Asfiled with the Securities and Exchange Commission on September 8, 2023

 

RegistrationNo. 333-_____

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

 

REGISTRATIONSTATEMENT

UNDERTHE SECURITIES ACT OF 1933

 

Jet.AIInc.

(Exactname 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.)

 

10845Griffith Peak Dr.

Suite200

LasVegas, Nevada 89135

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

 

MikeWinston

10845Griffith Peak Dr.

Suite200

LasVegas, Nevada 89135

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

 

Copiesto:

 

Heidi Mortensen

Jeanne Campanelli

CrowdCheckLaw LLP

70012th Street NW, Suite 700

Washington,D.C. 20005

(703) 548-7263

 

Assoon as practicable after the effective date of this Registration Statement.

(Approximatedate of commencement of proposed sale to the public)

 

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

 

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

 

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

 

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

 

Indicateby 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,” “smallerreporting 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	☒

 

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

 

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

 

 

 

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

 

Subjectto Completion, Dated September 8, 2023

 

PRELIMINARYPROSPECTUS

 

Jet.AIInc.

 

 

Upto 7,763,127 Shares of Common Stock
Up to 13,668,781 Shares of Common Stock Issuable Upon
Exercise of Warrants

Up to 125,000 Shares of Common Stock UponConversion of Shares of Preferred Stock

 

 

Thisprospectus relates to (i) the offering and resale by certain selling stockholders identified in this prospectus of up to 1,163,127shares of our common stock, par value $0.0001 per share (“Common Stock”), (ii) the issuance by us of 2,179,447 sharesof Common Stock pursuant to the exercise of the GEM Warrant (as defined herein) and the resale of such shares by GEM (as defined herein),(iii) the issuance by us of up to 125,000 shares of Common Stock upon conversion of shares of our Series A Preferred Shares (as definedherein) and the resale of such shares by Maxim Partners (as defined herein), (iv) the issuance by us of up to 6,600,000 sharesof Common Stock that we may, in our discretion, elect to issue and sell to GEM, from time to time after the date of this prospectus,pursuant to the Share Purchase Agreement (as defined herein) in which GEM has committed to purchase from us, at our direction,up to $40,000,000 of our Common Stock, subject to the terms and conditions contained in the Share Purchase Agreement, and the resaleof such shares by GEM, and (v) the issuance by us of up to 11,489,334 shares of Common Stock upon the exercise of outstanding warrantsto purchase our common stock (the “JTAIW Warrants” and, together with the GEM Warrant, the “Warrants”).

 

Weare registering up to 10,067,574 shares of Common Stock for resale pursuant to the selling stockholders’ registration rightsunder certain agreements between us and the selling stockholders. Our registration of the securities covered by this prospectus doesnot mean that the selling stockholders will offer or sell any of the shares of Common Stock. The selling stockholders acquired thesesecurities in private transactions exempt from registration under the Securities Act of 1933, as amended (the “SecuritiesAct”).

 

Wewill not receive any proceeds from the sale of the shares by the selling stockholders although we will receive the exercise price ofany warrants not exercised by GEM on a cashless exercise basis. We will bear all fees and expenses incident to our obligationto register the shares of Common Stock. For a list of the selling stockholders, see the section entitled “Selling Stockholders”on page 88.

 

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

 

OurCommon Stock is traded on Nasdaq under the symbol “JTAI.” On September 7, 2023, the last reported sale price of sharesof our common stock on Nasdaq was $3.65.

 

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

 

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

 

Investingin our common stock involves risks. Before buying any shares of common stock, you should review carefully the risks and uncertaintiesdescribed under the heading “Risk Factors” beginning on page 16 of this prospectus and in the documents incorporated by referenceinto this prospectus.

 

Neitherthe Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passedupon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

Thedate of this prospectus is                    , 2023

 

 

TABLEOF CONTENTS

 

	Page
ABOUT THIS PROSPECTUS	3
CERTAIN DEFINED TERMS	4
PROSPECTUS SUMMARY	8
THE OFFERING	15
RISK FACTORS	16
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	31
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION	33
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43
BUSINESS	57
DIRECTORS AND EXECUTIVE OFFICERS	66
EXECUTIVE COMPENSATION	73
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS	84
USE OF PROCEEDS	86
DETERMINATION OF OFFERING PRICE	86
DIVIDEND POLICY	86
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	86
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	87
SELLING STOCKHOLDERS	88
PLAN OF DISTRIBUTION	89
DESCRIPTION OF CAPITAL STOCK	90
LEGAL MATTERS	95
EXPERTS	95
WHERE YOU CAN FIND MORE INFORMATION	95
INDEX TO FINANCIAL STATEMENTS	F-1

 

 

ABOUTTHIS PROSPECTUS

 

Thisprospectus 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 securitiesoffered by them described in this prospectus. This prospectus also relates to the issuance by us of the shares of common stock issuableupon the exercise of the Warrants. We will not receive any proceeds from the sale of shares of common stock underlying the Warrants pursuantto this prospectus, except with respect to amounts received by us upon the exercise of the Warrants for cash.

 

Wemay also file a prospectus supplement or post-effective amendment to the registration statement of which this prospectus forms a partthat 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 informationin this prospectus and the applicable prospectus supplement or post-effective amendment, you should rely on the prospectus supplementor 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-effectiveamendment, 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 CanFind More Information.”

 

Youshould rely only on the information contained in this prospectus. Neither we nor the selling stockholders have authorized anyone to provideyou 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 stockholderstake no responsibility for and can provide no assurance as to the reliability of any other information that others may give you. If anyoneprovides you with different or inconsistent information, you should not rely on it. You should assume that the information appearingin this prospectus, any post-effective amendment and any applicable prospectus supplement to this prospectus is accurate only as of thedate 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 thereofis not permitted. You should not assume that the information appearing in this prospectus any post-effective amendment and any applicableprospectus 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 beforemaking an investment decision.

