NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
1—Description of Organization and Business Operations
Oxbridge
Acquisition Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on April 12, 2021. The Company was
incorporated for the purpose of effecting a merger, capital stock or share exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth
company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As
of March 31, 2023, the Company had not commenced any operations. All activity for the period from April 12, 2021 (inception) through
March 31, 2023 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”
or “IPO”) described below, and subsequent to the Initial Public Offering, identifying a target company for a Business
Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at
the earliest. The Company may generate non-operating income in the form of interest and dividend income on marketable securities
from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal
year end.
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 underwriter 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 (Note 5).
Simultaneously
with the closing of the IPO, the Company consummated the sale of 5,760,000 warrants to the Sponsor and Maxim Group LLC (“Maxim”),
the underwriter in this offering (the “Private Placement Warrants”), at a price of $1.00 per Private Placement Warrant, generating
gross proceeds of $5,760,000, which is discussed in Note 4. Each Private Placement Warrant is exercisable to purchase one Class A ordinary
share at $11.50 per share.
Upon
the closing of the Initial Public Offering, the Over-Allotment and the Private Placement, $116,725,000 ($10.15 per Unit) of the net proceeds
of the Initial Public Offering and certain proceeds of the Private Placement was placed in a trust account (“Trust Account”),
located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and may be invested only in U.S.
government securities within the meaning of Section 2(a)(16) of the Investment Company Act with a maturity of 185 days or less or in
money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company
Act, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
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 $ (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 $ 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
March 31, 2023, approximately $12.97 million was held in Trust for possible redemption of 1,186,952 Class A ordinary shares at approximately
$10.92 per share.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering
and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net
assets held in the Trust Account (as defined below) (excluding the amount of deferred underwriting commissions and taxes payable on the
interest earned on the Trust Account) at the time of the signing of the agreement to enter into the initial Business Combination. However,
the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
1—Description of Organization and Business Operations (continued)
The
Company will provide the holders (the “Public Shareholders”) of its Public Shares, with the opportunity to redeem all or
a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek
shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The
Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account
(anticipated to be approximately $11.07
per Public Share as of August 16, 2023). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced
by the deferred underwriting commissions the Company will pay to the underwriter. These Public Shares have been classified as
temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards
Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities
from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at
least $5,000,001
and the approval of an ordinary resolution, being the affirmative vote of a majority of the ordinary shares represented in person or
by proxy and entitled to vote thereon and who vote at a general meeting in favor of the business combination. If a shareholder vote
is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Memorandum and Articles of Association, as amended (the “Amended and Restated
Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities
and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination.
If, however, shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for
business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy
rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection
with a Business Combination, the Initial Shareholder (as defined below) have agreed to vote their Founder Shares (as defined below
in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In
addition, the Initial Shareholder have agreed to waive their redemption rights with respect to their Founder Shares and Public
Shares in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Amended and Restated Memorandum and Articles of Association provides that a Public Shareholder, together with any
affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined
under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming
its shares with respect to more than an aggregate of 15% or more of the Class A ordinary shares sold in the Initial Public Offering,
without the prior consent of the Company.
The
Company’s Sponsor (the “Initial Shareholder”) officers and directors have agreed not to propose an amendment to Amended
and Restated Memorandum and Articles of Association (A) that would modify the substance or timing of the Company’s obligation to
allow redemption in connection with our initial business combination or to redeem 100% of its Public Shares if the Company does not complete
a Business Combination by August 16, 2023, as described in more detail in the prospectus for the IPO) (the “Combination Period”)
or (B) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity, unless
the Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such
amendment.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
1—Description of Organization and Business Operations (continued)
If
the Company is unable to complete a Business Combination within the Combination Period, the Company 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
(which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then
issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including
the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in each case to the
Company’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements
of applicable law.
The
Initial Shareholder, officers and directors have agreed to waive their liquidation rights with respect to the Founder Shares if the Company
fails to complete a Business Combination within the Combination Period. However, if the Initial Shareholder or members of the Company’s
management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from
the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period.
Maxim has agreed to waive their rights to its deferred underwriting commission held in the Trust Account in the event the Company does
not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other
funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution,
it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets)
will be approximately $11.07 per share held in the Trust Account. In order to protect the amounts held in the Trust Account,
the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor (other than the Company’s independent
registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which
the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will
not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or
to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriter of the Initial Public
Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).
Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible
to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have
to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s
independent registered public accounting firm), prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
1—Description of Organization and Business Operations (continued)
Proposed
Business Combination
On
February 24, 2023, Oxbridge Acquisition Corp. (“Oxbridge” or the “Acquiror”), entered into a Business Combination
Agreement and Plan of Reorganization (the “Merger Agreement”) with OXAC Merger Sub I, Inc., a Delaware corporation and a
direct wholly owned subsidiary of Oxbridge (“First Merger Sub”), Summerlin Aviation LLC (f/k/a OXAC Merger Sub II, LLC),
a Delaware limited liability company and a direct wholly owned subsidiary of Oxbridge (“Second Merger Sub”), and Jet Token,
Inc., a Delaware corporation (“Jet Token”), pursuant to which the Company will redomicile as a Delaware corporation and immediately
renamed Jet.AI (the “Domestication”), and promptly following the Domestication, (a) First Merger Sub will merge with and
into Jet Token (the “First Merger”), with Jet Token surviving the merger as a wholly owned subsidiary of Jet.AI (the time
at which the First Merger becomes effective, the “Effective Time”), and (b) as soon as practicable, but in any event within
three days following the Effective Time and as part of the same overall transaction as the First Merger, Jet Token (as the surviving
entity of the First Merger) will merge with and into Second Merger Sub (the “Second Merger” and, together with the First
Merger and all other transactions contemplated by the Business Combination Agreement, the “Proposed Business Combination”),
with Second Merger Sub surviving the merger as a wholly owned subsidiary of Jet.AI.
The
aggregate consideration payable to the stockholders of Jet.AI at the closing of the Proposed Business Combination (the “Closing”)
is $105,000,000, payable through 4,500,000 in shares of the Company’s common stock, par value $0.0001 per share (“Common
Stock”), valued at $10.00 per share, as well as warrants valued at $60,000,000 using agreed-upon Black Scholes pricing model.
The number of warrants will be determine at or near Closing and will be determined through the quotient of $60,000,000
and the price of each warrant as determined from the Black Scholes pricing model. There is no cash consideration in the Proposed Business
Combination.
As
consideration for the Mergers, at the Effective Time, each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (including shares of Company Common Stock resulting from the Company Preferred Stock Conversion) shall be canceled
and converted into the right to receive: (i) the number of shares of Domesticated Acquiror Common Stock equal to the Stock Exchange Ratio
(the “Per Share Stock Merger Consideration”), plus (ii) a warrant (each, an “Merger Consideration Warrant”) to
acquire the number of shares of Domesticated Acquiror Common Stock equal to the Warrant Exchange Ratio (the “Per Share Warrant
Merger Consideration”; and together with the Per Share Stock Merger Consideration, the “Per Share Merger Consideration”),
with each Merger Consideration Warrant being exercisable during the ten-year period following the Effective Time at an exercise price
of $15.00 per share.
The
Merger Agreement contains customary representations, warranties and covenants by the parties thereto, including, among other things,
covenants with respect to the conduct of the Company and Jet Token during the period between execution of the Merger Agreement and the
Closing. The representations, warranties and covenants made under the Merger Agreement will not survive the closing; provided, any covenants
that are to be performed at or after the closing shall survive until such covenant has been performed or satisfied. No party to the Merger
Agreement will have any liabilities to such other parties, other than claims for willful and material breach or fraud. Each of the Company
and Jet Token have agreed to use their commercially reasonable efforts to cause the Merger to be consummated as soon as practicable.
The
closing of the Proposed Business Combination is subject to certain conditions, including, among others, that (i) the stockholders of
Jet Token and the stockholders of the Company approve the Proposed Business Combination, (ii) the Nasdaq Stock Market approves for listing
the common stock to be issued in connection with the Proposed Business Combination, and (iii) the Company has $5,000,001 or more in net
tangible assets at the closing.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
1—Description of Organization and Business Operations (continued)
Proposed
Business Combination (continued)
The
Merger Agreement may be terminated prior to the closing under certain circumstances, including, among others, (i) by written consent
of Jet Token and the Company, (ii) by written notice from either the Company or Jet Token, if (A) the closing has not occurred on or
before July 1, 2023 (the “Outside Date”), unless the terminating party’s failure to comply in any material respect
with its obligations under the Merger Agreement shall have proximately contributed to the failure of the closing to have occurred on
or prior to the Outside Date, (iii) the Company or Jet Token does not obtain stockholder approval of the Proposed Business Combination
at its special meeting, (iii) by written notice from either the Company or Jet Token, in the event that the other party breaches any
of its representations, warranties, covenants or other agreements under the Merger Agreement that would result in the failure of the
conditions to the Company’s or Jet Token’s obligation to consummate the Proposed Business Combination and such breach has
not been cured by the breaching party by the earlier of 30 days after receiving notice of such breach.
