NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
April
30, 2020
(Unaudited)
Note
1 – Organization and Business Operations
Organization
and General
8i
Enterprises Acquisition Corp. (the “Company”, “we”, or “JFK”) is a newly incorporated company
incorporated on November 24, 2017, 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.
As
of April 30, 2020, the Company had not yet commenced any operations. All activity for the period from November 24, 2017 (inception)
through April 30, 2020, relates to the Company’s formation, the Initial Public Offering (“IPO”), and the potential
acquisition of Diginex Ltd. 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.
Sponsor
and Financing
The
Company issued one share to its founding director upon its inception on November 24, 2017 for $1. On April 17, 2018, this share
was transferred to the 8i Holdings Limited. On July 25 2018, the Company issued 1,437,499 shares to 8i Holdings Limited for $24,999.
The
Company’s sponsor is 8i Holdings Limited (“the “Sponsor”), a Limited Liability Exempted Company incorporated
in the Cayman Islands on November 24, 2017. The registration statements for the Company’s IPO were declared effective on
March 27, 2019. On April 1, 2019, the Company consummated the Initial Public Offering of 5,000,000 units (“Units”
or “Public Units” and, with respect to the ordinary shares included in the Public Units being offered, the “Public
Shares”), generating gross proceeds of $50,000,000, which is described in Note 3. Simultaneously with the closing of the
IPO, the Company consummated the private placement (“Private Placement”) with 8i Enterprises Pte. Ltd., a company
wholly owned by Mr. James Tan, of 221,250 units (the “Private Units”) at a price of $10.00 per Private Unit, generating
total proceeds of $2,212,500.
Upon
closing of the IPO and the private placement, the proceeds, less $2,212,500 was held in a trust account (the “Trust Account”)
(discussed below).
On
April 4, 2019, the underwriters exercised the over-allotment option in full and the closing of the issuance and sale of the additional
Units occurred on April 8, 2019. The total aggregate issuance by the Company of 750,000 units at a price of $10.00 per unit resulted
in total gross proceeds of $7,500,000, less underwriters’ discount of $1,437,500. On April 8, 2019, simultaneously with
the sale of the over-allotment units, the Company consummated the private sale of an additional 18,750 Private Units, generating
gross proceeds of $187,500.
The
Trust Account
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.
Initial
Business Combination
On
March 20, 2020, the original date for the meeting of the shareholders of the Company (the “Original Meeting), the shareholders
voted in favor of a proposal to adjourn the meeting to June 15, 2020 (the “Adjournment”). The Company adjourned the
Original Meeting due to certain closing conditions not yet being fulfilled. As a result, we were unable to complete the Business
Combination by the initial deadline of April 1, 2020, which was 12 months after the consummation of the IPO. On March 26, 2020,
the Company deposited $575,000 into the trust account pursuant to the Trust Agreement between the Company and Wilmington Trust
Company, in order to extend the time available for the Company to consummate its initial business combination by three (3) months
from April 1, 2020 to June 30, 2020 (the “First Extension Deadline”), which is 15 months from the closing of the IPO.
If we anticipate that we may not be able to consummate our initial business combination by June 30, 2020 we may, but are not obligated
to, extend the period of time to consummate a business combination by an additional three months until October 1, 2020 (which
would be a total of up to 18 months after the closing of the IPO to complete a business combination). Pursuant to the terms of
our Amended and Restated Memorandum and Articles of Association and the Trust Agreement entered into between us and Wilmington
Trust Company, in order to extend the time available for us to consummate our initial business combination, our insiders or their
affiliates or designees, upon five days’ advance notice prior to the applicable deadline, must deposit into the trust account
$575,000 on or prior to the date of the applicable deadline. The insiders will receive a non-interest bearing, unsecured promissory
note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business combination
unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of our
initial business combination, or, at the lender’s discretion, converted upon consummation of our business combination into
additional Private Units at a price of USD10.00 per unit. Our shareholders have approved the issuance of the Private Units upon
conversion of such notes, to the extent the holder wishes to so convert such notes at the time of the consummation of our initial
business combination. In the event that we receive notice from our insiders five days prior to the applicable deadline of their
intent to effect an extension, we intend to issue a press release announcing such intention at least three days prior to the applicable
deadline. In addition, we intend to issue a press release the day after the applicable deadline announcing whether or not the
funds had been timely deposited. Our insiders and their affiliates or designees are not obligated to fund the trust account to
extend the time for us to complete our initial business combination. To the extent that some, but not all, of our insiders, decide
to extend the period of time to consummate our initial business combination, such insiders (or their affiliates or designees)
may deposit the entire amount required. If we are unable to consummate our initial business combination within 15 months from
the closing of the IPO (or within 18 months, as previously described), we will, as promptly as possible but not more than ten
business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust account,
including a pro rata portion of any interest earned on the funds held in the trust account and not necessary to pay our taxes,
and then seek to liquidate and dissolve. However, we may not be able to distribute such amounts as a result of claims of creditors
which may take priority over the claims of our public shareholders. In the event of our dissolution and liquidation, the public
rights will expire and will be worthless.
If
the Company is not able to consummate a Business Combination before June 30, 2020, the Company will commence an automatic winding
up, dissolution and liquidation, unless the Company seeks and receives the consent of its’ shareholders to otherwise extend
the life of the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
These financial statements do not include any adjustments that might result from the outcome of these uncertainties.
If
we are unable to consummate our initial business combination within this time period, we will liquidate the trust account and
distribute the proceeds held therein to our public shareholders and dissolve. If we are forced to liquidate, we anticipate that
we would distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior
to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims
that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts,
as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that
we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be
liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter
an insolvent liquidation.