 

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

 

OnAugust 10, 2023 (the “Closing Date”), we consummated the previously announced “Business Combination” pursuantto the Business Combination Agreement and Plan of Reorganization, dated February 24, 2023, as amended by Amendment No. 1 to the BusinessCombination Agreement, dated as of May 11, 2023 (the “Business Combination Agreement”), by and among the Company, OXAC MergerSub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“First Merger Sub”), SummerlinAviation 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 Delawarecorporation (“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”).

 

 

CERTAINDEFINED TERMS

 

Unlessthe 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;

 

 

●	“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;

 

 

●	“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;
●	“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;
●	“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 $3,00,000 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” 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);

 

 

●	“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;
●	“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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RISKFACTORS

 

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

 

RisksRelated to the Company’s Business

 

TheCompany is an early stage company with a limited operating history.

 

TheCompany’s predecessor operating company Jet Token, Inc. was formed on June 4, 2018. Accordingly, the Company has a limited historyupon which an investor can evaluate its performance and future prospects. The Company has a short history and a limited number of aircraftand 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 itsgrowth and the entry of competitors into the market. The Company has incurred net losses to date and anticipates continuing net lossesfor the foreseeable future. The Company cannot assure you that it will be profitable in the foreseeable future or generate sufficientprofits to pay dividends. If the Company does achieve profitability, the Company cannot be certain that it will be able to sustain orincrease such profitability. The Company has not consistently generated positive cash flow from operations, and it cannot be certainthat it will be able to generate positive cash flow from operations in the future. To achieve and sustain profitability, the Companymust accomplish numerous objectives, including broadening and stabilizing its sources of revenue and increasing the number of payingmembers to its service. Accomplishing these objectives may require significant capital investments. The Company cannot be assured thatit will be able to achieve these objectives.

 

TheCompany may not be able to successfully implement its growth strategies.

 

TheCompany’s growth strategies include, among other things, expanding its addressable market by opening up private aviation to non-membersthrough our marketplace, expanding into new domestic markets and developing adjacent businesses. The Company faces numerous challengesin 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 offeringsand launch new products and service offerings. Although the Company devotes significant financial and other resources to the expansionof its products and service offerings, its efforts may not be commercially successful or achieve the desired results. The Company’sfinancial results and its ability to maintain or improve its competitive position will depend on its ability to effectively gauge thedirection of its key marketplaces and successfully identify, develop, market and sell new or improved products and services in thesechanging marketplaces. The Company’s inability to successfully implement its growth strategies could have a material adverse effecton its business, financial condition and results of operations and any assumptions underlying estimates of expected cost savings or expectedrevenues may be inaccurate.

 

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

 

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

 

●

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

 

 

	●	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.

 

TheCompany’s business is primarily focused on certain targeted geographic regions, making it vulnerable to risks associated with havinggeographically concentrated operations.

 

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

 

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

 

Asis customary in the aviation industry, the Company is reliant on external financing for the acquisition of its aircraft and is likelyto need additional financing in the future in order to grow its fleet. The Company has acquired one HondaJet under a leasing arrangementdescribed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If the Companyis 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 haveaccess to external financing for future aircraft, for whatever reason, including reasons relating to the Company’s business orprospects or the broader economy, the Company may not be in a position to grow and/or survive.

 

 

TheCompany may not have enough capital as needed and may be required to raise more capital and the terms of subsequent financings may adverselyimpact your investment.

 

TheCompany 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 Companymay issue debt or equity securities to raise funds, modify its growth plans, or take some other action. Interest on debt securities couldincrease costs and negatively impact operating results and convertible debt securities could result in diluting your interest in theCompany. If the Company is unable to find additional capital on favorable terms, then it is possible that it will choose to cease itssales activity. In that case, the only asset remaining to generate a return on your investment could be the Company’s intellectualproperty. Even if the Company is not forced to cease its sales activity, the unavailability of capital could result in the Company performingbelow expectations, which could adversely impact the value of your investment.

 

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

 

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

 

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

 

TheCompany has relied on a third-party app developer to develop the initial versions of its App and the Company may continue to rely onthird parties for future development of portions of any new or revised App. In place of a third-party app developer, the Company reliesboth on internal development and freelance contractors supervised by the Company’s Chief Technology Officer. The Company intendsto 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 notlimited 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.

 

 

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

 

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

 

TheCompany’s platform’s continuing and uninterrupted performance is critical to its success. That platform is dependent on theperformance and reliability of Internet, mobile, and other infrastructure services that are not under the Company’s control. Whilethe Company has engaged reputable vendors to provide these products or services, the Company does not have control over the operationsof the facilities or systems used by its third-party providers. These facilities and systems may be vulnerable to damage or interruptionfrom natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, pandemics, and similar events or acts ofmisconduct. In addition, any changes in one of the Company’s third-party service provider’s service levels may adverselyaffect the Company’s ability to meet the requirements of its customers. While the Company believes it has implemented reasonablebackup and disaster recovery plans, the Company has experienced, and expects that in the future it will experience, interruptions, delaysand outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or softwareerrors, website hosting disruptions, capacity constraints, or external factors beyond the Company’s control. Sustained or repeatedsystem 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 theCompany expands its products and service offerings. Any negative publicity or user dissatisfaction arising from these disruptions couldharm the Company’s reputation and brand, may adversely affect the usage of the Company’s offerings, and could harm the Company’sbusiness, financial condition and results of operation.

 

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

 

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

 

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

 

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

 

 

TheCompany protects its intellectual property through a combination of trademarks, domain names and other measures. The Company has registeredits 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 thevalue of its intellectual property. In addition, it may be possible for other parties to copy or reverse engineer the Company’sapplications or other technology offerings. Moreover, the Company’s proprietary algorithms, data analytics engines, or other softwareor trade secrets may be compromised by third parties or the Company’s employees, which could cause the Company to lose any competitiveadvantage it may have from them.

 

Inaddition, the Company’s business is subject to the risk of third parties infringing its intellectual property. The Company maynot always be successful in securing protection for, or identifying or stopping infringements of, its intellectual property and it mayneed to resort to litigation in the future to enforce its rights in this regard. Any such litigation could result in significant costsand a diversion of resources. Further, such enforcement efforts may result in a ruling that the Company’s intellectual propertyrights are unenforceable.