During
the Three Months ended March 31, 2023, the Company incurred approximately $251,000 of expenses associated with the Proposed Business
Combination.
Going
Concern
In
connection with the Company’s assessment of going concern considerations in accordance GAAP, management has determined that if
the Company is unable to raise additional funds to alleviate liquidity needs as well as complete a Business Combination by August 16,
2023, then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory
liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after August 16, 2023.
Management’s
plans to address this need for capital through potential loans from certain of our affiliates. However, our affiliates are not obligated
to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our
expenses.
Liquidity
and Capital Resources
As
of March 31, 2023 the Company had cash of approximately $66,000 and a working capital deficit of approximately $249,000 to satisfy the
Company’s liquidity needs. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s
Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, provide
the Company Working Capital Loans (see Note 4). As of March 31, 2023, there were no amounts outstanding under any Working Capital Loans.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
2—Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating
results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Form S-1 which contains
the initial audited financial statements and notes thereto for the period from April 12, 2021 (inception) to April 16, 2021 as filed
with the SEC on July 19, 2021 and the Form 10-K’s as filed with the SEC on March 30, 2022 and February 22, 2023. The interim results
for the three-month period ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December
31, 2023 or for any future interim periods.
Emerging
Growth Company
The
Company is 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 it 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 of 2002, 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 Jumpstart Our Business Startups Act of 2012 (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 an emerging growth 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 an election to opt out is irrevocable. The Company has 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 the Company’s financial statement with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
2—Summary of Significant Accounting Policies (continued)
Use
of Estimates
The
preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement
and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgement.
It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at
the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one
or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Material
estimate that is particularly susceptible to significant change in the near-term relate to the fair value of the derivative warrant
liabilities. Although considerable variability is likely to be inherent in this estimate, management believes that the amounts
provided are reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustment is reflected in current
operations.
Cash
and cash equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
As of March 31, 2023, the Company had approximately $66,000 of cash and cash equivalents.
Marketable
Securities Held in Trust Account
At
March 31, 2023, substantially all of the assets held in the Trust Account were held in money market funds which are invested
primarily in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading
securities. Trading securities are presented on the condensed balance sheets at fair value at the end of each reporting period.
Gains and losses resulting from the change in fair value of investments held in Trust Account as well as interest and dividends are
included in income earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The
estimated fair values of investments held in Trust Account are determined using available market information.
Concentration
of Credit Risk
Financial
instruments that subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which exceeds
the Federal Depository Insurance Corporation coverage of $250,000. The Company has not experienced losses on these accounts.
Offering
Costs
The
Company accounts for offering costs in accordance with the requirements of ASC 340-10-S99-1. Offering costs consist of legal, accounting,
underwriting fees and other costs that are directly related to the IPO. Offering costs associated with warrant liabilities are expensed,
and offering costs associated with the Class A ordinary shares are recorded to shareholders’ deficit as a reduction of cash proceeds.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet due to their short-term
nature.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
2—Summary of Significant Accounting Policies (continued)
Fair
value measurements
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
● |
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
● |
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and |
|
● |
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
The
following is a description of the valuation methodologies used for assets and liabilities measured at fair value:
Money
Market Funds
Valued
at the daily closing price as reported by the fund. Money market funds held by the Company are open-end funds that are registered with
the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact
at the price. The funds are deemed to be actively traded.
Derivative
Warrant Liabilities
The
fair value of the Private Placement Warrants is based on the Black Scholes option pricing model utilizing various assumptions based on
management’s judgment. Significant deviations from management’s estimates and inputs could result in a material change in
fair value. As such, the fair value of the Private Placement Warrants is classified as Level 3. The fair value of the Public Warrants
is classified as Level 1 due to the use of an observable market price in an active market.
There
have been no changes in the methodologies used at March 31, 2023 or December 31, 2022. See Note 7 for additional information on assets
and liabilities measured at fair value.
