Filing scope and business context
This is Oxus Acquisition Corp.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2023—not a Borealis Foods operating-company 10-Q. Oxus is a blank-check company that had not commenced operations or generated operating revenue; Borealis Foods is the proposed acquisition target.
Oxus had signed a business combination agreement with Borealis on February 23, 2023. The proposed transaction includes Oxus continuing as an Ontario corporation and amalgamations involving Borealis and Oxus. Borealis shareholders’ aggregate consideration is based on a stated $150 million value less Borealis net indebtedness, divided by $10 per share. The deal had not closed by the filing date.
Financial results and condition
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Operating revenue | None | None |
| Formation and operating expenses | 2023: $698,329; 2022: $537,448 | 2023: $2,816,871; 2022: $1,102,990 |
| Dividend income | 2023: $245,280; 2022: $249,903 | 2023: $1,640,343; 2022: $264,263 |
| Net loss | 2023: $452,181; 2022: $287,545 | 2023: $1,182,348; 2022: $838,727 |
| Net loss per share, basic and diluted | 2023: $0.07; 2022: $0.01 | 2023: $0.10; 2022: $0.04 |
Operating margins are not meaningful because Oxus had no operating revenue. The higher six-month loss reflected operating expenses rising faster than trust-account dividend income, despite the substantial increase in that income.
- At June 30, 2023, cash outside the trust was $2,479, versus $680,792 at December 31, 2022. Trust-account marketable securities were $21.13 million, down from $178.53 million.
- Current liabilities were $4.71 million, including $2.55 million due under a non-interest-bearing related-party promissory note and $2.10 million of accrued offering costs and expenses. Management reported a $4.71 million working-capital deficiency.
- Operating cash use was $1.33 million for the first half of 2023, compared with $396,918 in the first half of 2022. Trust withdrawals and redemption payments were each $159.34 million; these were investing and financing cash flows, respectively.
- There was no reported conventional long-term debt, and the filing reports no off-balance-sheet arrangements. The trust balance is intended for a business combination or shareholder redemptions, not ordinary operating liquidity.
Material changes and transaction developments
- At the March 2023 extension vote, holders redeemed 15,300,532 Class A shares for approximately $159.34 million, or about $10.41 per share. The trust held about $20.3 million afterward and $21.13 million at June 30.
- The business-combination deadline was extended from March 8 to December 8, 2023. Oxus disclosed that failure to complete a transaction by then, absent another extension, would require liquidation and dissolution.
- On April 5, the sponsor converted 1.5 million Class B shares into 1.5 million Class A shares. The filing reports 6,561,968 total ordinary shares outstanding at June 30; 3,749,468 Class A and 2,812,500 Class B shares were outstanding as of August 18.
- Subsequent to quarter-end, the sponsor deposited $60,000 into the trust on July 31, and Oxus drew $200,000 under its note on August 10, bringing the note balance to $2.75 million as of the filing date.
- On August 11, Oxus and Borealis amended the business-combination agreement, including reducing the proposed equity-plan share allocation from 15% to 5%. Oxus filed a Form S-4 registration statement on August 14.
Outlook, risks, contingencies, and controls
- Management stated that Oxus needs additional capital for working capital and transaction costs. Sponsor and other related parties may provide loans but are not obligated to do so; management gave no assurance that financing would be available on acceptable terms.
- Management concluded that the low operating liquidity and potential mandatory liquidation by December 8 raised substantial doubt about Oxus’s ability to continue as a going concern. The financial statements include no liquidation-related adjustments.
- Completion remains subject to transaction and shareholder processes and other conditions. If no business combination is completed within the permitted period, public shares are to be redeemed from the trust; warrants would expire worthless.
- Oxus disclosed a material weakness in internal control over financial reporting related to accounting for complex financial instruments. Disclosure controls were therefore deemed ineffective at June 30. Management described remediation efforts but gave no assurance they will be effective.
- Potential deal-related costs include a $5.3 million advisory fee payable upon completion and a contingent legal success fee of up to $0.2 million. The filing also cites market, geopolitical, conflict, sanctions, and pandemic-related uncertainties that could impair the search or transaction.
- The filing reported no legal proceedings and no material changes to the risk factors in Oxus’s 2022 Form 10-K.
Important facts for investors to verify
- Confirm the current status, terms, conditions, financing, redemption effects, and expected closing timing of the Oxus–Borealis transaction; the proposed deal was not completed as of this filing.
- Review Borealis’s own financial statements and disclosures for its revenue, profitability, cash flow, debt, and operating risks; this Oxus filing does not provide a clear value for those operating-company metrics.
- Verify Oxus’s ability to fund transaction costs and operations, the outstanding sponsor-note balance and repayment terms, and any subsequent trust deposits or extensions.
- Assess the December 8, 2023 combination deadline and liquidation consequences alongside the going-concern warning.
- Review the material weakness, remediation progress, and the transaction’s potential dilution, including the amended equity-plan allocation and sponsor securities.