Pursuant
to the Nasdaq listing rules, our initial business combination must be with a target business or businesses whose collective fair
market value is at least equal to 80% of the balance in the trust account (excluding any deferred underwriting discounts and commissions
and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for such business
combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target
will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such
as actual and potential sales, earnings, cash flow and/or book value). Our board of directors will have broad discretion in choosing
the standard used to establish the fair market value of any prospective target business. The target business or businesses that
we acquire may have a collective fair market value substantially in excess of 80% of the trust account balance.
Share
Exchange Agreement
On
July 9, 2019, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Diginex Ltd.,
a Hong Kong company (“Diginex”), the shareholders of Diginex (the “Sellers”) and Pelham Limited, a Hong
Kong company, as representative of the Sellers (the “Representative”), pursuant to which the Company would acquire
all of the outstanding equity interests of Diginex (the “Acquisition”). Diginex is in the business of providing blockchain
technologies for an ecosystem infrastructure to enable adoption of digital assets across financial markets through the offer of
advisory, markets and asset management services. Pursuant to the terms of the Share Exchange Agreement, the Sellers agreed to
sell, transfer, convey, assign and deliver to the Company all of the issued and outstanding ordinary shares of Diginex owned by
the Sellers in exchange for the issuance to the Sellers of an aggregate of 20,000,000 Ordinary Shares (the “Share Exchange”).
On
October 8, 2019, each of the parties to the Share Exchange Agreement entered into an amendment and joinder to the Share Exchange
Agreement (the “Amendment,” and together with the Share Exchange Agreement, the “Amended Agreement”) with
Diginex Limited (formerly known as Digital Innovative Limited), a Singapore public company limited by shares (“Singapore
NewCo”), and its wholly-owned subsidiary Digital Innovative Limited, a British Virgin Islands business company (“BVI
NewCo”), for the purpose of joining both entities as parties to the Share Exchange Agreement. The Amendment reflects that
prior to the consummation of the Share Exchange, BVI NewCo will merge with and into the Company (the “Reincorporation Merger”),
and the Company will be the surviving entity and a wholly-owned subsidiary of Singapore NewCo pursuant to a merger agreement by
and among Singapore NewCo, BVI NewCo and the Company (the “Merger Agreement”) and a plan of merger by and among the
Company and BVI NewCo (the “Plan of Merger”). At the closing of the Reincorporation Merger, Singapore NewCo will issue
ordinary shares, with no par value (the “Singapore NewCo Ordinary Shares”), and warrants to the Company’s shareholders
(the “Singapore NewCo Warrants”), as set forth in the Merger Agreement. The Amendment also provides, among other things,
(i) that Singapore NewCo Ordinary Shares will be issued to the Sellers in the Share Exchange in lieu of Ordinary Shares, (ii)
that references to the proxy statement in the Amended Agreement were replaced with references to the definitive proxy statement/prospectus
and (iii) that references to the Purchaser and its obligations (x) post-closing, (y) with respect to Nasdaq matters, and (z) for
directors’ and officers’ indemnification and liability insurance in the Share Exchange Agreement, were replaced with
Singapore NewCo.
On
January 28, 2020, each of the parties to the Share Exchange Agreement and the Amendment entered into an amendment to the Share
Exchange Agreement (the “Second Amendment,” and together with Amendment and the Share Exchange Agreement, the “Amended
Share Exchange Agreement”), for the purpose of increasing the size of Diginex’s permitted pre-Closing Date private
placement of its ordinary shares from $30 million to $50 million.
On
May 6, 2020, each of the parties to the Second Amendment entered into a third amendment to the Share Exchange Agreement (the “Third
Amendment,” and together with the Share Exchange Agreement, the Amendment and the Second Amendment, the “Amended Share
Exchange Agreement”) to, among other things, (a) extend the outside closing date of the Share Exchange to June 23, 2020,
(b) increase the number of Singapore NewCo Ordinary Shares issuable to the Sellers in the Share Exchange from 20,000,000 to 25,000,000,
(c) increase the number of shares the Sellers are entitled to receive if the closing price of the Singapore NewCo Ordinary Shares
satisfy certain thresholds (the “Earnout Shares”) from an aggregate of 5,000,000 to 12,000,000, adjust closing price
targets and to increase the milestone dates by which the Earnout Shares could be issued from three years to four years after the
anniversary of the Closing Date; (d) increase the number of options to purchase Singapore NewCo Ordinary Shares received upon
cancellation of the outstanding options to purchase ordinary shares under Diginex’s existing incentive plan from 4,200,000
to 5,600,000, and (e) allow JFK to issue up to 1,000,000 Singapore NewCo Ordinary Shares to third party advisors or consultants
to (i) assist JFK with maintaining funds of at least $15,000,000 in the trust account after giving effect to all JFK ordinary
share redemptions, but prior to taking into account JFK’s liabilities for any fees and costs relating to the transactions
contemplated by the Amended Share Exchange Agreement, or (ii) provide market making services to Diginex after the Closing.