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 Black-Scholes option pricing 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 from December
31, 2021, and through to March 31, 2023. The fair value of the Private Warrants has been estimated initially and subsequently, as of
March 31, 2023, using a version of the 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.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
2—Summary of Significant Accounting Policies (continued)
Class
A Ordinary Shares Subject to Possible Redemption
As
of March 31, 2023, there were 1,301,952
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 are measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that are 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 March 31, 2023 and 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 the Company’s balance sheets. At March 31, 2023 and December 31, 2022, there are no mandatory convertible ordinary shares.
(Loss)
Earnings Per Ordinary Share
The
Company complies with accounting and disclosure requirements of FASB ASC 260, “Earnings Per Share”. (Loss) earnings per ordinary
share is computed by dividing (loss) earnings by the weighted average number of ordinary shares outstanding during the period.
The
Company has two classes of ordinary shares, Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata
between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both
classes of shares share pro rata in the income/loss of the Company. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
At
March 31, 2023, 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 loss of the Company. As a result of the net loss, any potentially dilutive securities would
be considered anti-dilutive. As a result, diluted loss per share is the same as basic
loss per share for the period ended March 31, 2023.
At
March 31, 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 exercise price exceeding the average market price of the
Company’s ordinary shares during the period ended March 31, 2022. As a result, diluted earnings per share is the same as basic earnings
per share for the period ended March 31, 2022.
The
following table reflects the calculation of basic and diluted net (loss) earnings per share (in dollars, except per share amounts):
Schedule of Basic and Diluted Net Loss Per
Share
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
| |
For Three Months Ended
March 31
| |
| |
2023 | | |
2022 | |
| |
Class A | | |
Class B | | |
Class A | | |
Class B | |
Basic and diluted (loss) earnings per ordinary share | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Allocation of net (loss) earnings | |
$ | (191,771 | ) | |
$ | (423,474 | ) | |
$ | 2,697,102 | | |
$ | 667,600 | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 1,301,952 | | |
| 2,875,000 | | |
| 11,615,000 | | |
| 2,875,000 | |
Basic and diluted net (loss) earnings | |
$ | (0.15 | ) | |
$ | (0.15 | ) | |
$ | 0.23 | | |
$ | 0.23 | |
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
2—Summary of Significant Accounting Policies (continued)
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period
that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax
positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than
not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the
Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as
income tax expense. As of March 31, 2023, there were no unrecognized tax benefits and no amounts accrued for interest and penalties.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially
change over the next twelve months.
The
Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently
not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s
tax provision was zero for the period presented.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect
on the Company’s financial statements.
Note
3—Initial Public Offering
On
August 16, 2021, the Company consummated its IPO of 10,000,000 Units at $10.00 per Unit, generating gross proceeds of $100,000,000 and
incurring offering costs of approximately $6,624,000, inclusive of approximately $3,500,000 in deferred underwriting commissions. The
underwriter was granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up
to 1,500,000 additional Units to cover over-allotments, if any, at $10.00 per Unit. On August 16, 2021, Maxim exercised the over-allotment
option in full and, purchased an additional 1,500,000 Over-Allotment Units, generating additional gross proceeds of $15,000,000, and
incurring additional offering costs of $825,000, inclusive of approximately $525,000 of deferred underwriting commissions.
Each
Unit consists of one Class A ordinary share, and one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles
the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 6).
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
4—Related Party Transactions
Founder
Shares
On
April 12, 2021, the Sponsor paid $25,000, or approximately $ per share, to cover certain expenses on behalf of the Company in exchange
for issuance of Class B ordinary shares, par value $ (the “Founder Shares”). The Founder Shares will automatically
convert into shares of Class A ordinary shares at the time of the Company’s initial Business Combination and are subject to certain
transfer restrictions, as described in Note 6.
The
Initial Shareholder have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the
earlier to occur of: (i) one year after the completion of the initial Business Combination or (ii) the date following the completion
of the initial Business Combination on which the Company completes a liquidation, merger, share exchange or other similar transaction
that results in all of the shareholders having the right to exchange their ordinary shares for cash, securities or other property. Notwithstanding
the foregoing, if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions,
share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 120 days after the initial Business Combination, the Founder Shares will be released from the lockup.