 

Moreover,companies in the aviation and technology industries are frequently subject to litigation based on allegations of intellectual propertyinfringement, misappropriation, or other violations. As the Company expands and raises its profile, the likelihood of intellectual propertyclaims being asserted against it grows. Further, the Company may acquire or introduce new technology offerings, which may increase theCompany’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 defendingsuch a claim, it may be required to pay substantial damages or could be subject to an injunction or agree to a settlement that may preventit from using its intellectual property or making its offerings available to customers. Some intellectual property claims may requirethe Company to seek a license to continue its operations, and those licenses may not be available on commercially reasonable terms ormay significantly increase the Company’s operating expenses. If the Company is unable to procure a license, it may be requiredto develop non-infringing technological alternatives, which could require significant time and expense. Any of these events could adverselyaffect the Company’s business, financial condition, or operations.

 

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

 

Inorder to operate its business, achieve its goals, and remain competitive, the Company continuously seeks to identify and devise, investin, 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.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

RisksRelated to the Company’s Operating Environment

 

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

 

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

 

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

 

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

 

 

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

 

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

 

Theprivate 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, willingnessand ability to serve specific airports or regions, and investment requirements. The Company plans to compete against private jet charterand fractional jet companies as well as business jet charter companies. Both the private jet charter companies and the business jet chartercompanies have numerous competitive advantages that enable them to attract customers. Jet.AI’s access to a smaller aircraft fleetand regional focus puts it at a competitive disadvantage, particularly with respect to its appeal to business travelers who want to traveloverseas.

 

Thefractional private jet companies and many of the business jet charter companies have access to larger fleets of aircraft and have greaterfinancial 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 tosustain profitable operations.

 

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

 

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

 

Aviationbusinesses 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 changingsecurity 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.

 

Likeother aviation companies, the Company’s business is affected by factors beyond its control, including air traffic congestion atairports, airport slot restrictions, air traffic control inefficiencies, natural disasters, adverse weather conditions, increased andchanging security measures, changing regulatory and governmental requirements, new or changing travel-related taxes, or the outbreakof disease. Factors that cause flight delays frustrate passengers and increase operating costs and decrease revenues, which in turn couldadversely affect profitability. In the United States, the federal government singularly controls all U.S. airspace, and aviation operatorsare 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 oftenrely on outdated technologies that routinely overwhelm the system and compel aviation operators to fly inefficient, indirect routes resultingin delays and increased operational cost. In addition, there are currently proposals before Congress that could potentially lead to theprivatization of the United States’ air traffic control system, which could adversely affect the Company’s business.

 

 

Adverseweather conditions and natural disasters, such as hurricanes, winter snowstorms or earthquakes, can cause flight cancellations or significantdelays. 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 morequickly from these events, and therefore could have a material adverse effect on the Company’s business, results of operationsand financial condition to a greater degree than other air carriers. Any general reduction in passenger traffic could have a materialadverse effect on the Company’s business, results of operations and financial condition.

 

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

 

Theoperation of aircraft is subject to various risks, including catastrophic disasters, crashes, mechanical failures and collisions, whichmay 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’sand 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 potentialgrounding of the Company’s fleet and suspension or revocation of its operating authorities) and damage to its reputation and customerrelationships. In addition, to the extent an accident occurs with an aircraft the Company operates or charters, the Company could beheld liable for resulting damages, which may involve claims from injured passengers and survivors of deceased passengers. There can beno assurance that the amount of the Company’s insurance coverage available in the event of such losses would be adequate to coversuch 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, couldcreate a public perception that the Company is less safe or reliable than other private aircraft operators, which could cause customersto lose confidence and switch to other private aircraft operators or other means of transportation. In addition, any aircraft accidentor incident, whether involving the Company or other private aircraft operators, could also affect the public’s view of industrysafety, which may reduce the amount of trust by customers.

 

TheCompany incurs considerable costs to maintain the quality of (i) its safety program, (ii) its training programs and (iii) its fleet ofaircraft. The Company cannot guarantee that these costs will not increase. Likewise, the Company cannot guarantee that its efforts willprovide 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 itsbusiness, financial condition and results of operations.

 

Thesupply 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.

 

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

 

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

 

 

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

 

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

 

TheCompany is exposed to operational disruptions due to maintenance.

 

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

 

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

 

Fuelis 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 impactthe Company’s revenue, margins, operating expenses and results of operations. While the Company may be able to pass increases infuel costs on to its customers, increased fuel surcharges may affect the Company’s revenue and retention if a prolonged periodof high fuel costs occurs. To the extent there is a significant increase in fuel costs that affects the amount the Company’s customerschoose to fly, it may have a material adverse effect on the Company’s business, financial condition and results of operations.

 

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

 

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

 

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

 

Throughthe Company’s marketing, advertising, and communications with its customers, the Company sets the tone for its brand as aspirationalbut also within reach. The Company’s strives to create high levels of customer satisfaction through the experience provided byits 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 dependenton its ability to attract and retain skilled employees who can support the Company’s customers and are sufficiently knowledgeableabout the Company’s product and services. As the Company continues to grow its business and improve its platform, it will facechallenges related to providing quality support at an increased scale. Any failure to provide efficient customer support, or a marketperception that the Company does not maintain high-quality support, could adversely affect the Company’s reputation, brand, business,financial condition and results of operations.

 

 

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

 

Demandfor 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.

 

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

 

TheCompany’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’sproduct or services may change and if they do then the selling of the Company’s product or service may no longer be possible orprofitable.

 

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

 

TheCompany believes that its future success will depend in large part on its ability to retain or attract highly qualified management, technicaland 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 beable to grow and expand its business.

 

RisksRelating to Ownership of Jet.AI Common Stock

 

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

 

TheCompany has never paid cash dividends on its capital stock and currently intends to retain any future earnings to fund the growth ofits 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’sfinancial condition, operating results, capital requirements, general business conditions and other factors that the Jet.AI Board maydeem relevant. As a result, capital appreciation, if any, of Jet.AI’s Common Stock will be the sole source of gain for the foreseeablefuture.