The
Third Amendment includes new covenants of the parties prior to the Closing Date, such as (a) JFK shall convert all outstanding
promissory notes issued in favor of 8i Enterprises Pte. Ltd. into JFK private units as of the Closing Date (the “Sponsor
Loan Conversion”), (b) JFK shall use commercially reasonable efforts to cause Chardan Capital LLC (“Chardan”)
to agree to convert, effective as of the Closing Date, deferred underwriting compensation in the amount of $1,725,000 owed to
Chardan and any additional fees to be paid by JFK to Chardan upon the consummation of the Closing into Singapore NewCo Ordinary
Shares at $10.00 per share, which shares will be subject to a lock-up agreement restricting any transfer thereof for a period
of no less than six months after Closing, (c) Diginex will use commercially reasonable efforts to cause one of its service providers
to enter into a lock-up agreement in connection with receipt of Singapore NewCo Ordinary Shares that such service provider will
receive on the Closing Date for a period of no less than six months after the Closing Date, and (d) each of JFK and Diginex will
use best efforts to assist the other party to fulfill the new covenants relating to (i) JFK maintaining $15,000,000 in the trust
account as of the Closing Date after giving effect to JFK’s ordinary share redemptions, but prior to taking into account
JFK’s liabilities for any fees and costs relating to the transactions contemplated by the Amended Share Exchange Agreement,
and (ii) Diginex raising at least $15,000,000 through the issuance of new ordinary shares to be completed no later than the Closing
(the “Subsequent Diginex Equity Private Placement”). The failure to comply with the covenants described in clause
(d) of this paragraph will not constitute a material breach of the Amended Share Exchange Agreement for the purposes of fulfilling
certain closing conditions of parties, or with respect to the indemnification or termination provisions set forth in the Amended
Share Exchange Agreement. In the event the respective covenants that are the subject matter of clause (d) of this paragraph are
not fulfilled, or, (i) if the market value of the unrestricted publicly held JFK ordinary shares (as calculated under the rules
of The Nasdaq Capital Market (“Nasdaq”)) that are outstanding as of immediately prior to the Closing Date (after giving
effect to the JFK ordinary share redemptions), and (ii) the combined stockholders equity of JFK and Diginex (after giving effect
to the JFK ordinary share redemptions, the Share Exchange and the transactions contemplated thereby), fail to satisfy Nasdaq listing
requirements ((i) and (ii), collectively, the “Nasdaq Requirements”), the parties have agreed to negotiate in good
faith to reach a mutually agreeable resolution with respect thereto. However, if they are unable to reach an agreement, such failure
will not be a material breach on the part of any party that elects to terminate the Amended Share Exchange Agreement because the
transactions contemplated thereunder did not occur prior to June 23, 2020, the outside closing date.
The
Third Amendment includes new covenants of Diginex that (a) without JFK’s prior written consent (which consent will not be
unreasonably withheld or delayed), Diginex and its affiliates will not, directly or indirectly, or through any other person (including,
its directors, officers and agents) engage with or contact, for the purpose of making an investment into Diginex or any of its
affiliates, any potential investor actually introduced to Diginex or its affiliates by JFK or its affiliates during the period
commencing on April 27, 2020 and ending on the earlier of the Closing Date and termination of the Amended Share Exchange Agreement,
and who have not previously (i) had any direct or indirect business or investment relationship with Diginex or its affiliates
or (ii) engaged in any discussions with or contacted or been contacted by, directly or indirectly, or through any other person
(including, its directors, officers and agents), Diginex or the Diginex’s affiliates, advisors or representatives regarding
a potential business or investment relationship, until the Closing Date, or in the event the Amended Shares Exchange Agreement
is terminated, for a period of 12 months after the termination, and (b) without JFK’s prior written consent (which consent
will not be unreasonably withheld, conditioned or delayed) Diginex will not use any proceeds of the Subsequent Diginex Private
Placement, up to $15,000,000, for any purpose other than its operating expenses and capital expenditures.
The
Third Amendment includes new covenants of all parties that, (a) JFK will use commercially reasonable efforts to cause one of its
service providers to enter into a lock-up agreement in connection with receipt of Singapore NewCo Ordinary Shares that such service
provider will receive for a period of no less than six months after the Closing Date, (b) JFK will use commercially reasonable
efforts to cause the balance of the trust account after giving effect to JFK’s ordinary share redemptions, but prior to
taking into account JFK’s liabilities for any fees and costs relating to the transactions contemplated by the Amended Share
Exchange Agreement, to be an amount greater than or equal to $15,000,000, (c) prior to the Closing Date, Diginex will use its
commercially reasonable efforts to raise at least $15,000,000 through the Subsequent Diginex Private Placement, and (d) JFK and
Diginex will use commercially reasonable efforts to satisfy the Nasdaq Requirements.
The
Third Amendment includes new conditions to the obligations of the parties to consummate the Share Exchange, such as (i) the balance
of the trust account will be an amount greater than or equal to $15,000,000 after giving effect to JFK’s ordinary share
redemptions, but prior to taking into account JFK’s liabilities for any fees and costs relating to the Share Exchange, and
(ii) during the period commencing on April 24, 2020 and ending on the Closing Date, Diginex will raise at least $15,000,000 through
the Subsequent Diginex Private Placement. As a new condition to Diginex’s obligation to consummate the Share Exchange, JFK
will deliver to Diginex evidence of the Sponsor Loan Conversion. The existing condition to consummate the Share Exchange that
JFK receives executed copies of lock-up agreements from all of the Diginex shareholders has been revised, so that in Diginex’s
sole discretion up to 5,000,000 of the Singapore NewCo Ordinary Shares issued in the Subsequent Diginex Private Placement may
be issued without being subject to the restrictions in the lock-up agreement.
The
Third Amendment provides Diginex the right, at its sole option, to terminate the Amended Share Exchange Agreement if the Nasdaq
Requirements are not met, or if after giving effect to the JFK ordinary share redemptions, the Share Exchange and the transactions
contemplated thereby, JFK fails to comply with the net tangible assets requirements set forth in its Amended and Restated Memorandum
and Articles of Association.
