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As filed with the Securities and Exchange Commission on December 19, 2023

 

Registration No. 333-274432

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 3

TO

 

FORM S-1

 

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

 

Jet.AI Inc.

(Exact name of registrant as specified in its charter.)

 

Delaware   4522   93-2971741

(State or other jurisdiction

of incorporation or organization)

  (Primary Standard Industrial Classification Number)  

(IRS Employer

Identification No.)

 

10845 Griffith Peak Dr.

Suite 200

Las Vegas, Nevada 89135

702-747-4000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Michael Winston

10845 Griffith Peak Dr.

Suite 200

Las Vegas, Nevada 89135

702-747-4000
(Name, address, including zip code and telephone number, including area code, of agent for service)

 

Copies to:

 

Heidi Mortensen

Jeanne Campanelli

CrowdCheck Law LLP

700 12th Street NW, Suite 700

Washington, D.C. 20005

(703) 548-7263

 

As soon as practicable after the effective date of this Registration Statement.

(Approximate date of commencement of proposed sale to the public)

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ☒

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company
       
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.

 

 

 

 

 

 

The information in this preliminary prospectus is not complete and may be changed. The selling stockholders named in this preliminary prospectus may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and the selling stockholders named in this preliminary prospectus are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion, Dated December 19, 2023

 

PRELIMINARY PROSPECTUS

 

Jet.AI Inc.

 

 

Primary offering

Up to 11,489,334 Shares of Common Stock Issuable Upon
Exercise of JTAIW Warrants

 

Resale offering

Up to 24,390,627 Shares of Common Stock

Up to 2,179,447 Shares of Common Stock Issuable Upon

Exercise of the GEM Warrant

Up to 5,760,000 Shares of Common Stock Issuable Upon

Exercise of Private Placement Warrants

Up to 182,500 Shares of Common Stock Issuable Upon

Conversion of Shares of Preferred Stock

 

 

 

This prospectus relates to the issuance by us of up to 11,489,334 shares of our common stock par value $0.0001 per share (“Common Stock”), issuable upon the exercise of 11,489,334 outstanding warrants (the “JTAIW Warrants”) by holders thereof. The JTAIW Warrants were originally issued in the initial public offering (“IPO”) of Units of Oxbridge (as defined herein), with each Unit then consisting of one Class A ordinary share of Oxbridge and one redeemable warrant. Each outstanding JTAIW Warrant entitles the holder thereof to purchase one share of our Common Stock at a price of $11.50 per share, subject to adjustment. In light of the current trading price of our Common Stock ($3.59 closing price as of December 15, 2023), it is unlikely that the JTAIW Warrants will be exercised in the near future but to the extent that they are, we will receive the proceeds from any exercise of JTAIW Warrants.

 

This prospectus also relates to the offer and sale from time to time by certain selling stockholders named in this prospectus (the “selling stockholders”) pursuant to the selling stockholders’ registration rights under certain agreements between us and the selling stockholders of up to 32,330,074 shares of Common Stock consisting of

 

  115,000 shares of Common Stock issued to Maxim Partners LLC (“Maxim Partners”) on August 16, 2021 pursuant to the underwriting agreement in connection with Oxbridge’s IPO, representing a value of $9.00 per share reflecting an allocation of the $10.00 per Unit IPO price,
  270,000 shares of Common Stock issued on August 10, 2023 to Maxim Partners to settle payment obligations of $2,898,000 (or approximately $10.73 per share) under the underwriting agreement in connection with Oxbridge’s IPO,
  112,700 shares of Common Stock issuable upon conversion of shares of Series A Preferred Shares (as defined herein) issued to Maxim Partners to settle payment obligations of $1,127,000 (or approximately $10.00 per share) under the underwriting agreement in connection with Oxbridge’s IPO,
  up to 12,300 shares of Common Stock issuable to Maxim Partners as PIK Shares (as defined herein) in lieu of payment of cash dividends on the Series A Preferred Shares,
  548,127 shares of Common Stock issued to Meteora (as defined herein) pursuant to the FPA Funding Amount PIPE Subscription Agreement (as defined herein) for $10.00 per share, subject to netting the aggregate purchase price against payments by the Company to Meteora under the Forward Purchase Agreement (as defined herein),
  up to 2,179,447 shares of Common Stock issuable after the date of this prospectus to GEM (as defined herein) upon the exercise of a warrant to purchase shares of our Common Stock (the “GEM Warrant”) at an exercise price of $8.60 per share.  In light of the current trading price of our Common Stock ($3.59 closing price as of December 15, 2023), it is unlikely that the GEM Warrant will be exercised in the near future but to the extent that it is, we will receive the proceeds from any exercise of the GEM Warrant for cash,
  up to 400,000 shares of Common Stock issuable after the date of this prospectus to GEM in lieu of paying a commitment fee of $800,000 to GEM pursuant to the Share Purchase Agreement (as defined herein),
  up to 20,000,000 shares of Common Stock issuable to GEM after the date of this prospectus under the Share Purchase Agreement, at a purchase price equal to 90% of the average daily closing price during the applicable 30-day drawdown pricing period,
  57,500 shares of Common Stock issuable upon conversion of shares of Series A-1 Preferred Shares (as defined herein) issued to OAC Sponsor Ltd. (the “Sponsor”) to settle the payment obligations of the Company under a promissory note in the principal amount of $575,000 (approximately $10.00 per share of Common Stock),
  2,875,000 shares of Common Stock issued to Sponsor in connection with the formation of Oxbridge (which we also refer to as “Founder Shares”) at an average purchase price of approximately $0.009 per share, and
  5,760,000 shares of Common Stock issuable upon exercise of 5,760,000 warrants (the “Private Placement Warrants,” and, together with the “JTAIW Warrants” and the “GEM Warrant,” the “Warrants”) issued in a private placement to the Sponsor and Maxim in connection with the closing of Oxbridge’s IPO at a purchase price of $1.00 per warrant. Each outstanding Private Placement Warrant  entitles the holder thereof to purchase one share of our Common Stock at a price of $11.50 per share, subject to adjustment. In light of the current trading price of our Common Stock ($3.59 closing price as of December 15, 2023), it is unlikely that the Private Placement Warrants will be exercised in the near future but to the extent that they are, we will receive the proceeds from any exercise of Private Placement Warrants for cash.

 

1
 

 

Our registration of the securities covered by this prospectus does not mean that the selling stockholders will offer or sell any of the shares of Common Stock. The selling stockholders acquired or will acquire these securities in private transactions exempt from registration under the Securities Act of 1933, as amended (the Securities Act).

 

We will not receive any proceeds from the sale of the shares by the selling stockholders. To the extent that the holders of the Private Placement Warrants or the GEM Warrant exercise all or part of their respective warrants for cash rather than on a cashless exercise basis, which is unlikely in the near future given the current trading price of our Common Stock as discussed above, we will receive the exercise price of such exercise. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. For a list of the selling stockholders, see the section entitled “Selling Stockholders” on page 93.

 

In connection with an extraordinary general meeting of Oxbridge shareholders in November 2022, in which Oxbridge asked its shareholders to vote to extend the date by which Oxbridge had to consummate a business combination, the holders of 10,313,048 Class A ordinary shares, or approximately 90.0% of the shares with redemption rights at the time, 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. Subsequently, in connection with the extraordinary general meeting of shareholders of Oxbridge to approve the Business Combination and certain other related proposals (the “Meeting”), holders of 1,144,215 of Oxbridge’s Class A ordinary shares, or approximately 96.4% of the shares with redemption rights at the time, exercised their right to redeem their shares for a full pro rata portion of the trust account holding the proceeds from Oxbridge’s IPO, at a redemption price of approximately $11.10 per share, for an aggregate redemption amount of $12,655,017. On August 8, 2023, pursuant to the Forward Purchase Agreement described below, Meteora purchased 663,556 of the Class A ordinary shares from third parties through a broker in the open market or reversed previously submitted redemption requests prior to the Closing and waived its rights with respect to these shares. Furthermore, Meteora has purchased an additional 548,127 such shares from us pursuant to the terms of the Forward Purchase Agreement.

 

The 32,330,074 shares of Common Stock being offered for resale pursuant to this prospectus by the selling securityholders would represent approximately 65.74% of shares of Common Stock outstanding of the Company as of December 15, 2023 (including shares issuable upon the cash exercise in full of the Warrants, conversion of the shares of preferred stock and issuances under the Share Purchase Agreement ). Given the substantial number of shares of Common Stock being registered pursuant to this prospectus, the sale of such shares, or the perception in the market of the potential for the sale of a large number of shares, could increase the volatility of the market price of our Common Stock or result in a significant decline in the public trading price of our Common Stock. Even if our trading price is significantly below $10.00, the offering price for the units offered in Oxbridge’s IPO, certain selling stockholders may still have an incentive to sell shares of our Common Stock because they purchased the shares at prices lower than the public investors or the current trading price of our common stock, or for other reasons. While the selling stockholders may experience a positive rate of return on their investment in our Common Stock, the public stockholders may not experience a similar rate of return on the securities they purchased due to differences in their purchase prices and the trading price.

 

The selling stockholders may offer, sell or otherwise dispose of the shares of Common Stock included in this prospectus in a number of different ways and at varying prices. See the section titled “Plan of Distribution” for more information about how the selling stockholders may sell or otherwise dispose of the shares of Common Stock being offered in this prospectus.

 

Our Common Stock and the JTAIW Warrants are traded on Nasdaq under the symbols “JTAI” and “JTAIW,” respectively. On December 15, 2023, the last reported sale price of shares of our Common Stock on Nasdaq was $3.59 and the last reported sales price of the JTAIW Warrants was $0.061.

 

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

 

We are an “emerging growth company” as defined under U.S. federal securities laws and, as such, have elected to comply with reduced public company reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

 

Investing in our Common Stock involves risks. Before buying any shares of Common Stock, you should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 17 of this prospectus and in the documents incorporated by reference into this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is                    , 2023

 

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TABLE OF CONTENTS

 

  Page
   
ABOUT THIS PROSPECTUS 4
   
CERTAIN DEFINED TERMS 5
   
PROSPECTUS SUMMARY 9
   
THE OFFERING 16
   
RISK FACTORS 17
   
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 35
   
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 37
   
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 44
   
BUSINESS 62
   
DIRECTORS AND EXECUTIVE OFFICERS 71
   
EXECUTIVE COMPENSATION 78
   
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS 89
   
USE OF PROCEEDS 91
   
DETERMINATION OF OFFERING PRICE 91
   
DIVIDEND POLICY 91
   
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 91
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 92
   
SELLING STOCKHOLDERS 93
   
PLAN OF DISTRIBUTION 94
   
DESCRIPTION OF CAPITAL STOCK 95
   
LEGAL MATTERS 100
   
EXPERTS 100
   
WHERE YOU CAN FIND MORE INFORMATION 100
   

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

100
   
INDEX TO FINANCIAL STATEMENTS F-1

 

3
 

 

ABOUT THIS PROSPECTUS

 

This prospectus is part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”) using a “shelf” registration process. We will not receive any proceeds from the sale by the selling stockholders of the securities offered by them described in this prospectus. This prospectus also relates to the issuance by us of the shares of Common Stock issuable upon the exercise of the JTAIW Warrants. We will only receive proceeds from the sale of shares of Common Stock underlying the JTAIW Warrants to the extent the holders choose to exercise those Warrants.

 

We may also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a part that may contain material information relating to these offerings. The prospectus supplement or post-effective amendment may also add, update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplement or post-effective amendment, as applicable. The registration statement we filed with the SEC, of which this prospectus forms a part, includes exhibits that provide more detail of the matters discussed in this prospectus. You should read this prospectus, any post-effective amendment, and any applicable prospectus supplement and the related exhibits filed with the SEC before making your investment decision. The registration statement and the exhibits can be obtained from the SEC, as indicated under the section entitled “Where You Can Find More Information.”

 

You should rely only on the information contained in this prospectus. Neither we nor the selling stockholders have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus, any post-effective amendment, or any applicable prospectus supplement prepared by or on behalf of us or to which we have referred you. We and the selling stockholders take no responsibility for and can provide no assurance as to the reliability of any other information that others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus, any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate only as of the date on its respective cover. Our business, financial condition, results of operations and prospects may have changed since those dates. Neither we nor the selling stockholders are making an offer to sell our Common Stock in any jurisdiction where the offer or sale thereof is not permitted. You should not assume that the information appearing in this prospectus any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate as of any date other than their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. You should read carefully the entirety of this prospectus before making an investment decision.

 

Some of the market and industry data contained in this prospectus are based on independent industry publications or other publicly available information. We believe this information is reliable as of the applicable date of its publication, however, we have not independently verified and cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained herein, and our beliefs and estimates based on such data, may not be reliable.

 

On August 10, 2023 (the “Closing Date”), we consummated the previously announced “Business Combination” pursuant to the Business Combination Agreement and Plan of Reorganization, dated February 24, 2023, as amended by Amendment No. 1 to the Business Combination Agreement, dated as of May 11, 2023 (the “Business Combination Agreement”), by and among the Company, OXAC Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“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 the Company (“Second Merger Sub” and, together with First Merger Sub, the “Merger Subs”), and Jet Token Inc., a Delaware corporation (“Jet Token”). On the Closing Date, and in connection with the closing of the Business Combination (the “Closing”), we changed our name to Jet.AI Inc. (“Jet.AI”).

 

4
 

 

CERTAIN DEFINED TERMS

 

Unless the context otherwise requires, references in this prospectus to:

 

“Adjusted Base Stock Merger Consideration” are to the quotient equal to (a) (i) $45,000,000 less (ii) Net Indebtedness as of the Closing Date multiplied by 0.428571; and (b) $10.00;
   
“Business Combination” are to the First Merger, the Second Merger and all other transactions contemplated by the Business Combination Agreement, which was completed August 10, 2023;
   
“Business Combination Agreement” are to the Business Combination Agreement and Plan of Reorganization, dated as of February 24, 2023, by and among Oxbridge, First Merger Sub, Second Merger Sub and Jet Token;
   
“Class A Ordinary Shares” are to the Class A ordinary shares, par value $0.0001 per share, of Oxbridge;
   
“Class B Ordinary Shares” are to Class B ordinary shares, par value $0.0001 per share, of Oxbridge;
   
“Closing” are to the closing of the Business Combination;
   
“Closing Date” are to the date on which the Closing occurred;
   
“Code” are to the Internal Revenue Code of 1986, as amended;
   
“Conversion” are to the conversion of each share of Jet Token Preferred Stock into a number of shares of Jet Token Voting Common Stock immediately prior to the Effective Time at the then-effective conversion rate as calculated pursuant to the Jet Token Charter;
   
“Effective Time” are to the date and time at which the First Merger became effective;
   
“extraordinary general meeting” are to the extraordinary general meeting of Oxbridge that was held on November 9, 2022;
   
“First Merger” are to the merger of First Merger Sub with and into Jet Token, with Jet Token surviving the merger as a wholly owned subsidiary of Jet.AI;
   
“First Merger Sub” are to OXAC Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of Oxbridge;
   
“Founder Shares” are to the outstanding Class B Ordinary Shares;
   
“Historical Rollover Shareholders” are to the holders of shares of Jet.AI Common Stock and Jet.AI Warrants that were issued in exchange for all outstanding shares of Jet Token Common Stock in the Business Combination;
   
“Initial Business Combination” are to Oxbridge’s initial merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses after the Initial Public Offering. The Business Combination constituted Oxbridge’s Initial Business Combination;
   
“Initial Public Offering” or “IPO” are to Oxbridge’s initial public offering of units, which closed on August 16, 2021;
   
“initial shareholders” are to the holders of Oxbridge’s Founder Shares, which includes Oxbridge’s Sponsor;
   
“IRS” are to the Internal Revenue Service;

 

5
 

 

“Jet.AI” are to (a) prior to giving effect to the Domestication and the Business Combination, Oxbridge, and (b) after giving effect to the Domestication and the Business Combination, Jet.AI Inc.;
   
“Jet.AI Common Stock” and “Common Stock” are to the shares of common stock, par value $0.0001 per share, of Jet.AI (after the Domestication as a corporation in the State of Delaware);
   
“Jet.AI Options” are to the options to purchase shares of Jet.AI Common Stock into which the Jet Token Options converted at the Effective Time;
   
“Jet.AI Preferred Stock” are to the shares of preferred stock, par value $0.0001 per share, of Jet.AI;
   
“Jet.AI Units” are to the units of Jet.AI, each consisting of one share of Jet.AI Common Stock and one Jet.AI Warrant, into which the Oxbridge Units converted upon consummation of the Domestication;
   
“Jet.AI Warrants” are to the warrants to purchase shares of Jet.AI Common Stock into which the Oxbridge Warrants and Jet Token Warrants converted upon consummation of the Domestication and at the Effective Time, respectively, and which were issued in exchange for certain outstanding shares of Jet Token Common Stock in the Business Combination;
   
“Jet Token” are to Jet Token Inc., a Delaware corporation;
   
“Jet Token Board” are to the board of directors of Jet Token;
   
“Jet Token Charter” are to the Amended and Restated Certificate of Incorporation, as amended, of Jet Token dated December 12, 2019, as the same may be amended, supplemented or modified from time to time;
   
“Jet Token Common Stock” are to the Jet Token Voting Common Stock and the Jet Token Non-Voting Common Stock;
   
“Jet Token Non-Voting Common Stock” are to the shares of Jet Token’s non-voting common stock, par value $0.0000001 per share;
   
“Jet Token Options” are to all outstanding options to purchase shares of Jet Token Voting Common Stock or Jet Token Non-Voting Common Stock, as applicable, whether or not exercisable and whether or not vested, immediately prior to the Closing under the Jet Token Option Plans;
   
“Jet Token Option Plans” are to the Jet Token Inc. 2021 Stock Plan, adopted on August 20, 2021, and the Jet Token Inc. Amended and Restated 2018 Stock Option and Grant Plan, adopted on September 22, 2019, as each such Jet Token Option Plan may have been amended, supplemented or modified from time to time;
   
“Jet Token Outstanding Shares” are to the total number of shares of Jet Token Common Stock outstanding immediately prior to the Effective Time, including, without limitation or duplication, (a) the number of shares of Jet Token Voting Common Stock issuable upon conversion of the Jet Token Preferred Stock pursuant to the Conversion;
   
“Jet Token Preferred Stock” are to the Jet Token Series Seed Preferred Stock and the Jet Token Series CF Non-Voting Preferred Stock;
   
“Jet Token RSU Award” are to each Restricted Stock Unit Award of Jet Token granted, and that remained outstanding immediately prior to the Closing;
   