 

TheCompany’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.

 

Fluctuationsin the price of the Common Stock could contribute to the loss of all or part of your investment. If an active market for our securitiesdevelops 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 ourCommon Stock and our Common Stock may trade at prices significantly below the price you paid for them. In such circumstances, the tradingprice of our securities may not recover and may experience a further decline.

 

 

Factorsaffecting the trading price of the Common Stock may include:

 

	●	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;
	●	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;
	●	operating and share price performance of other companies in the industry or related markets;
	●	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 or significant stockholders or the perception that such sales could occur;
	●	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.

 

Broadmarket and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stockmarket in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to theoperating 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 investorsperceive to be similar to Jet.AI could depress our stock price regardless of our business, prospects, financial conditions or resultsof operations. A decline in the market price of Jet.AI’s securities also could adversely affect its ability to issue additionalsecurities and its ability to obtain additional financing in the future.

 

 

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

 

TheCompany’s Certificate of Incorporation afford certain rights and powers to the Jet.AI Board that could contribute to the delayor prevention of an acquisition that it deems undesirable. Any of the foregoing provisions and terms that have the effect of delayingor 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.”

 

Jet.AIis subject to risks related to taxation in the United States.

 

Significantjudgments based on interpretations of existing tax laws or regulations are required in determining Jet.AI’s provision for incometaxes. Jet.AI’s effective income tax rate could be adversely affected by various factors, including, but not limited to, changesin 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-basedcompensation), changes in the location of Jet.AI’s operations, changes in Jet.AI’s future levels of research and developmentspending, mergers and acquisitions or the results of examinations by various tax authorities. Although Jet.AI believes its tax estimatesare reasonable, if the IRS or any other taxing authority disagrees with the positions taken on its tax returns, Jet.AI could have additionaltax liability, including interest and penalties. If material, payment of such additional amounts upon final adjudication of any disputescould have a material impact on our results of operations and financial position.

 

Changesto applicable tax laws and regulations or exposure to additional income tax liabilities could affect Jet.AI’s business and futureprofitability.

 

Oneof 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 customersare 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.AIand may have an adverse effect on its business and future profitability.

 

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

 

Asa result of plans to expand Jet.AI’s business operations, including to jurisdictions in which tax laws may not be favorable, itsobligations 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.

 

Inthe 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 effectivetax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standardsor practices, (c) changes in the composition of operating income by tax jurisdiction and (d) pre-tax operating results of Jet.AI’sbusiness.

 

 

Additionally,Jet.AI may be subject to significant income, withholding, and other tax obligations in the United States and may become subject to taxationin numerous additional U.S. state and local and non-U.S. jurisdictions with respect to income, operations and subsidiaries related tothose jurisdictions. Jet.AI’s after-tax profitability and financial results could be subject to volatility or be affected by numerousfactors, 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 anytax valuation allowances, (d) the tax treatment of stock-based compensation, (e) changes in the relative amount of earnings subject totax 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 intercompanytransactions and the extent to which taxing authorities in relevant jurisdictions respect those intercompany transactions, and (i) theability to structure business operations in an efficient and competitive manner. Outcomes from audits or examinations by taxing authoritiescould have an adverse effect on Jet.AI’s after-tax profitability and financial condition. Additionally, the IRS and several foreigntax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services andthe use of intangibles. Tax authorities could disagree with Jet.AI’s intercompany charges, cross-jurisdictional transfer pricingor other matters and assess additional taxes. If Jet.AI does not prevail in any such disagreements, Jet.AI’s profitability maybe affected.

 

Jet.AI’safter-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 retroactiveeffect.

 

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

 

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

 

Jet.AI’ssole material asset is its direct and indirect interests in its subsidiaries and, accordingly, Jet.AI will be dependent upon distributionsfrom its subsidiaries to pay taxes and cover its corporate and other overhead expenses and pay dividends, if any, on the Jet.AI CommonStock.

 

Jet.AIis a holding company and it has no material assets other than its direct and indirect equity interests in its subsidiaries. Jet.AI willhave no independent means of generating revenue. To the extent Jet.AI’s subsidiaries have available cash, Jet.AI will cause itssubsidiaries 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 distributefunds to Jet.AI or are restricted from making such distributions or payments under applicable law or regulation or under the terms oftheir financing arrangements, or are otherwise unable to provide such funds, Jet.AI’s liquidity and financial condition could bematerially adversely affected.

 

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

 

Theunaudited pro forma condensed combined financial information for Jet.AI following the Business Combination in this prospectus is presentedfor illustrative purposes only and is not necessarily indicative of what Jet.AI’s actual financial position or results of operationswould 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.

 

 

Theissuances of additional shares of Jet.AI Common Stock under the GEM Warrant may result in dilution of future Jet.AI stockholders andhave a negative impact on the market price of Jet.AI Common Stock.

 

Theclosing Share Purchase Agreement entitles GEM to receive (i) payment of a commitment fee of $800,000 payable in either cash or Jet.AICommon Stock and (ii) a warrant granting GEM the right to purchase up to 6% of the outstanding common stock of Jet.AI as of the closingof the Business Combination, calculated on a fully diluted basis, at a strike price per share equal $10.00 per share. The shares issuablepursuant to the GEM Warrant are calculated on a fully diluted basis as of the closing of the Business Combination, which calculationincluded shares issuable upon exercise of the Oxbridge public warrants, Oxbridge private placement warrants, the Merger ConsiderationWarrants and Jet Token Options and Jet Token RSU Awards. If the Oxbridge public warrants, the Oxbridge private placement warrants, MergerConsideration Warrants, Jet Token Options and/or Jet Token RSU Awards are not exercised in full or at all, and GEM exercises the GEMWarrant, then GEM could hold more than 6% of the outstanding common stock of Jet.AI on a non-diluted basis.

