Feutune Light Acquisition (FLFV) - 2022 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Unaudited Financial Statements Presents Feutune Light Acquisition Corporation's unaudited condensed financial statements and related notes for the period ended September 30, 2022 Condensed Balance Sheet Presents the company's financial position, including assets, liabilities, and equity, as of a specific date Condensed Balance Sheet Summary | Metric | Amount (USD) | |:------------------------------------------------|:-------------| | Cash | $700,350 | | Prepaid expenses | $186,085 | | Investments held in Trust Account | $99,689,971 | | Total Assets | $100,608,489 | | Accrued expenses | $85,317 | | Franchise tax payable | $26,333 | | Deferred underwriters' discount | $3,421,250 | | Total Liabilities | $3,532,900 | | Common stock subject to possible redemption | $99,663,638 | | Total Stockholders' Deficit | $(2,588,049) | | Total Liabilities, Temporary Equity and Stockholders' Deficit | $100,608,489 | Condensed Statement of Operations Details the company's revenues, expenses, and net income or loss over a period Condensed Statement of Operations Summary | Metric | Three Months Ended Sep 30, 2022 (USD) | Inception to Sep 30, 2022 (USD) | |:------------------------------------------------|:--------------------------------------|:--------------------------------| | Formation and operating costs | $147,633 | $241,607 | | Franchise tax expenses | $24,000 | $26,333 | | Loss from Operations | $(171,633) | $(267,940) | | Interest earned on investment held in Trust Account | $451,036 | $473,721 | | Income before income taxes | $279,403 | $205,781 | | Net Income | $279,403 | $205,781 | | Basic and diluted net income per share (redeemable) | $0.03 | $0.08 | | Basic and diluted net loss per share (attributable to Feutune Light Acquisition Corporation) | $(0.01) | $(0.04) | Condensed Statement of Changes in Stockholders' Deficit Outlines changes in the company's equity accounts over a period - The total stockholders' deficit increased from $(2,420,064) as of June 30, 2022, to $(2,588,049) as of September 30, 2022, primarily due to net income of $279,403 offset by accretion of carrying value to redemption value of $(447,388)[18] Statement of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Statement of Cash Flows Summary | Cash Flow Activity | Inception to Sep 30, 2022 (USD) | |:--------------------------------------------------|:--------------------------------| | Net Cash Used in Operating Activities | $(374,458) |\ | Net Cash Used in Investing Activities | $(99,216,250) |\ | Net Cash Provided by Financing Activities | $100,291,058 |\ | Net Change in Cash | $700,350 |\ | Cash, September 30, 2022 | $700,350 | Notes to Condensed Financial Statements Provides detailed explanations and additional information supporting the financial statements Note 1 — Organization and Business Operation Describes the company's formation, business purpose, and operational context - Feutune Light Acquisition Corporation is a blank check company (SPAC) incorporated on January 19, 2022, formed to effect a business combination, it has not commenced operations and generates non-operating income from interest on IPO proceeds[24][25] - The company completed its IPO on June 21, 2022, selling 9,775,000 units for $97,750,000, and a private placement of 498,875 units for $4,988,750, a total of $99,216,250 was placed in a Trust Account[26][27][32] - The company faces a 'going concern' risk due to the uncertainty of completing a Business Combination within the required timeframe (March 21, 2023, or up to December 21, 2023, with extensions) and potential insufficient funds for operations or redemptions[34][44][46] Note 2 — Significant accounting policies Outlines the key accounting principles and methods used in preparing financial statements - The company operates under US GAAP and SEC regulations, utilizing estimates in financial statement preparation, it is an 'emerging growth company' and has elected not to opt out of the extended transition period for new accounting standards[47][48][51][52] - Investments held in the Trust Account, primarily money market funds invested in short-term U.S. Treasury securities, are classified as trading securities and measured at fair value, with gains/losses recognized as interest income[54][55][81] - Common stock subject to possible redemption is classified as temporary equity at its redemption value ($10.20 per share as of September 30, 2022), with changes in redemption value recognized immediately[63] - The Inflation Reduction Act of 2022 (IRA) imposes a 1% excise tax on stock repurchases after December 31, 2022, which may apply to redemptions in connection with a Business Combination or liquidation, potentially reducing available cash[78][79] Note 3 — Investments Held in Trust Account Details the nature and value of investments held in the company's Trust Account Trust Account Investments | Description | Level | September 30, 2022 (USD) | |:---------------------------------------------|:------|:-------------------------| | Trust Account - U.S. Treasury Securities Money Market Fund | 1 | $99,689,971 | - Interest income from investments in the Trust Account amounted to $451,036 for the three months ended September 30, 2022, and $473,721 from inception to September 30, 2022[81] Note 4 — Initial Public Offering Provides information on the company's IPO, including proceeds and share characteristics - The IPO on June 21, 2022, generated gross proceeds of $97,750,000 