IPO on July 20, 2024, selling 6,900,000 units for gross proceeds of $69,000,000[141] - Simultaneously, a private placement of 238,000 units was made to the Sponsor for $2,380,000, issued under Section 4(a)(2) of the Securities Act[142] - A total of $69,000,000 from the IPO and private placement proceeds was placed in a U.S.-based Trust Account[143] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section reports that there are no defaults upon senior securities - None[145] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to the Company - Not applicable[146] ITEM 5. OTHER INFORMATION This section confirms that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - During the quarter ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[147] ITEM 6. EXHIBITS This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - Key exhibits include the Merger Agreement with Great Future Technology Inc., Parent Shareholder Lock-Up and Support Agreement, Sponsor Lock-up Agreement, Sponsor Voting and Support Agreement, Amended and Restated Registration Rights Agreement, Mutual Termination Agreement, and various certifications (CEO, CFO)[151] PART III. SIGNATURES - The report was signed on August 1, 2025, by Matthew Chen, Chief Executive Officer (Principal Executive Officer), and Luhuan Zhong, Chief Financial Officer (Principal Financial Officer)[155]