“Jet Token Series CF Non-Voting Preferred Stock” are to the shares of Jet Token’s Preferred Stock designated as Series CF Non-Voting Preferred Stock in the Jet Token Charter;

 

6
 

 

“Jet Token Series Seed Preferred Stock” are to the shares of Jet Token’s Preferred Stock designated as Series Seed Preferred Stock in the Jet Token Charter;
   
“Jet Token Voting Common Stock” are to the shares of Jet Token’s voting common stock, par value $0.0000001 per share;
   
“Jet Token Warrants” are to all outstanding warrants to acquire Jet Token Common Stock, whether or not exercisable, immediately prior to the Closing;
   
“management” or our “management team” are to our officers and directors;
   
“Maxim” are to Maxim Group, LLC;
   
“Maxim Partners” are to Maxim Partners LLC;
   
“Meeting” are to the extraordinary general meeting of Oxbridge that was held on August 7, 2023;
   
“Merger Consideration Warrant Count” are to the quotient equal to (a) (i) $60,000,000 less (ii) Net Indebtedness as of the Closing Date multiplied by 0.571429 and (b) the Warrant Fair Market Value;
   
“Merger Consideration Warrants” are to the warrants to purchase shares of Jet.AI Common Stock which were issued at the Effective Time in exchange for certain outstanding shares of Jet Token Common Stock and Jet Token RSU Awards;
   
“Meteora” are to, collectively, Meteora Capital Partners, LP (ii) Meteora Select Trading Opportunities Master, LP, and (iii) Meteora Strategic Capital, LLC;
   
“Nasdaq” are to the Nasdaq Stock Market LLC;
   
“Net Indebtedness” are to, at any specified time, Jet Token’s Indebtedness (as defined in the Business Combination Agreement) less up to $3,000,000 of Jet Token’s cash and cash equivalents, which may be a positive or negative amount;
   
“Net Indebtedness Shares” are up to 300,000 shares of Jet.AI Common Stock that may be issued in connection with the Business Combination, representing the maximum additional number of shares that may be issued as a result of the Net Indebtedness adjustment to the Per Share Merger Consideration;
   
“Ordinary Shares” are to the Class A Ordinary Shares and the Class B Ordinary Shares of Oxbridge;
   
“Oxbridge” are to Oxbridge Acquisition Corp., a Cayman Islands exempted company;
   
“Oxbridge Board” are to the board of directors of Oxbridge;
   
“Oxbridge Units” are to the units sold in the IPO, each of which consisted of one Class A Ordinary Share and one public warrant;
   
“Oxbridge Warrants” are to (a) prior to giving effect to the Domestication and the Business Combination, the public warrants and the private placement warrants, and (b) after giving effect to the Domestication and the Business Combination, the warrants to purchase shares of Jet.AI Common Stock that the public warrants and private placement warrants converted into upon consummation of the Domestication and the Business Combination;
   
“private placement warrants” and “Private Placement Warrants” are to the warrants issued to Sponsor and Maxim Partners, parent company of the representative to the underwriters in our IPO, in a private placement simultaneously with the closing of our IPO;
   
“Proxy Statement” are to the final prospectus and definitive proxy statement of Jet.AI, dated July 28, 2023 and filed with the SEC on July 28, 2023;
   
“public shareholders” are to the holders of Oxbridge public shares;
   
“public shares” are to the Class A Ordinary Shares sold as part of the Oxbridge Units in the IPO (whether they were purchased in the IPO or thereafter in the open market);
   
“public warrants” are to the warrants sold as part of the Oxbridge Units in the IPO (whether they were purchased in the IPO or thereafter in the open market);

 

7
 

 

“SEC” are to the U.S. Securities and Exchange Commission;
   
“Second Merger” are to the merger of Jet Token (as the surviving entity of the First Merger) with and into Second Merger Sub, with Second Merger Sub surviving the merger as a wholly owned subsidiary of Jet.AI;
   
“Second Merger Sub” are to Summerlin Aviation LLC (f/k/a OXAC Merger Sub II, LLC), a Delaware limited liability company and a direct wholly owned subsidiary of Oxbridge;
   
“Sponsor” are to OAC Sponsor Ltd., a Cayman Islands exempted company;
   
“Stock Exchange Ratio” means the ratio (rounded to six decimal places), which is the quotient obtained by dividing (i) the Adjusted Base Stock Merger Consideration by (ii) Jet Token Outstanding Shares;
   
“Trust Account” are to the trust account maintained by Continental Stock Transfer & Trust Company that held the proceeds (including interest not previously released to Oxbridge for working capital purposes) from the IPO and a concurrent private placement of private placement warrants to our Sponsor and Maxim;
   
“U.S. GAAP” are to the generally accepted accounting principles in the United States;
   
“Warrants” are collectively to the Private Placement Warrants, the JTAIW Warrants and the GEM Warrant.
   
“Warrant Agreement” are to the Warrant Agreement, dated August 11, 2021, between Oxbridge and Continental Stock Transfer & Trust Company, as warrant agent;
   
“Warrant Exchange Ratio” are to the ratio (rounded to six decimal places) equal to the quotient obtained by dividing (i) the Merger Consideration Warrant Count by (ii) Jet Token Outstanding Shares; and
   

“Warrant Fair Market Value” are to the fair market value of a Merger Consideration Warrant as determined using the Black-Scholes method with the following inputs: (a) risk-free rate equal to the UST 10-year rate on the second Business Day immediately before the Closing Date as published on https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2023 (or if unavailable, as published by Bloomberg L.P.); (b) current stock price of $10.00; (c) exercise price of $15.00; (d) dividend yield of 0.00%; (e) term of 10 years; and (f) stock price annualized standard deviation (volatility) equal to the average of the most recent twenty (20) trading days of daily volatility of Wheels Up Experience Inc. through the second Business Day immediately before the Closing Date, as determined using the volatility calculator available at https://www.fintools.com/resources/online-calculators/volatilitycalc/ (or if such calculator is unavailable, using a volatility calculator from Bloomberg L.P.); provided, however that if Wheels Up Experience Inc. (NYSE:UP) is acquired or has a material transaction or event materially affecting its volatility during such 20-day period, then volatility shall be determined using the average of the most recent 20 days of daily volatility preceding such transaction or event.

 

8
 

 

PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information you should consider before investing in our securities. Before deciding to invest in our securities, you should read this entire prospectus carefully, including the section of this prospectus entitled “Risk Factors” beginning on page 17

 

As used in this prospectus, unless the context requires otherwise, the terms “Company,”“Jet.AI,” “we,” “our” and “us” refer to Jet.AI Inc., formerly known as Oxbridge Acquisition Corp., and its consolidated subsidiaries.

 

Overview

 

Our business strategy combines concepts from fractional jet membership programs with innovations in artificial intelligence, also referred to herein as “AI.” Our purposeful enhancement of price discovery and reduced entry price have the potential to produce fairer and more inclusive results for aircraft owners and travelers alike.

 

We formed our predecessor, Jet Token, on June 4, 2018. We developed and, in September 2019, launched our booking platform represented by our iOS app JetToken (the “App”), which functions as a prospecting and quoting platform to arrange private jet travel with third party carriers as well as on our own aircraft. In July 2021, we leased a HondaJet aircraft under a short-term lease arrangement, which terminated in February 2022, to accelerate our aircraft operations and sales of jet card memberships. We have acquired four HondaJet Elite aircraft under our 2020 Purchase Agreement with Honda Aircraft Company, discussed under “– Our Aircraft” below, all four of which have been sold, but three of which remain part of our fleet, as discussed below, with three of the four aircraft having been delivered in 2022. Great Western Air, LLC (DBA Cirrus Aviation Services, LLC) (“Cirrus”) is managing, operating, and maintaining our aircraft and has a growing team of pilots that have been specially trained on the HondaJet at the Flight Safety facility on the Honda Aircraft Company campus in Greensboro, NC. Cirrus has additionally developed a safety co-pilot training program in coordination with the FAA and a local flight training academy for licensed pilots already skilled with the Garmin 1000 avionics suite.

 

We offer the following programs for our HondaJet Elite aircraft:

 

  Fractional ownership program: This program provides potential owners the ability to purchase a share in a jet at a fraction of the cost of acquiring an entire aircraft. Each 1/5 share guarantees 75 occupied hours of usage per year with 24 hours of notice. The fractional ownership program consists of a down payment, one or more progress payments, a payment on delivery, a Monthly Management Fee (MMF) and an Occupied Hourly Fee (OHF). As part of the aircraft purchase agreement, the buyer enters into an aircraft management agreement which lasts three years and, at the end of the contract period, the aircraft is typically sold, and the owners are given their pro-rata share of the sale proceeds. The three-year term is not renewable. Our current contracts do not contemplate the re-fractioning of the aircraft to other buyers at the end of the term, but rather a whole aircraft sale to a single buyer. Monthly management fees are in general subject to an annual CPI-W based step-up. CPI-W is a measure of cost inflation commonly used in long term aviation service contracts with OEMs and engine manufacturers.
     
  Jet card program: A membership in our jet card program generally includes 10, 25 or 50 occupied hours of usage per year with 24 hours of notice. Members generally pay 100% upfront and then fly for a fixed hourly rate over the next twelve months. Those who require guaranteed availability may pay a membership fee for an additional charge. Jet card program members may interchange as a set ratio per aircraft onto any one of twenty jets operated by our partner, Cirrus.

 

In addition to servicing members, fractional owners and third-party charter clients, our HondaJets are available to address unexpected cancellations or delays on brokered charters. Unlike most of our brokerage competitors, as well as many business jet management companies which require owner approval before their aircraft can be used for third party charter, we believe maintaining a fleet of readily available aircraft to back fill third party charter services provides more reliability and is an attractive selling point for potential clients.

 

9
 

 

In 2022, we entered into agreements with Cirrus under which we will sell jet cards for Cirrus’s aircraft, for a commission for sales and client management services, and we make Cirrus’s aircraft available to our customers for charter bookings at preferred rates and with certain service guarantees. As a result, our jet card members and charter customers have access to twenty of Cirrus’s aircraft in the light, mid, super-mid, heavy, and ultra-long-range categories, comprising the following aircraft: CJ3+, CJ4, Lear 45XR, Citation XLS+, Lear 60, Hawker 900XP, Challenger 300, Challenger 604, Falcon 900EX, Challenger 850, Gulfstream V and Gulfstream G550.

 

Our booking platform displays a variety of options across private aircraft types in addition to the pricing of our own aircraft, with a range of prices drawn from a list of thousands of aircraft for hire. We offer users the ability to request a jet and to simultaneously task us with seeking a lower-cost otherwise superior alternative. Our App is directly connected via our application programming interface (API) to Avinode, the major centralized database in private aviation. Through Avinode we can electronically and automatically correspond with operators of private jets who have posted their aircraft for hire. We currently accept both cash and blockchain currency, which our payment processor would be expected to promptly convert to fiat currency prior to confirming a booking. To date, we have not received blockchain currency as payment.

 

Background

 

Domestication and Business Combination

 

On August 10, 2023 (the “Closing Date”), Jet.AI Inc., a Delaware corporation (f/k/a Oxbridge Acquisition Corp.) (the “Company” or “Jet.AI”), consummated the previously announced “Business Combination” pursuant to the Business Combination Agreement and Plan of Reorganization, dated February 24, 2023, as amended by Amendment No. 1 to the Business Combination Agreement, dated as of May 11, 2023 (the “Business Combination Agreement”), by and among the Company, OXAC Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“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 the Company (“Second Merger Sub” and, together with First Merger Sub, the “Merger Subs”), and Jet Token Inc., a Delaware corporation (“Jet Token”).

 

On August 10, 2023, as contemplated by the Business Combination Agreement, Oxbridge filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which the Company was domesticated and continues as a Delaware corporation (the “Domestication”).

 

On August 10, 2023, as a result of the Business Combination and the other transactions contemplated by the Business Combination Agreement, following the consummation of the Domestication (a) First Merger Sub merged with and into Jet Token, with Jet Token surviving the merger as a wholly-owned subsidiary of the Company (the “First Merger”) and (b) after the effectiveness of the First Merger, Jet Token merged with and into Second Merger Sub, with Second Merger Sub surviving the merger as a wholly-owned subsidiary of the Company (the “Second Merger”).

 

Following the closing of the Business Combination, the Company owns, directly or indirectly, all of the issued and outstanding equity interests in the Second Merger Sub and its subsidiaries, and the stockholders of Jet Token as of immediately prior to the effective time of the First Merger (the “Jet Token Stockholders”) hold a portion of the Company’s common stock, par value $0.0001 per share (the “Jet.AI Common Stock” or the “Common Stock”).

 

As a result of and upon the effective time of the Domestication: (a) each then issued and outstanding Class A Ordinary Share of Oxbridge was converted automatically, on a one-for-one basis, into a share of Jet.AI Common Stock; (b) each then issued and outstanding Class B Ordinary Share of Oxbridge was converted automatically, on a one-for-one basis, into a share of Jet.AI Common Stock; (c) each then issued and outstanding Oxbridge Warrant was converted automatically into a warrant to purchase one share of Jet.AI Common Stock pursuant to the Warrant Agreement (“Jet.AI Warrant”); and (d) each then issued and outstanding Oxbridge Unit was converted automatically into a Jet.AI Unit, each consisting of one share of Jet.AI Common Stock and one Jet.AI Warrant.

 

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At the Effective Time of the Business Combination, (i) each outstanding share of Jet Token Common Stock, including each share of Jet Token Preferred Stock that was converted into shares of Jet Token Common Stock immediately prior to the Effective Time, was cancelled and automatically converted into the right to receive (x) the number of shares of Jet.AI Common Stock equal to the Stock Exchange Ratio of 0.03094529, and (y) the number of warrants (“Merger Consideration Warrants”) equal to the Warrant Exchange Ratio of 0.04924242; (ii) each Jet Token Option, whether or not exercisable and whether or not vested, that was outstanding immediately prior to the Effective Time was automatically converted into an option to purchase a number of Jet.AI Options based on the Option Exchange Ratio (determined in accordance with the Business Combination Agreement and as further described in the Proxy Statement); (iii) each Jet Token Warrant issued and outstanding immediately prior to the Effective Time was automatically converted into a warrant to acquire (x) a number of shares of Jet.AI Common Stock equal to the Stock Exchange Ratio and (y) a number of Merger Consideration Warrants equal to the Warrant Exchange Ratio; and (iv) each Jet Token RSU Award that was outstanding immediately prior to the Effective Time was converted into a Jet.AI RSU Award with respect to a number of RSUs based on the applicable exchange ratio (determined in accordance with the Business Combination Agreement).

 

In connection with the consummation of the Business Combination (the “Closing”), the registrant changed its name from Oxbridge Acquisition Corp. to Jet.AI Inc.

 

The foregoing description of the Business Combination does not purport to be complete and is qualified in its entirety by the full text of the Business Combination Agreement and the First Amendment to Business Combination Agreement, which are attached hereto as Exhibit 2.1 and Exhibit 2.2, respectively, to the registration statement of which this prospectus forms a part and are incorporated herein by reference.

 

Forward Purchase Agreement

 

On August 6, 2023, we entered into an agreement with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Meteora”) (the “Forward Purchase Agreement”) for OTC Equity Prepaid Forward Transactions. The purpose of our entering into this agreement and these transactions was to provide a mechanism whereby Meteora would purchase, and waive their redemption rights with respect to, a sufficient number of Oxbridge Class A ordinary shares to enable Oxbridge to have at least $5,000,000 of net tangible assets, a non-waivable condition to the Closing of the Business Combination and to provide the Company with cash to meet a portion of the transaction costs associated with the Business Combination. Capitalized terms used herein but not otherwise defined have the meanings ascribed to such terms in the Forward Purchase Agreement.

 

Pursuant to the terms of the Forward Purchase Agreement, Meteora agreed to purchase up to 1,186,952 of Oxbridge’s Class A ordinary shares concurrently with the Closing. The shares initially held by Meteora consisted of 663,556 shares it purchased from third parties through a broker in open market transactions or by reversing previously submitted redemption requests and waived its redemption rights with respect to these shares. Furthermore, Meteora purchased 247,756 “Additional Shares” directly from us in a private placement for a per share price of $10.00 pursuant to a subscription agreement entered into on August 6, 2023 (the “FPA Funding Amount PIPE Subscription Agreement”). Of the shares it purchased, 50,000 shares represented Share Consideration to Meteora under the Forward Purchase Agreement and are not subject to the terms of the Forward Purchase Agreement, meaning that Meteora is free to sell such shares and retain all proceeds therefrom. Netting out the Share Consideration, the total “Number of Shares” initially subject to the terms of the Forward Purchase Agreement was 861,312, comprising 613,556 “Recycled Shares” and 247,756 Additional Shares. Following the Closing of the Business Combination, approximately $7.4 million remained in the trust account pursuant to the Forward Purchase Agreement. We paid Meteora $6,805,651, representing amounts payable by us to Meteora under the Forward Purchase Agreement, net of the aggregate purchase price of the total number of Additional Shares issued to Meteora under the FPA Funding Amount PIPE Subscription Agreement; and Meteora paid us one-half (1/2) of the Prepayment Shortfall, or $625,000.

 

The parties to the Forward Purchase Agreement subsequently entered into two amendments to the Forward Purchase Agreement, on August 31, 2023 and October 2, 2023, respectively, the combined effect of which was to:

 

increase the total number of Additional Shares Meteora purchased from us under the FPA Funding Amount PIPE Subscription Agreement to 548,127,
provide payment to the Company of “Future Shortfall” amounts totaling $550,000 and reducing the Prepayment Shortfall to $1,175,000, all of which has been paid to us,
increase the total Share Consideration to 275,000 shares out of existing Recycled Shares,
reduce the number of Recycled Shares to 296,518,
increase the Number of Shares subject to the Forward Purchase Agreement to 994,645, and
extend the “Valuation Date” to the two year anniversary of the Closing of the Business Combination, or earlier at the discretion of Meteora and upon notice to us.

 

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Pursuant to the terms of the Forward Purchase Agreement, on December 11, 2023 Meteora sent a notice to the Company informing the Company that it had elected to terminate the Transaction with respect to 62,794 shares and paid the Company $99,755; thereby reducing the number of Recycled Shares to 233,724, making the Number of Shares subject to the Forward Purchase Agreement 931,851.

 

As a result of the foregoing transactions, the net proceeds received by the Company from the Forward Purchase Agreement and the FPA Funding Amount PIPE Subscription Agreement are $1,274,755.