Private
Placement Warrants
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the Private Placement of an 5,760,000 Private Placement Warrants
to the Sponsor and Maxim at an average purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company
of $5,760,000. The Private Placement Warrants are identical to the Public Warrants sold as part of the Units in the Initial Public Offering,
except that the Sponsor and Maxim have agreed not to transfer, assign or sell any of the Private Placement Warrants (except to certain
permitted transferees) until 30 days after the completion of the Company’s initial Business Combination. The Private Placement
Warrants are also not redeemable by the Company so long as they are held by the Sponsor and Maxim or their respective permitted transferees.
Certain
proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.
The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or
its permitted transferees.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
4—Related Party Transactions (continued)
Working
Capital Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, other Initial
Shareholder, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be
required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working
Capital Loans. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with
respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest,
or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into private placement warrants
at a price of $1.00 per warrant. As of March 31, 2023, the Company did not have any outstanding borrowings under the Working Capital
Loans.
Administrative
Services Agreement
Commencing
on the effective date of the Company’s IPO, the Company agreed to pay its Sponsor a total of up to $10,000
per month for office space, utilities, secretarial and administrative support. Upon completion of the initial Business Combination
or the Company’s liquidation, the Company will cease paying these monthly fees. For the three month period ended March 31,
2023, the Company recorded expenses of $50,000
(including a previously omitted charge of $20,000
relating to November and December 2022 charges) to the Sponsor under the Administrative Services Agreement.
Extension
Amendment Proposal and Promissory Note
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 has agreed to contribute to us a loan of $ (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 $ to the sponsor, in connection with the Extension Loan.
The Extension Loan was deposited into the trust account on or around 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.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
5—Commitments and Contingencies
Registration
Rights
The
holders of Founder Shares, Private Placement Warrants, and securities that may be issued upon conversion of Working Capital Loans, if
any, are 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 the Company registers such securities. In addition, these
holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the
completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to
1,500,000 additional Units to cover over-allotments, if any, at the IPO price less the underwriting discounts and commissions. On August
16, 2021, the underwriters fully exercised their over-allotment option.
The
underwriters were entitled to an underwriting discount of $0.20
per Unit, or $2.0
million in the aggregate (or $2.3
million in the aggregate including the underwriters’ over-allotment option which was exercised in full), payable upon the
closing of the IPO. In addition, $0.35
per unit, or approximately $3.5
million in the aggregate (or approximately $4.03
million in the aggregate including the underwriters’ over-allotment option which was exercised in full) was payable to the
underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held
in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting
agreement.
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.
Note
6 – Derivative Warrant Liabilities
As
of March 31, 2023, the Company had 11,500,000 Public Warrants and 5,760,000 Private Placement Warrants, outstanding.
The
Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination or (b) 12 months
from the closing of the IPO. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon
redemption or liquidation.
The
Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Public Warrant and will have no obligation
to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A
ordinary shares issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject
to the Company satisfying its obligations with respect to registration. No Public Warrant will be exercisable for cash or on a cashless
basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their Public Warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
6 – Derivative Warrant Liabilities (continued)
The
Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination,
it will use its best efforts to file with the SEC a registration statement registering the issuance, under the Securities Act, of the
Class A ordinary shares issuable upon exercise of the Public Warrants. The Company will use its best efforts to file with the SEC a registration
statement covering the shares of Class A ordinary shares issuable upon exercise of the warrants, to cause such registration statement
to become effective and to maintain a current prospectus relating to those shares of Class A ordinary shares until the warrants expire
or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A ordinary shares issuable
upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the Company will have failed
to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act or another exemption.
Redemption
of Warrants for Cash When the Price per Class A Ordinary Share Equals or Exceeds $18.00
Once
the Public Warrants become exercisable, the Company may call the Public Warrants for redemption
|
● |
in
whole and not in part; |
|
|
|
|
● |
at
a price of $0.01 per Public Warrant; |
|
|
|
|
● |
upon
not less than 30 days’ prior written notice of redemption to each warrant holder and |
|
|
|
|
● |
if,
and only if, the reported last sale price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share
sub-divisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day
period ending three business days before the Company sends the notice of redemption to the warrant holders (the “Reference
Value”). |
If
and when the Public Warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of ordinary shares upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws
or the Company is unable to effect such registration or qualification.
The
exercise price and number of shares of Class A ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances
including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. Additionally, in no event will
the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the
Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds
with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with the respect to such warrants. Accordingly, the warrants may expire worthless.