Of
the 25,000,000 Singapore NewCo Ordinary Shares issuable to the Sellers in the Share Exchange, 2,000,000 Singapore NewCo Ordinary
Shares (which will not be fully paid at issuance) will be deposited into an escrow account for a period of twelve months (the
“Escrow Period”) to satisfy any potential indemnification claims against Sellers brought pursuant to the Amended Share
Exchange Agreement (the “Escrow Shares”). At the closing of the Share Exchange, each option to purchase ordinary shares
of Diginex (the “Diginex Options”) outstanding under Diginex’s existing incentive plan, whether vested or unvested,
will be cancelled and the holders of the Diginex Options will receive options to acquire an aggregate of 5,600,000 Singapore NewCo
Ordinary Shares (the “Singapore NewCo Options”) in exchange for such cancellation. The Singapore NewCo Options may
not be transferred, assigned or sold for a period of fifteen (15) months following the consummation of the Business Combination.
Each Singapore NewCo Option will, without any requirement for payment, automatically convert into one (1) Singapore NewCo Ordinary
Share, which Singapore NewCo Ordinary Shares shall be issued to each holder of a Singapore NewCo Option as follows: (a) one-third
(1/3) on the date that is fifteen (15) months after the Closing Date, (b) one-third (1/3) on the date that is eighteen (18) months
after the Closing Date, and (c) one-third (1/3) on the date that is twenty-one (21) months after the Closing Date, in the case
of each of (a), (b) and (c), rounded to the nearest Singapore NewCo Ordinary Share, subject to certain limitations set forth herein.
The Singapore NewCo Options to be issued in the Share Exchange will be separate from and in addition to any options or other awards
issued or issuable under the Digital Innovative Limited 2019 Omnibus Incentive Plan (the “Incentive Plan”).
The
Sellers will be entitled to receive up to an additional 12,000,000 Earnout Shares after the closing of the Business Combination
if the closing price of Singapore NewCo Ordinary Shares on Nasdaq (or any other applicable securities exchange) is equal to or
greater than the stock prices set forth below during any five trading days out of any 30 trading day period (the “Trading
Period”) following the closing of the Business Combination until the applicable milestone date: (1) 3,000,000 Earnout Shares
if the closing price is USD$15.00 during any Trading Period ending on or before the first anniversary of the Closing Date; (2)
3,000,000 Earnout Shares if the closing price is USD$20.00 during any Trading Period ending on or before the second anniversary
of the Closing Date; (3) 3,000,000 Earnout Shares if the closing price is USD$25.00 during any Trading Period ending on or before
the third anniversary of the Closing Date; and (4) 3,000,000 Earnout Shares if the closing price is USD$30.00 during any Trading
Period ending on or before fourth anniversary of the Closing Date. All share and per share amounts above shall be proportionally
adjusted for share splits, dividends, and similar events.
Conditions
to Closing
General
Conditions
Consummation
of the Share Exchange is conditioned upon, among other things:
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no
applicable Law or Order (as defined in the Agreement) that restrains, prohibits or imposes any condition on the consummation
of the Closing shall be in force;
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no
Action being brought by any governmental Authority to enjoin or otherwise restrict the consummation of the Closing;
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the
Additional Agreements (as defined in the Agreement) shall have been entered into by each party thereto and the same shall
be in full force and effect;
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JFK
having at least $15,000,000 in the trust account after any redemptions of ordinary shares;
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JFK
having obtained the approval of the Business Combination by its shareholders at a duly convened meeting of shareholders;
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the
Singapore NewCo Ordinary Shares to be issued to the Sellers and to the holders of JFK having been approved for listing on
Nasdaq;
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JFK’s
redemption of any ordinary shares having been completed in accordance with the terms of JFK’s Amended and Restated Memorandum
and Articles of Association and the Share Exchange Agreement; and
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the
combined total assets of JFK and Diginex (after giving effect to the JFK shareholders who exercise their redemption rights)
minus the combined total intangible assets and liabilities of the Company and Diginex shall be at least $5,000,001; and
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Diginex
shall have raised at least $15,000,000 from the Diginex Subsequent Equity Private Placement.
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Diginex’s
Conditions to Closing
The
obligation of Diginex to consummate the Amended Share Exchange Agreement, in addition to the conditions described above, are conditioned
upon, among other things, each of the following:
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the
Company having performed in all material respects with its obligations required to be performed by it in Amended Share Exchange
Agreement at or prior to the closing of the Business Combination;
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the
representations and warranties of the Company, being true on and correct as of the closing date of the Business Combination
as if made at and as of such time (except for representations and warranties that speak as of a specific date prior to the
Closing Date, in which case such representations and warranties need only be true and correct as of such earlier date); provided,
that this condition shall be deemed satisfied unless any and all inaccuracies in such representations and warranties, in the
aggregate, result in a Purchaser Material Adverse Effect (as defined in the Amended Share Exchange Agreement), in each case
without giving effect to any limitation as to materiality or JFK Material Adverse Effect set forth therein;
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the
Company shall have executed and delivered to Diginex a copy of each Additional Agreement to which it is a party;
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the
Company shall have delivered evidence of the conversion of the Notes into Private Units;
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the
Sellers’ designees shall have been appointed to the Singapore NewCo board of directors, effective as of the closing
of the Business Combination;
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there
shall have not occurred and be continuing any Purchaser Material Adverse Effect;
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Singapore
NewCo shall have filed with the Accounting and Corporate Regulatory Authority of Singapore the Amended and Restated Constitution
in the form included in the Proxy Statement and approved by the Company’s shareholders at the Meeting; and
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the
Reincorporation Merger shall have been consummated.