 

Ifthe average closing price of Jet.AI’s Common Stock for the 10 trading days following the first anniversary of the date of listingis less than 90% of the then current exercise price of the GEM Warrant, then the exercise price of the GEM Warrant will be adjusted to110% of its then current exercise price.

 

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

 

Warrantswill become exercisable for common stock, which would increase the number of shares eligible for future resale in the public market andresult in dilution to our stockholders.

 

OutstandingWarrants to purchase an aggregate of 17,249,334 shares of our common stock will become exercisable in accordance with the terms of theWarrant Agreement governing those securities. These Warrants will become exercisable 30 days after the Closing Date. The exercise priceof these Warrants will be $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 publicmarket. Sales of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adverselyaffect the market price of our common stock. However, there is no guarantee that the public warrants will ever be in the money priorto their expiration, and as such, the Warrants may expire worthless.

 

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

 

Afterthe Business Combination, Oxbridge’s Sponsor holds approximately 33.0% of the Common Stock. Pursuant to the terms of the Lock-UpAgreements, 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 completea liquidation, merger, stock exchange or other similar transaction with an unaffiliated third party that results in all of stockholdershaving the right to exchange their stock for cash, securities or other property.

 

 

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

 

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

 

Changesin laws or regulations, or a failure to comply with any laws or regulations, may adversely affect our business, investments and resultsof operations.

 

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

 

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

 

Wequalify 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 notemerging growth companies, including (a) the exemption from the auditor attestation requirements with respect to internal control overfinancial reporting under Section 404 of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-goldenparachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxystatements. As a result, our shareholders may not have access to certain information they deem important. We will remain an emerginggrowth company until the earliest of (a) the last day of the fiscal year (i) following August 16, 2026, the fifth anniversary of ourIPO, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules fromtime 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 CommonStock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (b) thedate on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.

 

Inaddition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the exemption from complying withnew 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 applyto private companies. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with therequirements that apply to non-emerging growth companies, but any such election to opt out is irrevocable. We have elected not to optout of such extended transition period, which means that when a standard is issued or revised and it has different application datesfor public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companiesadopt the new or revised standard. This may make comparison of our financial statements with another public company which is neitheran emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossiblebecause of the potential differences in accounting standards used.

 

Wecannot predict if investors will find our Common Stock less attractive because we will rely on these exemptions. If some investors findour Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our share price maybe more volatile.

 

 

CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Thisprospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the ExchangeAct. 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 financialperformance 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-lookingstatements 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’sactual 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 thissection, to reflect events or circumstances after the date of this prospectus. The Company cautions you that these forward-looking statementsare subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of theCompany.

 

Inaddition, 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;

 

 

	●	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.”

 

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

 

Youshould read this prospectus with the understanding that our actual future results may be materially different from what we expect. Wedo 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.

 

 

UNAUDITEDPRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Thefollowing unaudited pro forma condensed combined balance sheet as of June 30, 2023 and the unaudited pro forma condensed combined statementsof operations for the six months ended June 30, 2023 and for the year ended December 31, 2022 present the combination of the historicalfinancial 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 informationhas been prepared in accordance with Article 11 of Regulation S-X.

 

Theunaudited pro forma condensed combined balance sheet as of June 30, 2023 combines the historical unaudited condensed balance sheet ofJet.AI as of June 30, 2023 and the historical unaudited condensed consolidated balance sheet of Jet Token as of June 30, 2023 on a proforma basis as if the Business Combination had been consummated on June 30, 2023. The unaudited pro forma condensed combined statementof operations for the six months ended June 30, 2023 and the audited pro forma condensed statement of operations for the year ended December31, 2022 combines the historical condensed statement of operations of Jet.AI for the six months ended June 30, 2023 and the year endedDecember 31, 2022 and the historical condensed consolidated statement of operations of Jet Token for the same periods on a pro formabasis as if the Business Combination had been consummated on January 1, 2022.

 

Thehistorical financial information of Jet.AI was derived from the audited financial statements of Jet.AI as of and for the year ended December31, 2022 and the unaudited financial statements for the three and six months ended June 30, 2023, 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 yearended December 31, 2022 and the six months ended June 30, 2023, included elsewhere in this prospectus. This information should be readtogether with Jet.AI’s and Jet Token’s audited financial statements and related notes, the sections entitled “Management’sDiscussion and Analysis of Financial Condition and Results of Operations of Oxbridge,” and “Management’s Discussionand Analysis of Financial Condition and Results of Operations of Jet Token” and other financial information included elsewherein this prospectus.

 

Introduction

 

OnAugust 10, 2023, as a result of the previously announced Business Combination Agreement dated February 24, 2023, as amended, Oxbridgedomesticated as a Delaware corporation, First Merger Sub merged with and into Jet Token, with Jet Token surviving the First Merger asa 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 underthe new symbols “JTAI,” “JTAIW” and “JTAIZ,” respectively.

 

Priorto completion of the Business Combination, Jet.AI was a blank check company incorporated on April 12, 2021 as a Cayman Islands exemptedcompany for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or othersimilar 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 purchaseone Class A Ordinary Share at a price of $11.50 per share, generating gross proceeds to Jet.AI of $115,000,000.

 

Simultaneouslywith the closing of its IPO, Jet.AI consummated the private placement of 5,760,000 Private Placement Warrants to the Sponsor and MaximPartners, parent company of the representative to the underwriters in its initial public offering, at an average purchase priceof $1.00 per Private Placement Warrant, generating gross proceeds to Jet.AI of $5,760,000. The Private Placement Warrants are identicalto 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 ofthe Company’s initial Business Combination. Additionally, the Private Placement Warrants are not redeemable by the Company andare 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 forredemption and elects to require holders to exercise their public warrants on a cashless basis.

 

 

Jet.AIalso 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.

 

Uponthe closing of the IPO and the sale of the Private Placement Warrants, an aggregate of $116,725,000 was placed in the Trust Account withContinental Stock Transfer & Trust Company acting as trustee and was available to be invested in United States “governmentsecurities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment CompanyAct”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated underthe Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by Jet.AI, until the earlierof: (a) the completion of an Initial Business Combination and (b) the distribution of the Trust Account.