 

The Forward Purchase Agreement, as amended, provides for a cash settlement following the Valuation Date, at which time Meteora is obligated to pay us an amount equal to the “Number of Shares” subject to the Forward Purchase Agreement (provided such Shares are registered for resale or freely transferrable pursuant to an exemption from registration) multiplied by a per share price reflecting the Company’s volume weighted average trading price over a number of days following the Valuation Date, subject to alternate calculations in certain circumstances. At settlement, we are obligated to pay Meteora a settlement adjustment of $2.00 per share for the total Number of Shares, which is payable in cash, or in shares of our Common Stock if the settlement adjustment is greater than the settlement amount payable by Meteora and provided that Meteora’s ownership would not exceed 9.9% of our outstanding Common Stock. Provided further, that if the settlement amount less the settlement amount adjustment is a negative number and the Company has elected to pay the settlement amount adjustment in cash, then neither Meteora nor the Company shall be liable to the other party for any payment under the Forward Purchase Agreement.

 

Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – General – Liquidity and Capital Resources – Meteora Transactions” for a further discussion of the terms of the Forward Purchase Agreement and the FPA Funding Amount PIPE Subscription Agreement.

 

Share Purchase Agreement

 

Jet Token executed a Share Purchase Agreement, dated as of August 4, 2022 (the “Share Purchase Agreement”), with GEM Yield LLC SCS and GEM Yield Bahamas Limited (together with GEM Yield LLC SCS, “GEM”), which was automatically assigned to the Company upon the Closing of the Business Combination. Under the Share Purchase Agreement, the Company has the right to periodically issue and sell to GEM, and GEM has agreed to purchase, up to $40,000,000 aggregate value of shares of the Company’s Common Stock (the “Aggregate Limit”) during the 36-month period following the date of the Closing of the Business Combination.

 

Upon the election of the Company to make such a sale, it will deliver a drawdown notice to GEM, and, if all applicable conditions are satisfied, GEM will purchase newly issued shares for the amount specified in the drawdown notice. The purchase price of the shares to be sold is set at 90% of the average daily closing price of the Company’s Common Stock during the applicable pricing period. The pricing period for a drawdown will be 30 consecutive trading days commencing with the first trading day designated in a drawdown notice. The Company is not permitted to make a draw-down request in an amount that exceeds 400% of the average daily trading volume for the 30 trading days immediately preceding the drawdown exercise date. Each drawdown notice shall set forth a threshold price set by the Company for such drawdown, which is the price set by the Company below which the Company does not wish to issue shares of its common stock during the applicable pricing period. In no event may the Company issue a drawdown notice to the extent that the sale of Common Stock pursuant thereto and pursuant to all other prior drawdown notices would cause the Company to sell, or GEM to purchase, an aggregate number of shares exceeding the Aggregate Limit. Each drawdown is subject to certain closing conditions, including (i) the continued accuracy of the representations and warranties made in the Share Purchase Agreement, (ii) a registration statement registering the resale of the shares sold under the Share Purchase Agreement having been declared effective by the SEC, (iii) the absence of any statute, rule, regulation, executive order, decree, ruling or injunction prohibiting the consummation of the transactions contemplated by the Share Purchase Agreement, (iv) the Company’s Common Stock not being suspended from trading by the market on which the shares are then listed, (v) the absence of any litigation commenced, or governmental investigation commenced or threated, against the Company in connection with the Share Purchase Agreement transactions and (vi) the delivery of an opinion by the Company’s counsel.

 

 

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In consideration for these services, the Company has agreed to pay GEM a commitment fee equal to $800,000 payable in cash or freely tradable shares of Common Stock at the “Daily Closing Price” of the Common Stock, at the option of the Company. Upon the Company’s issuance of shares in connection with any drawdown purchase made by GEM, the Company will be required to pay GEM a portion of such commitment fee in an amount equal to 2% of the amount purchased in such drawdown; provided that the full $800,000 commitment fee shall be paid on or before the first anniversary of the closing of the Business Combination. “Daily Closing Price” is defined as the closing price of the Common Stock on Nasdaq on a particular day, as reported by Bloomberg. The Company is obligated to pay the commitment fee regardless of whether it draws down any funds under the Share Purchase Agreement.

 

GEM is not obligated to purchase shares under the Share Purchase Agreement if any purchase of shares would result in GEM and its affiliates beneficially owning, directly or indirectly, at the time of the proposed issuance, more than 9.99% of the number of issued and outstanding shares of Common Stock as of the date of such proposed issuance. GEM may waive the restriction under the Share Purchase Agreement by providing the Company with sixty-one (61) days’ notice that GEM would like to waive the restriction with regard to any or all shares issuable pursuant to the Share Purchase Agreement.

 

Jet Token also entered into a registration rights agreement with GEM (the “GEM Registration Rights Agreement”), which was automatically assigned to the Company upon the closing of the Business Combination. The GEM Registration Rights Agreement obligates the Company to file a registration statement with respect to resales of the shares of Common Stock issued to GEM under the Share Purchase Agreement and upon exercise of the GEM Warrant.

 

On August 10, 2023, the Company issued GEM a warrant (as subsequently amended, the “GEM Warrant”) granting it the right to purchase up to 6% of the outstanding Common Stock of the Company on a fully diluted basis as of the date of listing. The GEM Warrant has a term of three years. The exercise price of the GEM Warrant is $8.60 per share; provided, that, if the average closing price of Jet.AI’s Common Stock for the 10 trading days following the first anniversary of the date of listing is less than 90% of the then current exercise price of the GEM Warrant, then the exercise price of the GEM Warrant will be adjusted to 110% of its then current exercise price. The GEM Warrant provides that GEM can elect to limit the exercisability of the GEM Warrant such that it is not exercisable to the extent that, after giving effect to the exercise, GEM and its affiliates, to the Company’s actual knowledge, would beneficially own in excess of 4.99% of the Common Stock outstanding immediately after giving effect to such exercise. GEM has made this election, which may be revoked by providing written notice, which revocation will not be effective until the sixty-first (61st) day thereafter.

 

The Share Purchase Agreement is only available to the Company to the extent any issuance of Common Stock pursuant to the Share Purchase Agreement does not result in GEM and its affiliates acquiring more than 9.99% of the number of issued and outstanding shares of Common Stock as of the date of such proposed issuance. As a result of GEM’s beneficial ownership of 4.99% of the company’s outstanding common stock related to the exercisable portion of the GEM Warrant, as a practical matter the Company will only be able to issue shares of Common Stock to GEM under the Share Purchase Agreement in an amount equal to 5% of its outstanding Common Stock.

 

Copies of the Share Purchase Agreement, the GEM Registration Rights Agreement, the GEM Warrant and the GEM Warrant Amendment are filed as Exhibits 10.8, 10.9, 4.3 and 4.4, respectively, to the registration statement of which this prospectus forms a part, and the foregoing description of the terms of the Share Purchase Agreement, the GEM Registration Rights Agreement, the GEM Warrant and the GEM Warrant Amendment is qualified in its entirety by reference thereto and is incorporated herein by reference.

 

Lock-Up Agreements

 

All of the Founder Shares are subject to a lock-up pursuant to a Lock-Up Agreement and will be released only if specified conditions were met. In particular, subject to certain limited exceptions, all such shares would be subject to a lock-up during the period commencing from the Closing and ending on the earliest of (A) one year after the date of the closing of the Business Combination and (B) subsequent to the Business Combination, (x) if the closing price of the Common Stock equals or exceeds $12.00 per unit (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination or (y) the date after the closing of the Business Combination on which Jet.AI completes a liquidation, merger, stock exchange, or other similar transaction with an unaffiliated third party that results in all of Jet.AI’s stockholders having the right to exchange their shares of common stock for cash, securities, or other property.

 

In connection with the Business Combination, Michael Winston and George Murnane each entered into a lock-up agreement with Jet.AI (the “Lock-Up Agreement”). Collectively, these individuals hold an aggregate of 7,666,814 shares of Common Stock (including 1,028,865 shares issuable upon the exercise of Jet.AI Options and 4,076,294 shares issuable upon the exercise of Merger Consideration Warrants). The terms of the Lock-Up Agreement are the same as those applicable to the Founder Shares.

 

The form of Lock-Up Agreement is filed as Exhibit 10.17 to the registration statement of which this prospectus forms a part, and the foregoing description of the Lock-Up Agreement is qualified in its entirety by reference thereto.

 

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Sponsor Waiver and Release

 

On August 10, 2023, in connection with the Business Combination, OAC Sponsor Ltd., a Cayman Islands exempted company (the “Sponsor”) entered into a letter agreement with Oxbridge (i) agreeing to waive the anti-dilution rights set forth in Article 17.3 of the Oxbridge Articles of Association with respect to the shares of Oxbridge Class B Common Stock owned by the Sponsor that may be triggered from the Mergers and/or the other transactions contemplated under the Business Combination Agreement, and (ii) released Oxbridge and Jet.AI from any and all claims arising prior to the Closing.

 

The foregoing description of the indemnification agreements is qualified in its entirety by the full text of the form of Sponsor waiver and release, a copy of which is filed as Exhibit 10.18 to the registration statement of which this prospectus forms a part.

 

Maxim Settlement Agreement

 

On August 10, 2023, the Company entered into a settlement agreement (“Maxim Settlement Agreement”) with Maxim Group LLC, the underwriter for the Company’s initial public offering (“Maxim”). Pursuant to the Maxim Settlement Agreement, the Company issued 270,000 shares of Jet.AI Common Stock to settle the payment obligations of the Company under the underwriting agreement dated on or about August 11, 2021, by and between the Company and Maxim, which shares of Jet.AI Common Stock are subject to a Registration Rights Agreement. The Company also issued 1,127 shares of Series A Convertible Preferred Stock in an amount equal in value to $1,127,000 (the “Series A Preferred Shares”). The shares of Jet.AI Common Stock issuable upon conversion of the Series A Preferred Shares are subject to the Registration Rights Agreement.

 

The foregoing description of the Maxim Settlement Agreement and Registration Rights Agreement is qualified in its entirety by the full text of such agreements, copies of which are filed as Exhibit 10.20 and Exhibit 10.21, respectively, to the registration statement of which this prospectus forms a part.

 

Sponsor Settlement Agreement

 

On August 10, 2023, the Company entered into a settlement agreement (“Sponsor Settlement Agreement”) with Sponsor. Pursuant to the Sponsor Settlement Agreement, the Company issued 575 shares of the Company’s Series A-1 Convertible Preferred Stock (the “Series A-1 Preferred Shares”) to settle the payment obligations of the Company under a promissory note in the principal amount of $575,000 dated November 14, 2022 in favor of Sponsor. The shares of Jet.AI Common Stock issuable upon conversion of the Series A-1 Preferred Shares are subject to a Registration Rights Agreement between the Company and Sponsor.

 

The foregoing description of the Sponsor Settlement Agreement and Registration Rights Agreement is qualified in its entirety by the full text of such agreements, copies of which are filed as Exhibit 10.22 and Exhibit 10.23, respectively, to the registration statement of which this prospectus forms a part.

 

Recent Events

 

Our Common Stock is currently listed on The Nasdaq Global Market under the symbol “JTAI”. Notwithstanding such listing, there is no guarantee that we will be able to maintain our listing on Nasdaq for any period of time. Among the conditions required for continued listing on The Nasdaq Global Market, Nasdaq requires us to maintain at least $10 million in stockholders’ equity (the “Stockholders’ Equity standard”) or $50 million in market value of listed securities (the “Market Value standard”) or total assets and total revenues of at least $50 million in the most recently completed fiscal year or two of the last three most recently completed fiscal years (the “Total Assets / Total Revenues standard”). Our stockholders’ equity is currently not above The Nasdaq Global Market’s $10 million minimum, as discussed below.

 

On December 1, 2023, the Company received a notification letter (the “Letter”) from the Nasdaq Listing Qualifications Staff of Nasdaq notifying the Company that its amount of stockholders’ equity has fallen below the $10 million required minimum for continued listing on The Nasdaq Global Market set forth in Nasdaq Listing Rule 5450(b)(1)(A). The Company’s stockholders’ equity as of September 30, 2023 was $(4,257,094), as reported in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. The Letter has no immediate impact on the listing of the Company’s Common Stock on Nasdaq.

 

 

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The Letter also noted that as of September 30, 2023, the Company does not meet The Nasdaq Global Market alternative listing criteria for the Market Value standard or the Total Assets / Total Revenues standard. The Letter further noted that the Company may consider applying to transfer the Company’s securities to The Nasdaq Capital Market (the “Capital Market”), which would require the Company to, among other things, meet the Capital Market’s continued listing requirements.

 

In accordance with Nasdaq rules and as stated in the Letter, the Company has until January 15, 2024 (45 calendar days from the date of the Letter) to submit a plan to regain compliance. In determining the acceptability of the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for the Company’s current non-compliance, other corporate events that may occur within the Nasdaq review period, the Company’s overall financial condition and its public disclosures. If the plan is accepted, Nasdaq will provide written confirmation and can grant an extension of up to 180 calendar days from the date of the Letter to evidence compliance. If Nasdaq rejects the plan, the Company will have the opportunity to appeal the decision to a Hearings Panel pursuant to Rule 5815(a), but there can be no assurance that Nasdaq would grant the Company’s request for approval of its compliance plan.

 

As of the date of this prospectus, the Company has not yet submitted a compliance plan to Nasdaq. The Company intends to timely submit a compliance plan to Nasdaq to regain compliance with Nasdaq’s listing criteria, which may include a proposed transfer to the Capital Market. At the market closing price on December 15, 2023, the Company believes it would meet the criteria under the market value standard for the Capital Market, however, there can be no assurance that our stock will not decline and therefore we may not be able to continue to meet the listing standards for Capital Market. Nasdaq’s determination that we fail to meet the continued listing standards of Nasdaq may result in our securities being delisted from Nasdaq.

 

Risk Factors

 

Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. These risks include the following:

 

  The Company is an early stage company with a limited operating history.
  The Company may not be able to successfully implement its growth strategies.
  The Company’s operating results are expected to be difficult to predict based on a number of factors that also will affect its long-term performance.
  If the Company cannot internally or externally finance its aircraft or generate sufficient funds to make payments to external financing sources, the Company may not succeed.
  The Company may not have enough capital as needed and may be required to raise more capital and the terms of subsequent financings may adversely impact your investment.
  The Company’s business and reputation rely on, and will continue to rely on, third parties.
  Demand for the Company’s product and services may decline due to factors beyond its control.
  The Company faces a high level of competition with numerous market participants with greater financial resources and operating experience.
  Aviation businesses are often affected by factors beyond their control including: air traffic congestion at airports; airport slot restrictions; air traffic control inefficiencies; natural disasters; adverse weather conditions, such as hurricanes or blizzards; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; or the outbreak of disease; any of which could have a material adverse effect on the Company’s business, results of operations and financial condition.
  The Company’s business is primarily focused on certain targeted geographic regions, making it vulnerable to risks associated with having geographically concentrated operations.
  The operation of aircraft is subject to various risks, and failure to maintain an acceptable safety record may have an adverse impact on our ability to obtain and retain customers.
  The supply of pilots to the airline industry is limited and may negatively affect the Company’s operations and financial condition. Increases in labor costs may adversely affect the Company’s business, results of operations and financial condition.
  The Company is exposed to operational disruptions due to maintenance.
  Significant increases in fuel costs could have a material adverse effect on the Company’s business, financial condition and results of operations.
  If efforts to continue to build a strong brand identity and improve member satisfaction and loyalty are not successful, the Company may not be able to attract or retain members, and its operating results may be adversely affected.
  The demand for the Company’s services is subject to seasonal fluctuations.
  If we fail to comply with the continued listing requirements of Nasdaq, we would face possible delisting, which would result in a limited public market for our shares, limit our ability to access existing liquidity facilities and make obtaining future financing more difficult for us.
  The issuance of additional shares of Jet.AI Common Stock under the Share Purchase Agreement and the GEM Warrant may result in dilution of future Jet.AI stockholders and have a negative impact on the market price of Jet.AI Common Stock.
  We may not have access to funding under the Forward Purchase Agreement.
  Certain existing stockholders purchased our securities at a price below the current trading price of such securities, and may experience a positive rate of return based on the current trading price.
  Sales of Jet.AI Common Stock, or the perception of such sales, by us or the selling stockholders pursuant to this prospectus in the public market or otherwise could cause the market price for Jet.AI Common Stock to decline and certain selling stockholders still may receive significant proceeds.
  A significant portion of Jet.AI’s total outstanding shares are restricted from immediate resale following the consummation of the Business Combination, but may be sold into the market in the near future. This could cause the market price of the Common Stock to drop significantly, even if our business is doing well.

 

 

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THE OFFERING

 

Common Stock offered by us  

Up to 11,489,334 shares issuable upon exercise of JTAIW Warrants.

     
Common Stock offered by selling stockholders   Up to 32,330,074 shares of Common Stock.
     
Offering price   The selling stockholders will sell their shares at prevailing market prices or privately negotiated prices.
     
Common Stock outstanding   9,164,364 shares of Common Stock (as of December 15, 2023).
     
Use of proceeds  

We will not receive any proceeds from the sale of the shares of Common Stock offered by the selling stockholders, except with respect to amounts received by us upon exercise of the GEM Warrant and the Private Placement Warrants if such Warrants are exercised for cash.

 

We may also receive up to $40 million in aggregate gross proceeds under the Share Purchase Agreement from sales of Common Stock we may make to GEM, if any, from time to time after the date of this prospectus, assuming we draw down the full amount available, and up to approximately $18.7 million from the exercise of the GEM Warrant, if the GEM Warrant is exercised for cash rather than on a cashless basis.

 

We will receive up to an aggregate of approximately $132.1 million from the exercise of the JTAIW Warrants, assuming the exercise in full of all of the warrants for cash.

 

We will receive up to an aggregate of approximately $66.2 million from the exercise of the Private Placement Warrants, if they are exercised for cash rather than on a cashless basis.

 

We expect to use the proceeds from exercise of the Warrants and from sale of the shares pursuant to the Share Purchase Agreement for general corporate and working capital purposes. The exercise price of the JTAIW Warrants and Private Placement Warrants is $11.50 per warrant and the GEM Warrant is $8.60. We believe the likelihood that warrant holders will exercise their warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our Common Stock. If the trading price for our Common Stock is less than $11.50 or $8.60 per share, as the case may be, we believe holders of our Warrants will be unlikely to exercise their warrants. See “Use of Proceeds” on page 91 for additional information.

     
Risk factors   You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our Common Stock.
     
Market for the Common Stock and warrants   Our Common Stock and the JTAIW Warrants are traded on Nasdaq under the symbols “JTAI” and “JTAIW,” respectively.

 

 

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RISK FACTORS

 

Investing in our Common Stock involves a high degree of risk. In addition to the information, documents or reports included or incorporated by reference in this prospectus and, if applicable, any prospectus supplement or other offering materials, you should carefully consider the risks described below in addition to the other information contained in this prospectus, before making an investment decision. Our business, financial condition or results of operations could be harmed by any of these risks. As a result, you could lose some or all of your investment in our Common Stock. The risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations.

