Feutune Light Acquisition (FLFV) - 2022 Q4 - Annual Report

PART I Business Feutune Light Acquisition Corporation is a Delaware-incorporated blank check company formed to effect a business combination - The company is a blank check company and will not undertake its initial business combination with an entity based in or having the majority of its operations in China (including Hong Kong and Macau)[245][255] IPO and Private Placement Details (June 2022) | Offering | Units Sold | Price Per Unit | Gross Proceeds | Trust Account Deposit | | :--- | :--- | :--- | :--- | :--- | | Initial Public Offering (IPO) | 9,775,000 | $10.00 | $97,750,000 | $99,216,250 ($10.15/Unit) | | Private Placement | 498,875 | $10.00 | $4,988,750 | (Portion included in Trust) | - On March 21, 2023, the Sponsor deposited $977,500 into the Trust Account to extend the period to consummate an initial business combination by three months, to June 21, 2023[261] - The company's initial business combination must be with a target having a fair market value of at least 80% of the assets held in the Trust Account at the time of the agreement[266] - The company may be subject to CFIUS review for transactions with U.S. businesses due to a sponsor member being a Hong Kong citizen and U.S. permanent resident, which could limit the pool of potential targets[260] Risk Factors The company's potential classification as a "foreign person" under U.S. regulations could subject acquisitions to CFIUS review - The company may be considered a "foreign person" because a sponsor member, Ms. Sau Fong Yeung, is a Hong Kong citizen and U.S. permanent resident, which could subject proposed business combinations with U.S. businesses to CFIUS review[225] - A CFIUS review could block, delay, or impose adverse conditions on an initial business combination, limiting the pool of potential targets[225] - The residency of the sponsor's manager in Hong Kong and the potential for future officers/directors to be located outside the U.S. may make it difficult for U.S. investors to enforce legal judgments[226][227] Properties The company does not own any real estate or other material physical properties and utilizes provided office space - The company's principal executive offices are located at 48 Bridge Street, Building A, Metuchen, New Jersey 08840[229] - The company does not own any real estate or other physical properties material to its operations[229] Legal Proceedings The company is not currently a party to any material litigation or legal proceedings - There is no material litigation, arbitration, or governmental proceeding currently pending against the company or its management team[222][230] Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[27] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's securities trade on Nasdaq, and it has not paid any cash dividends - The company's Units, Class A Common Stock, Warrants, and Rights began trading on the Nasdaq Capital Market under the symbols "FLFVU", "FLFV", "FLFVW", and "FLFVR", respectively[30] - The company has not paid any cash dividends to date and does not intend to pay any prior to the completion of an initial business combination[310] - As of March 15, 2023, there were 2 holders of record for Class A Common Stock and 8 for Class B Common Stock[309] Management's Discussion and Analysis of Financial Condition and Results of Operations As a pre-combination SPAC, the company generated interest income but faces substantial doubt about its going concern status Results of Operations The company generated net income of $537,881 for the period, derived from interest earned on investments in the Trust Account - For the period from January 19, 2022 (inception) through December 31, 2022, the company had a net income of $537,881[334] - The company's activity has been limited to evaluating business combination candidates and it generates non-operating income from interest earned on the Trust Account[333] Liquidity and Capital Resources and Going Concern Management has identified substantial doubt about the company's ability to continue as a going concern due to liquidity needs - As of December 31, 2022, the Company had cash of $546,632 and working capital of $623,347[337] - Management has determined that liquidity concerns and the mandatory liquidation requirement raise substantial doubt about the Company's ability to continue as a going concern[190][343] - The Sponsor or its affiliates may loan the company up to $3,000,000 for transaction costs, which may be convertible into units at $10.00 per unit[340] Critical Accounting Policies and Estimates Key accounting policies include classifying redeemable common stock as temporary equity and warrants as equity instruments - Warrants are accounted for as equity-classified instruments; the fair value of the 9,775,000 IPO Warrants was estimated at approximately $2.7 million using a Monte Carlo Model[7][316] - Class A Common Stock subject to possible redemption is classified as temporary equity and presented at a redemption value of $10.25 per share as of December 31, 2022[9] - The company uses a three-level hierarchy (Level 1, 2, 3) to measure the fair value of its financial instruments[11][12][13] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company replaced Friedman LLP with Marcum LLP as its auditor following a business combination between the two firms - On October 7, 2022, the company replaced Friedman LLP with Marcum LLP as its independent registered public accounting firm[24] - The change was due to the combination of Friedman with Marcum, effective September 1, 2022[24] - There were no disagreements with Friedman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure[31] Controls and Procedures Management concluded disclosure controls were effective but identified a material weakness in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[35] - A material weakness in internal control over financial reporting was identified as of December 31, 2022, due to issues in accounting for complex equity instruments related to the IPO[40] - This annual report does not include an attestation report on internal controls from the independent registered public accounting firm because the company is an emerging growth company[41] PART III Directors, Executive Officers and Corporate Governance The company details its leadership team, board independence, and significant potential conflicts of interest Directors and Executive Officers The leadership team and board possess extensive backgrounds in capital markets, finance, and special purpose acquisition companies Executive Officers and Directors | Name | Age | Position | | :--- | :--- | :--- | | Xuedong (Tony) Tian | 51 | Chief Executive Officer, Director | | Lei Xu | 46 | Chairwoman and President | | Yuanmei Ma | 51 | Chief Financial Officer | | Kevin Vassily | 56 | Independent Director | | David Ping Li | 57 | Independent Director | | Michael Davidov | 48 | Independent Director | Corporate Governance The board has a majority of independent directors, who comprise the entirety of the Audit and Compensation committees - The board has determined that Kevin Vassily, David Ping Li, and Michael Davidov are independent directors[57] - The Audit Committee consists of three independent directors, with Mr. Li serving as chairman and qualifying as an "audit committee financial expert"[58][60] - The Compensation Committee consists of three independent directors, with Mr. Vassily serving as chairman[62] Conflicts of Interest Significant conflicts of interest exist due to officers' and directors' fiduciary duties to other entities, including other SPACs - Officers and directors have existing fiduciary or contractual obligations to other entities and may be required to present business combination opportunities to them first[74] - A table is provided summarizing the various entities to which the company's executive officers and directors owe fiduciary duties, including other SPACs, investment firms, and non-profits[83] - CEO Xuedong (Tony) Tian is also the Managing Director of US Tiger Securities, Inc, a representative of the underwriters in the IPO, which presents a conflict of interest as US Tiger may have competing opportunities[79] Executive Compensation Executive officers and directors have not received cash compensation, receiving Founder Shares instead - No officers or directors have received any cash compensation for services rendered to the company[88] - The Sponsor transferred an aggregate of 505,000 Founder Shares to the company's officers, directors, and secretary as compensation; for example, CEO Xuedong (Tony) Tian received 141,000 Founder Shares[88] - After the business combination, directors or management who remain with the company may be paid consulting or management fees, but the amounts are not yet known[89] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Feutune Light Sponsor LLC is the primary beneficial owner, holding a significant majority of the Class B Common Stock Beneficial Ownership of Common Stock (Selected) | Name of Beneficial Owner | Class B Common Stock Owned | Approx. % of Class B Outstanding | | :--- | :--- | :--- | | Feutune Light Sponsor LLC | 1,938,750 | 79.34% | | Sau Fong Yeung (Sponsor Manager) | 1,938,750 | 79.34% | | Lei Xu (Chairwoman) | 126,990 | 5.20% | | Xuedong (Tony) Tian (CEO) | 117,030 | 4.79% | - The Founder Shares and Private Shares are subject to lock-up provisions that restrict their transfer until certain milestones are met post-business combination[101] Certain Relationships and Related Transactions, and Director Independence The Sponsor purchased Founder Shares for a nominal price and provided a short-term promissory note for IPO expenses - On February 2, 2022, the Sponsor acquired 2,443,750 Founder Shares for an aggregate price of $25,000[104] - Simultaneously with the IPO, the Sponsor and US Tiger purchased 498,875 Private Units at $10.00 per unit, generating gross proceeds of approximately $4.99 million[107] - The Sponsor provided a promissory note of up to $500,000 for IPO expenses, of which $280,000 was drawn and subsequently repaid in full on June 21, 2022[111] - The Sponsor or its affiliates may loan the company up to $3,000,000 for transaction costs, which may be convertible into Private Shares at $10.00 per share[117] Principal Accountant Fees and Services The company paid fees to its independent public accounting firms for audit services related to its financial statements and IPO Public Accounting Fees (2022) | Firm | Service | Fees (USD) | | :--- | :--- | :--- | | Friedman LLP | Audit Fees | $54,000 | | Marcum LLP | Audit Fees | $12,000 | PART IV Exhibits, Financial Statement Schedules This section indexes all exhibits filed with the Form 10-K, including key corporate and legal agreements - Lists all exhibits filed with the Annual Report, including the Underwriting Agreement (1.1), Amended and Restated Certificate of Incorporation (3.1), Warrant Agreement (4.5), and various officer certifications (31.1, 31.2, 32.1, 32.2)[131][132][134] Financial Statements and Notes The audited financial statements show a stockholders' deficit, with the auditor expressing substantial doubt about its going concern status Report of Independent Registered Public Accounting Firm The auditor's report includes an explanatory paragraph highlighting substantial doubt about the company's ability to continue as a going concern - The auditor, Marcum LLP, issued an opinion that the financial statements are fairly presented in conformity with U.S. GAAP[148] - The report includes an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern, citing its dependence on completing a business combination and its current cash position[149] Financial Statements The balance sheet is characterized by significant assets in trust and a corresponding large temporary equity value for redeemable stock Key Financial Data (as of and for the period ended December 31, 2022) | Metric | Amount (USD) | | :--- | :--- | | Balance Sheet | | | Cash | $546,632 | | Investments held in Trust Account | $100,525,498 | | Total Assets | $101,240,621 | | Total Liabilities | $3,832,932 | | Class A common stock subject to possible redemption | $100,205,591 | | Total Stockholders' Deficit | ($2,797,902) | | Statement of Operations | | | Interest earned on investments | $1,309,248 | | Loss from Operations | ($508,379) | | Net Income | $537,881 | Notes to Financial Statements The notes detail the company's SPAC structure, accounting policies, IPO specifics, and related-party transactions - Note 1: The company is a blank check company formed for a business combination and has extended its combination period to June 21, 2023[168][176] - Note 2: The company is an "emerging growth company" and has elected not to opt out of the extended transition period for new accounting standards[193][201] - Note 6: The Sponsor acquired 2,443,750 Founder Shares for $25,000 and provided a $280,000 loan for IPO expenses, which was fully repaid[390][404] - Note 8: Details the authorized and outstanding shares for Class A and Class B common stock, as well as the terms of the outstanding Rights and Warrants[398][400][401] - Note 9: The income tax provision for the period was $262,988[414]