ITEM
1. BUSINESS
Introduction
8i
Enterprises Acquisition Corp (“8i”) is a British Virgin Islands business company incorporated on November 24, 2017
as a blank check company 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 target businesses. Our efforts to identify a prospective
target business will not be limited to any particular industry or geographic location, although we intend to focus on targets
located in Asia.
On
April 1, 2019, we consummated our initial public offering (“IPO”) of 5,000,000 units (the “Units”). Each
Unit consists of one ordinary share (the “Ordinary Shares”), one redeemable warrant to purchase one-half of one ordinary
share (the “Public Warrants”) and one right to receive 1/10 of an Ordinary Share upon the consummation of our initial
business combination (the “Rights”). The Units were sold at an offering price of $10.00 per Unit, generating gross
proceeds of $50,000,000. The Company granted the underwriters a 45-day option to purchase up to 750,000 additional Units to cover
over-allotments, if any.
On
April 1, 2019, simultaneously with the consummation of the IPO, we consummated the private placement (“Private Placement”)
with 8i Enterprises Pte Ltd, an entity controlled by 8i’s Chairman and Chief Executive Officer (“Enterprises”)
of 221,250 units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,212,500.
The Private Units are identical to the Units sold in the IPO, except that the warrants underlying the Private Units (i) may be
exercised on a cashless basis at the holder’s option and (ii) will not be redeemable by the Company, in each case as long
as they are held by Enterprises or its permitted transferees. Additionally, because the Private Units were issued in a private
transaction, our Sponsor and its permitted transferees will be allowed to exercise the warrants included in the Private Units
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. Additionally, Enterprises agreed not to transfer, assign or sell any of the Private
Units or underlying securities (except in limited circumstances, as described in the registration statement relating to the IPO)
until the completion of the Company’s initial business combination. Enterprises was granted certain demand and piggyback
registration rights in connection with the Private Units.
The
underwriters exercised the over-allotment option in full and, on April 4, 2019, the underwriters purchased 750,000 over-allotment
option Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $7,500,000. On April 4, 2019,
simultaneously with the sale of the over-allotment Units, the Company consummated the private sale of an additional 18,750 Private
Units to Enterprises, generating gross proceeds of $187,500.
A
total of $57,500,000 of the net proceeds from the sale of Units in the IPO (including the over-allotment option Units) and the
private placements on April 1, 2019 and April 4, 2019 were placed in a trust account established for the benefit of the Company’s
public shareholders at JPMorgan Chase Bank maintained by Wilmington Trust Company, acting as trustee. None of the funds held in
trust will be released from the trust account, other than interest income to pay any tax obligations, until the earlier of (i)
the consummation of the Company’s initial business combination and (ii) the Company’s failure to consummate a business
combination by September 30, 2020.
Business
Combination Agreement
On
July 9, 2019, 8i entered into a share exchange agreement (the “Share Exchange Agreement”) with Diginex Limited, 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 the terms of the Share Exchange
Agreement, the Sellers agreed to sell, transfer, convey, assign and deliver to 8i 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, no
par value, of 8i (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”) with Diginex Limited, a Singapore public company limited by shares (formerly known as
Digital Innovative Limited) (“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 8i
(the “Reincorporation Merger”, and together with the “Share Exchange,” the “Business Combination”),
and 8i 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 8i (the “Merger Agreement”) and a plan of merger by and among 8i 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 8i’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 8i ordinary shares, (ii) that references
to the proxy statement in the Share Exchange Agreement are replaced with references to this 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, are replaced with Singapore NewCo.
The “Closing Date” shall mean the date on which the Business Combination is consummated.