 

Risks Related to the Company’s Business

 

The Company is an early stage company with a limited operating history.

 

The Company’s predecessor operating company Jet Token, Inc. was formed on June 4, 2018. Accordingly, the Company has a limited history upon which an investor can evaluate its performance and future prospects. The Company has a short history and a limited number of aircraft and related customers. The Company’s current and proposed operations are subject to all business risks associated with newer enterprises. These include likely fluctuations in operating results as the Company reacts to developments in its markets, difficulty in managing its growth and the entry of competitors into the market. The Company has incurred net losses to date and anticipates continuing net losses for the foreseeable future. The Company cannot assure you that it will be profitable in the foreseeable future or generate sufficient profits to pay dividends. If the Company does achieve profitability, the Company cannot be certain that it will be able to sustain or increase such profitability. The Company has not consistently generated positive cash flow from operations, and it cannot be certain that it will be able to generate positive cash flow from operations in the future. To achieve and sustain profitability, the Company must accomplish numerous objectives, including broadening and stabilizing its sources of revenue and increasing the number of paying members to its service. Accomplishing these objectives may require significant capital investments. The Company cannot be assured that it will be able to achieve these objectives.

 

The Company may not be able to successfully implement its growth strategies.

 

The Company’s growth strategies include, among other things, expanding its addressable market by opening up private aviation to non-members through our marketplace, expanding into new domestic markets and developing adjacent businesses. The Company faces numerous challenges in implementing its growth strategies, including its ability to execute on market, business, product/service and geographic expansions. The Company’s strategies for growth are dependent on, among other things, its ability to expand existing products and service offerings and launch new products and service offerings. Although the Company devotes significant financial and other resources to the expansion of its products and service offerings, its efforts may not be commercially successful or achieve the desired results. The Company’s financial results and its ability to maintain or improve its competitive position will depend on its ability to effectively gauge the direction of its key marketplaces and successfully identify, develop, market and sell new or improved products and services in these changing marketplaces. The Company’s inability to successfully implement its growth strategies could have a material adverse effect on its business, financial condition and results of operations and any assumptions underlying estimates of expected cost savings or expected revenues may be inaccurate.

 

The Company’s operating results are expected to be difficult to predict based on a number of factors that also will affect its long-term performance.

 

The Company expects its operating results to fluctuate significantly in the future based on a variety of factors, many of which are outside its control and difficult to predict. As a result, period-to-period comparisons of the Company’s operating results may not be a good indicator of its future or long-term performance. The following factors may affect the Company from period-to-period and may affect its long-term performance:

 

  the Company may fail to successfully execute its business, marketing and other strategies;

 

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  the Company’s ability to grow complementary products and service offerings may be limited, which could negatively impact its growth rate and financial performance;
     
  the Company may be unable to attract new customers and/or retain existing customers;
     
  the Company may require additional capital to finance strategic investments and operations, pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and the Company cannot be sure that additional financing will be available;
     
  the Company’s historical growth rates may not be reflective of its future growth;
     
  the Company’s business and operating results may be significantly impacted by general economic conditions, the health of the U.S. aviation industry and risks associated with its aviation assets;
     
  litigation or investigations involving the Company could result in material settlements, fines or penalties and may adversely affect the Company’s business, financial condition and results of operations;
     
  existing or new adverse regulations or interpretations thereof applicable to the Company’s industry may restrict its ability to expand or to operate its business as intended and may expose the Company to fines and other penalties;
     
  the occurrence of geopolitical events such as war, terrorism, civil unrest, political instability, environmental or climatic factors, natural disaster, pandemic or epidemic outbreak, public health crisis and general economic conditions may have an adverse effect on the Company’s business;
     
  some of the Company’s potential losses may not be covered by insurance, and the Company may be unable to obtain or maintain adequate insurance coverage; and
     
  the Company is potentially subject to taxation-related risks in multiple jurisdictions, and changes in tax laws could have a material adverse effect on its business, cash flow, results of operations or financial condition.

 

The Company’s business is primarily focused on certain targeted geographic regions, making it vulnerable to risks associated with having geographically concentrated operations.

 

Jet.AI’s customer base is primarily concentrated in certain geographic regions of the United States. As a result, Jet.AI’s business, financial condition and results of operations are susceptible to regional economic downturns and other regional factors, including state regulations and budget constraints and severe weather conditions, catastrophic events or other disruptions. As Jet.AI seeks to expand in its existing markets, opportunities for growth within these regions will become more limited and the geographic concentration of the Company’s business may increase.

 

If the Company cannot internally or externally finance its aircraft or generate sufficient funds to make payments to external financing sources, the Company may not succeed.

 

As is customary in the aviation industry, the Company is reliant on external financing for the acquisition of its aircraft and is likely to need additional financing in the future in order to grow its fleet. The Company has acquired one HondaJet under a leasing arrangement described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If the Company is unable to generate sufficient revenue or other funding to make payments on this lease arrangement, the lessor may take back the aircraft, which would have a material adverse effect on the Company’s business and reputation. Furthermore, if the Company does not have access to external financing for future aircraft, for whatever reason, including reasons relating to the Company’s business or prospects or the broader economy, the Company may not be in a position to grow and/or survive.

 

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The Company may not have enough capital as needed and may be required to raise more capital and the terms of subsequent financings may adversely impact your investment.

 

The Company anticipates needing access to credit in order to support its working capital requirements as it grows. Interest rates are rising, and it is a difficult environment for obtaining credit on favorable terms. If the Company cannot obtain credit when needed, the Company may issue debt or equity securities to raise funds, modify its growth plans, or take some other action. Interest on debt securities could increase costs and negatively impact operating results and convertible debt securities could result in diluting your interest in the Company. If the Company is unable to find additional capital on favorable terms, then it is possible that it will choose to cease its sales activity. In that case, the only asset remaining to generate a return on your investment could be the Company’s intellectual property. Even if the Company is not forced to cease its sales activity, the unavailability of capital could result in the Company performing below expectations, which could adversely impact the value of your investment.

 

The prices of blockchain currencies that the Company intends to accept as payment are extremely volatile. Fluctuations in the price of blockchain currencies and digital assets generally could materially and adversely affect the Company’s business.

 

The Company accepts blockchain currencies, like Bitcoin, as payment (although it has not received any such payments to date) and the market value of these blockchain currencies is highly volatile. Though the Company intends to promptly exchange blockchain currencies for fiat currencies to limit direct exposure to this volatility, the Company believes its services have a modest competitive advantage due to its acceptance of blockchain currencies as payment vis-a-vis its competitors. To the extent that this high level of volatility decreases the general use of blockchain currencies, the Company may lose this advantage and its results may suffer. Furthermore, a decrease in the price of a single blockchain asset may cause volatility in the entire blockchain asset industry and may affect other blockchain assets.

 

The Company’s business and reputation rely on, and will continue to rely on, third parties.

 

The Company has relied on a third-party app developer to develop the initial versions of its App and the Company may continue to rely on third parties for future development of portions of any new or revised App. In place of a third-party app developer, the Company relies both on internal development and freelance contractors supervised by the Company’s Chief Technology Officer. The Company intends to continue to build its internal development team and to gradually decrease its reliance on external contractors for app development. If there were delays or complications in the further development of the App, this might result in difficulties that include but are not limited to the following:

 

  Increased Development Costs: Extended development timelines can result in higher costs associated with personnel, software licenses, hardware, and other development resources. Delays may require additional investments to address technical issues, hire more personnel, or acquire additional technology or expertise to expedite the development process. These increased costs may negatively impact our financial performance and profitability.
  Missed Time-to-Market Opportunities: Delays in app development may cause us to miss strategic market windows, limiting our ability to capture early adopters and gain a competitive advantage. Competitors may seize the opportunity to launch similar apps, potentially eroding our market share and diminishing our growth prospects. Our ability to generate revenue and establish a strong market presence may be compromised as a result.
  Customer Dissatisfaction and Loss of Trust: If delays or complications prolong the release of our App, it may lead to customer frustration and disappointment. Anticipation for the app’s availability may diminish, and users may turn to alternative solutions or competitors. Customer dissatisfaction can harm our reputation and brand image, resulting in a loss of trust and reducing customer loyalty and engagement with our products and services.
  Negative Impact on Revenue and Financial Performance: The delay in launching our App may impact our revenue projections, financial forecasts, and investment plans. The inability to generate expected revenue streams can adversely affect our cash flow, profitability, and ability to meet financial obligations or raise additional capital. Our valuation and attractiveness to investors may also be negatively impacted.
  Opportunity Costs and Competitive Disadvantage: Time spent on addressing delays and complications diverts management’s attention and resources away from other strategic initiatives or product developments. We may miss out on potential partnership opportunities, market expansions, or product enhancements, resulting in missed revenue and growth opportunities. Competitors who successfully launch their apps within a shorter timeframe may gain a competitive advantage over us.
  Loss of Investor Confidence: Extended delays or ongoing complications may erode investor confidence in our ability to execute our business plan successfully. Investors may question our management’s capability, resulting in reduced investor interest, difficulty in raising funds, and a potential decline in our stock price. The loss of investor confidence can have broader implications for our overall financial stability and long-term viability.

 

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The Company also expects to rely heavily on its existing operating partner, Cirrus Aviation Services, to maintain and operate the Company’s leased aircraft for charter services and the Company will rely on third party operators when its clients book flights through its platform with those operators. Both the Company and Cirrus actively book charter onto the Company aircraft. Cirrus books charter via its 24-hour charter department and the Company books charter via its App. The failure of these third parties to perform these roles properly may result in damage to the Company’s reputation, loss of clients, potential litigation and other costs. The Company may also experience delays, defects, errors, or other problems with their work that could have an adverse effect on its results and its ability to achieve profitability.

 

The Company relies on third-party Internet, mobile, and other products and services to deliver its mobile and web applications and flight management system offerings to customers, and any disruption of, or interference with, the Company’s use of those services could adversely affect its business, financial condition, results of operations, and customers.

 

The Company’s platform’s continuing and uninterrupted performance is critical to its success. That platform is dependent on the performance and reliability of Internet, mobile, and other infrastructure services that are not under the Company’s control. While the Company has engaged reputable vendors to provide these products or services, the Company does not have control over the operations of the facilities or systems used by its third-party providers. These facilities and systems may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, pandemics, and similar events or acts of misconduct. In addition, any changes in one of the Company’s third-party service provider’s service levels may adversely affect the Company’s ability to meet the requirements of its customers. While the Company believes it has implemented reasonable backup and disaster recovery plans, the Company has experienced, and expects that in the future it will experience, interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, capacity constraints, or external factors beyond the Company’s control. Sustained or repeated system failures would reduce the attractiveness of the Company’s offerings and could disrupt the Company’s customers’ businesses. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as the Company expands its products and service offerings. Any negative publicity or user dissatisfaction arising from these disruptions could harm the Company’s reputation and brand, may adversely affect the usage of the Company’s offerings, and could harm the Company’s business, financial condition and results of operation.

 

The Company relies on third parties maintaining open marketplaces to distribute its mobile and web applications.

 

The success of the Company’s App relies in part on third parties maintaining open marketplaces, including the Apple App Store and Google Play, which make our App available for download. The Company cannot be assured that the marketplaces through which it distributes its App will maintain their current structures or that such marketplaces will not charge the Company fees to list its App for download.

 

The Company may be unable to adequately protect its intellectual property interests or may be found infringing on the intellectual property interests of others.

 

The Company’s intellectual property includes its trademarks, domain names, website, mobile and web applications, software (including our proprietary algorithms and data analytics engines), copyrights, trade secrets, and inventions (whether or not patentable). The Company believes that its intellectual property plays an important role in protecting its brand and the competitiveness of its business. If the Company does not adequately protect its intellectual property, its brand and reputation may be adversely affected and its ability to compete effectively may be impaired.

 

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The Company protects its intellectual property through a combination of trademarks, domain names and other measures. The Company has registered its trademarks and domain names that it currently uses in the United States. The Company’s efforts may not be sufficient or effective. Further, the Company may be unable to prevent competitors from acquiring trademarks or domain names that are similar to or diminish the value of its intellectual property. In addition, it may be possible for other parties to copy or reverse engineer the Company’s applications or other technology offerings. Moreover, the Company’s proprietary algorithms, data analytics engines, or other software or trade secrets may be compromised by third parties or the Company’s employees, which could cause the Company to lose any competitive advantage it may have from them.

 

In addition, the Company’s business is subject to the risk of third parties infringing its intellectual property. The Company may not always be successful in securing protection for, or identifying or stopping infringements of, its intellectual property and it may need to resort to litigation in the future to enforce its rights in this regard. Any such litigation could result in significant costs and a diversion of resources. Further, such enforcement efforts may result in a ruling that the Company’s intellectual property rights are unenforceable.

 

Moreover, companies in the aviation and technology industries are frequently subject to litigation based on allegations of intellectual property infringement, misappropriation, or other violations. As the Company expands and raises its profile, the likelihood of intellectual property claims being asserted against it grows. Further, the Company may acquire or introduce new technology offerings, which may increase the Company’s exposure to patent and other intellectual property claims. Any intellectual property claims asserted against the Company, whether or not having any merit, could be time-consuming and expensive to settle or litigate. If the Company is unsuccessful in defending such a claim, it may be required to pay substantial damages or could be subject to an injunction or agree to a settlement that may prevent it from using its intellectual property or making its offerings available to customers. Some intellectual property claims may require the Company to seek a license to continue its operations, and those licenses may not be available on commercially reasonable terms or may significantly increase the Company’s operating expenses. If the Company is unable to procure a license, it may be required to develop non-infringing technological alternatives, which could require significant time and expense. Any of these events could adversely affect the Company’s business, financial condition, or operations.

 

A delay or failure to identify and devise, invest in and implement certain important technology, business, and other initiatives could have a material impact on the Company’s business, financial condition and results of operations.

 

In order to operate its business, achieve its goals, and remain competitive, the Company continuously seeks to identify and devise, invest in, implement and pursue technology, business and other important initiatives, such as those relating to aircraft fleet structuring, business processes, information technology, initiatives seeking to ensure high quality service experience, and others.

 

The Company’s business and the aircraft the Company operates are characterized by changing technology, introductions and enhancements of models of aircraft and services and shifting customer demands, including technology preferences. The Company’s future growth and financial performance will depend in part upon its ability to develop, market and integrate new services and to accommodate the latest technological advances and customer preferences. In addition, the introduction of new technologies or services that compete with the Company’s product and services could result in its revenues decreasing over time. If the Company is unable to upgrade its operations or fleet with the latest technological advances in a timely manner, or at all, its business, financial condition and results of operations could suffer.

 

The Company is dependent on its information systems which may be vulnerable to cyber-attacks or other events.

 

The Company’s operations are dependent on its information systems and the information collected, processed, stored, and handled by these systems. The Company relies heavily on its computer systems to manage its client account balances, booking, pricing, processing and other processes. The Company receives, retains and transmits certain confidential information, including personally identifiable information that its clients provide. In addition, for these operations, the Company depends in part on the secure transmission of confidential information over public networks to charter operators. The Company’s information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches, including credit card or personally identifiable information breaches, coordinated cyber-attacks, vandalism, catastrophic events and human error. If the Company’s platform is hacked, these funds could be at risk of being stolen which would damage the Company’s reputation and likely its business. Any significant disruption or cyber-attacks on the Company’s information systems, particularly those involving confidential information being accessed, obtained, damaged, or used by unauthorized or improper persons, could harm the Company’s reputation and expose it to regulatory or legal actions and adversely affect its business and its financial results.

 

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Because the Company’s software could be used to collect and store personal information, privacy concerns in the territories in which the Company operates could result in additional costs and liabilities to the Company or inhibit sales of its software.

 

The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, storage and disclosure of personal information and breach notification procedures. The Company is also required to comply with laws, rules and regulations relating to data security. Interpretation of these laws, rules and regulations and their application to the Company’s software and services in applicable jurisdictions is ongoing and cannot be fully determined at this time.

 

In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act of 2018 (the “CCPA”) and other state and federal laws relating to privacy and data security. By way of example, the CCPA requires covered businesses to provide new disclosures to California residents, provide them new ways to opt-out of certain disclosures of personal information, and allows for a new cause of action for data breaches. It includes a framework that includes potential statutory damages and private rights of action. There is some uncertainty as to how the CCPA, and similar privacy laws emerging in other states, could impact the Company’s business as it depends on how such laws will be interpreted. As the Company expands its operations, compliance with privacy laws may increase its operating costs.

 

The Company may not have enough funds to sustain the business until it becomes profitable.

 

The Company may not accurately anticipate how quickly it may use its funds and whether these funds are sufficient to bring the business to profitability.

 

Risks Related to the Company’s Operating Environment

 

Demand for the Company’s product and services may decline due to factors beyond its control.

 

Demand for private jet charters may be negatively impacted by factors affecting air travel generally, such as adverse weather conditions, an outbreak of a contagious disease and other natural events, terrorism and increased security screening requirements.

 

In particular, the recurrence of a pandemic, whether COVID-19 or otherwise, may result in a decline in air travel. Additionally, the reimposition of travel restrictions and other measures intended to contain the spread of any such virus may contribute to a decline in demand for air travel. If travel remains in a general decline for a significant period of time, the Company may be unable to compete with more established operators and may not be able to achieve profitability in the medium term or at all.

 

More broadly, business jet travel is highly correlated to the performance of the economy, and an economic downturn, such as the current economic environment, which has been adversely affected by high rates of inflation, increasing interest rates, and low consumer sentiment, is likely to have a direct impact on the use of business jets. The Company’s customers may consider private air travel through its products and services to be a luxury item, especially when compared to commercial air travel. As a result, any economic downturn which has an adverse effect on the Company’s customers’ spending habits could cause them to travel less frequently and, to the extent they travel, to travel using commercial air carriers or other means considered to be more economical than the Company’s products and services. For example, beginning in 2008 and in connection with weakened macroeconomic conditions, the corporate and executive jet aviation industry, and companies that utilize corporate jets, experienced intensified political and media scrutiny. It is likely that the current economic downturn will impact demand for private jet travel for some time.