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the
Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of common
shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend,
extraordinary dividend or recapitalization, reorganization, merger or consolidation.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
6 – Derivative Warrant Liabilities (continued)
In
addition, if (x) the Company issues additional shares of Class A ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per
Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of
directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held
by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of
the Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on
the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”)
is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher
of the Market Value and the Newly Issued Price and the $18.00 per share redemption trigger price described above will be adjusted (to
the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the IPO, except that the Private Placement
Warrants and the ordinary shares issuable upon exercise of the Private Placement Warrants, so long as they are held by the Initial Shareholders
or their permitted transferees, (i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable
upon exercise of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days
after the completion of the initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be
entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants.
The
Company has accounted for the 17,260,000
warrants issued in connection with the Initial
Public Offering (including 11,500,000
Public Warrants and 5,760,000
Private Placement Warrants) in accordance with
the guidance contained in ASC 815-40.
The
warrant agreement contains an Alternative Issuance provision that if less than 70% of the consideration receivable by the holders of
the Class A common stock in the Business Combination is payable in the form of common equity in the successor entity, and if the holders
of the warrants properly exercise the warrants within thirty days following the public disclosure of the consummation of Business Combination
by the Company, the warrant price shall be reduced by an amount equal to the difference (but in no event less than zero) of (i) the warrant
price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) minus (B) the Black-Scholes Warrant
Value (as defined below). The “Black-Scholes Warrant Value” means the value of a Warrant immediately prior to the consummation
of the Business Combination based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets. “Per
Share Consideration” means (i) if the consideration paid to holders of the common stock consists exclusively of cash, the amount
of such cash per common stock, and (ii) in all other cases, the volume weighted average price of the common stock as reported during
the ten-trading day period ending on the trading day prior to the effective date of the Business Combination.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
6 – Derivative Warrant Liabilities (continued)
The
Company believes that the adjustments to the exercise price of the warrants is based on a variable that is not an input to the fair
value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 – 40, and thus the warrants are not
eligible for an exception from derivative accounting. The accounting treatment of derivative financial instruments requires that the
Company record a derivative liability upon the closing of the Initial Public Offering. Accordingly, the Company classifies each
warrant as a liability at its fair value and the warrants will be allocated a portion of the proceeds from the issuance of the Units
equal to its fair value determined using Black-Scholes option pricing model. This liability is subject to re-measurement at each
balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair
value recognized in the Company’s statements of operations. For the three-month periods ending March 31, 2023 and 2022, the
Company recognized a (loss)/gain on revaluation of approximately ($0.39 million) and $3.4 million, respectively. The Company will
reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the
warrants will be reclassified as of the date of the event that causes the reclassification.
Note
7 - Fair Value Measurements
The
following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a
recurring basis as of March 31, 2023 and December 31, 2022, by level within the fair value hierarchy:
Schedule
of Fair Value Liabilities Measured on Recurring Basis
| |
Fair Value Measurements Using | | |
| |
At March 31, 2023 | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Description | |
| |
Assets | |
| | | |
| | | |
| | | |
| | |
Marketable securities held in trust account | |
$ | 12,970,811 | | |
$ | - | | |
$ | - | | |
$ | 12,970,811 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities - public warrants | |
$ | 754,400 | | |
$ | - | | |
$ | - | | |
$ | 754,400 | |
Warrant liabilities - private warrants | |
$ | - | | |
$ | - | | |
$ | 4,621 | | |
$ | 4,621 | |
| |
Fair Value Measurements Using | | |
| |
At December 31, 2022 | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | | |
Total | |
Description | |
| |
Assets | |
| | | |
| | | |
| | | |
| | |
Marketable securities held in trust account | |
$ | 12,834,629 | | |
$ | - | | |
$ | - | | |
$ | 12,834,629 | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Warrant liabilities - public warrants | |
$ | 368,000 | | |
$ | - | | |
$ | - | | |
$ | 368,000 | |
Warrant liabilities - private warrants | |
$ | - | | |
$ | - | | |
$ | 1,902 | | |
$ | 1,902 | |
The
Public Warrants issued in connection with the Public Offering and the Private Placement Warrants were initially and subsequently measured
at fair value using a Black-Scholes option pricing model. The subsequent measurement of the Public Warrants as of March 31, 2023 and
December 31, 2022, are classified as Level 1 due to the use of an observable market quote in an active market.
