10-Q: Thunder Power Q3: Delisting, Mounting Losses, Going Concern

Thunder Power Holdings, Inc. reports significant operating losses, a critical going concern warning, and its Nasdaq delisting, alongside ongoing related party financing and a pending share exchange agreement.

Summary

• Thunder Power Holdings, Inc. (AIEV) is an early-stage electric vehicle (EV) company focused on design, development, and manufacturing, with no commercially available vehicles or revenue generated to date.
• The company reported a net loss of $428,139 for the three months ended September 30, 2025, and $1,686,545 for the nine months ended September 30, 2025.
• Cash balance significantly decreased to $16,441 as of September 30, 2025, from $52,616 at December 31, 2024.
• Net cash used in operating activities increased to $1,368,298 for the nine months ended September 30, 2025, compared to $905,358 for the same period in 2024.
• The company's shares were suspended from trading on Nasdaq on April 21, 2025, and delisted effective July 31, 2025, now trading on the over-the-counter market under AIEV.
• Management has raised substantial doubt about the company's ability to continue as a going concern due to operating losses, liquidity challenges, the Nasdaq delisting, and legal proceedings involving its principal shareholder.
• A Share Exchange Agreement with Electric Power Technology Limited (TW Company) is pending, involving the issuance of 37,635,039 new common shares, with the closing date intended to be extended beyond October 31, 2025.
• Total liabilities increased to $8,262,795 as of September 30, 2025, from $7,031,432 at December 31, 2024, largely due to increased amounts due to related parties.
• The company has not met the Tranche 1 Earnout Shares revenue condition of $42,200,000 for the fiscal year 2024, and the 2025 performance condition cannot be reasonably assessed.

Sentiment

Score: 1

Explanation: The company faces severe financial distress, including a critical going concern warning, Nasdaq delisting, minimal cash reserves, increasing liabilities, and no revenue. The ongoing legal issues of the principal shareholder add further uncertainty, making the outlook extremely negative.

Positives

• Net loss decreased to $428,139 for the three months ended September 30, 2025, from $912,317 in the prior year period.
• Net loss decreased to $1,686,545 for the nine months ended September 30, 2025, from $2,474,256 in the prior year period.
• General and administrative expenses decreased by approximately $0.4 million for the three months ended September 30, 2025, and by approximately $0.8 million for the nine months ended September 30, 2025, primarily due to lower professional and consulting expenses and share-based compensation compared to the prior year.

Negatives

• The company has not generated any revenue from the sale of electric vehicles since its inception.
• Cash balance significantly declined to $16,441 as of September 30, 2025, from $52,616 at December 31, 2024.
• Net cash used in operating activities increased to $1,368,298 for the nine months ended September 30, 2025, indicating a higher cash burn.
• Total current liabilities increased to $8,257,294 as of September 30, 2025, from $7,031,432 at December 31, 2024.
• Total shareholders' equity decreased to $5,246,923 as of September 30, 2025, from $6,523,627 at December 31, 2024.
• Accumulated loss increased to $38,618,791 as of September 30, 2025, from $36,932,246 at December 31, 2024.
• The company's common stock was delisted from the Nasdaq Global Market on July 31, 2025, and now trades on the over-the-counter market.
• Management has identified substantial doubt about the company's ability to continue as a going concern.
• The principal shareholder is involved in 5 ongoing legal proceedings, the outcome of which cannot be reasonably estimated, creating uncertainty about future financial support.
• The revenue condition for Tranche 1 Earnout Shares ($42,200,000 by December 31, 2025) was not met for 2024, and the 2025 condition cannot be reasonably assessed.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to significant operating losses, lack of revenue, and limited liquidity.
• Uncertainty surrounding the timing and market conditions for the settlement of the prepaid forward contract in shares, which may affect the company's ability to meet short-term obligations.
• The Nasdaq delisting has impacted the company's ability to access capital markets and raise funds.
• Ongoing legal proceedings involving the principal shareholder introduce significant uncertainty about his future involvement and ability to continue supporting the company financially.
• As an early-stage company, there is a risk of continued substantial operating losses for the foreseeable future due to the capital-intensive nature of the EV business and lack of commercial product sales.
• Reliance on a limited number of EV models (Coupe, Sedan, City Car, SUV) for future revenue, with no new models expected until at least 2030.
• Potential for significant increases in expenses related to developing and manufacturing vehicles, tooling, expanding facilities, research and development, raw material procurement, and general and administrative costs.
• Risks associated with developing a third-party retail product distribution and full-service network, which if ineffective, could adversely affect operations and financial conditions.

Future Outlook

The company expects to continue incurring substantial operating losses for the foreseeable future as it is an early-stage company with no commercially available vehicles. Future success is dependent on developing and commercializing its four planned EV models (Coupe, Sedan, City Car, SUV), with no new models expected until at least 2030. Significant capital will be required to develop and grow the business, including manufacturing, R&D, and marketing. The company also anticipates an increase in general and administrative expenses with the launch of production lines and costs associated with being a publicly traded company.

