References to the "Company," "our," "us" or "we" refer to Oxbridge Acquisition
Corp. The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Forward Looking Statements
All statements other than statements of historical fact included in this Form
10-K including, without limitation, statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward-looking statements. When used in this Form
10-K, words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or our management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, our management. Actual results could differ materially from those
contemplated by the forward-looking statements as a result of certain factors
detailed in our filings with the SEC.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Form 10-K. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
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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").
Our sponsor is OAC Sponsor Ltd., a Cayman Islands exempted company (the
"Sponsor"). The registration statement for our initial public offering ("IPO")
was declared effective on August 11, 2021. On August 16, 2021, we consummated
our 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 our IPO, we completed the private
sale (the "private placement") of 5,760,000 warrants to the Sponsor and Maxim
Group LLC ("Maxim"), the underwriter in our IPO, at a price of $1.00 per private
placement warrant, generating gross proceeds of $5,760,000.
Upon the closing of our IPO and the private placement, $116,725,000 ($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, 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.
Our management has broad discretion with respect to the specific application of
the net proceeds of the IPO 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.
On November 9, 2022, the Company held an extraordinary general meeting (the
"EGM") of shareholders. At the EGM, the Company's shareholders were presented
the proposals to extend the date by which the Company must consummate a business
combination (the "Termination Date") from November 16, 2022 to August 16, 2023
(or such earlier date as determined by the Board of Directors) by amending the
Company's Amended and Restated Memorandum and Articles of Association (the
"Extension Amendment Proposal"). The Extension Amendment Proposal to amend the
Company's Amended and Restated Memorandum and Articles of Association ("Charter
Amendment") was approved. The Company filed the Charter Amendment with the
Cayman Islands Registrar of Companies on November 11, 2022.
In connection with the vote to approve the Extension Amendment Proposal, the
holders of 10,313,048 Class A ordinary shares properly exercised their right to
redeem their shares for cash at a redemption price of approximately $10.22 per
share, for an aggregate redemption amount of $105,424,960 in connection with
the Extension Amendment Proposal.
The Sponsor agreed to contribute to us a loan of $575,000 (the "Extension
Loan"), to be deposited into the trust account to extend the Termination Date
from November 16, 2022 to August 16, 2023. On November 14, 2022, the Company
issued a promissory note (the "Extension Note") in the aggregate principal
amount of $575,000 to the Sponsor, in connection with the Extension Loan. The
Extension Loan was deposited into the trust account on November 15, 2022.
The Extension Note bears no interest and is repayable in full upon the earlier
of (a) the date of the consummation of an initial business combination, or (b)
the date of the liquidation of the Company.
We have until August 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.
At December 31, 2022, approximately $12.8 million was held in Trust for possible
redemption of 1,186,952 Class A ordinary shares at approximately $10.81 per
share.
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Liquidity and Capital Resources
As of December 31, 2022 we had cash of approximately $212,000 and a working
capital of approximately $110,000 to satisfy our 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 December 31, 2022, there were no amounts outstanding
under any working capital loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of a Business Combination or six months 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.
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 Annual Report
on Form 10-K 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 Annual Report on Form 10-K.
Results of Operations
As of December 31, 2022, we had not commenced any operations. All activity for
the year ended December 31, 2022 and the period from April 12, 2021 (inception)
through December 31, 2021 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.
45
Net Income for the year ended December 31, 2022 was $7.18 million, or $0.546
basic and diluted earnings per share, which consisted of an approximately
$487,000 in general and administrative expenses, $964,000 in interest income and
approximately $6.7 million gain on warrant liability revaluation.
For the period from April 12, 2021 (inception) through to December 31, 2021, we
had a net loss of approximately $3.54 million, which consisted of an
approximately $86,000 in general and administrative expenses and approximately
$3.46 million loss on warrant liability revaluation.
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 year ended December 31, 2022, the Company recorded
expenses of $100,000 (2021: $50,000) 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.
Critical Accounting Policies
Derivative financial instruments
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our 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 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 beginning on December 31, 2021 and through
to December 31, 2022. The fair value of the Private Warrants has been estimated
initially and subsequently, as of December 31, 2022, using a 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.
46
Class A Ordinary Shares Subject to Possible Redemption
As of December 31, 2022, there were 1,301,952 Class A ordinary shares issued or
outstanding. We account for our 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 our control) are classified as temporary equity. At all
other times, ordinary shares are classified as shareholders' equity. Our
ordinary shares feature certain redemption rights that are considered to be
outside of our control and be subject to occurrence of uncertain future events.
Accordingly, at December 31, 2022, 1,186,952 Class A ordinary shares subject to
possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' equity section of our condensed balance sheets.
Balance Sheet Arrangements
As of December 31, 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.
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, we, 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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