Jet.AI Inc. quarterly report, Q3 FY2021

Full document

Filing summary

Entity and period: The supplied filing is Oxbridge Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2021—not a Jet.AI Inc. filing. Oxbridge was a newly formed SPAC incorporated to pursue a business combination. It reported no operating activity or revenue through the period; its reported activity related to formation and its August 2021 IPO.

Financial results and position

  • Revenue and profit: No operating revenue. Net income was $60,246 for the three months ended September 30, 2021, and $56,869 from inception through September 30. The quarterly result included $92,546 of warrant-liability fair-value income, offset by $32,497 of formation and administrative expenses; inception-to-date expenses were $35,874. Basic and diluted earnings per share were $0.004.
  • Cash flow: Inception-to-date operating cash flow was positive $20,847, investing cash flow was negative $116.725 million (funds placed in trust), and financing cash flow was positive $117.361 million. Ending cash outside the trust was $656,562.
  • Liquidity and assets: Total assets were $117.382 million, including $116.725 million held in trust. Management reported approximately $600,000 of working capital and believed available working capital and borrowing capacity would cover needs through the earlier of a business combination or one year from filing.
  • Liabilities and equity: Total liabilities were $7.602 million, including $4.025 million of deferred underwriting commissions and $3.520 million of derivative warrant liabilities. Shareholders’ equity was $5.000 million; 10,323,161 Class A shares, valued at $104.780 million, were classified as temporary equity because of possible redemption.
  • Capitalization: The IPO and full over-allotment raised $115 million gross from 11.5 million units at $10 each. The company also raised $5.760 million from private-placement warrants. It placed $116.725 million in trust. No working-capital loans were outstanding.
  • Margins and debt: Operating margins are not meaningful because the company had no revenue. The filing reports no long-term debt obligations.

Changes and outlook

  • This is a newly formed company with no comparable prior-year operating period presented; the filing gives inception-to-date results alongside the quarter.
  • Management expected increased public-company compliance and due-diligence costs. It intended to use funds outside trust for expenses and the search for a business-combination target. No target or transaction guidance is provided.
  • The company had 15 months after the August 16, 2021 IPO to complete a business combination, with a possible extension to 21 months. If it failed to complete a transaction within the applicable period, it would cease operations and redeem public shares, subject to the filing’s terms.
  • COVID-19 could adversely affect the company’s financial position or target search, but management said the effect could not be determined. Warrant liabilities are Level 3 estimates and are remeasured each reporting period, so fair-value changes can affect reported earnings without corresponding operating cash flow.
  • Public shareholders may redeem shares in connection with a business combination. Warrants may expire worthless if no transaction is completed. The sponsor may provide working-capital loans but is not obligated to do so.
  • Management reported effective disclosure controls as of September 30, 2021, with no material changes in internal control during the quarter. No legal proceedings were reported.

Investor facts to verify

  1. Confirm the filing belongs to Oxbridge Acquisition Corp., not Jet.AI Inc., before relying on it for Jet.AI analysis.
  2. Verify the business-combination deadline: the filing states 15 months from the August 16, 2021 IPO, but its MD&A also gives November 16, 2023 as the deadline. Those dates appear inconsistent; the filing text does not clearly reconcile them.
  3. Review the terms and accounting valuation of the 17.260 million public and private warrants, including potential dilution and future fair-value effects.
  4. Assess the amount of public-share redemptions, trust proceeds available at any transaction, and the company’s ability to fund expenses outside the trust.
  5. Review the sponsor’s indemnity and deferred underwriting commission terms, as well as the risks of failing to complete a business combination.