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The
Company’s Conditions to Closing
The
obligations of the Company to consummate the transactions contemplated by the Amended Share Exchange Agreement, in addition to
the conditions described above in the first paragraph of this section, are conditioned upon, among other things, each of the following:
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Diginex
having performed in all material respects its obligations required to be performed by it in the Share Exchange Agreement at
or prior to the closing of the Business Combination;
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there
shall have not occurred and be continuing any Diginex Material Adverse Effect (as defined in the Amended Share Exchange Agreement)
on Diginex and its subsidiaries;
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the
representations and warranties of Diginex being true and correct on and as of the closing of the Business Combination as if
made at and as of such time (except for representations and warranties that speak as of a specific date prior to the closing
date, in which case such representations and warranties need only be true and correct as of such earlier date); provided,
that with the exception of representations and warranties relating to corporate existence and power, authorization, execution,
delivery and performance of the Amended Share Exchange Agreement and other transaction documents, non-contravention, capitalization,
and finders’ fees, this condition shall be deemed satisfied unless any and all inaccuracies in such representations
and warranties, in the aggregate, result in a Company Material Adverse Effect (as defined in the Amended Share Exchange Agreement),
in each case without giving effect to any limitation as to materiality or Company Material Adverse Effect set forth therein;
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there
shall have not occurred and be continuing any Diginex Material Adverse Effect;
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Diginex’s
key personnel shall have executed non-compete agreements and Diginex shall have entered into labor agreements with each of
its employees to the extent required by law, and satisfied all accrued obligations applicable to its employees; and
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Diginex
shall have provided executed copies of lock-up agreements by each of the Sellers, which lock-up agreements shall, at Diginex’s
sole discretion, not place any restrictions on up to 5,000,000 Singapore NewCo Ordinary Shares issued in the Subsequent Company
Private Placement.
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Accounting
for the Acquisition
The
Business Combination will be accounted for as a “reverse merger” in accordance with U.S. GAAP. Under this method of
accounting the Company will be treated as the “acquired” company for financial reporting purposes. This determination
is primarily based on the fact that subsequent to the Business Combination, Diginex securityholders are expected to have a majority
of the voting power of the combined company, Diginex comprising all of the ongoing operations of the combined entity, Diginex
comprising a majority of the governing body of the combined company, and Diginex’s senior management comprising all of the
senior management of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the
equivalent of Diginex issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the
Company will be stated at fair value which approximates historical costs as the Company has only cash and short-term liabilities.
No goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Diginex.
Liquidation
However,
the holders of the initial shares will not participate in any liquidation distribution with respect to such securities. In the
event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution
(including Trust Account assets) will be less than the $10.00 per Unit in the Initial Public Offering. In order to protect the
amounts held in the Trust Account, an affiliate of the sponsor will contractually agree, pursuant to a written agreement to the
Company, that if the Company liquidates the Trust Account prior to the consummation of a business combination, it will be liable
to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other
entities that are owed money by the Company for services rendered or contracted for or products sold to the Company. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any
kind in or to any monies held in the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third party, the affiliate of the sponsor will not be responsible to the extent of any liability for such third party
claims. The Company will seek to reduce the possibility that the affiliate of the sponsor will have to indemnify the Trust Account
due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors),
prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
The
Company will pay the costs of liquidating the trust account from the remaining assets outside of the trust account. If such funds
are insufficient, the Sponsor has contractually agreed to advance the Company the funds necessary to complete such liquidation
(currently anticipated to be no more than approximately $18,500) and has contractually agreed not to seek repayment for such expenses.
Liquidity
As
of April 30, 2020, the Company had cash outside the Trust Account of $3,965 available for working capital needs. All remaining
cash was held in the Trust Account and is generally unavailable for use, prior to an initial Business Combination, and is restricted
for use either in a Business Combination or to redeem ordinary shares. As of April 30, 2020, none of the amount on deposit in
the Trust Account was available to be withdrawn as described above.
Through
April 30, 2020, the Company’s liquidity needs were satisfied through receipt of an aggregate of $1,781,185 from an affiliate
of the Sponsor, of which $326,185 were repaid upon the IPO, the remaining net proceeds from the IPO and Private Placement (as
described in Note 3 and Note 4), as well as the receipt of $100,000 from Diginex.
Until
consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional
funding from the Sponsor’s promissory note commitment, for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations
of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting
the target business to acquire and structuring, negotiating and consummating the Business Combination.
If
the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating Business Combination is less
than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to
the Business Combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers,
directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest
in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve
liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business
plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all. Furthermore, if the Company is not able to consummate a Business Combination by the First Extension
Deadline, the Company may exercise its option to extend the timeframe for an additional three months, which would require the
Company to deposit into the trust account $575,000 (an additional $0.10 per IPO share), or commence an automatic winding up, dissolution
and liquidation of the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Note
2 – Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements of the Company is presented in U.S. dollars in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of
the U.S. Securities and Exchange Commission (“SEC”). The unaudited condensed financial statements reflect all adjustments
(consisting of normal recurring adjustments) that are, in the opinion of management, necessary to present fairly its financial
position, results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results
to be expected for a full year. This Form 10-Q should be read in conjunction with our audited financial statements included in
our Annual Report on Form 10-K for the year ended July 31, 2019, filed with the SEC on September 19, 2019.
Emerging
Growth Company
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 not 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 the 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.
