NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 - Organization and Business Operations
Organization
and General
8i
Acquisition 2 Corp (the “Company”) is a company incorporated on January 21, 2021, under the laws of the British Virgin Islands
for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination with one or more businesses or entities (a “Initial Business Combination”). The Company is an
“emerging growth company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”),
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company’s efforts to identify
a prospective target business will not be limited to a particular industry or geographic location (excluding China). The Articles of
Association prohibit the Company from undertaking the initial business combination with any entity that conducts a majority of its business
or is headquartered in China (including Hong Kong and Macau).
As
of April 30, 2022, the Company had not yet commenced any operations. All activity for the period from January 21, 2021 (inception) through
April 30, 2022 relates to the Company’s formation and the proposed initial public offering (the “IPO”) described below.
The Company will not generate any operating revenues until after the completion of its Initial Business Combination, at the earliest.
The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived
from the IPO.
The
Company has selected July 31 as its fiscal year end.
The
Company will have 12 months from the closing of the IPO (or up to 18 months, with extension of two times by an additional three months
each time) to consummate a Business Combination (the “Combination Period”). If the Company fails to consummate a Business
Combination within the Combination Period, it will trigger its automatic winding up, liquidation and subsequent dissolution pursuant
to the terms of the Company’s amended and restated memorandum and articles of association. As a result, this has the same effect
as if the Company had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be
required from the Company’s shareholders to commence such a voluntary winding up, liquidation and subsequent dissolution.
As
of March 18, 2021, the Company was sponsored by 8i Holdings Limited, a Limited Liability Exempted Company incorporated in the Cayman
Islands on November 24, 2017. On April 12, 2021, 8i Holdings Limited transferred their founder shares (as defined below) to 8i Holdings
2 Pte Ltd (the “Sponsor”), a Singapore Limited Liability Company incorporated on April 1, 2021.
The
Trust Account
Upon
the closing of the IPO and the private placement, $86,250,000 was placed in a trust account (the “Trust Account”) with American
Stock Transfer & Trust Company, LLC acting as trustee.
The
funds held in the Trust Account will be invested only in United States government treasury bills, bonds or notes having a maturity of
180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company
Act of 1940 and that invest solely in United States government treasuries. Except with respect to interest earned on the funds held in
the Trust Account that may be released to the Company to pay its income or other tax obligations, the proceeds will not be released from
the Trust Account until the earlier of the completion of a Business Combination or the Company’s liquidation.
Business Combination
On April 11, 2022, the Company entered into a
Share Purchase Agreement (the “SPA”) with Euda Health Limited, a British Virgin Islands business company (“EUDA Health”),
Watermark Developments Limited, a British Virgin Islands business company (the “Seller”) and Kwong Yeow Liew, acting as Representative
of the Indemnified Parties (the “Indemnified Party Representative”). Pursuant to the terms of the SPA, a business combination
between the Company and EUDA Health will be effected through the purchase by the Company of all of the issued and outstanding shares
of EUDA Health from the Seller (the “Share Purchase”).
The Company’s board of directors have (i)
approved and declared advisable the SPA, the Share Purchase and the other transactions contemplated thereby, and (ii) resolved to recommend
approval of the SPA and related transactions by the shareholders of the Company.
Mr. Meng Dong (James) Tan, the Company’s
Chief Executive Officer and Chairman of the Company’s board of directors, owns 10% of the equity interests of the Seller. The Company
anticipates that it will receive a fairness opinion from EverEdge Global to the effect that the purchase price to be paid by the Company
for the shares of EUDA Health pursuant to the SPA is fair to the Company from a financial point of view (the “Fairness Opinion”).
In connection with the closing of the transactions
under the SPA the current officers and directors of EUDA Health will become the Company’s officers and directors. The Company’s
sponsor, 8i Holdings 2 Pte. Ltd. (the “Sponsor”), will have the right to nominate one director to serve as an independent
director on the post-closing board of director.
Liquidity
and Capital Resources
At
April 30, 2022 and July 31, 2021, the Company had $546,887 and nil in cash and working capital/(deficit) of $(175,726) and $(218,797)
(excluding deferred offering costs and deferred underwriting commissions), respectively.