 

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Any of these factors that cause the demand for private jet travel may result in delays that could reduce the attractiveness of private air charter travel versus other means of transportation, particularly for shorter distance travel, which represents our target market. Delays also frustrate passengers, affecting the Company’s reputation and potentially reducing fleet utilization and charter bookings as a result of flight cancellations and increase costs. The Company may experience decreased demand, as well as a loss of reputation, in the event of an accident involving one of its aircraft or an aircraft booked through our platform or any actual or alleged misuse of its platform or aircraft by customers in violation of law. Demand for the Company’s product and services may also decline due to actions that increase the cost of private air charter travel versus other forms of transportation, particularly efforts aimed at addressing climate change such as carbon tax initiatives or other actions. Any of the foregoing circumstances or events which reduced the demand for private jet charters could negatively impact the Company’s ability to establish its business and achieve profitability.

 

The Company faces a high level of competition with numerous market participants with greater financial resources and operating experience.

 

The private air travel industry is extraordinarily competitive. Factors that affect competition in this industry include price, reliability, safety, regulations, professional reputation, aircraft availability, equipment and quality, consistency and ease of service, willingness and ability to serve specific airports or regions, and investment requirements. The Company plans to compete against private jet charter and fractional jet companies as well as business jet charter companies. Both the private jet charter companies and the business jet charter companies have numerous competitive advantages that enable them to attract customers. Jet.AI’s access to a smaller aircraft fleet and regional focus puts it at a competitive disadvantage, particularly with respect to its appeal to business travelers who want to travel overseas.

 

The fractional private jet companies and many of the business jet charter companies have access to larger fleets of aircraft and have greater financial resources, which would permit them to more effectively service customers. Due to the Company’s relatively small size, it is more susceptible to their competitive activities, which could prevent the Company from attaining the level of sales required to sustain profitable operations.

 

Recent consolidation in the industry, such as VistaJet’s acquisitions of XOJET and JetSmarter and Wheels Up’s acquisition of Delta Private Jets as well as Gama Aviation, a business jet services company, and increased consolidation in the future could further intensify the competitive environment the Company faces.

 

There can be no assurance that the Company’s competitors will not be successful in capturing a share of our present or potential customer base. The materialization of any of these risks could adversely affect the Company’s business, financial condition and results of operations.

 

Aviation businesses are often affected by factors beyond their control including: air traffic congestion at airports; airport slot restrictions; air traffic control inefficiencies; natural disasters; adverse weather conditions, such as hurricanes or blizzards; increased and changing security measures; changing regulatory and governmental requirements; new or changing travel-related taxes; or the outbreak of disease; any of which could have a material adverse effect on the Company’s business, results of operations and financial condition.

 

Like other aviation companies, the Company’s business is affected by factors beyond its control, including air traffic congestion at airports, airport slot restrictions, air traffic control inefficiencies, natural disasters, adverse weather conditions, increased and changing security measures, changing regulatory and governmental requirements, new or changing travel-related taxes, or the outbreak of disease. Factors that cause flight delays frustrate passengers and increase operating costs and decrease revenues, which in turn could adversely affect profitability. In the United States, the federal government singularly controls all U.S. airspace, and aviation operators are completely dependent on the FAA to operate that airspace in a safe, efficient and affordable manner. The air traffic control system, which is operated by the FAA, faces challenges in managing the growing demand for U.S. air travel. U.S. air-traffic controllers often rely on outdated technologies that routinely overwhelm the system and compel aviation operators to fly inefficient, indirect routes resulting in delays and increased operational cost. In addition, there are currently proposals before Congress that could potentially lead to the privatization of the United States’ air traffic control system, which could adversely affect the Company’s business.

 

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Adverse weather conditions and natural disasters, such as hurricanes, winter snowstorms or earthquakes, can cause flight cancellations or significant delays. Cancellations or delays due to adverse weather conditions or natural disasters, air traffic control problems or inefficiencies, breaches in security or other factors may affect the Company to a greater degree than its competitors who may be able to recover more quickly from these events, and therefore could have a material adverse effect on the Company’s business, results of operations and financial condition to a greater degree than other air carriers. Any general reduction in passenger traffic could have a material adverse effect on the Company’s business, results of operations and financial condition.

 

The operation of aircraft is subject to various risks, and failure to maintain an acceptable safety record may have an adverse impact on our ability to obtain and retain customers.

 

The operation of aircraft is subject to various risks, including catastrophic disasters, crashes, mechanical failures and collisions, which may result in loss of life, personal injury and/or damage to property and equipment. The Company may experience accidents in the future. These risks could endanger the safety of its customers, personnel, third parties, equipment, cargo and other property (both the Company’s and that of third parties), as well as the environment. If any of these events were to occur, the Company could experience loss of revenue, termination of customer contracts, higher insurance rates, litigation, regulatory investigations and enforcement actions (including potential grounding of the Company’s fleet and suspension or revocation of its operating authorities) and damage to its reputation and customer relationships. In addition, to the extent an accident occurs with an aircraft the Company operates or charters, the Company could be held liable for resulting damages, which may involve claims from injured passengers and survivors of deceased passengers. There can be no assurance that the amount of the Company’s insurance coverage available in the event of such losses would be adequate to cover such losses, or that the Company would not be forced to bear substantial losses from such events, regardless of its insurance cover.

 

Moreover, any aircraft accident or incident, even if fully insured, and whether involving the Company or other private aircraft operators, could create a public perception that the Company is less safe or reliable than other private aircraft operators, which could cause customers to lose confidence and switch to other private aircraft operators or other means of transportation. In addition, any aircraft accident or incident, whether involving the Company or other private aircraft operators, could also affect the public’s view of industry safety, which may reduce the amount of trust by customers.

 

The Company incurs considerable costs to maintain the quality of (i) its safety program, (ii) its training programs and (iii) its fleet of aircraft. The Company cannot guarantee that these costs will not increase. Likewise, the Company cannot guarantee that its efforts will provide an adequate level of safety or an acceptable safety record. If the Company is unable to maintain an acceptable safety record, the Company may not be able to retain existing customers or attract new customers, which could have a material adverse effect on its business, financial condition and results of operations.

 

The supply of pilots to the airline industry is limited and may negatively affect the Company’s operations and financial condition. Increases in labor costs may adversely affect the Company’s business, results of operations and financial condition.

 

The Company’s pilots are subject to stringent pilot qualification and crew member flight training standards , which among other things require minimum flight time for pilots and mandate strict rules to minimize pilot fatigue. The existence of such requirements effectively limits the supply of qualified pilot candidates and increases pilot salaries and related labor costs. A shortage of pilots would require the Company to further increase its labor costs, which would result in a material reduction in its earnings. Such requirements also impact pilot scheduling, work hours and the number of pilots required to be employed for the Company’s operations.

 

In addition, the Company’s operations and financial condition may be negatively impacted if it is unable to train pilots in a timely manner. Due to an industry-wide shortage of qualified pilots, driven by the flight hours requirements under the FAA qualification standards and attrition resulting from the hiring needs of other industry participants, pilot training timelines have significantly increased and stressed the availability of flight simulators, instructors and related training equipment. As a result, the training of the Company’s pilots may not be accomplished in a cost-efficient manner or in a manner timely enough to support the Company’s operational needs.

 

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Pilot attrition may negatively affect the Company’s operations and financial condition.

 

In recent years, the Company has observed significant volatility in pilot attrition as a result of pilot wage and bonus increases at other industry participants and the growth of cargo, low-cost and ultra-low-cost airlines. If attrition rates are higher than the availability of replacement pilots, the Company’s operations and financial results could be materially and adversely affected.

 

The Company is exposed to operational disruptions due to maintenance.

 

The Company’s fleet requires regular maintenance work, which may cause operational disruption. The Company’s inability to perform timely maintenance and repairs can result in its aircraft being underutilized which could have an adverse impact on its business, financial condition and results of operations. On occasion, airframe manufacturers and/or regulatory authorities require mandatory or recommended modifications to be made across a particular fleet which may mean having to ground a particular type of aircraft. This may cause operational disruption to and impose significant costs on the Company. Moreover, as the Company’s aircraft base increases, maintenance costs could potentially increase.

 

Significant increases in fuel costs could have a material adverse effect on the Company’s business, financial condition and results of operations.

 

Fuel is essential to the operation of the Company’s aircraft and to the Company’s ability to carry out its transport services. Fuel costs are a key component of the Company’s operating expenses. A significant increase in fuel costs may negatively impact the Company’s revenue, margins, operating expenses and results of operations. While the Company may be able to pass increases in fuel costs on to its customers, increased fuel surcharges may affect the Company’s revenue and retention if a prolonged period of high fuel costs occurs. To the extent there is a significant increase in fuel costs that affects the amount the Company’s customers choose to fly, it may have a material adverse effect on the Company’s business, financial condition and results of operations.

 

If efforts to continue to build a strong brand identity and improve member satisfaction and loyalty are not successful, the Company may not be able to attract or retain members, and its operating results may be adversely affected.

 

The Company must continue to build and maintain strong brand identity for its products and services, which have expanded over time. The Company believes that strong brand identity will continue to be important in attracting members. If the Company’s efforts to promote and maintain its brand are not successful, the Company’s operating results and our ability to attract members and other customers may be adversely affected. From time to time, the Company’s members and other customers may express dissatisfaction with its products and service offerings, in part due to factors that could be outside of the Company’s control, such as the timing and availability of aircraft and service interruptions driven by prevailing political, regulatory, or natural conditions. To the extent dissatisfaction with the Company’s products and services is widespread or not adequately addressed, the Company’s brand may be adversely impacted and its ability to attract and retain members may be adversely affected. With respect to the Company’s planned expansion into additional markets, the Company will also need to establish its brand and to the extent it is not successful, the Company’s business in new markets would be adversely impacted.

 

Any failure to offer high-quality customer support may harm the Company’s relationships with its customers and could adversely affect the Company’s reputation, brand, business, financial condition and results of operations.

 

Through the Company’s marketing, advertising, and communications with its customers, the Company sets the tone for its brand as aspirational but also within reach. The Company’s strives to create high levels of customer satisfaction through the experience provided by its team and representatives. The ease and reliability of its offerings, including its ability to provide high-quality customer support, helps the Company attract and retain customers. The Company’s ability to provide effective and timely support is largely dependent on its ability to attract and retain skilled employees who can support the Company’s customers and are sufficiently knowledgeable about the Company’s product and services. As the Company continues to grow its business and improve its platform, it will face challenges related to providing quality support at an increased scale. Any failure to provide efficient customer support, or a market perception that the Company does not maintain high-quality support, could adversely affect the Company’s reputation, brand, business, financial condition and results of operations.

 

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The demand for the Company’s services is subject to seasonal fluctuations.

 

Demand for the Company’s services will fluctuate over the course of the year and is higher in the summer season and during holiday periods. During periods of higher demand, the Company’s ability to provide agreed upon levels of service to its customers may deteriorate, which could have a negative impact on the Company’s reputation and its ability to succeed.

 

The Company’s ability to sell its product or service may be adversely affected by changes in government regulation.

 

The Company’s business is subject to significant regulation by the FAA, the TSA (Transportation Security Administration) as well as “know your customer” obligations and other laws and regulations. The laws and regulations concerning the selling of the Company’s product or services may change and if they do then the selling of the Company’s product or service may no longer be possible or profitable.

 

The Company’s failure to attract and retain highly qualified personnel in the future could harm its business.

 

The Company believes that its future success will depend in large part on its ability to retain or attract highly qualified management, technical and other personnel. The Company may not be successful in retaining key personnel or in attracting other highly qualified personnel. If the Company is unable to retain or attract significant numbers of qualified management and other personnel, the Company may not be able to grow and expand its business.

 

Risks Relating to Ownership of Jet.AI Common Stock

 

The Company has never paid cash dividends on its capital stock, and Jet.AI does not anticipate paying dividends in the foreseeable future.

 

The Company has never paid cash dividends on its capital stock and currently intends to retain any future earnings to fund the growth of its business. Any determination to pay dividends in the future will be at the discretion of the Jet.AI Board and will depend on Jet.AI’s financial condition, operating results, capital requirements, general business conditions and other factors that the Jet.AI Board may deem relevant. As a result, capital appreciation, if any, of Jet.AI’s Common Stock will be the sole source of gain for the foreseeable future.

 

The Company’s stock price may be volatile, and you may not be able to sell shares at or above the price at which you purchase shares.

 

Fluctuations in the price of the Common Stock could contribute to the loss of all or part of your investment. If an active market for our securities develops and continues, the trading price of Common Stock could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our Common Stock and our Common Stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

 

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Factors affecting the trading price of the Common Stock may include:

 

  the realization of any of the risk factors presented in this prospectus;
     
  actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to Jet.AI;
     
  failure to meet or exceed financial estimates and projections of the investment community or that Jet.AI provides to the public;
     
  issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general;
     
  announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
     
  the volume of shares of Common Stock available for public sale;
     
  operating and stock price performance of other companies that investors deem comparable to Jet.AI;
     
  Jet.AI’s ability to market new and enhanced products and technologies on a timely basis;
     
  changes in laws and regulations affecting Jet.AI’s business;
     
  Jet.AI’s ability to meet compliance requirements;
     
  commencement of, or involvement in, litigation involving Jet.AI;
     
  changes in financial estimates and recommendations by securities analysts concerning Jet.AI or the market in general;
     
  the timing and magnitude of investments in the growth of the business;
     
  actual or anticipated changes in laws and regulations;
     
  additions or departures of key management or other personnel;
     
  increased labor costs;
     
  disputes or other developments related to intellectual property or other proprietary rights, including litigation;
     
  the ability to market new and enhanced solutions on a timely basis;
     
  sales of substantial amounts of the Jet.AI Common Stock by Jet.AI’s directors, executive officers, significant stockholders or the selling stockholders or the perception that such sales could occur, including as a result of transactions under the Share Purchase Agreement and the Forward Purchase Agreement;
     
  trading volume of our Common Stock, including as a result of transactions under the Share Purchase Agreement and the Forward Purchase Agreement;
     
  changes in capital structure, including future issuances of securities or the incurrence of debt; and
     
  general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

 

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to Jet.AI could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of Jet.AI’s securities also could adversely affect its ability to issue additional securities and its ability to obtain additional financing in the future.

 

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Anti-takeover provisions contained in the Company’s Certificate of Incorporation and applicable laws could impair a takeover attempt.

 

The Company’s Certificate of Incorporation afford certain rights and powers to the Jet.AI Board that could contribute to the delay or prevention of an acquisition that it deems undesirable. Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for stockholders to receive a premium for their shares of Common Stock, and could also affect the price that some investors are willing to pay for the Common Stock. See also “Description of the Securities.”

 

If we fail to comply with the continued listing requirements of Nasdaq, we would face possible delisting, which would result in a limited public market for our shares, limit our ability to access existing liquidity facilities and make obtaining future financing more difficult for us.

 

Our Common Stock is currently listed on The Nasdaq Global Market under the symbol “JTAI”. Notwithstanding such listing, there is no guarantee that we will be able to maintain our listing on Nasdaq for any period of time. Among the conditions required for continued listing on The Nasdaq Global Market, Nasdaq requires us to maintain at least $10 million in stockholders’ equity (the “Stockholders’ Equity standard”) or $50 million in market value of listed securities (the “Market Value standard”) or total assets and total revenues of at least $50 million in the most recently completed fiscal year or two of the last three most recently completed fiscal years (the “Total Assets / Total Revenues standard”). Our stockholders’ equity is currently not above The Nasdaq Global Market’s $10 million minimum, as discussed below. Nasdaq’s determination that we fail to meet the continued listing standards of Nasdaq may result in our securities being delisted from Nasdaq.

 

On December 1, 2023, the Company received a notification letter (the “Letter”) from the Nasdaq Listing Qualifications Staff of Nasdaq notifying the Company that its amount of stockholders’ equity has fallen below the $10 million required minimum for continued listing on The Nasdaq Global Market set forth in Nasdaq Listing Rule 5450(b)(1)(A). The Company’s stockholders’ equity as of September 30, 2023 was $(4,257,094), as reported in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023. The Letter has no immediate impact on the listing of the Company’s Common Stock on Nasdaq.

 

The Letter also noted that as of September 30, 2023, the Company does not meet The Nasdaq Global Market alternative listing criteria for the Market Value standard or the Total Assets / Total Revenues standard. The Letter further noted that the Company may consider applying to transfer the Company’s securities to The Nasdaq Capital Market (the “Capital Market”), which would require the Company to, among other things, meet the Capital Market’s continued listing requirements.

 

In accordance with Nasdaq rules and as stated in the Letter, the Company has until January 15, 2024 (45 calendar days from the date of the Letter) to submit a plan to regain compliance. In determining the acceptability of the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for the Company’s current non-compliance, other corporate events that may occur within the Nasdaq review period, the Company’s overall financial condition and its public disclosures. If the plan is accepted, Nasdaq will provide written confirmation and can grant an extension of up to 180 calendar days from the date of the Letter to evidence compliance. If Nasdaq rejects the plan, the Company will have the opportunity to appeal the decision to a Hearings Panel pursuant to Rule 5815(a), but there can be no assurance that Nasdaq would grant the Company’s request for approval of its compliance plan.

 

As of the date of this prospectus, the Company has not yet submitted a compliance plan to Nasdaq. The Company intends to timely submit a compliance plan to Nasdaq to regain compliance with Nasdaq’s listing criteria, which may include a proposed transfer to the Capital Market.

 

There can be no assurance that Nasdaq will accept the Company’s compliance plan, or, if accepted, that the Company will be able to achieve or maintain compliance with continued listing criteria of the Nasdaq Global Market or lower continued listing criteria of the Nasdaq Capital Market. If Nasdaq does not accept the Company’s plan or if the Company is unable to regain compliance within any extension period granted by Nasdaq, Nasdaq would be required to issue a delisting determination. The Company would at that time be entitled to request a hearing before a Nasdaq Hearings Panel to present its plan to regain compliance and to request a further extension period to regain compliance. The request for a hearing would stay any delisting action by Nasdaq.

 

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If we are unable to achieve and maintain compliance with such listing standards or other Nasdaq listing requirements, including by moving to the Capital Market, in the future, we could be subject to suspension and delisting proceedings. A delisting of our Common Stock and listed warrants and our inability to list on another national securities market could negatively impact us by: (i) reducing the liquidity and market price of our Common Stock and listed warrants; (ii) reducing the number of investors willing to hold or acquire our Common Stock and listed warrants, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use certain registration statements to offer and sell freely tradable securities, thereby limiting our ability to access the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees. In addition, a delisting of our Common Stock would prevent us from being able to access financing under the Share Purchase Agreement, Forward Purchase Agreement and FPA Funding Amount PIPE Subscription Agreement. Furthermore, the Company may have to pay all or a portion of the $800,000 commitment fee due under the Share Purchase Agreement in cash if its shares are no longer listed. The Company may not have sufficient funds to be able to pay such fee. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – General – Liquidity and Capital Resources.”

 

Jet.AI is subject to risks related to taxation in the United States.

