References to the "Company," "Oxbridge Acquisition Corp.," "our," "us" or "we"
refer to Oxbridge Acquisition Corp. The following discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the unaudited interim condensed financial statements and the
notes thereto contained elsewhere in this report. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q, including in this
Management's Discussion and Analysis, other than purely historical information,
including estimates, projections, statements relating to our business plans,
objectives and expected operating results, and the assumptions upon which those
statements are based, are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). These forward-looking statements generally are identified
by the words "believe," "project," "predict," "expect," "anticipate,"
"estimate," "intend," "plan," "may," "should," "will," "would," "will be," "will
continue," "will likely result," and similar expressions. Forward-looking
statements are based on current expectations and assumptions that are subject to
risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. A detailed discussion of risks and uncertainties
that could cause actual results and events to differ materially from such
forward-looking statements is included in the section entitled "Risk Factors"
contained in our Form S-1 filed with the Securities and Exchange Commission
("SEC") on July 30, 2021. We undertake no obligation to publicly update or
revise any forward -looking statements, whether as a result of new information,
future events, or otherwise. Readers are cautioned not to place undue reliance
on the forward -looking statements which speak only to the dates on which they
were made.
Overview
We are a Cayman Islands exempted company incorporated on July 31, 2020, for the
purpose of entering into a merger, share exchange, asset acquisition, share
purchase, recapitalization, reorganization or other similar business combination
with one or more target businesses (the "Business Combination").
The Company's sponsor is OAC Sponsor Ltd., a Cayman Islands exempted company
(the "Sponsor"). The registration statement for the Company's Initial Public
Offering was declared effective on August 11, 2021. On August 16, 2021, the
Company consummated its IPO of 10,000,000 units (each, a "Unit" and
collectively, the "Units" and, with respect to the Class A ordinary shares
included in the Units, the "Public Shares"), at $10.00 per Unit, generating
gross proceeds of $100,000,000 and incurring offering costs of approximately
$6,596,000, inclusive of $3,500,000 in deferred underwriting commissions. The
underwriters exercised the over-allotment option in full and on August 16, 2021,
purchased an additional 1,500,000 units (the "Over-Allotment Units"), generating
additional gross proceeds of $15,000,000 (the "Over-Allotment"), and incurring
additional offering costs of $825,000, inclusive of $525,000 of deferred
underwriting commissions.
Substantially concurrently with the closing of the Initial Public Offering, we
completed the private sale (the "Private Placement") of 5,760,000 warrants to
the Sponsor and Maxim Group LLC ("Maxim"), the underwriter in this offering, at
a price of $1.00 per Private Placement Warrant, generating gross proceeds of
$5,760,000.
Upon the closing of the Initial Public Offering and the Private Placement,
$116,725,000 (approximately $10.15 per Unit) from the net proceeds of the sale
of the Units in the IPO, including a portion of the proceeds from the Private
Placement, was deposited in a trust account ("Trust Account"), located in the
United States with Continental Stock Transfer & Trust Company acting as trustee,
which may only be invested in permitted United States "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended, having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act
that invest only in direct U.S. government treasury obligations.
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Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
We will have 15 months (or up to 21 months if the Company extends the period of
time to consummate a business combination by the full amount of time) from the
closing of the Initial Public Offering, or November 16, 2023, to complete the
initial Business Combination (the "Combination Period"). However, if we are
unable to complete the initial Business Combination within the Combination
Period, we will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously
released to us to pay the our taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public shareholders' rights as
shareholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining shareholders
and board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and the
requirements of other applicable law.
Liquidity and Capital Resources
As of June 30, 2021 we had no cash and a working capital deficit of $176,620.
Prior to the completion of our IPO, our liquidity needs had been satisfied
through a capital contribution from the Sponsor of $25,000 for the founder
shares, the loan under an unsecured promissory note from the Sponsor of up to
$300,000, of which had a balance outstanding as of June 30, 2021 of $177,420.
After consummation of the IPO on August 16, 2021, the Company had approximately
$1.5 million in its operating bank account, and working capital of approximately
$639,000 to satisfy the Company's liquidity needs.