The
registration statement for the Company’s IPO (as described in Note 3) was declared effective on November 22, 2021. On November
24, 2021, the Company consummated the IPO of 8,625,000 units (include the exercise of the over-allotment option by the underwriters in
the IPO) at $10.00 per unit (the “Public Units’), generating gross proceeds of $86,250,000. Each Unit consists of one ordinary
share, one redeemable warrant (each a “Warrant”, and, collectively, the “Warrants”), and one right to receive
one-tenth of an ordinary share upon the consummation of an Initial Business Combination.
Simultaneously
with the IPO, the Company sold to Mr. Meng Dong (James) Tan 292,250 units at $10.00 per unit (the “Private Units”) in a private
placement generating total gross proceeds of $2,922,500, which is described in Note 4.
Offering
costs amounted to $5,876,815 consisting of $1,725,000 of underwriting fees, $3,018,750 of deferred underwriting fees, $649,588 of other
offering costs and an excess of fair value of representative’s purchase option of $483,477. Except for the $100 for the Unit Purchase
Option and $25,000 of subscription of ordinary shares (as defined in Note 7), the Company received net proceeds of $87,114,830 from the
IPO and the private placement.
On
January 21, 2021 and February 5, 2021, the Company issued an aggregate of ordinary shares to 8i Holding Limited, which have
been subsequently sold to the Sponsor for an aggregate purchase price of $, or approximately $ per share. On June 14, 2021,
the Sponsor transferred 15,000 founder shares in the aggregate to the directors for nominal consideration. On October 25, 2021, the Company
issued an additional ordinary shares which were purchased by the Sponsor for $, resulting in an aggregate of 2,156,250
ordinary shares outstanding.
Going
Concern
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” the Company has until November 24, 2022 (absent any extensions of such period by the Sponsor, pursuant to
the terms described above) to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate
the proposed Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a business combination
not occur, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern.
No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after November
24, 2022. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However, there can
be no assurance that the Company will be able to consummate any business combination by November 24, 2022.
Note
2 - Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating
results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Prospectus, which contains
the initial audited financial statements and notes thereto for the period from January 21, 2021 (inception) to July 31, 2021 as filed
with the SEC on November 21, 2021, the Company’s report on Form 8-K, which contains the Company’s audited balance sheet and
notes thereto as of November 24, 2021, as filed with the SEC on November 24, 2021, and the Company’s report on Form 10-Q, which
contains the Company’s unaudited financial statements and notes thereto as of October 31, 2021 and January 31, 2022 as filed with
the SEC on December 22, 2021 and March 8, 2022, respectively. The interim results for the three and nine months ended April 30, 2022,
for the three months ended April 30, 2021, and for the period from January 21, 2021 (inception) through April 30, 2021 are not necessarily
indicative of the results to be expected for the year ending July 31, 2022.
Emerging
Growth Company Status
The
Company is an emerging growth company as defined by Section 2(a) of the JOBS Act and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but no
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosures obligations regarding executive compensation in its periodic reports and proxy statements, and exceptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payment not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out
of such extended transition period which means that when a standard is issued or revised, and it has different application dates for
public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of April 30, 2022 and July 31, 2021.
Investments
Held in Trust Account
As
of April 30, 2022, the assets held in the Trust Account was held in trading securities. The Company’s portfolio of investments
held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less, investments in money market funds that invest in U.S. government securities, cash,
or a combination thereof. The Company’s investments held in the Trust Account are classified as trading securities. Trading securities
are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in
fair value of these securities is included in gain on Investments Held in Trust Account in the accompanying statement of operations.
The estimated fair values of investments held in the Trust Account are determined using available market information.
At
April 30, 2022, the Company had $86,259,395 held in the Trust Account, including $9,395 dividends earned on cash and marketable securities
held in Trust Account.
Concentration
of credit risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. As of April 30, 2022 and July 31, 2021, the Company
had not experienced losses on this account.
Offering
Costs Associated with the IPO
Offering
costs consist of underwriting, legal, accounting, registration and other expenses incurred through the balance sheet date that are directly
related to the IPO. Offering costs totaled $5,876,815 consisting of $1,725,000 of underwriting fees, $3,018,750 of deferred underwriting
fees, $649,588 of other expenses, and an excess of fair value of representative’s purchase option of $483,477. The Company complies
with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A
– “Expenses of Offering”. The Company allocates offering costs between public shares, public warrants and public rights
based on the estimated fair values of public shares, public warrants and public rights at the date of issuance. Offering costs associated
with the ordinary shares are allocated between permanent equity and temporary equity.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured
at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that is either within
the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)
are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s
ordinary shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value (plus any interest
earned and/or dividends on the Trust Account) as temporary equity, outside of the shareholders’ equity section of the Company’s
balance sheets.