On
January 28, 2020, each of the parties to the Amendment entered into a second amendment to the Share Exchange Agreement (the “Second
Amendment”), 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”) 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 8i to issue up to 1,000,000 Singapore NewCo Ordinary Shares to third party advisors or consultants
to (i) assist 8i with maintaining funds of at least $15,000,000 in the trust account after giving effect to all 8i ordinary share
redemptions, but prior to taking into account 8i’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) 8i shall convert all outstanding
promissory notes issued in favor of 8i Enterprises Pte. Ltd. into 8i private units as of the Closing Date (the “Sponsor
Loan Conversion”), (b) 8i 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 8i 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 8i and Diginex will
use best efforts to assist the other party to fulfill the new covenants relating to (i) 8i maintaining $15,000,000 in the trust
account as of the Closing Date after giving effect to 8i’s ordinary share redemptions, but prior to taking into account
8i’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 8i 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 8i ordinary share redemptions), and (ii) the combined stockholders equity of 8i and Diginex (after giving effect
to the 8i 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 8i’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 8i 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 Share Exchange Agreement
is terminated, for a period of 12 months after the termination, and (b) without 8i’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) 8i 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) 8i will use commercially reasonable
efforts to cause the balance of the trust account after giving effect to 8i’s ordinary share redemptions, but prior to taking
into account 8i’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) 8i 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 8i’s ordinary share redemptions,
but prior to taking into account 8i’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, 8i will deliver
to Diginex evidence of the Sponsor Loan Conversion. The existing condition to consummate the Share Exchange that 8i 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 8i ordinary share redemptions, the Share Exchange and the transactions
contemplated thereby, 8i 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.
On
June 24, 2020, each of the parties to the Third Amendment entered into a fourth amendment to the Share Exchange Agreement (the
“Fourth Amendment,” and together with the Share Exchange Agreement, the Amendment, the Second Amendment and the Third
Amendment, the “Amended Share Exchange Agreement”) to, among other things, (a) extend the outside Closing Date of
the Business Combination to September 28, 2020 and (b) agree to hold the Meeting no later than September 15, 2020.
The
Fourth Amendment includes new covenants that all of the parties will, (i) take all steps required to extend the time available
to consummate the Business Combination for an additional three months to September 30, 2020, including, sharing payment of the
extension fees payable to the 8i trust account in the amount of $575,000, (ii) use their commercially reasonable efforts to hold
the Meeting no later than September 15, 2020 and hold the closing of the Business Combination no later than September 28, 2020,
and (iii) use their commercially reasonable efforts to have 6,411,100 of the Singapore NewCo Ordinary Shares issuable, in the
aggregate, to various parties pursuant to the Share Exchange Agreement be freely tradeable from the day immediately following
the Closing Date.
In
connection with the Business Combination, we filed and will file relevant materials with the Securities and Exchange Commission
(the “SEC”), including a proxy statement on Schedule 14A. Promptly after filing our definitive proxy statement with
the SEC, we mailed the definitive proxy statement and a proxy card to each stockholder entitled to vote at the special meeting
relating to the acquisition. INVESTORS AND SECURITY HOLDERS OF 8i ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS
OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE ACQUISITION THAT 8i WILL FILE WITH THE SEC WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT 8i, DIGINEX AND THE ACQUISITION. The preliminary proxy
statement, the definitive proxy statement and other relevant materials in connection with the acquisition, and any other documents
filed by us with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or by writing to us at 6 Eu
Tong Sen Street, #08-13 The Central, Singapore 059817.
Recent
Developments
On
each of July 2, 2019, July 23, 2019, September 25, 2019, October 15, 2019, January 7, 2020, February 3, 2020, March 3, 2020, March
26, 2020, May 11, 2020, June 24, 2020, July 24, 2020, August 3, 2020 and September 4, 2020, 8i issued the Notes in the aggregate
principal amount of $200,000, $100,000, $150,000, $200,000, $70,000, $60,000, $100,000, $575,000, $16,000, $287,500, $132,000,
$50,000 and $280,000, respectively (the “Notes”), to 8i Enterprises Pte Ltd, an entity controlled by 8i’s Chairman
and Chief Executive Officer (“Enterprises”). Pursuant to the terms of the Notes, the Notes do not bear interest and
mature upon closing of a business combination by the Company. Each Note is convertible at Enterprises’ 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 convertible into Private Units. However, in
order to comply with 8i’s obligations under the Third Amendment to convert all of the Notes, 8i’s Board authorized
and approved the conversion of Notes in excess of $500,000 to such amount as necessary to fulfill 8i’s obligations but not
exceeding $3,000,000. Enterprises has provided 8i with written notice to convert the Notes into 175,850 Private Units immediately
prior to the closing of the Business Combination.
