Oxus Acquisition Corp. Form 10-Q Summary
Entity and period: The supplied filing is Oxus Acquisition Corp.’s unaudited 10-Q for the quarter and nine months ended September 30, 2023, filed November 20, 2023. Although the request identifies Borealis Foods Inc., Borealis is the proposed target; the reported financials are those of Oxus, a pre-combination SPAC, and are not Borealis operating results.
Business context and transaction
Oxus had not commenced operating activities or generated operating revenue. Its activity was formation, fundraising, and pursuing a business combination. In February 2023 it agreed to combine with Borealis through a series of Canadian continuance and amalgamation steps. The agreement, amended in August, provides for Borealis shareholders to receive New Oxus shares based on a stated Borealis value of $150 million less Borealis net indebtedness, divided by $10 per share. Completion remained uncertain.
In March 2023, holders redeemed 15,300,532 public shares for approximately $159.34 million, leaving about $20.3 million in the trust at that time. Trust assets were $21.53 million at September 30. The original combination deadline had been extended to December 8, 2023. A further extension, potentially to June 8, 2024, was proposed in a preliminary proxy statement filed November 8; it was not described as approved in this filing.
Financial results and position
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating expenses | 2023: $1.20 million; 2022: $1.04 million | 2023: $4.01 million; 2022: $2.14 million |
| Net loss | 2023: $0.92 million; 2022: $0.23 million | 2023: $2.10 million; 2022: $1.07 million |
| Dividend income | 2023: $0.27 million; 2022: $0.80 million | 2023: $1.92 million; 2022: $1.06 million |
| Net loss per ordinary share | 2023: $0.14; 2022: $0.01 | 2023: $0.21; 2022: $0.05 |
Operating expenses and net loss increased versus the comparable periods. The filing attributes results primarily to SPAC expenses and dividend income from trust investments; operating margins are not meaningful because Oxus had no operating revenue.
- Cash flow: Operating activities used $1.94 million in the first nine months of 2023, versus $0.67 million in 2022. Investing activities provided $158.92 million, mainly from trust withdrawals for redemptions; financing activities used $157.59 million, mainly for those same redemptions.
- Liquidity: September 30 cash outside the trust was $70,191, down from $680,792 at year-end 2022. Trust investments were $21.53 million, down from $178.53 million. The company reported a $6.02 million working-capital deficiency.
- Debt and obligations: The non-interest-bearing sponsor promissory note had $3.35 million outstanding at September 30, payable upon a business combination. The filing also discloses a $5.3 million advisor fee payable upon transaction completion and up to $0.2 million in contingent legal fees.
- Equity and shares: Shareholders’ deficit was $6.02 million. At September 30, 1,949,468 Class A shares remained subject to possible redemption. The filing reports 3,749,468 Class A and 2,812,500 Class B shares issued and outstanding as of November 20.
Outlook, risks, and unusual items
Management stated that additional sponsor, shareholder, officer, director, or third-party financing may be needed, but none of those parties is obligated to provide it. Management warned that unavailable financing could require reduced spending or suspension of transaction efforts. The filing states that the December 8, 2023 deadline, liquidity condition, and possibility of liquidation raised substantial doubt about Oxus’s ability to continue as a going concern; no liquidation adjustments were recorded.
After quarter-end, Oxus amended the sponsor note on October 2 to permit borrowing up to $6 million. The filing reports $3.75 million outstanding as of the filing date after October draws. Oxus also filed further amendments to its Borealis Form S-4 and proposed the additional deadline extension. These events were not reflected in September 30 balances.
Other risks include the possibility the transaction will not close, market and geopolitical uncertainty, and the effects of redemptions on available transaction funding. Oxus disclosed that disclosure controls were not effective as of September 30 because of material weaknesses in accounting for complex financial instruments and prepaid expenses; management said it performed additional analysis to support the financial statements. No material changes in internal control were reported during the quarter. No legal proceedings were reported.
Guidance: The filing provides no operating forecast or revenue guidance. Oxus does not expect operating revenue before a business combination.
Important facts for investors to verify
- Whether the Borealis transaction received required approvals and closed, and the final transaction value, financing, and dilution after redemptions.
- Whether shareholders approved the proposed extension beyond December 8, 2023, and the resulting liquidation deadline.
- Current trust balance, redemptions, sponsor-note borrowings, and cash available outside the trust.
- Borealis’s net indebtedness used to determine its share consideration; this Oxus filing does not provide a clear current value for that amount.
- Whether the disclosed material weaknesses were remediated and whether controls were subsequently assessed as effective.
- Payment and final amount of transaction-contingent advisor and legal fees.