 

Significant judgments based on interpretations of existing tax laws or regulations are required in determining Jet.AI’s provision for income taxes. Jet.AI’s effective income tax rate could be adversely affected by various factors, including, but not limited to, changes in the mix of earnings in tax jurisdictions with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in existing tax policies, laws, regulations or rates, changes in the level of non-deductible expenses (including share-based compensation), changes in the location of Jet.AI’s operations, changes in Jet.AI’s future levels of research and development spending, mergers and acquisitions or the results of examinations by various tax authorities. Although Jet.AI believes its tax estimates are reasonable, if the IRS or any other taxing authority disagrees with the positions taken on its tax returns, Jet.AI could have additional tax liability, including interest and penalties. If material, payment of such additional amounts upon final adjudication of any disputes could have a material impact on our results of operations and financial position.

 

Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect Jet.AI’s business and future profitability.

 

One of the Company’s predecessors, Oxbridge Acquisition Corp., was organized under the laws of the Cayan Islands. Jet.AI is a U.S. corporation and thus subject to U.S. corporate income tax on its worldwide income. Further, since Jet.AI’s operations and customers are located throughout the United States, Jet.AI is subject to various U.S. state and local taxes. U.S. federal, state, local and non-U.S. tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to Jet.AI and may have an adverse effect on its business and future profitability.

 

For example, several tax proposals have been set forth that would, if enacted, make significant changes to U.S. tax laws. Such proposals include an increase in the U.S. income tax rate applicable to corporations (such as Jet.AI) from 21% to 28%. Congress may consider, and could include, some or all of these proposals in connection with tax reform that may be undertaken. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws could adversely affect Jet.AI’s business and future profitability.

 

As a result of plans to expand Jet.AI’s business operations, including to jurisdictions in which tax laws may not be favorable, its obligations may change or fluctuate, become significantly more complex or become subject to greater risk of examination by taxing authorities, any of which could adversely affect Jet.AI’s after-tax profitability and financial results.

 

In the event that Jet.AI’s business expands domestically or internationally, its effective tax rates may fluctuate widely in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under U.S. GAAP, changes in deferred tax assets and liabilities, or changes in tax laws. Factors that could materially affect Jet.AI’s future effective tax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standards or practices, (c) changes in the composition of operating income by tax jurisdiction and (d) pre-tax operating results of Jet.AI’s business.

 

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Additionally, Jet.AI may be subject to significant income, withholding, and other tax obligations in the United States and may become subject to taxation in numerous additional U.S. state and local and non-U.S. jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions. Jet.AI’s after-tax profitability and financial results could be subject to volatility or be affected by numerous factors, including (a) the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities, (b) changes in the valuation of deferred tax assets and liabilities, if any, (c) the expected timing and amount of the release of any tax valuation allowances, (d) the tax treatment of stock-based compensation, (e) changes in the relative amount of earnings subject to tax in the various jurisdictions, (f) the potential business expansion into, or otherwise becoming subject to tax in, additional jurisdictions, (g) changes to existing intercompany structure (and any costs related thereto) and business operations, (h) the extent of intercompany transactions and the extent to which taxing authorities in relevant jurisdictions respect those intercompany transactions, and (i) the ability to structure business operations in an efficient and competitive manner. Outcomes from audits or examinations by taxing authorities could have an adverse effect on Jet.AI’s after-tax profitability and financial condition. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could disagree with Jet.AI’s intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If Jet.AI does not prevail in any such disagreements, Jet.AI’s profitability may be affected.

 

Jet.AI’s after-tax profitability and financial results may also be adversely affected by changes in relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions and interpretations thereof, in each case, possibly with retroactive effect.

 

Jet.AI’s ability to utilize its net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations.

 

In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to use its pre-change net operating loss carryforwards (“NOLs”) to offset future taxable income. The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three year period. If the Company has experienced an ownership change at any time since its incorporation, Jet.AI may be subject to limitations on its ability to utilize its existing NOLs and other tax attributes to offset taxable income or tax liability. In addition, future changes in Jet.AI’s stock ownership, which may be outside of Jet.AI’s control, may trigger an ownership change. Similar provisions of state tax law may also apply to limit Jet.AI’s use of accumulated state tax attributes. As a result, even if Jet.AI earns net taxable income in the future, its ability to use its pre-change NOL carryforwards and other tax attributes to offset such taxable income or tax liability may be subject to limitations, which could potentially result in increased future income tax liability to Jet.AI.

 

Jet.AI’s sole material asset is its direct and indirect interests in its subsidiaries and, accordingly, Jet.AI will be dependent upon distributions from its subsidiaries to pay taxes and cover its corporate and other overhead expenses and pay dividends, if any, on the Jet.AI Common Stock.

 

Jet.AI is a holding company and it has no material assets other than its direct and indirect equity interests in its subsidiaries. Jet.AI will have no independent means of generating revenue. To the extent Jet.AI’s subsidiaries have available cash, Jet.AI will cause its subsidiaries to make distributions of cash to pay taxes, cover Jet.AI’s corporate and other overhead expenses and pay dividends, if any, on the Common Stock. To the extent that Jet.AI needs funds and its subsidiaries fail to generate sufficient cash flow to distribute funds to Jet.AI or are restricted from making such distributions or payments under applicable law or regulation or under the terms of their financing arrangements, or are otherwise unable to provide such funds, Jet.AI’s liquidity and financial condition could be materially adversely affected.

 

The unaudited pro forma condensed combined financial information included in this prospectus may not be indicative of what the actual financial position or results of operations of Jet.AI would have been for the periods presented.

 

The unaudited pro forma condensed combined financial information for Jet.AI following the Business Combination in this prospectus is presented for illustrative purposes only and is not necessarily indicative of what Jet.AI’s actual financial position or results of operations would have been for the periods presented had the Business Combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

 

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The issuances of additional shares of Jet.AI Common Stock under the Share Purchase Agreement and the GEM Warrant may result in dilution of future Jet.AI stockholders and have a negative impact on the market price of Jet.AI Common Stock.

 

The proceeds from the Business Combination, Forward Purchase Agreement and our existing cash and cash equivalents may not be sufficient to meet our working capital needs and we intend to draw on the Share Purchase Agreement promptly following the effectiveness of the registration statement of which this prospectus forms a part. Further, our estimates may prove to be inaccurate, and we could spend our capital resources faster than we currently expect. Further, changing circumstances, some of which may be beyond our control, could also cause us to spend capital significantly faster than we currently anticipate, and we may need to seek additional funding sooner than planned. To the extent this occurs, it could impose significant dilution on the Company’s stockholders.

 

In addition to shares to be sold to GEM upon a drawdown, the Share Purchase Agreement entitles GEM to receive (i) payment of a commitment fee of $800,000 payable in either cash or Common Stock and (ii) the GEM Warrant. The shares issuable pursuant to the GEM Warrant were calculated on a fully diluted basis as of the closing of the Business Combination, which calculation included shares issuable upon exercise of the JTAIW Warrants, the Private Placement Warrants, the Merger Consideration Warrants, Jet Token Options and Jet Token RSU Awards. If the JTAIW Warrants, the Private Placement Warrants, Merger Consideration Warrants, Jet Token Options and/or Jet Token RSU Awards are not exercised in full or at all, and GEM exercises the GEM Warrant, then GEM could hold more than 6% of the outstanding common stock of Jet.AI on a non-diluted basis.

 

If the average closing price of Jet.AI’s Common Stock for the 10 trading days following the first anniversary of the date of listing is less than 90% of the then current exercise price of the GEM Warrant, then the exercise price of the GEM Warrant will be adjusted to 110% of its then current exercise price.

 

The issuances of Common Stock pursuant to the GEM Warrant and the Share Purchase Agreement would result in dilution of future Jet.AI stockholders and could have a negative impact on the market price of Common Stock and Jet.AI’s ability to obtain additional financing. See the subsection entitled “Prospectus Summary – Share Purchase Agreement” for a description of the GEM Warrant.

 

We may not have access to funding under the Forward Purchase Agreement.

 

Pursuant to the Forward Purchase Agreement, on each Cash Settlement Payment Date (as defined below), Meteora is obligated to pay us the Settlement Amount (as defined below) as adjusted by the Settlement Amount Adjustment (as defined below). For example, if the shares purchased pursuant to the FPA Funding Amount Subscription Agreement were settled at the last reported sales price of our Common Stock on December 15, 2023, or $3.59, we would receive a Settlement Amount equal to (A) (i) the number of shares to be sold by Meteora multiplied by (ii) $3.59, less (B) the Settlement Amount Adjustment equal to the product of (i) such number of shares sold by Meteora multiplied by (ii) $2.00; in other words, Meteora would be obligated to pay us $1.59 per share sold by Meteora. Based on the current number of shares subject to settlement under the Forward Purchase Agreement of 931,851 shares of Common Stock, the Company would receive an aggregate of $1,481,643, based on the December 15, 2023 closing price of $3.59. In addition, Meteora may accelerate the Valuation Date and as a result the Cash Settlement Payment Date upon the happening of certain events, including in the event that our Common Stock ceases to be listed on a national securities exchange. In the event of a delisting, the Settlement Amount would be based on a per share price of $0 and we would not receive any payments upon settlement of this agreement.

 

For the purposes of the immediately preceding paragraph, as more particularly described in the Forward Purchase Agreement, the “Cash Settlement Payment Date” means the tenth local business day following the last day of the valuation period commencing on the Valuation Date; the “Settlement Amount” means a cash amount equal to the Number of Shares as of the Valuation Date less the number of Unregistered Shares, multiplied by the volume weighted daily VWAP Price over the Valuation Period; and the “Settlement Amount Adjustment” means an amount equal to the product of (1) the Number of Shares as of the Valuation Date multiplied by (2) $2.00. To the extent that the VWAP Price over the Valuation Period is less than $2.00, we will not receive any payments nor will we be required to make any cash payments under the Forward Purchase Agreement.

 

Certain existing stockholders purchased our securities at a price below the current trading price of such securities, and may experience a positive rate of return based on the current trading price.

 

Certain of our stockholders, including certain of the selling stockholders, acquired shares of Common Stock or Private Placement Warrants at prices below, and in some cases considerably below, the current trading price of our Common Stock, and may experience a positive rate of return based on the current trading price.

 

Given the relatively lower purchase prices that some of our stockholders paid to acquire some of their securities compared to the current trading price of our shares of Common Stock, these stockholders, some of whom are registered holders pursuant to this registration, in some instances may earn a positive rate of return on their investment, which may be a significant positive rate of return, depending on the market price of our shares of Common Stock at the time that such stockholders choose to sell their shares of Common Stock.

 

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This prospectus relates to the offer and resale from time to time by the selling stockholders of (1) 115,000 shares of Common Stock issued to Maxim Partners pursuant to the underwriting agreement in connection with Oxbridge’s IPO, representing a value of $9.00 per share reflecting an allocation of the $10.00 per Unit IPO price, (2) 270,000 shares of Common Stock issued to Maxim Partners to settle payment obligations of $2,898,000 (or approximately $10.73 per share) under the underwriting agreement in connection with Oxbridge’s IPO, (3) 112,700 shares of Common Stock issuable upon conversion of shares of Series A Preferred Shares issued to Maxim Partners to settle payment obligations of $1,127,000 (or approximately $10.00 per share) under the underwriting agreement in connection with Oxbridge’s IPO, (4) up to 12,300 shares of Common Stock issuable to Maxim Partners as PIK Shares in lieu of payment of cash dividends on the Series A Preferred Shares, (5) 548,127 shares of Common Stock issued to Meteora pursuant to the FPA Funding Amount PIPE Subscription Agreement for $10.00 per share, subject to netting the aggregate purchase price against payments by the Company to Meteora under the Forward Purchase Agreement, (6) up to 2,179,447 shares of Common Stock issuable after the date of this prospectus to GEM (as defined herein) upon the exercise of a warrant to purchase shares of our Common Stock (the “GEM Warrant”) at an exercise price of $8.60 per share, (7) up to 400,000 shares of Common Stock issuable after the date of this prospectus to GEM in lieu of paying a commitment fee of $800,000 to GEM pursuant to the Share Purchase Agreement, (8) up to 20,000,000 shares of Common Stock issuable to GEM after the date of this prospectus under the Share Purchase Agreement, at a purchase price equal to 90% of the average daily closing price during the applicable 30-day drawdown pricing period, (9) 57,500 shares of Common Stock issuable upon conversion of shares of Series A-1 Preferred Shares issued to the Sponsor to settle the payment obligations of the Company under a promissory note in the principal amount of $575,000 (approximately $10.00 per share of Common Stock), (10) 2,875,000 shares of Common Stock issued to Sponsor in connection with the formation of Oxbridge at an average purchase price of approximately $0.009 per share, and (11) 5,760,000 shares of Common Stock issuable upon exercise of the Private Placement Warrants issued in a private placement to the Sponsor and Maxim in connection with the closing of Oxbridge’s IPO at a price of $1.00 per warrant; shares of Common Stock are issuable under the Private Placement Warrants at an exercise price of $11.50 per share, subject to adjustment.

 

Based on the closing price of our Common Stock of $3.59 on December 15, 2023, the Sponsor may experience potential profit of up to $3.581 per share of Common Stock based on the Sponsor’s initial purchase price of shares of Common Stock prior to the IPO at a price of approximately $0.009 per share (although such shares are subject to a one-year lockup from the date of the Closing), or $10,295,375 in the aggregate. Since any shares to be issued to GEM under the Share Purchase Agreement will be issued at a 90% discount to the average daily closing price during the 30-day pricing period prior to a drawdown, GEM may potentially make a profit of approximately 11% if it is able to immediately resell the shares it receives. If, for example, we draw down $1,000,000 and GEM is not restricted under Regulation M from reselling its shares of Common Stock, it could earn approximately $110,000 on such a drawdown amount. If we draw down the full amount available under the Share Purchase Agreement and GEM is not restricted under Regulation M from reselling its shares, it could earn approximately $4.4 million. In light of the fact that the current trading price of our Common Stock is below the prices at which many of the selling stockholders obtained their shares or at which they may obtain their shares upon exercise of Warrants, it is highly unlikely that they will choose to sell their shares or exercise their Warrants since such sales would generate losses rather than gains. In addition, Meteora holds 275,000 shares of Common Stock as Share Consideration out of the total number of shares that it originally purchased in open market transactions, and for which we paid Meteora $10.10 per share under the terms of the Forward Purchase Agreement. Share Consideration shares are not included in the number of shares covered by the settlement provisions of the Forward Purchase Agreement. Therefore Meteora is entitled to retain all proceeds from its sale of Share Consideration shares.

 

Public stockholders may not be able to experience the same positive rates of return on securities they purchase due to the low price at which the Sponsor and Meteora acquired shares of our Common Stock or the prices at which GEM may receive shares at the time of a drawdown.

 

Sales of Jet.AI Common Stock, or the perception of such sales, by us or the selling stockholders pursuant to this prospectus in the public market or otherwise could cause the market price for Jet.AI Common Stock to decline and certain selling stockholders still may receive significant proceeds.

 

The sale of shares of Common Stock in the public market or otherwise, including sales pursuant to this prospectus, or the perception that such sales could occur, could harm the prevailing market price of shares of our Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that is deemed appropriate. Resales of Common Stock may cause the market price of our securities to drop significantly, even if our business is doing well.

 

Sales of a substantial number of shares of Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Common Stock. The shares of Common Stock being offered for resale pursuant to this prospectus may include shares that were purchased at prices that may be significantly below the trading price of our Common Stock and the sale of which would result in the selling stockholder realizing a significant gain.

 

This prospectus registers the following shares that were purchased or issued at prices that may be significantly below the trading price of our Common Stock and the sale of which would result in the selling stockholder realizing a significant gain:

 

  Sponsor paid approximately $0.009 per share, for the Founder Shares and
  Sponsor and Maxim paid approximately $1.00 per warrant, for the Private Placement Warrants.

 

In connection with an extraordinary general meeting of Oxbridge shareholders in November 2022, in which Oxbridge asked its shareholders to vote to extend the date by which Oxbridge had to consummate a business combination, the holders of 10,313,048 Class A ordinary shares or approximately 90.0% of the shares with redemption rights at the time 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. Subsequently, in connection with the Meeting and the Business Combination, holders of 1,144,215 of Oxbridge’s Class A Ordinary Shares, or approximately 96.4% of the shares with redemption rights at the time, exercised their right to redeem their shares for cash at a redemption price of approximately $11.10 per share, for an aggregate redemption amount of $12,655,017. On August 8, 2023, pursuant to the Forward Purchase Agreement, Meteora purchased 663,556 of the Class A ordinary shares from third parties through a broker in open market transactions or by reversing previously submitted redemption requests and waived its redemption rights with respect to these shares. Furthermore, Meteora purchased an additional 247,000 such shares.

 

For so long as the registration statement of which this prospectus forms a part is available for use, if all of the 32,330,074 shares held or issuable to the selling stockholders are offered for sale, then the shares offered for resale pursuant to this prospectus by the selling stockholders would represent approximately 65.74% of shares outstanding of the Company as of December 15, 2023 (after giving effect to the issuance of the shares upon exercise of the Warrants, conversion of the shares of preferred stock and issuances under the Share Purchase Agreement). Given the substantial number of shares of Common Stock being registered for potential resale by selling stockholders pursuant to this prospectus, the sale of shares by the selling stockholders, or the perception in the market that the selling stockholders of a large number of shares intend to sell shares, could increase the volatility of the market price of our Common Stock or result in a significant decline in the public trading price of our Common Stock. Other than pursuant to the Warrants, we do not know the price at which the selling stockholders will acquire the shares but, based on the terms of the Forward Purchase Agreement and the Share Purchase Agreement, we anticipate that the selling stockholders will acquire the shares at an average of a 10% discount to the market price of our Common Stock. This will create an incentive for the selling stockholders to sell shares of our Common Stock because they purchased the shares at prices lower than the then-current trading price. While the selling stockholders may experience a positive rate of return on their investment in our Common Stock, the public stockholders may not experience a similar rate of return on the securities they purchased due to differences in their purchase prices and the trading price. 

 

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The Warrants may never be in the money, and may expire worthless. 

 

The exercise price of the JTAIW Warrants and the Private Placement Warrants is $11.50 per share and of the GEM Warrant is $8.60 per share. We believe the likelihood that holders will exercise the JTAIW Warrants, the Private Placement Warrants or the GEM Warrant, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of the Common Stock. If the trading price for our Common Stock is less than $11.50 per share, in the case of the JTAIW Warrants and Private Placement Warrants, or $8.60 per share in the case of the GEM Warrant, we believe holders of the Warrants will be unlikely to exercise the warrants. There is no guarantee that the Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the Warrants may expire worthless and we may receive no proceeds from the exercise of the Warrants. 