from the sale of 9,775,000 Public Units, each consisting of one Class A Common Stock, one Warrant, and one Right[83] - Public Shares include a redemption feature, classifying them as temporary equity outside of permanent equity, with changes in redemption value recognized immediately[84][85] IPO Proceeds and Redemption Value | Item | Amount (USD) | |:----------------------------------------------|:-------------|\ | Gross proceeds | $97,750,000 |\ | Less: Proceeds allocated to Warrants issued in IPO | $(2,649,025) |\ | Less: Proceeds allocated to Rights issued in IPO | $(1,270,750) |\ | Less: Offering costs of Public Units | $(5,893,942) |\ | Plus: Accretion of carrying value to redemption value | $11,727,355 |\ | Common stock subject to possible redemption | $99,663,638 | Note 5 — Private Placement Describes the private sale of equity securities and related agreements - Concurrently with the IPO, 498,875 Private Placement Units were sold at $10.00 per unit, generating $4,988,750, these units were sold to the Sponsor and US Tiger[88] - Founder Shares and Private Shares are subject to agreements including voting in favor of business combinations, waiving redemption rights, and not participating in liquidating distributions if a business combination is not consummated[89] Note 6 — Related Party Transactions Discloses transactions and relationships with affiliated parties - The Sponsor acquired 2,443,750 Class B common stock (Founder Shares) for $25,000, these shares represent 20% of the total common stock outstanding post-IPO and are subject to transfer restrictions[92][93][94] - The company issued 60,000 Representative Shares to US Tiger as compensation, which are subject to transfer restrictions and waiver of redemption/liquidation rights[96] - A non-interest bearing promissory note of up to $500,000 from the Sponsor for IPO expenses was repaid on June 21, 2022, with no outstanding balance as of September 30, 2022, the Sponsor may also provide working capital loans convertible into units[97][99][100] Note 7 — Commitments & Contingencies Identifies potential future obligations and uncertain events affecting the company - The company acknowledges the potential negative effect of the COVID-19 pandemic on its financial position and search for a target company, though the specific impact is not yet determinable[101] - 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[102] - The company paid a $1,955,000 underwriting discount at IPO closing and owes a deferred fee of $3,421,250 to underwriters, payable upon closing of a Business Combination[104] Note 8 — Stockholder's Equity Details the components of the company's equity, including stock, warrants, and rights Stockholder's Equity Summary | Stock Type | Authorized Shares | Issued & Outstanding (Sep 30, 2022) | |:------------------|:------------------|:------------------------------------|\ | Preferred Stock | 500,000 | None |\ | Class A Common Stock | 25,000,000 | 558,875 (excluding 9,775,000 subject to redemption) |\ | Class B Common Stock | 4,500,000 | 2,443,750 | - As of September 30, 2022, 10,273,875 Rights and 10,273,875 Warrants were outstanding, Warrants are exercisable at $11.50 per share, commencing later of 12 months from IPO or 30 days post-Business Combination, expiring five years after Business Combination[111][112][119] - The fair value of Warrants issued with the IPO and Private Placement was estimated at approximately $2.7 million and $0.1 million, respectively, using the Monte Carlo Model[117][118] Note 9 — Income Taxes Explains the company's income tax position, including deferred taxes and valuation allowances - The company's taxable income primarily consists of interest earned on Trust Account investments, there was no income tax expense for the period from inception through September 30, 2022[121] Income Tax Provision (Benefit) Summary | Income Tax Provision (Benefit) | Three Months Ended Sep 30, 2022 (USD) | Inception to Sep 30, 2022 (USD) | |:-------------------------------|:--------------------------------------|:--------------------------------|\ | Federal Deferred | $50,041 | $65,501 |\ | Valuation allowance | $(50,041) | $(65,501) |\ | Income tax provision | $0 | $0 | - As of September 30, 2022, the company had $65,501 in U.S. federal and state net operating loss carryovers, but a full valuation allowance was established due to significant uncertainty regarding future realization of deferred tax assets[121] Note 10 — Subsequent Events Reports significant events occurring after the balance sheet date but before financial statement issuance - The company evaluated subsequent events through November 16, 2022, and identified no events requiring adjustment or disclosure in the financial statements[122] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial condition, operational results, liquidity, and critical accounting policies Overview Provides a general introduction to the company's business and strategic objectives - Feutune Light Acquisition Corporation is a blank check company (SPAC) formed on January 19, 2022, to pursue a business combination, funded by its IPO and private placement proceeds[128] - The company is actively searching for a suitable business combination target but has not yet selected one and expects to incur significant costs in this pursuit[128][129] Recent Development Highlights significant events and changes impacting the company's operations and structure - Effective August 8, 2022, the company's Public Units separated, allowing Public Shares, Public