Offering
Costs
The
Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A
– “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred
through the balance sheet date that are related to the Public Offering and that were charged to stockholders’ equity upon
the completion of the IPO. Accordingly, offering costs totaling approximately $5,749,899 have been charged to stockholders’
equity (consisting of $1,437,500 in underwriters’ discount, $1,725,000 in deferred underwriters’ discount, plus $676,099
of other cash expenses, and a non-cash charge of $1,911,300 to record the fair value of the Unit Purchase Option (UPO) (as described
in Note 4 – Private Placement). There were no payments of deferred offering costs for the nine months ended April 30, 2020.
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, 2020 and July 31, 2019.
Cash
Held in Trust Account
At
April 30, 2020, the assets held in the Trust Account were held in cash and treasury funds.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000 per depositor. The Company has not experienced
losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair
Value Measurements and Disclosures”, approximates the carrying amounts represented in the accompanying balance sheet, primarily
due to its short-term nature.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory
redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary
shares (including ordinary shares that feature redemption rights that are 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
feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence
of uncertain future events. Accordingly, at April 30, 2020, ordinary shares subject to possible redemption are presented as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheets.
Warrants
and Rights
Since
the Company is not required to net cash settle the Warrants and Rights and the Warrants and Rights are exercisable upon the consummation
of an initial Business Combination, the management determined that the Warrants and Rights will be classified within shareholders’
equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale
will be allocated to Public Shares, Warrants, and Rights based on the relative fair value of the securities in accordance with
470-20-30. The value of the Public Shares, Warrants, and Rights will be based on the closing price paid by investors.
Net
Loss per Ordinary Share
The
Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net loss per ordinary
share is computed by dividing net loss by the weighted average number of ordinary shares issued and outstanding for the period.
At April 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised
or converted into ordinary shares and then share in the income of the Company. As a result, diluted income per ordinary share
is the same as basic income per ordinary share for the periods presented.
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 statement and tax basis of assets
and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. 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 statement 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 the interim period, disclosure and transition.
The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of April 30, 2020. The Company is currently not aware of any
issues under review that could result in significant payments, accruals or material deviation from its position. The Company is
subject to income tax examinations by major taxing authorities since inception and has identified the British Virgin Islands as
its only “major” tax jurisdiction. The Company is presently not subject to income taxes or income tax filing requirements
in the British Virgin Islands or the United States. As such, the Company’s tax provision was zero for the period presented.
Subsequent
Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the financial statements
were issued.
Recent
Accounting Pronouncements
Management
does not believe that 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
Pursuant
to the IPO on April 1, 2019, the Company sold 5,000,000 units at a purchase price of $10.00 per unit (the “Units”).
Each Unit consists of one ordinary share, one redeemable warrant (“Public Warrant”) to acquire one-half (1/2) of one
ordinary share, and one right (“Public Right”) to receive one-tenth (1/10) of an ordinary share upon the consummation
of an Initial Business Combination. Each redeemable warrant entitles the holder thereof to purchase one-half (1/2) of one ordinary
share at a price of $11.50 per full share, and each ten rights entitle the holder thereof to receive one ordinary share at the
closing of a business combination. However, the Warrants may only be exercised for a whole number of shares, meaning that the
Warrants must be exercised in multiples of two. No fractional shares will be issued upon separation of the Units.
Note
4 – Private Placement
Simultaneously
with the closing of the IPO, the Company consummated the Private Placement with 8i Enterprises Pte. Ltd. of 221,250 units (the
“Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,212,500.
On
April 4, 2019, the underwriters exercised the over-allotment option in full and the closing of the issuance and sale of the additional
Units occurred on April 8, 2019. The total aggregate issuance by the Company of 750,000 units at a price of $10.00 per unit resulted
in total gross proceeds of $7,500,000. On April 8, 2019, simultaneously with the sale of the over-allotment units, the Company
consummated the private sale of an additional 18,750 Private Units, generating gross proceeds of $187,500.
The
Company granted to Chardan Capital Markets, LLC (“Chardan”), the representative of the underwriters, a 45-day option
to purchase up to 750,000 units (over and above the 5,000,000 units referred to above) solely to cover over-allotments at $10.00
per unit. The Units that would be issued in connection with the over-allotment option would be identical to the Units issued in
the IPO.
On
April 1, 2019, the underwriters were paid a cash underwriting discount of two and a half percent (2.5%) of the gross proceeds
of the Initial Public Offering, or $1,250,000. On April 4, 2019, the underwriter exercised its over-allotment option in full.
Therefore, an additional underwriting discount of $187,500 was paid to the underwriters accordingly.
The
Company sold to the underwriters (and/or its designees), for $100, an option to purchase up to a total of six percent of the total
number of units sold in the public offering. The option is exercisable, in whole or in part, at $11.50 per unit. Based on a maximum
of 300,000 units (or 345,000 units if the over-allotment option is exercised) being exercisable under the option, the aggregate
proceeds from exercising the units would be $3,450,000 (or $3,967,500 if the over-allotment option is exercised in full). The
term for the exercise of the option would commence on the later of the consummation of an Initial Business Combination or one-year
anniversary from the IPO.
The
Private Units are identical to the units sold in the Initial Public Offering except the Private Units will be non-redeemable.
The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities
(except to the same permitted transferees as the insider shares) until the completion of the Business Combination.
Unless
the Company seeks and receives the consent of its’ shareholders to otherwise extend the life of the Company, if the Company
does not complete a Business Combination by June 30, 2020, the proceeds of the sale of the Private Units will be used to fund
the redemption of the Public Shares (subject to the requirements of applicable law).
Note
5 – Related Party Transactions
Founder
Shares
On
April 17, 2018 and July 25, 2018, the Sponsor purchased 1,437,500 ordinary shares (the “Founder Shares”) for an aggregate
price of $25,000, or approximately $0.0174 per share. The Founder Shares are identical to the ordinary shares included in the
Units being sold in the Proposed Offering. The Sponsor has agreed to forfeit 187,500 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.