Net
Loss Per Ordinary Shares
The
Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The statements of operations include
a presentation of income (loss) per redeemable ordinary share and income (loss) per non-redeemable share following the two-class method
of income (loss) per share. In order to determine the net income (loss) attributable to both the redeemable ordinary shares and the non-redeemable
shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated using the total net
income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the accretion to
redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders.
Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated using
a ratio of 78% for the redeemable ordinary shares and 22% for the non-redeemable shares for the three months ended April 30, 2022 and
68% for the redeemable ordinary shares and 32% for the non-redeemable shares for the nine months ended April 30, 2022, reflective of
the respective participation rights.
The
earnings per share presented in the condensed statements of operations is based on the following:
Schedule
of Earnings Per Share
| |
For
the three months ended April 30, 2022 | | |
For
the nine months ended April 30, 2022 | |
Net
loss | |
$ | (472,989 | ) | |
$ | (743,466 | ) |
Accretion
of temporary equity to redemption value | |
| (8,649 | ) | |
| (14,481,573 | ) |
Net
loss including accretion of temporary equity to redemption value | |
$ | (481,638 | ) | |
$ | (15,225,039 | ) |
| |
Redeemable | | |
Non-redeemable | | |
Redeemable | | |
Non-redeemable | |
| |
For
the three months ended April
30, 2022 | | |
For
the nine months ended April
30, 2022 | |
| |
Redeemable | | |
Non-redeemable | | |
Redeemable | | |
Non-redeemable | |
Basic
and diluted net loss per ordinary share: | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Allocation
of net loss including accretion of temporary equity | |
$ | (375,141 | ) | |
$ | (106,497 | ) | |
$ | (10,367,061 | ) | |
$ | (4,857,978 | ) |
Accretion
of temporary equity to redemption value | |
| 8,649 | | |
| - | | |
| 14,481,573 | | |
| - | |
Allocation
of net income (loss) | |
$ | (366,492 | ) | |
$ | (106,497 | ) | |
$ | 4,114,512 | | |
$ | (4,857,978 | ) |
| |
| | | |
| | | |
| | | |
| | |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Weighted average
shares outstanding | |
| 8,625,000 | | |
| 2,448,500 | | |
| 4,960,165 | | |
| 2,324,321 | |
Basic
and diluted net income (loss) per ordinary share | |
$ | (0.04 | ) | |
$ | (0.04 | ) | |
$ | 0.83 | | |
$ | (2.09 | ) |
| |
Three
Months Ended April 30, 2021 | | |
Period
from January 21, 2021 (inception) through April 30, 2021 | |
Basic
and diluted net loss per ordinary share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Net
loss | |
$ | (6,660 | ) | |
$ | (7,849 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average
shares outstanding | |
| 1,875,000 | | |
| 1,875,000 | |
Basic
and diluted net loss per ordinary share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| (1) | This
number excludes an aggregate of up to 281,250 shares subject to forfeiture if the over-allotment
option is not exercised in full or in part by the underwriters (see Note 5). As a result
of the full exercise of the over-allotment option by the underwriters upon the consummation
of the IPO, these shares are no longer subject to forfeiture (see Note 7). |
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 825, “Financial
Instruments” approximates the carrying amounts represented in the balance sheet, primarily due to its short-term nature.
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
● |
Level
1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
|
|
|
|
● |
Level
2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;
and |
|
|
|
|
● |
Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions,
such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax
assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities
and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statements recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition. The Company has identified the British Virgin Islands as its only “major” tax jurisdiction,
as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring
recognition in the Company’s financial statements. Since the Company was incorporated on January 21, 2021, the evaluation was performed
for the period from January 21, 2021 (inception) to July 31, 2021 and for the nine months ended April 30, 2022 which will be the only
periods subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does
not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording
interest and penalties associated with audits is to record such items as a component of income tax expense.
Recent
Accounting Pronouncements
In
August 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)
(“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope
exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces
additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.
ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. ASU 2020-06 is effective January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on January 1, 2021. The Company determined not to early adopt.
Management
does not believe that this and any other recently issued, but not yet effective, accounting pronouncements, if currently adopted,
would have an effect on the Company’s financial statements.