 

JetToken, a Delaware corporation, was founded in 2018 by Michael Winston, its Executive Chairman. Jet Token, directly and indirectly throughits 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 proprietarybooking platform (the “App”), which functions as a prospecting and quoting platform to arrange private jet travel with thirdparty carriers as well as via Jet Token’s leased and managed aircraft, for Part 135 (whole aircraft charter) and (iv) since January2023, joint ownership, alongside its existing operating partner, Cirrus, of 380 Software LLC, which supplies the technology to sell charterunder Part 380 (individual seats) on the Cirrus fleet of aircraft.

 

Descriptionof the Business Combination

 

JetToken is considered to be the accounting acquirer, as further discussed in “Note 1 — Basis of Presentation” of thisunaudited pro forma condensed combined financial information.

 

Inconnection with the Domestication and prior to the Effective Time, the total issued and outstanding 799,120 Class A Ordinary Shares and2,875,000 Class B Ordinary Shares as of June 23, 2023 were converted automatically, on a one-for-one basis, into shares of Jet.AI CommonStock. Each issued and outstanding public warrant and private placement warrant were converted automatically into a Jet.AI Warrant pursuantto the Warrant Agreement, entitling the holder to purchase one share of Jet.AI Common Stock at an exercise price of $11.50.

 

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

 

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

 

 

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

 

ForwardPurchase Agreement

 

Aspreviously 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, “Seller”) (the “Forward Purchase Agreement”) for OTC Equity Prepaid ForwardTransactions. For purposes of the Forward Purchase Agreement, Oxbridge is referred to as the “Counterparty” prior to theconsummation of the Business Combination, while Jet.AI is referred to as the “Counterparty” after the consummation of theBusiness Combination. Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to such terms in the ForwardPurchase Agreement.

 

Pursuantto the terms of the Forward Purchase Agreement, the Seller intended, but was not obligated, to purchase up to 1,186,952 (the “PurchasedAmount”) Class A ordinary shares, par value $0.0001 per share, of Oxbridge (“Oxbridge Shares”) concurrently with theClosing pursuant to the Seller’s FPA Funding Amount PIPE Subscription Agreement (as defined below), less the number of OxbridgeShares purchased by the Seller separately from third parties through a broker in the open market (“Recycled Shares”). NoSeller was required to purchase an amount of Oxbridge Shares such that following such purchase, that Seller’s ownership would exceed9.9% of the total Oxbridge Shares outstanding immediately after giving effect to such purchase, unless the Seller, at its sole discretion,waived such 9.9% ownership limitation. The Number of Shares subject to the Forward Purchase Agreement was subject to reduction followinga termination of the Forward Purchase Agreement with respect to such shares as described under “Optional Early Termination”in the Forward Purchase Agreement.

 

TheForward Purchase Agreement provided for a prepayment shortfall in an amount in U.S. dollars equal to $1,250,000 (the “PrepaymentShortfall”); provided that Seller shall pay one half (1/2) of the Prepayment Shortfall to Counterparty on the Prepayment Date (whichamount shall be netted from the Prepayment Amount) (the “Initial Shortfall”) and, at the request of Counterparty, the otherone half (1/2) of the Prepayment Shortfall (the “Future Shortfall”) on the date that the SEC declares the Registration Statementeffective (the “Registration Statement Effective Date”), provided the VWAP Price is greater than $6.00 for any 45 tradingdays during the prior 90 consecutive trading day period and average daily trading value over such period equals at least four times theFuture Shortfall. Seller in its sole discretion may sell Recycled Shares at any time following the Trade Date and at any sales price,without payment by Seller of any Early Termination Obligation until such time as the proceeds from such sales equal 100% of the InitialShortfall and 100% of the Future Shortfall actually paid to Counterparty (as set forth under Shortfall Sales in the Forward PurchaseAgreement) (such sales, “Shortfall Sales,” and such Shares, “Shortfall Sale Shares”). A sale of Shares is only(a) a “Shortfall Sale,” subject to the terms and conditions herein applicable to Shortfall Sale Shares, when a ShortfallSale Notice is delivered under the Forward Purchase Agreement, and (b) an Optional Early Termination, subject to the terms and conditionsof the Forward Purchase Agreement applicable to Terminated Shares, when an OET Notice is delivered under the Forward PurchaseAgreement, in each case the delivery of such notice in the sole discretion of the Seller (as further described in the “OptionalEarly Termination” and “Shortfall Sales” sections in the Forward Purchase Agreement).

 

FPAFunding Amount PIPE Subscription Agreement

 

Inconnection with the Business Combination, on August 6, 2023, Oxbridge entered into a subscription agreement (the “FPA Funding AmountPIPE Subscription Agreement”) with Seller.

 

 

Pursuantto the FPA Funding PIPE Subscription Agreement, Seller agreed to subscribe for and purchase, and Oxbridge agreed to issue and sell toSeller, on the Closing Date, an aggregate of up to 1,186,952 Oxbridge Shares, less the Recycled Shares in connection with the ForwardPurchase Agreement. At the Effective Time, 247,756 shares of Jet.AI were issued to Seller under the PIPE Subscription Agreement.

  

MaximSettlement Agreement

 

OnAugust 10, 2023, the Company entered into a settlement agreement (“Maxim Settlement Agreement”) with Maxim Group LLC, theunderwriter for the Company’s initial public offering (“Maxim”). Pursuant to the Maxim Settlement Agreement, the Companyissued 270,000 shares of Jet.AI Common Stock to settle the payment obligations of the Company under the underwriting agreement datedon or about August 11, 2011, by and between the Company and Maxim, which shares of Jet.AI Common Stock are subject to a RegistrationRights 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 Sharesare subject to the Registration Rights Agreement.

 

Thefollowing table summarizes the pro forma shares of Jet.AI Common Stock outstanding on August 10, 2023 immediately following the EffectiveTime, 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 OXAC Class A Ordinary Shares in connection with the Business Combination.
(2)	Reflects shares of OXAC’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 Seller 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.