Management Comments

• "Our mission is to power the future of sustainable transportation by creating stylish, innovative and cost-efficient premium electric vehicles centered around differentiated designs and solutions tailored for every lifestyle."
• "We believe that by leveraging our modular integration concept starting with the modularized chassis system patented by us, we are creating a family of EVs (excluding the City Car) which share common parts and modules which we believe requires lower investment and reduced design and production time as opposed to those of traditional automotive manufacturers."
• "We expect to offer to the market eco-friendly, premium EVs positioned to earn market share based on design, quality, comfort, range, and price."
• "Management has taken certain steps to address these concerns, including: (i) exploring new financing options, including potential debt extensions or new equity capital, (ii) exploring avenues to resolve the shareholders legal situation or secure alternative sources of financial support, and (iii) continuing to evaluate options for business restructuring or reducing operating costs."
• "The Company's continuation as a going concern is dependent upon its ability to obtain additional financing, resolve the legal matters affecting its shareholder, and ultimately generate sufficient cash flows from operations."
• Christopher Nicoll, CEO, and Pok Man Ho, Interim CFO, certified that the report fairly presents the financial condition and results of operations and that they are responsible for disclosure controls and internal control over financial reporting, concluding that disclosure controls and procedures were not effective as of September 30, 2025.

Industry Context

Thunder Power Holdings operates in the highly competitive and capital-intensive electric vehicle (EV) industry. As an early-stage company without a commercially available product, it faces significant challenges in a market dominated by established players and numerous well-funded startups. The company's strategy of developing proprietary technologies and a modular platform aims to differentiate itself, but the lack of revenue and substantial operating losses highlight the immense financial hurdles typical for new entrants in this sector. The delisting from Nasdaq further isolates the company from mainstream capital markets, making it harder to compete for funding against industry trends favoring companies with proven production and sales capabilities.

Management Changes

Corporate Governance

Legal Proceedings

• The company's principal shareholder is involved in 11 legal proceedings, with 6 cases ending in acquittals and 5 cases currently in the process of a second trial. The outcome of these 5 cases cannot be reasonably estimated, creating uncertainty regarding the shareholder's future involvement and ability to provide financial support.

Related Party Transactions

• Amount due to related parties increased significantly to $3,267,809 as of September 30, 2025, from $1,766,287 at December 31, 2024.
• The company borrowed $1,213,087 from Mr. Wellen Sham (controlling shareholder) for operations during the nine months ended September 30, 2025, with borrowings bearing an 8% interest rate and payable through September 2026.
• Mr. Wellen Sham also made payments of $20,152 on behalf of the company during the nine months ended September 30, 2025.
• The company borrowed $100,000 from Ms. Ling Houng Sham (spouse of Mr. Wellen Sham) for operations during the nine months ended September 30, 2025, with borrowings bearing an 8% interest rate and payable through March 2026.
• Outstanding balances due to Mr. Wellen Sham include promissory notes of $560,000 for FLFV extension, $1,879,647 for daily operations, $24,152 for operating expenses, and $179,410 in interest payable.
• Outstanding balances due to Ms. Ling Houng Sham include promissory notes of $300,000 for FLFV extension and $24,701 in interest payable.
• The company has an unsettled balance of $190,000 due to Feutune Light Sponsor LLC (FLFV Sponsor) from promissory notes issued in May and June 2024.
• TP HK (a related party over which Mr. Wellen Sham's spouse exercises significant influence) charged operating lease expenses of $3,523 and $13,539 for the three and nine months ended September 30, 2025, respectively. An amount of $109,899 is due to TP HK for payments made on behalf of TP Holdings, which is interest-free and repayable on demand.

Stakeholder Impact

• **Shareholders**: Significant negative impact due to Nasdaq delisting, substantial doubt about going concern, increasing accumulated losses, and potential dilution from future capital raises or the TW Company share exchange. The uncertainty surrounding the principal shareholder's legal proceedings also poses a risk to future support and company stability.
• **Employees**: Potential impact on job security and morale given the company's going concern warning, lack of revenue, and need for cost reduction.
• **Creditors**: Increased risk due to the company's weak financial position, low cash reserves, and going concern warning, particularly for related parties who are significant lenders.
• **Customers (potential)**: Uncertainty regarding the company's ability to bring its EV models to market and provide long-term support, given its early stage and financial challenges.

Next Steps

• Explore new financing options, including potential debt extensions or new equity capital, to address liquidity issues.
• Explore avenues to resolve the principal shareholder's legal situation or secure alternative sources of financial support.
• Continue to evaluate options for business restructuring or reducing operating costs.
• Enter into a supplemental agreement to extend the term of the Share Exchange Agreement with TW Company.
• Remediate the identified material weakness in disclosure controls and procedures by hiring a consulting firm and providing training for financial reporting and accounting personnel.

Key Dates

Recommendation

The company faces an extremely precarious financial situation, marked by a critical 'going concern' warning, zero revenue, rapidly dwindling cash reserves, and increasing liabilities. The delisting from Nasdaq severely limits access to capital and investor confidence. Furthermore, the principal shareholder's unresolved legal issues add significant uncertainty to future financial support. While the company is pursuing a share exchange and has a potential capital commitment, these are insufficient to offset the immediate and severe risks. The fundamental business model of an early-stage EV developer without a commercial product, coupled with these severe financial and operational challenges, makes the stock a strong sell.

Keywords

Electric Vehicles, EV, Automotive, Thunder Power Holdings, AIEV, 10-Q, Quarterly Report, Nasdaq Delisting, Going Concern, Financial Losses, Related Party Transactions, Share Exchange Agreement, Capital Raise, Corporate Governance