Note
3 - Initial Public Offering
On
November 24, 2021, the Company sold 8,625,000 Units at a price of $10.00 per Unit, generating gross proceeds of $86,250,000 related to
its IPO. Each Unit consists of one ordinary share, one redeemable warrant (each a “Warrant”, and, collectively, the “Warrants”),
and one right to receive one-tenth of an ordinary share upon the consummation of an Initial Business Combination. Each two redeemable
warrants entitle the holder thereof to purchase one ordinary share, and each ten rights entitle the holder thereof to receive one ordinary
share at the closing of a Business Combination. No fractional shares issued upon separation of the Units, and only whole Warrants will
trade.
American
Opportunities Growth Fund (the “Anchor Investor”), has purchased an aggregate of 400,000 units in the IPO, and the Company
has agreed to direct the underwriters to sell to the Anchor Investor such number of units, subject to the Company’s satisfying
the Nasdaq listing requirement.
The
Anchor Investor is required to not redeem any of the public shares it acquires in the IPO. With respect to the ordinary shares underlying
the units it may purchase in the IPO, upon the Company’s liquidation, the Anchor Investor will have the same rights to the funds
held in the Trust Account as the rights afforded to the public shareholders. In addition, the units (including the underlying securities)
the Anchor Investor may purchase in the IPO will not be subject to any agreements restricting their transfer.
Conditionally
anchor shares are classified as temporary equity. Accordingly, anchor shares are presented at initial carrying value as temporary equity,
outside of the shareholders’ equity section of the Company’s balance sheet.
The
Company granted the underwriters a 45-day option from the date of the IPO to purchase up to an additional 1,125,000 Public Units to cover
over-allotments. On November 24, 2021, the underwriters exercised the over-allotment option in full to purchase 1,125,000 Public Units,
at a purchase price of $10.00 per Public Unit, generating gross proceeds to the Company of $11,250,000 (see Note 6).
As
of April 30, 2022, the ordinary shares subject to redemption reflected on the balance sheet are reconciled in the following table:
Ordinary Shares Subject to Possible Redemption
1 | |
| | |
Gross
proceeds from public issuance | |
$ | 86,250,000 | |
Less: | |
| | |
Proceeds
allocated to pubic warrants and public rights | |
| (9,979,125 | ) |
Redeemable
ordinary shares issuance costs | |
| (5,196,868 | ) |
| |
| | |
Plus: | |
| | |
Accretion
of carrying value to redemption value (Deemed dividend) | |
| 14,481,573 | |
Ordinary
shares subject to possible redemption | |
$ | 85,555,580 | |
Note
4 - Private Placement
Concurrently
with the closing of the IPO, Mr. Meng Dong (James) Tan purchased an aggregate of 292,250 Private Units at a price of $10.00 per Private
Unit for an aggregate purchase price of $2,922,500 in a private placement. The Private Units are identical to the public Units except
with respect to certain registration rights and transfer restrictions. The proceeds from the Private Units were added to the proceeds
from the IPO to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,
the proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law), and the Private Units and all underlying securities will expire worthless.
Note
5 - Related Party Transactions
Founder
Shares
On
January 21, 2021 and February 5, 2021, 8i Holdings Limited paid an aggregate price of $, or approximately $ per share, to
cover certain offering costs in consideration for ordinary shares (the “Insider Shares” or “Founder Shares”).
On April 12, 2021, 8i Holdings Limited transferred an aggregate of Founder Shares to the Sponsor for $. On June 14, 2021,
the Sponsor transferred 15,000 Founder Shares in the aggregate to the Company’s directors for nominal consideration. On October
25, 2021, the Company issued an additional ordinary shares which were purchased by the Sponsor for $, resulting in an aggregate
of 2,156,250 ordinary shares outstanding. The issuance was considered as a nominal issuance, in substance a recapitalization transaction,
which was recorded and presented retroactively. The Founder Shares are identical to the ordinary shares included in the Units being sold
in the IPO. The Sponsor has agreed to forfeit Founder Shares to the extent that the over-allotment option is not exercised in
full by the underwriters. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the
underwriters so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares (excluding shares from
units of private placement) after the IPO. On November 24, 2021, the underwriters exercised the over-allotment option in full, so there
are founder shares subject to forfeiture.