Warrants, and Public Rights to trade separately on Nasdaq under symbols FLFV, FLFVW, and FLFVR, respectively[130] - The company changed its independent registered public accounting firm from Friedman LLP to Marcum LLP, effective October 11, 2022[132][133] - The company has until March 21, 2023 (or up to December 21, 2023, with extensions) to consummate its initial Business Combination[134] Results of Operations Analyzes the company's financial performance, including revenues, expenses, and net income - The company has not generated any operating revenues to date, with activities limited to organizational efforts and IPO preparation, non-operating income is derived from interest on marketable securities in the Trust Account[135] Results of Operations Summary | Metric | Three Months Ended Sep 30, 2022 (USD) | Inception to Sep 30, 2022 (USD) | |:-----------|:--------------------------------------|:--------------------------------|\ | Net Income | $279,403 | $205,781 | Liquidity and Capital Resources and Going Concern Examines the company's cash position, funding sources, and ability to meet future obligations - As of September 30, 2022, the company had cash of $700,350 and working capital of $774,785, $99,216,250 was held in the Trust Account[138][139] - Funds outside the Trust Account are intended for identifying and evaluating target businesses, due diligence, and negotiation of a Business Combination[141] - The company's ability to continue as a 'going concern' is in substantial doubt due to potential insufficient funds for operations, significant redemptions, and the mandatory liquidation if a Business Combination is not completed within the specified timeframe[145][146][147] Off-Balance Sheet Financing Arrangements Discloses any financial arrangements not recorded on the balance sheet - As of September 30, 2022, the company had no off-balance sheet arrangements, special purpose entities, guaranteed debts, or non-financial asset purchases[148] Contractual Obligations Outlines the company's commitments under various agreements - As of September 30, 2022, the company had no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities[149] - The company has registration rights agreements with holders of founder shares, Private Placement Units, and potential Working Capital Units, requiring it to register these securities for resale[150] Critical Accounting Policies Describes the accounting policies requiring significant judgment and estimates - Key accounting policies include presentation in conformity with US GAAP, classification of Trust Account investments as trading securities, accounting for offering costs, warrant classification (equity), and common stock subject to redemption as temporary equity[151][153][155][156][158] - Income taxes are accounted for under ASC 740, recognizing deferred tax assets and liabilities, with a valuation allowance established when realization is not probable, the company's net income (loss) per share calculation considers both redeemable and non-redeemable shares[159][166] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The company has no material market risk disclosures applicable for the reporting period - The company has no applicable quantitative and qualitative disclosures about market risk[168] ITEM 4. CONTROLS AND PROCEDURES. Management assesses the effectiveness of disclosure controls and procedures, noting no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2022[169] - The company, as an emerging growth company, is not required to include an attestation report of internal controls from its independent registered public accounting firm[171] - There were no material changes in internal control over financial reporting during the fiscal quarter covered by the report[172] PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not 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[175] ITEM 1A. RISK FACTORS Highlights factors that could materially affect results, including a new U.S. federal excise tax on stock repurchases - A new 1% U.S. federal excise tax, introduced by the Inflation Reduction Act of 2022, could be imposed on the company for stock repurchases (including redemptions) occurring after December 31, 2022[177] - This excise tax, payable by the company, could reduce the cash available to complete a Business Combination, depending on the timing of the combination, the value of redemptions, and new stock issuances[178] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Details unregistered equity sales, including private placement, and the use of IPO and private placement proceeds - 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, under the exemption from registration in Section 4(a)(2) of the Securities Act[179][180] - The net proceeds of $99,216,250 from the IPO ($97,750,000 gross) and the private placement were placed in a Trust Account for the benefit of public stockholders and underwriters[181][182] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There have been no defaults upon senior securities - There were no defaults upon senior securities[184] ITEM 4. MINE SAFETY DISCLOSURES Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[185] ITEM 5. OTHER INFORMATION There is no other information to report - There is no other information to report[186] ITEM 6. EXHIBITS Lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q - The report includes various exhibits such as CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.CAL, 101.SCH, 101.DEF, 101.LAB, 101.PRE, 104)[188]