 

Warrants for Common Stock are currently exercisable, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

 

Outstanding Warrants, including the Private Placement Warrants, to purchase an aggregate of 17,249,334 shares of our Common Stock became exercisable in accordance with the terms of the Warrant Agreement governing those securities 30 days after the Closing Date. The exercise price of these Warrants is $11.50 per share. To the extent such Warrants are exercised, additional shares of Common Stock will be issued, which will result in dilution to the existing holders of Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adversely affect the market price of our Common Stock. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration, and as such, the Warrants may expire worthless.

 

A significant portion of Jet.AI’s total outstanding shares are restricted from immediate resale following the consummation of the Business Combination, but may be sold into the market in the near future. This could cause the market price of the Common Stock to drop significantly, even if our business is doing well.

 

After the Business Combination, Oxbridge’s Sponsor beneficially owns approximately 55.7% of the Common Stock as of December 15, 2023. Pursuant to the terms of the Lock-Up Agreements, the Founder Shares, as well as shares of Common Stock held by Jet Token’s co-founders, Mike Winston and George Murnane, may not be transferred until the earlier to occur of (a) one year after the Closing or (b) the date after the Closing on which we complete a liquidation, merger, stock exchange or other similar transaction with an unaffiliated third party that results in all of stockholders having the right to exchange their stock for cash, securities or other property.

 

Following the expiration of such lockups, the holders of Founder Shares will not be restricted from selling shares of our Common Stock held by them, other than by applicable securities laws. As such, sales of a substantial number of shares of Common Stock in the public market could occur at any time following such expiration. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Common Stock. 

 

As restrictions on resale end and registration statements are available for use, the sale or possibility of sale of these shares could have the effect of increasing the volatility in our share price or the market price of our Common Stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

 

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If securities or industry analysts do not publish or cease publishing research or reports about Jet.AI, its business or its market, or if they change their recommendations regarding the Common Stock adversely, the price and trading volume of the Common Stock could decline.

 

The trading market for the Common Stock will be influenced by the research and reports that industry or securities analysts may publish about Jet.AI, its business, its market or its competitors. If any of the analysts who may cover Jet.AI change their recommendation regarding the Common Stock adversely, or provide more favorable relative recommendations about its competitors, the price of the Common Stock would likely decline. If any analyst who may cover Jet.AI were to cease their coverage or fail to regularly publish reports on Jet.AI, we could lose visibility in the financial markets, which could cause the stock price or trading volume of Jet.AI securities to decline.

 

Changes in laws or regulations, or a failure to comply with any laws or regulations, may adversely affect our business, investments and results of operations.

 

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and our results of operations.

 

The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.

 

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. As a result, our shareholders may not have access to certain information they deem important. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year (i) following August 16, 2026, the fifth anniversary of our IPO, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time) or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our the shares of Common Stock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.

 

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. 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.

 

We cannot predict if investors will find our Common Stock less attractive because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our share price may be more volatile.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this prospectus, regarding the proposed the Company’s future financial performance and the Company’s strategy, expansion plans, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project,” “strive,” “might,” “possible,” “potential,” “predict” or the negative of such terms or other similar expressions, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about Jet.AI that may cause Jet.AI’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus. The Company cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company.

 

In addition, the Company cautions you that the forward-looking statements regarding the Company, which are included in this prospectus, are subject to the following factors:

 

  Jet.AI’s ability to realize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of Jet.AI to grow and manage growth profitably;
     
  the ability to maintain the listing of the Company’s securities on Nasdaq;
     
  our public securities’ potential liquidity and trading;
     
  our ability to raise financing in the future;
     
  Jet.AI’s success in retaining or recruiting, or changes in, its officers, key employees or directors;
     
  the impact of the regulatory environment and complexities with compliance related to such environment, including compliance with restrictions imposed by federal law on ownership of U.S. airlines;
     
  actors relating to the business, operations and financial performance of Jet.AI (or any of its subsidiaries), including:

 

  the ability to anticipate the impact of the COVID-19 pandemic and its effect on business and financial conditions;

 

  changes in applicable laws or regulations;
     
  the risk that Jet.AI may fail to effectively build scalable and robust processes to manage the growth of its business;
     
  the risk that demand for Jet.AI’s products and services may decline;

 

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  high levels of competition faced by Jet.AI with numerous market participants having greater financial resources and operating experience than Jet.AI;
     
  the possibility that Jet.AI’s business may be adversely affected by changes in government regulations;
     
  the possibility that Jet.AI may not be able to grow its client base;
     
  the failure to attract and retain highly qualified personnel;
     
  the inability to finance aircraft or generate sufficient funds;
     
  the possibility that Jet.AI may not have enough capital and may be required to raise additional capital;
     
  data security breaches, cyber-attacks or other network outages;
     
  the volatility of the prices of blockchain currencies that the Company accepts as payment;
     
  our reliance on third parties;
     
  our inability to adequately protect our intellectual property interests or infringement on intellectual property interests of others;
     
  the possibility that Jet.AI may be adversely affected by other economic, business or competitive factors; and
     
  other factors detailed in the section entitled “Risk Factors.”

 

Should one or more of the risks or uncertainties described in this prospectus and in any document incorporated by reference in this prospectus materialize, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

 

You should read this prospectus with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Jet.AI Inc. (f./k/a Oxbridge Acquisition Corp.) and Jet Token after giving effect to the Business Combination, and related adjustments described in the accompanying notes. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 combines the historical condensed statement of operations of Jet.AI for the year ended December 31, 2022 and the historical condensed consolidated statement of operations of Jet Token for the same periods on a pro forma basis as if the Business Combination had been consummated on January 1, 2022. The unaudited pro forma condensed combined financial information does not include unaudited pro forma condensed combined balance sheets as of September 30, 2023 as the Business Combination was already reflected in the Company’s historical unaudited condensed consolidated balance sheets as of September 30, 2023. Further, the unaudited pro forma condensed combined statements of operations for the three and nine months ended September 30, 2023 were not provided because the historical operating results of Oxbridge Acquisition Corp. were not material and pro forma results would not be materially different from reported results for the periods presented.

 

The historical financial information of Jet.AI was derived from the audited financial statements of Jet.AI as of and for the year ended December 31, 2022, included elsewhere in this prospectus. The historical financial information of Jet Token was derived from the audited financial statements of Jet Token as of and for the year ended December 31, 2022, included elsewhere in this prospectus. This information should be read together with Jet.AI’s and Jet Token’s audited financial statements and related notes, the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this prospectus.

 

The unaudited pro forma condensed financial information was issued by the Company on August 21, 2023 in a Current Report on Form 8-K and does not give effect to events subsequent to that date, including the amendments to the Forward Purchase Agreement and the amendment of the GEM Warrant.

 

Introduction

 

On August 10, 2023, as a result of the previously announced Business Combination Agreement dated February 24, 2023, as amended, Oxbridge domesticated as a Delaware corporation, First Merger Sub merged with and into Jet Token, with Jet Token surviving the First Merger as a wholly owned subsidiary of Jet.AI, and Jet Token (as the surviving entity of the First Merger) merged with and into Second Merger Sub, with Second Merger Sub surviving the Second Merger as a wholly owned subsidiary of Jet.AI. In connection with the Business Combination, security holders of Jet.AI and Jet Token immediately prior to the Closing became security holders of Jet.AI. Following the Business Combination, on August 11, 2023, the Jet.AI Common Stock, the Jet.AI Warrants and the Merger Consideration Warrants began trading on Nasdaq under the new symbols “JTAI,” “JTAIW” and “JTAIZ,” respectively.

 

Prior to completion of the Business Combination, Jet.AI was a blank check company incorporated on April 12, 2021 as a Cayman Islands exempted company for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar transaction with one or more businesses or entities. On August 16, 2021, Jet.AI completed its IPO of 11,500,000 Oxbridge Units, including 1,500,000 Oxbridge Units that were issued pursuant to the underwriters’ exercise of their over-allotment option in full, with each Oxbridge Unit consisting of one Class A Ordinary Share and one warrant, where each whole warrant is exercisable to purchase one Class A Ordinary Share at a price of $11.50 per share, generating gross proceeds to Jet.AI of $115,000,000.

 

Simultaneously with the closing of its IPO, Jet.AI consummated the private placement of 5,760,000 Private Placement Warrants to the Sponsor and Maxim Partners, parent company of the representative to the underwriters in its initial public offering, at an average purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to Jet.AI of $5,760,000. The Private Placement Warrants are identical to the Public Warrants sold as part of the Units in the IPO, except that the Sponsor and Maxim Partners 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. Additionally, the Private Placement Warrants are not redeemable by the Company and are exercisable on a cashless basis so long as they are held by the Sponsor and Maxim Partners or their respective permitted transferees, whereas the public warrants are redeemable and may only be exercised on a cashless basis if the Company calls the public warrants for redemption and elects to require holders to exercise their public warrants on a cashless basis.

 

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Jet.AI also issued an aggregate of 2,875,000 Class B ordinary shares to the Sponsor for an aggregate purchase price of $25,000, or approximately $0.009 per share.

 

Upon the closing of the IPO and the sale of the Private Placement Warrants, an aggregate of $116,725,000 was placed in the Trust Account with Continental Stock Transfer & Trust Company acting as trustee and was available to be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), 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 which invest only in direct U.S. government treasury obligations, as determined by Jet.AI, until the earlier of: (a) the completion of an Initial Business Combination and (b) the distribution of the Trust Account.

 

Jet Token, a Delaware corporation, was founded in 2018 by Michael Winston, its Executive Chairman. Jet Token, directly and indirectly through its subsidiaries, is principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain of Jet Token’s and other’s aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform (the “App”), which functions as a prospecting and quoting platform to arrange private jet travel with third party carriers as well as via Jet Token’s leased and managed aircraft, for Part 135 (whole aircraft charter) and (iv) since January 2023, joint ownership, alongside its existing operating partner, Cirrus, of 380 Software LLC, which supplies the technology to sell charter under Part 380 (individual seats) on the Cirrus fleet of aircraft.

 

Description of the Business Combination

 

The Business Combination was accounted for as a reverse recapitalization in accordance with Generally Accepted Accounting Principles (“GAAP”). Jet Token is considered to be the accounting acquirer, as further discussed in “Note 1 — Basis of Presentation” of this unaudited pro forma condensed combined financial information.

 

In connection with the Domestication and prior to the Effective Time, the total issued and outstanding 799,120 Class A Ordinary Shares and 2,875,000 Class B Ordinary Shares as of June 23, 2023 were converted automatically, on a one-for-one basis, into shares of Jet.AI Common Stock. Each issued and outstanding public warrant and private placement warrant were converted automatically into a Jet.AI Warrant pursuant to the Warrant Agreement, entitling the holder to purchase one share of Jet.AI Common Stock at an exercise price of $11.50.

 

Each outstanding share of Jet Token Common Stock, including each share of Jet Token Preferred Stock that was converted into shares of Jet Token Common Stock immediately prior to the Effective Time, was cancelled and automatically converted into the right to receive (x) the number of shares of Jet.AI Common Stock equal to the Stock Exchange Ratio, and (y) the number of Merger Consideration Warrants equal to the Warrant Exchange Ratio. Each Jet Token Option, whether or not exercisable and whether or not vested, that was outstanding immediately prior to the Effective Time was automatically converted into an option to purchase a number of Jet.AI Options based on the Option Exchange Ratio. Each Jet Token Warrant issued and outstanding immediately prior to the Effective Time was automatically converted into a warrant to acquire (x) a number of shares of Jet.AI Common Stock equal to the Stock Exchange Ratio and (y) a number of Merger Consideration Warrants equal to the Warrant Exchange Ratio. Each Jet Token RSU Award that was outstanding immediately prior to the Effective Time was converted into a Jet.AI RSU Award with respect to a number of RSUs based on the applicable exchange ratio. Upon the consummation of the Business Combination, Oxbridge was immediately renamed “Jet.AI Inc.”

 

Upon the consummation of the Business Combination, 4,523,167 shares of Jet.AI Common Stock and 7,196,375 Merger Consideration Warrants were issued to the Historical Rollover Shareholders in exchange for all outstanding shares of Jet Token Common Stock (including shares of Jet Token Preferred Stock converted in the Conversion). The Company also reserved for issuance up to 3,284,488 shares of Jet.AI Common Stock in respect of Jet.AI Options issued in exchange for outstanding pre-merger Jet Token Options, and 148,950 shares of Jet.AI Common Stock and 237,030 Merger Consideration Warrants in respect of Jet.AI RSU Awards issued in exchange for outstanding pre-merger Jet Token RSU Awards.

 

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In addition, in connection with the Business Combination, Jet.AI proposed and approved the 2023 Jet.AI Omnibus Incentive Plan, which became effective upon closing of the Business Combination, in place of the existing Jet Token Option Plans. The purpose of the Omnibus Incentive Plan is to provide eligible employees, directors, consultants and the founders the opportunity to receive stock-based incentive awards in order to encourage them to contribute materially to Jet.AI’s growth and to align the economic interests of such persons with those of its stockholders. The financial impact of the Omnibus Incentive Plan has not been included in the unaudited pro forma condensed combined financial statement as it cannot be reliably estimated at this stage. See “Executive Compensation — Summary of the Omnibus Incentive Plan” for further information.

 

Forward Purchase Agreement

 

As previously disclosed, on August 6, 2023, Oxbridge entered into an agreement with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Meteora”) (the “Forward Purchase Agreement”) for OTC Equity Prepaid Forward Transactions. The purpose of our entering into this agreement and these transactions was to provide a mechanism whereby Meteora would purchase, and waive their redemption rights with respect to, a sufficient number of Oxbridge Class A ordinary shares to enable Oxbridge to have at least $5,000,000 of net tangible assets, a non-waivable condition to the Closing of the Business Combination and to provide the Company with cash to meet a portion of the transaction costs associated with the Business Combination. Capitalized terms used herein but not otherwise defined have the meanings ascribed to such terms in the Forward Purchase Agreement.

 

Pursuant to the terms of the Forward Purchase Agreement, Meteora agreed to purchase up to 1,186,952 of Oxbridge’s Class A ordinary shares concurrently with the Closing. The shares initially held by Meteora consisted of 663,556 shares it purchased from third parties through a broker in open market transactions or by reversing previously submitted redemption requests and waived its redemption rights with respect to these shares. Furthermore, Meteora purchased 247,756 “Additional Shares” directly from us in a private placement for a per share price of $10.00 pursuant to a subscription agreement entered into on August 6, 2023 (the “FPA Funding Amount PIPE Subscription Agreement”). Of the shares it purchased, 50,000 shares represented Share Consideration to Meteora under the Forward Purchase Agreement and are not subject to the terms of the Forward Purchase Agreement, meaning that Meteora is free to sell such shares and retain all proceeds therefrom. Netting out the Share Consideration, the total “Number of Shares” initially subject to the terms of the Forward Purchase Agreement was 861,312, comprising 613,556 “Recycled Shares” and 247,756 Additional Shares. Following the Closing of the Business Combination, approximately $7.4 million remained in the trust account pursuant to the Forward Purchase Agreement. We paid to Meteora $6,805,651, representing amounts payable by us to Meteora under the Forward Purchase Agreement, net of the aggregate purchase price of the total number of Additional Shares issued to Meteora under the FPA Funding Amount PIPE Subscription Agreement; and Meteora paid us one-half (1/2) of the Prepayment Shortfall, or $625,000.

 

39
 

 

Maxim Settlement Agreement

 

On August 10, 2023, the Company entered into a settlement agreement (“Maxim Settlement Agreement”) with Maxim Group LLC, the underwriter for the Company’s initial public offering (“Maxim”). Pursuant to the Maxim Settlement Agreement, the Company issued 270,000 shares of Jet.AI Common Stock to settle the payment obligations of the Company under the underwriting agreement dated on or about August 11, 2011, by and between the Company and Maxim, which shares of Jet.AI Common Stock are subject to a Registration Rights Agreement. The Company also issued 1,127 shares of Series A Convertible Preferred Stock in an amount equal in value to $1,127,000 (the “Series A Preferred Shares”). The shares of Jet.AI Common Stock issuable upon conversion of the Series A Preferred Shares are subject to the Registration Rights Agreement.

 

The following table summarizes the pro forma shares of Jet.AI Common Stock outstanding on August 10, 2023 immediately following the Effective Time, excluding the potential dilutive effect of exercise of Jet.AI Warrants and Merger Consideration Warrants:

 

   No. of Shares of
Jet.AI Common
Stock
   % of total Jet.AI
Common Stock
 
Historical Rollover Shareholders   4,523,167    51.9 
Public Shareholders (1)   799,120    9.2 
Initial Shareholders (2)   2,875,000    33.0 
PIPE Investors (3)   247,756    2.8 
Maxim (4)   270,000    3.1 
Total   8,715,043    100.0 

 

(1) Reflects actual redemptions of 502,832 shares of Oxbridge Class A Ordinary Shares in connection with the Business Combination.
(2) Reflects shares of Oxbridge’s Class B Ordinary Shares held by the Sponsor that converted on a one-for-one basis into shares of Jet.AI Common Stock in connection with the Business Combination and Domestication.
(3) Reflects the issuance of 247,756 shares of Jet.AI Common Stock to Meteora under that certain FPA Funding Amount PIPE Subscription Agreement dated August 6, 2023.
(4) Reflects the issuance of 270,000 shares of Jet.AI Common Stock to settle the payment obligations of the Company under the underwriting agreement with Maxim.

 

The following unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022, are based on the historical financial statements of Jet.AI and Jet Token. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

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Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2022

 

(in thousands, except share and per share amounts)

 

   Jet Token, Inc.
(Historical)
   Jet.AI Inc. (f/k/a Oxbridge
Acquisition Corp.)
(Historical)
   Transaction
Accounting
Adjustments
      Pro Forma
Combined
 
                    
Revenues  $21,863   $-   $-      $21,863 
Cost of revenues   19,804    -    -       19,804 
                        
Gross profit   2,059    -    -       2,059 
                        
Operating Expenses:                       
General and administrative   9,231    487    -       9,718 
Sales and marketing   427    -    -       427 
Research and development   137    -    -       137 
Total operating expenses   9,795    487    -       10,282 
                        
Operating loss   (7,736)   (487)   -       (8,223)
                        
Other (income) expense:                       
Interest income   -    (964)   964   AA   - 
Change in fair value of warrant liabilities   -    (6,699)   6,699   BB    -
Total other (income) expense   -    (7,663)   7,663       -
                        
(Loss) income before provision for income taxes   (7,736)   7,176    (7,663)      (8,223)
                        
Provision for income taxes   2    -    -       2 
                        
Net (loss) income  $(7,738)  $7,176   $(7,663)     $(8,225)
                        
Weighted average shares outstanding – basic and diluted   122,747,555    13,133,764            7,472,579 
Net (loss) income per share - basic and diluted  $(0.06)  $0.55           $(1.10)

 

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Notes to Unaudited Pro Forma Condensed Combined Financial Information

 

Note 1. Basis of Presentation

 

The Business Combination is expected to be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Jet.AI Inc. (f/k/a Oxbridge Acquisition Corp, Inc.) (“Jet.AI”) has been treated as the “accounting acquiree” and Jet Token, Inc. (“Jet Token”) as the “accounting acquirer” for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination has been treated as the equivalent of Jet Token issuing shares for the net assets of Jet.AI, followed by a recapitalization. The net assets of Jet Token will be stated at historical cost. Operations prior to the Business Combination will be those of Jet Token.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 gives pro forma effect to the Business Combination as if it had been completed on January 1, 2022. This period is presented on the basis of Jet Token as the accounting acquirer.

