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 and our Form 10-K filed with the SEC on March 30, 2022.
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 April 12, 2021, 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
$6,624,000, 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 up to November 16, 2022 (or up to August 16, 2023 if the Company
extends the period of time to consummate a business combination by the full
amount of time) 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 September 30, 2022 the Company had cash of approximately $279,000 and a
working capital of approximately $281,000 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 September 30, 2022, 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
In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. The impact of this action and related sanctions
on the world economy are not determinable as of the date of this report and the
specific impact on the Company's financial condition, results of operations, and
cash flows is also not determinable as of the date of this Quarterly Report on
Form 10-Q.
Results of Operations
As of September 30, 2022, we had not commenced any operations. All activity for
the quarter and nine months ended September 30, 2022 and the period from April
12, 2021 (inception) through September 30, 2022 relates to our formation and the
Initial Public Offering, and subsequent to the Initial Public Offering,
identifying a target company for a Business Combination. 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.
Net Income for the quarter ended September 30, 2022 was $779 thousand, or $0.054
basic and diluted earnings per share compared to a net income of $60 thousand,
or $0.004 basic and diluted earnings per share, for the quarter ended September
30, 2021. The increase is due to an increase on interest earned on marketable
securities and the positive change in fair value of warrant liabilities during
the quarter ended September 30, 2022 when compared with the prior period.
Net Income for the nine months ended September 30, 2022 was $3.64 million, or
$0.251 basic or diluted earnings per share compared to a net income of $56
thousand, or $0.004 per basic and diluted earnings per share, for the nine
months ended September 2021. The increase is due primarily to the positive
change in fair value of warrant liabilities during the quarter ended September
30, 2022 when compared with the prior period.
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. For the three and nine-month periods ended September 30, 2022, the
Company recorded expenses of $30,000 and $90,000, respectively, to the Sponsor
under the Administrative Agreement.
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
Derivative financial instruments
The Company does not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. The Company evaluates all of its financial
instruments, including issued stock purchase warrants, to determine if such
instruments are derivatives or contain features that qualify as embedded
derivatives, pursuant to ASC 480 and ASC 815, "Derivatives and Hedging" ("ASC
815"). The classification of derivative instruments, including whether such
instruments should be recorded as liabilities or as equity, will be re-assessed
at the end of each reporting period. Derivative warrant liabilities will be
classified as non-current liabilities as their liquidation is not reasonably
expected to require the use of current assets or require the creation of current
liabilities.
The 17,260,000 warrants issued on August 16, 2021 in connection with the IPO and
the Private Placement (including the 11,500,000 warrants included in the Units
and the 5,760,000 Private Placement Warrants) are recognized as derivative
liabilities in accordance with ASC 815. The liabilities are subject to
re-measurement at each balance sheet date until exercised, and any change in
fair value is recognized in the Company's statement of operations. The fair
value of the Public Warrants issued in connection with the Public Offering were
initially measured at fair value using a Modified Black-Scholes option pricing
model simulation model and subsequently, the fair value of Public Warrants
issued in connection with the Initial Public Offering have been measured based
on the listed market price of such warrants as beginning on December 31, 2021
and through to September 30, 2022. The fair value of the Private Warrants has
been estimated initially and subsequently, as of September 30, 2022, using a
Modified Black-Scholes option pricing model. The determination of the fair value
of the warrant liabilities may be subject to change as more current information
becomes available and accordingly the actual results could differ significantly.
Derivative warrant liabilities are classified as non-current liabilities as
their liquidation is not reasonably expected to require the use of current
assets or require the creation of current liabilities.
Class A Ordinary Shares Subject to Possible Redemption
As of September 30, 2022, there were 11,615,000 Class A ordinary shares issued
or outstanding. The Company accounts 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 are 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) are classified as
temporary equity. At all other times, ordinary shares are 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 be subject
to occurrence of uncertain future events. Accordingly, at September 30, 2022,
10,332,033 Class A ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, outside of the shareholders' equity
section of the Company's condensed balance sheets.
Earnings Per Ordinary Share
Earnings per share is computed by dividing earnings by the weighted average
number of ordinary shares outstanding during the period. At September 30, 2022,
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 due to the sum of the proceeds exceeding the average
market price of the Company's ordinary share during the periods presented. As a
result, diluted earnings per share is the same as basic earnings per share for
the period presented.
Off-Balance Sheet Arrangements
As of September 30, 2022, 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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