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
7 - Fair Value Measurements (continued)
The
Company utilizes a Black-Scholes model to value the Private Placement Warrants at each reporting period, with changes in fair value recognized
in the statements of operations. The estimated fair value of the Private Placement Warrant liability is determined using Level 3 inputs.
Inherent in the Black-Scholes option pricing model are assumptions related to expected stock-price volatility, expected life, risk-free
interest rate and dividend yield. The Company estimates the volatility of its warrants based on historical volatility of its stock price.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected
remaining life of the warrants. The Company used the modified extension date deadline of August 16, 2023, to determine the estimated
life of the warrants. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
There
were no transfers between Levels 1, 2 or 3 during the three-month periods ended March 31, 2023 and 2022.
The
following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:
Schedule
of Fair Value Measurements
| |
At March 31, 2023 | | |
At December 31, 2022 | |
| |
| | |
| |
Share price | |
$ | 10.71 | | |
$ | 10.45 | |
Exercise price | |
$ | 11.5 | | |
$ | 11.5 | |
Expected dividend yield | |
| 0 | % | |
| 0 | % |
Expected volatility | |
| 3.39 | % | |
| 2.97 | % |
Risk-free interest rate | |
| 4.95 | % | |
| 4.85 | % |
Expected life (in years) | |
| 0.42 | | |
| 0.67 | |
The
following table provides a reconciliation of changes in fair value of the beginning and ending balances for the liabilities classified
as Level 3:
Schedule
of Fair Value Warrant Liabilities
| |
Private Placement Warrants | | |
Public Warrants
| | |
Warrant Liabilities
| |
Fair value of Level 3 warrants at January 1, 2023 | |
$ | 1,902 | | |
$ | - | | |
$ | 1,902 | |
Change in valuation inputs or other assumptions | |
| 2,719 | | |
| - | | |
| 2,719 | |
Fair value of Level 3 warrants at March 31, 2023 | |
$ | 4,621 | | |
$ | - | | |
$ | 4,621 | |
The
following table presents the changes in the fair value of derivative warrant liabilities:
Schedule
of Fair Value Warrant Liabilities
| |
Private
Placement Warrants | | |
Public
Warrants | | |
Total
Warrant Liabilities | |
| |
| | |
| | |
| |
Fair value as of January 1, 2023 | |
$ | 1,902 | | |
$ | 368,000 | | |
$ | 369,902 | |
Change in valuation inputs or other assumptions | |
| 2,719 | | |
| 386,400 | | |
| 389,119 | |
Fair value as of March 31, 2023 | |
$ | 4,621 | | |
$ | 754,400 | | |
$ | 759,021 | |
OXBRIDGE
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2023
(Unaudited)
Note
8—Shareholders’ Equity
Preference
Shares—The Company is authorized to issue 4,000,000 preference shares with a par value of $0.0001 per share, with such
designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.
As of March 31, 2023, there were no preference shares issued or outstanding.
Class
A Ordinary Shares—The Company is authorized to issue 400,000,000
Class A ordinary shares with a par value of $0.0001
per share. Holders of the Company’s Class
A ordinary shares are entitled to one vote for each share. As of March 31, 2023 and December 31, 2022, there were 1,301,952
Class A ordinary shares outstanding, of which
1,186,952
has been classified as temporary equity due to
its redeemable nature.
Class
B Ordinary Shares—The Company is authorized to issue 40,000,000
Class B ordinary shares with a par value of $0.0001
per share. Holders are entitled to one vote for each Class B ordinary share. At March 31, 2023 and December 31, 2022, there were 2,875,000
Class B ordinary shares issued and outstanding. Holders of the Class A ordinary shares and holders of the Class B ordinary shares
will vote together as a single class on all matters submitted to a vote of the Company’s shareholders, except as required by
applicable law or stock exchange rule; provided that only holders of the Class B ordinary shares have the right to vote on the
appointment of the Company’s directors prior to the initial Business Combination.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination on a
one-for-one basis (as adjusted). In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed
issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder
Shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such conversion (after giving
effect to any redemptions of Class A ordinary shares by Public Shareholders), including the total number of Class A ordinary shares issued,
or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company
in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked
securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business
Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans;
provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Note
9—Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements, except for as disclosed below.
ADD –
ISSUANCE OF NEW PROMISSORY NOTE; S-4 AMENDMENT (IF DONE BEFORE FILING DATE)