 

Thefollowing unaudited pro forma condensed combined balance sheet as of June 30, 2023 and the unaudited pro forma condensed combined statementsof operations for the six months ended June 30, 2023 and for the year ended December 31, 2022, are based on the historical financialstatements of Jet.AI and Jet Token. The unaudited pro forma adjustments are based on information currently available, andassumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results maydiffer materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

 

UnauditedPro Forma Condensed Combined Balance Sheet as of June 30, 2023

 

(inthousands, 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
Assets
Current assets:
Cash and cash equivalents		$	638			$	20			$	13,125			A		$	6,343
											248			J
											(2,192	)		C
											(5,496	)		H
Other current assets			186				37				-						223
Total current assets			824				57				5,685						6,566
Property and equipment, net			9				-				-						9
Intangible assets, net			106				-				-						106
Right-of-use asset			1,829				-				-						1,829
Investment in joint venture			100				-				-						100
Other assets			748				-				-						748
Marketable securities held in trust account			-				13,125				(13,125	)					-
Total assets		$	3,616			$	13,182			$	(7,440	)				$	9,358
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	498			$	-			$	-					$	498
Accrued liabilities			762				411										1,173
Deferred revenue			1,100				-				-						1,100
Lease liability, current portion			502				-				-						502
Due to affiliates			-				-										-
Total current liabilities			2,862				411				-						3,273
Lease liability, net of current portion			1,278														1,278
Promissory note payable			-				575				(575	)		B			-
Deferred underwriting commissions			-				4,025				(4,025	)		B			-
Derivative warrant liabilities			-				576				(576	)		I			-
Total liabilities			4,140				5,587				(5,176	)					4,551
Commitments and contingencies			-				-				-						-
Class A ordinary shares; 1,186,952 shares subject to possible redemption (at redemption value)							13,125				(13,125	)		D			-
Stockholders’ Equity
Series Seed Preferred stock			21				-				(21	)		E			-
Series CF Non-voting Preferred stock			704				-				(704	)		E			-
Class B ordinary shares			-				-				-						-
Series A Convertible Preferred Stock			-				-				1,127			B			1,127
Series A-1 Convertible Preferred Stock											575			B			575
Subscription receivable			(25	)			-				-						(25	)
Additional paid-in capital			30,600				-				13,125			D			34,954
											725			E
											60,000			F
											(60,000	)		F
											(2,192	)		C
											(5,496	)		H
											2,700			B
											198			B
											576			I
											248			J
											(5,530	)		G
Accumulated deficit			(31,824	)			(5,530	)			5,530			G			(31,824	)
Total stockholders’ equity			(524	)			(5,530	)			10,861						4,807
Total liabilities and stockholders’ equity		$	3,616			$	13,182			$	(7,440	)				$	9,358

 

 

UnauditedPro Forma Condensed Combined Statement of Operations for the Six Months Ended June 30, 2023

 

(inthousands, 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		$	4,668			$	-			$	-					$	4,668
Cost of revenues			4,944								-						4,944
Gross loss			(276	)			-				-						(276	)
Operating Expenses:
General and administrative			4,603				470				-						5,073
Sales and marketing			224				-				-						224
Research and development			65				-				-						65
Total operating expenses			4,892				470				-						5,362
Operating loss			(5,168	)			(470	)			-						(5,638	)
Other (income) expense:
Other interest income							(2	)			-						(2	)
Interest earned on marketable securities held in trust account			-				(291	)			291			AA			-
Change in fair value of warrant liabilities			-				206				-						206
Total other (income) expense			-				(87	)			291						204
Loss before provision for income taxes			(5,168	)			(383	)			(291	)					(5,842	)
Provision for income taxes			-				-				-						-
Net Loss		$	(5,168	)		$	(383	)		$	(291	)				$	(5,842	)
Weighted average shares outstanding - basic and diluted			126,287,952				4,176,952										8,715,043
Net loss per share - basic and diluted		$	(0.04	)		$	(0.09	)								$	(0.67	)

 

 

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

 

(inthousands, 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	)
Total other (income) expense			-				(7,663	)			964						(6,699	)
(Loss) income before provision for income taxes			(7,736	)			7,176				(964	)					(1,524	)
Provision for income taxes			2				-				-						2
Net (loss) income		$	(7,738	)		$	7,176			$	(964	)				$	(1,526	)
Weighted average shares outstanding – basic and diluted			122,747,555				13,133,764										17,154,099
Net (loss) income per share - basic and diluted		$	(0.06	)		$	0.55									$	(0.09	)

 

 

Notesto Unaudited Pro Forma Condensed Combined Financial Information

 

Note1. Basis of Presentation

 

TheBusiness 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 ofJet Token issuing shares for the net assets of Jet.AI, followed by a recapitalization. The net assets of Jet Token will be stated athistorical cost. Operations prior to the Business Combination will be those of Jet Token.

 

Theunaudited pro forma condensed combined balance sheet as of June 30, 2023 gives pro forma effect to the Business Combination as if ithad occurred on June 30, 2023. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022gives pro forma effect to the Business Combination as if it had been completed on January 1, 2022. These periods are presented on thebasis of Jet Token as the accounting acquirer.

 

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

 

Theunaudited 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 financialinformation is not necessarily indicative of what the actual results of operations and financial position would have been had the BusinessCombination and related transactions taken place on the dates indicated, nor are they indicative of the future consolidated results ofoperations or financial position of the Company. They should be read in conjunction with the historical financial statements and notesthereto of Jet Token, Inc. and Jet.AI included in the prospectus, and other financial information included elsewhere.

 

Note2. Accounting Policies

 

Uponconsummation 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 anydifferences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unauditedpro forma condensed combined financial information does not assume any differences in accounting policies.

 

Note3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

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

 

Theunaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amendedby the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” ReleaseNo. 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 thathave occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to presentManagement’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensedcombined financial information.