 

The pro forma adjustments reflecting the consummation of the Business Combination and related transactions are based on certain currently available information and certain assumptions and methodologies that the Company believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the difference may be material. The Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination. The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and related transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the Company. They should be read in conjunction with the historical financial statements and notes thereto of Jet Token, Inc. and Jet.AI included in the prospectus, and other financial information included elsewhere.

 

Note 2. Accounting Policies

 

Upon consummation of the Business Combination, management is performing a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

 

Note 3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only.

 

The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information.

 

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-combination company filed consolidated income tax returns during the periods presented. The pro forma basic and diluted loss per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the number of the Company’s shares outstanding, assuming the Business Combination and related transactions occurred as of the beginning of the period presented.

 

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Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for year ended December 31, 2022 are as follows:

 

AA. Reflects elimination of investment income on the Trust Account.

BB. Reflects the elimination of the change in fair value of warrant liabilities.

 

Note 4. Net Loss per Share

 

Net loss per share was calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2022. As the Business Combination and related transactions are being reflected as if they had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable in the Business Combination have been outstanding for the entirety of all periods presented.

 

The unaudited pro forma condensed combined financial information has been prepared based on the following information (in thousands, except share and per share amounts):

 

    For the
Year Ended
 
    December 31, 2022  
       
Pro forma net loss   $ (8,225 )
Weighted average shares outstanding of common stock     7,472,579  
Net loss per share - basic and diluted   (1.10 )
         
Excluded securities: (1)        
Assumed options     3,284,488  
Merger Consideration Warrants issued to Jet Token Shareholders     7,196,375  
Public Warrants     11,489,334  
Private Warrants     5,760,000  
Shares issued to Restricted Stock Unit Awards     148,950  
Merger Consideration Warrants issued to Restricted Stock Unit Awards     237,020  

 

 

(1) The potentially dilutive outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive, issuance or vesting of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the periods presented.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis provides information which Jet.AI’s management believes is relevant to an assessment and understanding of its consolidated results of operations and financial condition. You should read the following discussion and analysis of Jet.AI’s financial condition and results of operations together with the historical audited annual consolidated financial statements as of and for the years ended December 31, 2022 and 2021 and unaudited consolidated financial statements as of September 30, 2023 and the three and nine months ended September 30, 2023 and 2022, and the related notes that are included elsewhere in this prospectus. This discussion and analysis should also be read together with the unaudited pro forma condensed combined financial information for the year ended December 31, 2022 and the accompanying notes thereto included elsewhere in this prospectus. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Certain of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to plans and strategy for Jet.AI’s business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors,” Jet.AI’s actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this prospectus. We assume no obligation to update any of these forward-looking statements. Please also see the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

 

Percentage amounts included in this prospectus have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in the consolidated financial statements included elsewhere in this prospectus. Certain other amounts that appear in this prospectus may not sum due to rounding.

 

Business Combination

 

As discussed under “Prospectus Summary - Background” above, on August 10, 2023, Oxbridge Acquisition Corp. (“Oxbridge”), consummated a business combination pursuant to a Business Combination Agreement and Plan of Reorganization, as amended by Amendment No. 1 to the Business Combination Agreement, dated as of May 11, 2023 (the “Business Combination Agreement”) among Oxbridge, 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 the Business Combination Agreement, Oxbridge redomiciled as a Delaware corporation and was immediately renamed Jet.AI, Inc., and promptly thereafter, (a) First Merger Sub merged with and into Jet Token with Jet Token surviving the merger as a wholly owned subsidiary of Jet.AI Inc. and (b) Jet Token merged with and into Second Merger Sub (each merger and all other transactions contemplated by the Business Combination Agreement, the “Business Combination”).

 

As a result of the Business Combination:

 

  the then issued and outstanding Class A ordinary shares of Oxbridge were converted, on a one-for-one basis, into shares of common stock, par value $0.0001 per share of Jet.AI, Inc. (“Common Stock”),

 

  the then issued and outstanding Class B ordinary share of Oxbridge were converted, on a one-for-one basis, into shares of Common Stock of Jet.AI. Inc.,

 

  the then issued and outstanding Oxbridge warrants were converted into an equal number of warrants, each exercisable for one share of Common Stock (“Jet.AI Warrants”),

 

  the then issued and outstanding Oxbridge Units were converted into an equal number of Jet.AI Units, each consisting of one share of Common Stock and one Jet.AI Warrant,

 

  the outstanding shares of Jet Token common stock, including all shares of Jet Token preferred stock that converted into shares of Jet Token common stock, were cancelled and converted into the right to receive the number of shares of Common Stock and the number of warrants (“Merger Warrants”) based on the respective exchange rations set forth in the Business Combination Agreement,

 

  all outstanding Jet Token options for Common Stock , whether or not exercisable and whether or not vested, were converted into options to purchase Common Stock based on the applicable exchange ratio determined in accordance with the Business Combination Agreement,

 

  all outstanding Jet Token warrants were converted into warrants to acquire the number of shares of Common Stock and Merger Warrants based on the applicable exchange ratio set forth in the Business Combination Agreement, and

 

  the outstanding Jet Token restricted stock unit awards were converted into Jet.AI restricted stock unit awards based on the applicable exchange ratio determined in accordance with the Business Combination Agreement.

 

As a result of the Business Combination, Jet.AI Inc. has one class of Common Stock, listed on Nasdaq under the ticker symbol “JTAI”, and two classes of warrants the Jet.AI Warrants and the Merger Warrants, listed on Nasdaq under the ticker symbols “JTAIW” and “JTAIZ” respectively.

 

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The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP, whereby Oxbridge is treated as the acquired company and Jet Token is treated as the acquirer (the “Reverse Recapitalization”). Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Jet Token issuing stock for the net assets of Oxbridge, accompanied by a recapitalization. The net assets of Oxbridge were stated at historical cost, with no goodwill or other intangible assets recorded.

 

The consolidated assets, liabilities, and results of operations prior to the Reverse Recapitalization are those of Jet Token. The shares and corresponding capital amounts and losses per share, prior to the Reverse Recapitalization, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination.

 

Jet Token has been determined to be the accounting acquirer in the Business Combination based on the following predominate factors:

 

  Jet Token’s existing stockholders have the greatest voting interest in the combined entity;
     
  Jet Token existing stockholders have the ability to nominate a majority of the initial members of combined entity’s board;
     
  Jet Token’s senior management is the senior management of the combined entity
     
  Jet Token is the larger entity based on historical operating activity and has the larger employee base; and
     
  The post-combination company has assumed a Jet Token branded name: “Jet.AI Inc.”

 

References in this MD&A to “Jet.AI” or “the Company” refer to Jet Token Inc. prior to the consummation of the Business Combination.

 

Overview

 

Jet.AI, a Delaware corporation, was founded in 2018 by Michael Winston, its Executive Chairman. The Company, directly and indirectly through its subsidiaries, has been principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain of the Company’s and other’s aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform (the “App”), which functions as a prospecting and quoting platform to arrange private jet travel with third party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet aircraft by Cirrus, (v) aircraft brokerage and (vi) service revenue from the monthly management and hourly operation of customer aircraft.

 

Under the Company’s fractional ownership program, a customer purchases an ownership share in a jet which guarantees the customer access to the jet for a preset number of hours per year. The fractional ownership program typically consists of a down payment, one or more progress payments, a payment on delivery, and in future periods will include a Monthly Management Fee (MMF) and an Occupied Hourly Fee (OHF) during the term of the fractional owner’s management agreement. The sale of a fractional interest or whole aircraft is recognized at the time of aircraft delivery, MMF revenue is generally fixed and would be recognized monthly over the life of the management agreement, while OHF revenue is typically variable and would be recognized monthly based on the number of hours flown by the customer in the period. The Company’s jet card program provides the customer with a preset number of hours of private jet access at a fixed hourly rate over the agreement term (generally a year), typically paid 100% upfront. The Company also receives commission-based revenue for sales of jet cards on behalf of Cirrus and engages in whole aircraft brokerage. The Company recognizes revenue from sales of its own jet cards and from third-party charters generated through the Company’s App, upon transfer of control of its promised services, which generally occurs upon completion of a flight, or, in the case of unused hours under the jet card program, at the end of the contract term. The Company recognizes its share of the revenue from the sales of Cirrus jet cards upon payment by the program member.

 

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Results of Operations

 

The following table sets forth our results of operations for the periods indicated:

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
   For the Year Ended
December 31,
 
   2023   2022   2023   2022   2022   2021 
                         
Revenues  $3,367,189   $11,909,588   $8,035,505   $19,650,567   $21,862,728   $1,112,195 
                               
Cost of revenues   3,196,748    10,905,766    8,140,905    17,833,726    19,803,739    1,383,100 
                               
Gross profit (loss)   170,441    1,003,822    (105,400)   1,816,841    2,058,989    (270,905)
                               
Operating Expenses:                              
General and administrative (including stock-based compensation of $2,669,071, $2,060,703, $5,424,158, and $4,431,950, $6,492,653, and $12,690,373, respectively)   4,231,142    2,835,745    8,834,864    6,255,723    9,230,789    14,879,597 
Sales and marketing   156,991    118,301    380,699    281,442    426,728    704,724 
Research and development   48,823    46,905    113,778    93,077    137,278    117,391 
Total operating expenses   4,436,956    3,000,951    9,329,341    6,630,242    9,794,795    15,701,712 
                               
Operating loss   (4,266,515)   (1,997,129)   (9,434,741)   (4,813,398)   (7,735,806)   (15,972,617)
                               
Other (income) expense:                              
Interest expense   24,095    -    24,095    -    -    - 
Other income   (51)   -    (51)   (3)   (3)   (207,368)
Total other (income) expense   24,044    -    24,044    (3)   (3)   (207,368)
              24,044                
Loss before provision for income taxes   (4,290,559)   (1,997,129)   (9,458,785)   (4,813,398)   (7,735,803)   (15,765,249)
                               
Provision for income taxes   -    -    -    800    2,400    - 
                               
Net Loss  $(4,290,559)  $(1,997,129)  $(9,458,785)  $(4,814,198)  $(7,738,203)  $(15,765,249)
                               
Weighted average shares outstanding - basic and diluted   7,018,212    4,424,267    5,354,931    4,398,303    122,747,555    118,503,131 
Net loss per share - basic and diluted  $(0.61)  $(0.45)  $(1.77)  $(1.09)  $(0.06)  $(0.13)

 

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Three Months Ended September 30, 2023 and 2022

 

Revenues

 

Revenues for the third quarter of 2023 totaled $3.4 million, a $8.5 million decrease from 2022’s third quarter revenues of $11.9 million and were comprised of $775,000 in services revenue from the management of customers’ aircraft, $797,000 in software-related revenue, $732,000 in Jet Card revenue for hours flown and other charges based on hours flown, and $1.1 million in revenue from the chartering of our HondaJets by our operating partner Cirrus.

 

The primary reason for this decrease in revenue was due to the absence of aircraft available for fractional sale in the third quarter of 2023 compared with the successful fractionalization of the Company’s last two HondaJets during the third quarter of 2022. The decrease in revenue in the third quarter of 2023 was offset by additional service revenue of $775,000 arising from the Company’s entering into an agreement to manage a customer’s aircraft in the fourth quarter of 2022.

 

The following table sets forth a breakout of revenue components by subcategory for the three months ended September 30, 2023 and 2022.

 

   Three Months Ended 
   September 30, 
   2023   2022 
         
Software App and Cirrus Charter  $1,860,795   $341,557 
Jet Card and Fractional Programs   731,716    568,031 
Management and Other Services   774,678    - 
Fractional/Whole Aircraft Sales   -    11,000,000 
   $3,367,189   $11,909,588 

 

The Company recognized $797,000 in revenue related to App-generated Services and software revenues related to charter bookings made through its App in the third quarter of 2023, an increase of $678,000 and reflected additional brokerage staff, increased marketing and greater awareness of the Company. This compares to revenues totaling $119,000 in the 2022 period.

 

During the third quarter of 2023, the Company sold 122 prepaid flight hours under its jet card and fractional programs, amounting to $713,000, and recognized $709,000 of revenue for 113 flight hours flown or forfeited, as well as additional charges. These additional charges represent primarily charges for cost reimbursements such as a fuel component adjustment to adjust for changes in fuel prices relative to the jet card and fractional contracts’ base fuel price and reimbursement of federal excise taxes. Prepaid flight hours are recognized as revenue as the flight hours are used or forfeited. At September 30, 2023, the Company had recorded deferred revenue of $1.2 million on its consolidated balance sheet representing prepaid flight hours for which the related travel had not yet occurred.

 

In the third quarter of 2022, the Company sold 50 prepaid flight hours, amounting to $273,000, and recognized $527,000 of revenue for 93 flight hours flown or forfeited, as well as additional charges. At September 30, 2022, the Company had recorded deferred revenue of approximately $1.2 million.

 

The increase in flight hours flown period over period is a direct result of the increased number of the Company’s aircraft.

 

The following table details the flight hours sold and flown or forfeited, as well as the associated deferred revenues and recognized revenues, respectively, and additional charges for the third quarter of 2023 and 2022:

 

   For the three months ended September 30, 
   2023   2022 
Deferred revenue at the beginning of the period (1)  $1,099,545   $1,383,213 
Prepaid flight hours sold          
Amount  $712,769   $272,875 
Total Flight Hours   122    50 
           
Prepaid flight hours flown          
Amount  $649,077   $479,010 
Total flight hours   113    93 
           
Additional charges  $59,760   $48,361 
Total flight hour revenue  $708,837   $527,371 
           
Deferred revenue at the end of the period (2)  $1,163,237   $1,177,078 

 

(1) Deferred revenue at June 30, 2023 and 2022 also includes $10,301 and $0, respectively, with respect to customer prepayments associated with software app transactions.
(2) Deferred revenue at September 30, 2023 and 2022 also includes $268,889 and $25,534, respectively, with respect to customer prepayments associated with software app transactions.

 

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In addition to its software App and jet card revenues, the Company also generates revenue through the direct chartering of its HondaJet aircraft by Cirrus. During the third quarter of 2023 this revenue amounted to approximately $1.1 million, an increase of $840,000, or 377.6% from the prior year. The increased revenue was a direct result of the greater number of HondaJets operated in the third quarter of 2023 and the addition of the managed Citation CJ4.

 

Cost of revenues

 

Our cost of revenue is comprised of payments to Cirrus for the maintenance and management of our fleet aircraft, commissions to Cirrus for their arranging for charters on our aircraft, aircraft lease expense, federal excise tax relating to jet card and third-party charters, and payments to third-party aircraft operators for both charter flights booked through our App, as well as the cost of subcharters for covering jet card flights when our HondaJets were unavailable. The management of our aircraft by Cirrus covers all our aircraft regardless of whether the aircraft are used for program flight hours or charter flights and includes expenses such as fuel, pilot wages and training costs, aircraft insurance, maintenance and other flight operational expenses.

 

In the third quarter of 2022, the Company operated 1 HondaJet as compared to the 3 HondaJets and 1 CJ4 that it operated in the 2023 period.

 

As a result of its increased fleet and the increase in jet card and Cirrus charter flight activity, as well as the startup costs relating to the introduction of the CJ4 to its fleet, costs related to the operation of these aircraft and payments to Cirrus for their management increased $1.0 million from $0.4 million in the third quarter of 2022 to $1.4 million in 2023 and aircraft lease payments increased $154,000 from $167,000 in the third quarter of 2022 to $321,000 in 2023. The Company also incurred third-party charter costs of approximately $1.4 million in the third quarter of 2023, a $1.1 million increase over 2022, in order to fulfill a greater number of App-generated charter bookings, as well as subcharters used for covering jet card flights when our HondaJets were unavailable. Merchant fees and federal excise tax relating to charter flights of $41,000 in the third quarter of 2023 were a $6,000 reduction as compared to $47,000 in the third quarter of 2022.

 

In total, it cost $1.8 million to operate these 4 aircraft in the third quarter of 2023, compared to $0.7 million to operate 1 aircraft in the third quarter of 2022.

 

Gross profit (loss)

 

The resulting gross profit totaled approximately $170,000 for the third quarter of 2023, compared to $1.0 million for the third quarter of 2022. The gross profit in the third quarter of 2023 was largely driven by greater utilization of the Company’s aircraft, offset by increased subcharter costs relating to flights performed by third-party operators for certain of our jet card customers. The 2022 results were positively affected by the fractionalization of the last two of the Company’s HondaJets. Excluding the profit from these fractionalizations, gross profit for the third quarter of 2022 would have been a loss of $26,000.

 

Total Operating Expenses

 

In the third quarter of 2023, the Company’s operating expenses increased by approximately $1.4 million over the prior year comparable period due to an approximate $1.4 million increase in general and administrative expenses, $37,000 increase in sales and marketing expenses and slightly higher research and development costs. Excluding non-cash stock-based compensation of $2.7 million and $2.1 million in the third quarter of 2023 and 2022, respectively, general and administrative expenses rose by approximately $787,000 primarily due to an increase in professional service expenses of $623,000 related to our Business Combination, Directors and Officers Insurance costs of $98,000, $16,000 in higher rent and increased wages of $79,000, primarily due to increased commissions compensation payable on jet card sales.

 

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The Company’s sales and marketing expenses increased by about $39,000 to $157,000 in the third quarter of 2023 from $118,000 in the third quarter of 2022, as the Company continued the acceleration of its sales and marketing spending upon aircraft delivery and the associated increase in marketable jet card inventory. These expenses are mainly linked to promoting the Company and its programs.

 

Research and development expenses were essentially unchanged at $49,000 in the third quarter of 2023 from $47,000 in the third quarter of 2022, due to continuing refinement of the App, as well as continued development work on additional software offerings.