All
of the Founder Shares issued and outstanding prior to the date of the IPO will be placed in escrow with an escrow agent until the earlier
of six months after the date of the consummation of an Initial Business Combination and the date on which the closing price of the Company’s
ordinary shares equals or exceeds $ per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after the Initial Business Combination or earlier, if, subsequent
to the Initial Business Combination, the Company consummates a liquidation, merger, share exchange or other similar transaction which
results in all of its shareholders having the right to exchange their shares for cash, securities or other property. Up to of
the Founder Shares may also be released from escrow earlier than this date for forfeiture and cancellation if the over-allotment option
is not exercised in full within 45-day after the IPO. On November 24, 2021, the underwriters exercised the over-allotment option in full,
so there are no founder shares subject to forfeiture.
Promissory
Note - Related Party
On
January 12, 2022, Mr. Meng Dong (James) Tan, Chief Executive Officer of the Company, agreed to loan the Company up to $300,000 to cover
expenses related to the IPO pursuant to a promissory note (the “Note 1”). The Note 1 was non-interest bearing and payable
promptly after the date on which the Company consummates an Initial Business Combination. As of April 30,
2022, the total amount borrowed under the Note 1 was $300,000.
On
March 18, 2022, Mr. Meng Dong (James) Tan, Chief Executive Officer of the Company, agreed to loan the Company up to $500,000 to cover
expenses related to the Business Combination pursuant to a promissory note (the “Note 2”). The Note 2 was non-interest bearing
and payable promptly after the date on which the Company consummates an Initial Business Combination. As of April 30,
2022, the total amount borrowed under the Note 2 was $500,000.
Mr.
Meng Dong (James) Tan has the right, but not the obligation, to convert this Note, in whole or in part, into private units (the “Units”)
of the Company containing the same securities as issued in the Company’s IPO and by providing the Company with written notice of
its intention to convert this Note at least one business day prior to the closing of a Business Combination. The number of Units to be
received by the Payee in connection with such conversion shall be an amount determined by dividing (x) the sum of the outstanding principal
amount payable to Mr. Meng Dong (James) Tan, by (y) $10.00.
Due
to Related Parties
As
of April 30, 2022
and July 31, 2021, the total amount contains administrative service fee of $ and $ accrued by the Company’s Sponsor, respectively.
For
the nine months ended April 30, 2022, Mr. Meng Dong (James) Tan, Chief Executive Officer of the Company, loaned the Company $1,943 to
cover certain operating expenses of the Company. As of April 30, 2022, the total amount due to Mr. Tan was $1,943.
Related
Party Loans
As
of April 30, 2022
and July 31, 2021, 8i Enterprises Pte Ltd, a company wholly owned by Mr. Meng Dong (James) Tan, had loaned the Company an aggregate of
$0 and $396,157 in regard to the costs associated with formation and the IPO, respectively. Such loan is non-interest bearing. On December
6, 2021, the Company repaid $396,157 of related party loans.
Administrative
Service Fee
The
Company has agreed, commencing on the effective date of the IPO, to pay the affiliate of the Company’s Sponsor a monthly fee of
an aggregate of $ for office space, utilities and personnel. This arrangement will terminate upon the completion of a Business
Combination or the distribution of the Trust Account to the public shareholders. For the period from November 24, 2021 through April
30, 2022, the Company has accrued $53,000 of administrative service fee, which is included in formation and operating costs on the statement
of operations.
Note
6 - Commitments and Contingencies
Underwriters
Agreement
The
Company granted the underwriters, a 45-day option to purchase up to 1,125,000 units (over and above the 7,500,000 units referred to above)
solely to cover over-allotments at $10.00 per unit.
On
November 24, 2021, the Company paid cash underwriting commissions of 2.0% of the gross proceeds of the IPO, or $1,725,000.
The
underwriters are entitled to a deferred underwriting commission of 3.5% of the gross proceeds of the IPO, or $3,018,750, which will be
paid from the funds held in the Trust Account upon completion of the Company’s initial Business Combination subject to the terms
of the underwriting agreement.
On
November 24, 2021, the underwriters exercised the over-allotment option in full to purchase 1,125,000 Public Units at a purchase price
of $10.00 per Public Unit, generating gross proceeds to the Company of $11,250,000 (see Note 3), and were, in aggregate, paid a fixed
underwriting discount of $225,000.