 

 

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

 

Adjustmentsto Unaudited Pro Forma Condensed Combined Balance Sheet

 

Theadjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2023 are as follows:

 

	A.	Reflects the reclassification of marketable securities held in the Trust Account to cash and cash equivalents.
	B.	Reflects classification adjustments in relation to the repayment of the promissory note and deferred underwriting commissions both of which become payable upon the completion of a business combination.
	C.	Represents acquisition-related transaction costs totaling $2,192,000 (all of which is expected to be classified as equity issuance costs). The transaction costs are $2,192,000 for Jet.AI.
	D.	Represents the conversion of Jet.AI’s 799,120 Ordinary Shares to shares of common stock of the Domesticated Acquiror, par value $0.0001 per share, pursuant to the Business Combination Agreement.
	E.	Represents the conversion of 683,333 shares of Jet Token’s Series Seed Preferred Stock and 18,813,002 shares of its Series CF Non-Voting Preferred Stock to 21,029.56 and 578,969.85 shares, respectively, of Jet.AI common stock, par value $0.0000001 per share, pursuant to the Business Combination Agreement.
	F.	Represents recapitalization of Jet Token’s outstanding equity and the issuance of 4,523,167 shares of common stock and warrants exercisable into 7,196,375 shares of Jet.AI common stock to Jet Token shareholders as consideration for the reverse recapitalization. The number of Merger Consideration Warrants to be issued at closing are based on a value of $60,000,000 using the Black-Scholes model and are considered equity issuance costs associated with the Business Combination, and thus are contained within additional paid-in capital.
	G.	Reflects the reclassification of Jet.AI’s historical accumulated deficit.
	H.	Reflects the redemption of 502,832 public shares for aggregate redemption payments of $5.6 million allocated to common stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of approximately $11.10 per share.
	I.	Reflects the change of classification of the Public Warrants from liability to equity upon closing of the Business Combination. Upon closing of the Business Combination, shares underlying the Public Warrants are not redeemable and Jet. AI will have a single class of voting stock, which does not preclude the Public Warrants from being considered indexed to Jet.AI’s equity and allows the Public Warrants to meet the criteria for equity classification.
	J.	Reflects the issuance of 247,756 shares of Jet.AI Common Stock to Seller under that certain FPA Funding Amount PIPE Subscription Agreement dated August 6, 2023.

 

 

Adjustmentsto Unaudited Pro Forma Condensed Combined Statements of Operations

 

Thepro forma adjustments included in the unaudited pro forma condensed combined statement of operations for year ended December 31, 2022and for the six month period ended June 30, 2023 are as follows:

 

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

 

Note4. Net Loss per Share

 

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

 

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

 

		For the Six Months Ended				For the Year Ended
		June 30, 2023				December 31, 2022
Pro forma net loss		$	(5,842	)		$	(1,526	)
Weighted average shares outstanding of common stock		$	8,715,043			$	17,154,099
Net loss per share - basic and diluted			(0.67	)			(0.09	)
Excluded securities: (1)
Assumed options			3,284,488				3,284,488
Merger Consideration Warrants issued to Jet Token Shareholders			7,196,375				7,196,375
Public Warrants			11,489,334				11,489,334
Private Warrants			5,760,000				5,760,000
Shares issued to Restricted Stock Unit Awards			148,950				148,950
Merger Consideration Warrants issued to Restricted Stock Unit Awards			237,020				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 certainconditions which were not satisfied by the end of the periods presented.

 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL

CONDITIONAND RESULTS OF OPERATIONS

 

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

 

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

 

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

 

Overview

 

Jet.AI,a Delaware corporation, was founded in 2018 by Michael Winston, its Executive Chairman. The Company, directly and indirectly throughits 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 aproprietary booking platform (the “App”), which functions as a prospecting and quoting platform to arrange private jet travelwith third party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet aircraftby Cirrus, (v) aircraft brokerage and (vi) service revenue from the monthly management and hourly operation of customer aircraft.

 

Underthe Company’s fractional ownership program, a customer purchases an ownership share in a jet which guarantees the customer accessto the jet for a preset number of hours per year. The fractional ownership program typically consists of a down payment, one or moreprogress 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 recognizedat 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 rateover the agreement term (generally a year), typically paid 100% upfront. The Company also receives commission-based revenue for salesof jet cards on behalf of Cirrus and engages in whole aircraft brokerage. The Company recognizes revenue from sales of its own jet cardsand from third-party charters generated through the Company’s App, upon transfer of control of its promised services, which generallyoccurs upon completion of a flight, or, in the case of unused hours under the jet card program, at the end of the contract term. TheCompany recognizes its share of the revenue from the sales of Cirrus jet cards upon payment by the program member.

 

 

Results of Operations

 

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

 

		Three Months Ended June 30,								Six Months Ended June 30,								For the Year Ended December 31,
		2023				2022				2023				2022				2022				2021
Revenues		$	2,792,808			$	7,009,542			$	4,668,316			$	7,740,979			$	21,862,728			$	1,112,195
Cost of revenues			2,993,631				6,120,638				4,944,157				6,927,960				19,803,739				1,383,100
Gross (loss) profit			(200,823	)			888,904				(275,841	)			813,019				2,058,989				(270,905	)
Operating Expenses:
General and administrative (including stock-based compensation of $2,755,087, $2,371,247,  $6,492,653, $12,690,373, $6,492,653, and $12,690,373, respectively)			2,115,704				1,706,247				4,603,722				3,419,978				9,230,789				14,879,597
Sales and marketing			103,541				77,489				223,708				163,141				426,728				704,724
Research and development			28,636				27,061				64,955				46,172				137,278				117,391
Total operating expenses			2,247,881				1,810,797				4,892,385				3,629,291				9,794,795				15,701,712
Operating loss			(2,448,704	)			(921,893	)			(5,168,226	)			(2,816,272	)			(7,735,806	)			(15,972,617	)
Provision for income taxes			-				-				-				800				2,400				-
Net Loss		$	(2,448,704	)		$	(921,891	)		$	(5,168,226	)		$	(2,817,069	)		$	(7,738,203	)		$	(15,765,249	)<