All
of the Founder Shares issued and outstanding prior to the date of the IPO were placed in escrow with VStock Transfer, LLC, as
escrow agent, until (1) with respect to 50% of the Founder Shares, 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
$12.50 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 and (2) with respect to the remaining
50% of the Founder Shares, six months after the date of the consummation of an Initial Business Combination, or earlier, in either
case, 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 187,500 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. The over-allotment option was exercised in full on April 4,
2019.
Related
Party Loans
8i
Enterprises Pte. Ltd., an entity controlled by the Company’s Chairman and Chief Executive Officer, extended a loan of $25,000
on May 3, 2018. This loan was non-interest bearing and was repaid in August 2018. As of April 30, 2020, 8i Enterprises Pte. Ltd.
had advanced the Company an aggregate of $1,781,185, in regard to the costs associated with the formation, the IPO Offering, and
business combination efforts, of which the Company repaid $326,185 to 8i Enterprises Pte. Ltd. from the proceeds of the Initial
Public Offering not being placed in the Trust Account on April 1, 2019.
On
July 2, 2019, July 23, 2019, September 25, 2019, October 15, 2019, January 7, 2020, February 3, 2020, March 3, 2020, March 26,
2020 and May 11, 2020, the Company issued unsecured promissory notes in the aggregate principal amount of up to $1,471,000 (the
“Notes”) to 8i Enterprises Pte. Ltd. The Notes do not bear interest and mature upon closing of a business combination
by the Company. Each Note is convertible at 8i Enterprises Pte. Ltd.’s option upon providing written notice of such conversion
at least one business day prior to the consummation of the Business Combination, into Private Units consisting of one ordinary
share, one redeemable warrant to acquire one-half of one ordinary share (which entitles the holder thereof to purchase one-half
of one ordinary share at a price of $11.50 per full share), and one right to receive one-tenth (1/10) of an ordinary share upon
the consummation of an initial business combination (which securities have terms equivalent to the terms of the private placement
securities issued in connection with the Company’s IPO) at a price of $10.00 per share at the closing of a business combination.
Initially up to $500,000 of the outstanding Notes were initially convertible into Private Units. However, in order to comply with
the Company’s obligations under the Third Amendment to convert all of the Notes, the Company’s Board authorized and
approved the conversion of Notes in excess of $500,000 to such amount as necessary to fulfill the Company’s obligations
but not exceeding $3,000,000. 8i Enterprises Pte. Ltd. has provided the Company with written notice to convert the Notes into
147,100 Private Units immediately prior to the Closing.
Note
6 – Due to Diginex
On
March 3, 2020, the Company issued an unsecured promissory note to Diginex amounting to $100,000 (the “Diginex Note”).
The Diginex Note does not bear interest and mature upon closing of a business combination by the Company.
Note
7 – Commitments and Contingencies
Agreements
with underwriters
The
Company sold to Chardan, for $100, an option to purchase up to 345,000 units exercisable at $11.50 per unit, commencing on the
later of the consummation of a business combination and six months from the effective date of the Registration Statement.
Registration
Rights
The
holders of the Founders’ Shares issued and outstanding at the closing of the IPO, as well as the holders of the private
units (and all underlying securities) will be entitled to registration rights pursuant to an agreement to be signed prior to or
on the date of the IPO. 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 will 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.
Business
Combination Marketing Agreements
Chardan
M&A Agreement
On
April 12, 2019, the Company engaged Chardan to act as financial and M&A advisor (the Chardan M&A Agreement) in connection
with a business combination (the “Transaction”) to advise and assist the Company in negotiating terms and conditions
of the above defined or other transactions, introduce the Company, either directly or indirectly, to potential investors and/or
business partners (“Chardan Introduced Parties”), and perform such other financial advisory services as Chardan and
the Company may from time to time agree upon. In the event a Transaction is consummated, the Company will pay Chardan an advisory
fee (the Chardan Advisory Fee”) equal to the lesser of $1 million or 1% of the Aggregate Value of the Transaction, which
is deductible from the Chardan Financing Fee and Chardan M&A Fee described below. In the event a Transaction is consummated
involving a Chardan Introduced Party as investor that is not a holder of the Company’s securities as of April 12, 2019,
the Company will pay Chardan a financing fee (the “Chardan Financing Fee”) an aggregate cash fee equal to 5% of the
aggregate sales price of the Company securities sold in the Transaction to investors that are not holders of the Company’s
securities as of April 12, 2019. In the event a Transaction is consummated involving a Chardan Introduced Party as business combination
target that has not been in negotiations with the Company as of April 12, 2019, the Company will pay Chardan an aggregate M&A
fee (the “Chardan M&A Fee”) based on the Aggregate Value of the Transaction, according to the following schedule:
3% of the Aggregate Value up to $100 million, 2% of the Aggregate Value up between $100 million to $200 million; and 1% of the
Aggregate Value above $200 million. If a Transaction with an Introduced Party is not consummated prior to the expiration of the
Chardan M&A Agreement, Chardan shall be entitled to the Chardan Advisory Fee and the Chardan Financing Fee with respect to
any Transaction involving introduced parties within 12 months following the expiration or termination of the Chardan M&A agreement.
The Company will also reimburse Chardan for up to $50,000 of its reasonable costs and expenses incurred by it in connection with
the performance of its services.