Unit
Purchase Option
The
Company sold to Maxim Group LLC (and/or its designees) an option for $100 to purchase up to a total of 431,250 units exercisable, in
whole or in part, at $11.00 per unit, between the first and fifth anniversary dates of the effective date of the registration statement
of which the IPO forms a part. The purchase option may be exercised for cash or on a cashless basis, at the holder’s option. The
option and the 431,250 units, as well as the 474,375 shares (which includes the 43,125 ordinary shares issuable for the rights included
in the units), and the warrants to purchase 215,625 shares that may be issued upon exercise of the option, have been deemed compensation
by FINRA and are therefore subject to a lock-up for a period of 180 beginning on the date of commencement of sales of the IPO pursuant
to Rule 5110(e)(1) of FINRA’s Rules, during which time the option may not be sold, transferred, assigned, pledged or hypothecated,
or be subject of any hedging, short sale, derivative or put or call transaction that would result in the economic disposition of the
securities.
Registration
Rights
The
holders of the Founder Shares issued and outstanding at the closing of the IPO, as well as the holders of the private units (and underlying
securities) and any securities issued to the initial shareholders, officers, directors or their affiliates in payment of working capital
loans made to the Company, will be entitled to registration rights pursuant to a registration rights agreement. The holders of a majority
of these securities are entitled to make up to two demands, that the Company registers such securities. In addition, the holders have
certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s
consummation of an Initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that
the virus could have a negative effect on the company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Note
7 - Shareholder’s Equity
Ordinary
Shares
The
Company is authorized to issue unlimited ordinary shares of no par value. Holders of the Company’s ordinary shares are entitled
to one vote for each ordinary share.
As
of July 31, 2021, the Company has issued an aggregate of 1,437,500 ordinary shares for $25,000, of which 187,500 shares are subject to
forfeiture to the extent that the underwriters’ over-allotment option is not exercised in the IPO. On October 25, 2021, the Company
issued additional ordinary shares which were purchased by the Sponsor for $, resulting in an aggregate of 2,156,250 ordinary
shares outstanding. The Sponsor has agreed to forfeit ordinary shares to the extent that the over-allotment option is not exercised
in full by the underwriters. All shares and associated amounts have been retroactively restated to reflect the share capitalization.
On November 24, 2021, the underwriters exercised the over-allotment option in full, so there is no shares subject to forfeiture any more.
Warrants
Each
warrant entitles the holder to purchase one ordinary share at a price of $11.50 per share commencing 30 days after the completion of
its initial business combination, and expiring five years from after the completion of an initial business combination. No fractional
warrant will be issued and only whole warrants will trade. The Company may redeem the warrants at a price of $0.01 per warrant upon 30
days’ notice, only in the event that the last sale price of the ordinary shares is at least $16.50 per share for any 20 trading
days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given, provided there
is an effective registration statement and current prospectus in effect with respect to the ordinary shares underlying such warrants
during the 30 day redemption period. If a registration statement is not effective within 60 days following the consummation of a business
combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to an available exemption
from registration under the Securities Act.
In
addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.50 per share (with such
issue price or effective issue price to be determined in good faith by our board of directors), (y) the aggregate gross proceeds from
such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business
combination, and (z) the volume weighted average trading price of the ordinary shares during the 20 trading day period starting on the
trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market Value”)
is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market
Value, and the last sales price of the ordinary shares that triggers the Company’s right to redeem the Warrants will be adjusted
(to the nearest cent) to be equal to 165% of the Market Value.
Note
8—Recurring Fair Value Measurements
As
of April 30, 2022, investment securities in the Company’s Trust Account consisted of a treasury securities fund in the amount of
$86,259,395 which was held as money market funds. The following table presents information about the Company’s assets and liabilities
that were measured at fair value on a recurring basis as of April 30, 2022, and indicates the fair value hierarchy of the valuation techniques
the Company utilized to determine such fair value.
Schedule of Fair Value Assets
| |
| | |
Quoted | | |
Significant | | |
Significant | |
| |
| | |
Prices | | |
Other | | |
Other | |
| |
Value | | |
in
Active | | |
Observable | | |
Unobservable | |
| |
Carrying | | |
Markets | | |
Inputs | | |
Inputs | |
| |
Value | | |
(Level
1) | | |
(Level
2) | | |
(Level
3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Investments
held in Trust Account – Money Market Fund | |
$ | 86,259,395 | | |
$ | 86,259,395 | | |
$ | - | | |
$ | - | |
| |
$ | 86,259,395 | | |
$ | 86,259,395 | | |
$ | - | | |
$ | - | |
Note
9 - Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to May 25, 2022, the date the
financial statements was available to be issued. Based upon the review, the Company did not identify any subsequent events that would
have required adjustment or disclosure in the financial statements.