In order to fund working capital deficiencies or finance transaction costs in
connection with an intended initial business combination, our sponsor or an
affiliate of our sponsor or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. If we complete our initial
business combination, we would repay such loaned amounts. In the event that our
initial business combination does not close, we may use a portion of the working
capital held outside the trust account to repay such loaned amounts but no
proceeds from our trust account would be used for such repayment. Up to
$1,500,000 of such working capital loans may be convertible into private
placement-equivalent warrants at a price of $1.00 per warrant (which, for
example, would result in the holders being issued 1,500,000 warrants if
$1,500,000 of notes were so converted), at the option of the lender. Such
warrants would be identical to the private placement warrants, including as to
exercise price, exercisability and exercise period. The terms of such working
capital loans by our sponsor or its affiliates, or our officers and directors,
if any, have not been determined and no written agreements exist with respect to
such loans. Prior to the completion of our initial business combination, we do
not expect to seek loans from parties other than our sponsor or an affiliate of
our sponsor as we do not believe third parties will be willing to loan such
funds and provide a waiver against any and all rights to seek access to funds in
our trust account. As of June 30, 2021, there were no amounts outstanding under
any Working Capital Loans.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of a Business Combination or one year from this
filing. Over this time period, we will be using these funds to pay existing
accounts payable, identifying and evaluating prospective initial Business
Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
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Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the virus could have a
negative effect on our financial position, results of its operations, and/or
search for a target company, the specific impact is not readily determinable as
of the date of these unaudited condensed financial statements. The unaudited
condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Results of Operations
As of June 30, 2021, we had not commenced any operations. All activity for the
period from April 12, 2021 (inception) through June 30, 2021 relates to our
formation and the Initial Public Offering. We have neither engaged in any
operations nor generated any revenues to date. We will not generate any
operating revenues until after the completion of our initial Business
Combination, at the earliest. We will generate non-operating income in the form
of interest income and unrealized gains from the proceeds derived from the
Initial Public Offering. We expect to incur increased expenses as a result of
being a public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For the period from April 12, 2021 (inception) and June 30, 2021, we had net
loss of $3,377, which consisted of formation costs and administrative expenses.
Contractual Obligations
Other than the below, we do not have any long-term debt obligations, capital
lease obligations, operating lease obligations, purchase obligations or
long-term liabilities.
Administrative Services Agreement
Commencing on the date that our securities are first listed, we agreed to pay
the Sponsor $10,000 per month for office space, secretarial and administrative
services provided to members of our founding team. Upon completion of the
initial Business Combination or our liquidation, we will cease paying such
monthly fees. As of June 30, 2021, nothing has been accrued or paid.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants, Class A ordinary
shares underlying the Private Placement Warrants and Warrants that may be issued
upon conversion of Working Capital Loans (and any Class A ordinary shares
issuable upon the exercise of the Private Placement Warrants and Warrants that
may be issued upon conversion of Working Capital Loans) will be entitled to
registration rights pursuant to a registration and shareholder rights agreement.
The holders of these securities are entitled to make up to three demands,
excluding short form demands, that we register such securities. In addition, the
holders have certain "piggy-back" registration rights with respect to
registration statements filed subsequent to our completion of the initial
Business Combination. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
On August 16, 2021, we paid an underwriting discount of 2% of the per Unit
offering price, or approximately $2,300,000 million in the aggregate at the
closing of the Initial Public Offering, and the underwriters are entitled to a
deferred underwriting discount of 3.5% of the gross proceeds of the Initial
Public Offering, or $4,025,000 in the aggregate. The deferred fee will be
payable to the underwriters from the amounts held in the Trust Account solely in
the event that we complete an initial Business Combination, subject to the terms
of the underwriting agreement.
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Critical Accounting Policies
Deferred Offering Costs
The Company complies with the requirements of the ASC 340-10-S99-1. Offering
costs consisted of legal, accounting, underwriting fees and other costs incurred
through the IPO that were directly related to the Public Offering. Offering
costs amounted to $8,570,962 and were charged to shareholders' equity upon the
completion of the Initial Public Offering.
Net Loss Per Ordinary Share
Net loss per share is computed by dividing net loss by the weighted average
number of ordinary shares outstanding during the period, excluding ordinary
shares subject to forfeiture. At June 30, 2021, the Company did not have any
dilutive securities and other contracts that could, potentially, be exercised or
converted into ordinary shares and then share in the earnings of the Company. As
a result, diluted loss per share is the same as basic loss per share for the
period presented.
Ordinary Shares Subject to Possible Redemption
As of June 30, 2021, there were no Class A ordinary shares issued or
outstanding. The Company will account for its Class A ordinary shares subject to
possible redemption in accordance with the guidance in Accounting Standards
Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity."
Ordinary shares subject to mandatory redemption will be classified as a
liability instrument and is measured at fair value. Conditionally redeemable
ordinary shares (including ordinary shares that features redemption rights that
is either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company's control) will be
classified as temporary equity. At all other times, ordinary shares will be
classified as shareholders' equity. The Company's ordinary shares features
certain redemption rights that are considered to be outside of the Company's
control and subject to occurrence of uncertain future events. Accordingly,
ordinary shares subject to possible redemption will presented at redemption
value as temporary equity, outside of the shareholders' equity section of the
Company's condensed balance sheets.
Off-Balance Sheet Arrangements
As of June 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K.
Inflation
We do not believe that inflation had a material impact on our business, revenues
or operating results during the period presented.
Emerging Growth Company Status
We are an "emerging growth company," as defined in Section 2(a) of the
Securities Act, as modified by the Jumpstart our Business Startups Act of 2012,
(the "JOBS Act"), and may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in its periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously
approved.
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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies
from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act
registration statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that a company can
elect to opt out of the extended transition period and comply with the
requirements that apply to non-emerging growth companies but any such election
to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it
has different application dates for public or private companies, the Company, as
an emerging growth company, can adopt the new or revised standard at the time
private companies adopt the new or revised standard. This may make comparison of
our financial statements with another public company which is neither an
emerging growth company nor an emerging growth company which has opted out of
using the extended transition period difficult or impossible because of the
potential differences in accounting standards used.
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