Shine
Link Limited Pre-Combination Consultancy Agreement
The
Company has also engaged Shine Link Limited (“Shine Link”) to assist the Company in the search of suitable targets
to acquire for the business combination, introducing potential targets to the Company from time to time for consideration, providing
consultancy services to help guide the Company in acquiring Targets, whether or not introduced by Shine Link, assessing each potential
target and discussing each target with the Company, including its shareholding structure, structure of the transaction, capital
structure of the target, board composition and management structure, conflicts of interest and interest persons transactions,
matters arising from applicable regulations, appointment of suitable professionals, combination timetable, and other matters concerning
the combination preparation including negotiations and reviewing legal documentation. As consideration for Shine Link’s
services, the Company will issue 100,000 new shares to Shine Link upon successful closing of a combination, whether or not that
Target is introduced by Shine Link.
Financial
Advisory Agreements
In
December 2019, the Company separately engaged Alpha International Securities (Hong Kong) Limited (“Alpha”), Asia Capital
Link Equity Limited (“Asia Link”) and Shanghai Haohong Investment Management Limited (collectively, the “Advisors”)
to act as the Company’s non-exclusive advisors in connection with the Acquisition to assist the Company in identifying potential
investors that are interested in purchasing shares of the Company, informing and arranging potential investors to attend venues
where the Company or Diginex may provide non-confidential and publicly available information related to the Acquisition, assist
potential investors in making purchases, and other services related to potential investors. As consideration for the Advisors’
services, the Company will pay the Advisors a fee equal to 7% of the amount paid by the potential investors (“Purchase Amount”)
prior to the closing of the Acquisition. However, if the Purchase Amount exceeds $10 million, the fee shall be 8% of the Purchase
Amount.
In
December 2019, the Company engaged Orchardz Capital Pte. Ltd. (“Orchardz”) to provide introduction services, whereby
Orchardz will introduce sophisticated and/or high net worth individuals willing to invest in the Company via subscription of the
Company’s shares and arranging meetings for the Company to meet Orchardz’s clients or customers. In the event that
the services performed by Orchardz results in its clients or customers making investments into the Company, the Company will pay
to Orchardz a fee of 5.5% of the amount invested by such clients or customers.
Note
8 – Shareholders’ Equity
Ordinary
Shares
The
Company is authorized to issue unlimited ordinary shares of no par value. If the Company enters into an Initial Business Combination,
it may (depending on the terms of such an Initial Business Combination) be required to increase the number of ordinary shares
at the same time as the Company’s shareholders vote on the Initial Business Combination to the extent the Company seeks
shareholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled
to one vote for each share of common stock.
As
of April 30, 2020, the Company has issued an aggregate of 2,390,068 ordinary shares, excluding 5,037,432 shares subject to possible
redemption, none of which are subject to forfeiture.
Preferred
Stock
As
of April 30, 2020, there were no preferred stock issued or outstanding.
Public
Warrants
Each
warrant will become exercisable on the later of the completion of an Initial Business Combination and 12 months from the closing
of the IPO and will expire five years after the completion of an Initial Business Combination, or earlier upon redemption or liquidation.
The Public Warrants may only be exercised for a whole number of shares, meaning that the Public Warrants must be exercised in
multiples of two. Once the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole, and not in part,
at a price of $0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, if and only if (a) the last
sale price of the Company’s ordinary shares equals or exceeds $16.50 per share for any 20 trading days within a 30 trading
day period ending three business days prior to the date on which the Company sent the notice of redemption to the Warrant holders,
and (b) there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the
time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date
of redemption.
Except
in cases where the Company is not the surviving entity in a business combination, each holder of a right will automatically receive
one-tenth (1/10) of an ordinary share upon consummation of an Initial Business Combination. In the event it is not the surviving
entity upon completion of an Initial Business Combination, each holder of a right will be required to affirmatively convert his,
her or its rights in order to receive the one-tenth (1/10) of a share underlying each right upon consummation of the business
combination. No fractional shares will be issued in connection with an exchange of rights; fractional shares will either be rounded
down to the nearest whole share or otherwise addressed in accordance with the applicable provisions of the British Virgin Islands
law.
Private
Warrants
The
Private warrants contain identical terms as Public Warrants with the following exceptions:
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1.
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Private
warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held
by 8i Enterprises Pte. Ltd. or its permitted transferees.
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2.
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Because
the private units will be issued in a private transaction, 8i Enterprises Pte. Ltd. and its permitted transferees will be
allowed to exercise the private warrants for cash even if a registration statement covering the ordinary shares issuable upon
exercise of such warrants is not effective and receive unregistered ordinary shares.
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3.
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8i
Enterprises Pte. Ltd. and its designees have agreed (A) to vote the ordinary shares underlying the private units, or “private
shares,” in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to our
amended and restated memorandum and articles of association that would stop the Company’s public shareholders from converting
or selling their shares to the Company in connection with a business combination or affect the substance or timing of the
Company’s obligation to redeem 100% of the Company’s public shares if the Company does not complete a business
combination within 12 months from the closing of the Proposed Offering (or 18 months, as applicable) unless the Company provides
dissenting public shareholders with the opportunity to convert their public shares in connection with any such vote, (C) not
to convert any private shares for cash from the trust account in connection with a shareholder vote to approve our proposed
initial business combination or a vote to amend the provisions of the Company’s amended and restated memorandum and
articles of association relating to shareholders’ rights or pre-business combination activity and (D) that the private
shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated.
8i Enterprises Pte. Ltd. and its designees have also agreed not to transfer, assign or sell any of the private units or underlying
securities (except to the same permitted transferees as the insider shares and provided the transferees agree to the same
terms and restrictions as the permitted transferees of the insider shares must agree to) until the completion of our initial
business combination.
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