On
March 3, 2020 and June 24, 2020, 8i issued unsecured promissory notes to Diginex in the aggregate principal amount of up to $387,500
(the “Diginex Notes”). The Diginex Notes do not bear interest and mature upon closing of a business combination by
the Company. The proceeds of the Diginex Notes will be used for the Company’s share of the cost arising from an additional
services agreement with Chardan and for the cost of extending the combination period by an additional 3 months (until the end
of September 2020).
Competitive
Advantages
We
believe our specific competitive strengths to be the following:
Status
as a Publicly Listed Company
We
believe our structure will make us an attractive business combination partner to prospective target businesses. As a publicly
listed company, we will offer a target business an alternative to the traditional initial public offering. We believe that target
businesses will favor this alternative, which we believe is less expensive, while offering greater certainty of execution than
the traditional initial public offering. During an initial public offering, there are typically expenses incurred in marketing,
which would be costlier than a business combination with us. Furthermore, once a proposed business combination is approved by
our shareholders (if applicable) and the transaction is consummated, the target business will have effectively become public,
whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general
market conditions that could prevent the offering from occurring. Once public, we believe the target business would have greater
access to capital and additional means of creating management incentives that are better aligned with shareholders’ interests
than it would as a private company. It can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented management staffs.
Strong
Financial Position and Flexibility
With
the funds held in our trust account, we can offer a target business a variety of options to facilitate a business combination
and fund future expansion and growth of its business. Because we are able to consummate a business combination using the cash
proceeds from the IPO or debt, we have the flexibility to use an efficient structure allowing us to tailor the consideration to
be paid to the target business to address the needs of the parties. However, if a business combination requires us to use substantially
all of our cash to pay for the purchase price, we may need to arrange third party financing to help fund our business combination.
We have currently not taken any steps to secure third party financing.
Competitive
Weaknesses
We
believe our competitive weaknesses to be the following:
Limited
Financial Resources
Our
financial reserves will be relatively limited when contrasted with those of venture capital firms, leveraged buyout firms and
operating businesses competing for acquisitions. In addition, our financial resources could be reduced because of our obligation
to convert shares held by our public shareholders as well as any tender offer we conduct (subject to our being required to maintain
net tangible assets in the trust account of no less than $5,000,0001). In the event that we did not have enough funds available
to us to complete a business combination, we might be required to seek additional financing in order to complete a business combination.
Lack
of experience with blank check companies
Our
management team is not experienced in pursuing business combinations on behalf of blank check companies. Other blank check companies
may be sponsored and managed by individuals with prior experience in completing business combinations between blank check companies
and target businesses. Our management’s lack of experience may not be viewed favorably by target businesses.
Limited
technical and human resources
As
a blank check company, we have limited technical and human resources. Many venture capital funds, leveraged buyout firms and operating
businesses possess greater technical and human resources than we do and thus we may be at a disadvantage when competing with them
for target businesses.
Delay
associated with shareholder approval or tender offer
We
may be required to seek shareholder approval of our initial business combination. If we are not required to obtain shareholder
approval of an initial business combination, we will allow our shareholders to sell their shares to us pursuant to a tender offer.
Both seeking shareholder approval and conducting a tender offer will delay the consummation of our initial business combination.
Other companies competing with us for acquisition opportunities may not be subject to similar requirement, or may be able to satisfy
such requirements more quickly than we can. As a result, we may be at a disadvantage in competing for these opportunities.
Inability
to find suitable target companies
We
may not be able to find a target that meets our selection investment criteria. Even though we have broad discretion to acquire
a company that falls outside of our selection criteria, such a target may be less desirable than one that falls within our selection
criteria.
Acquisition
Strategy
Our
acquisition strategy is to identify, acquire and, after our initial business combination, to build a public company. Our selection
process will leverage our team’s network of industry, private equity and lending community relationships as well as relationship
with management teams of public and private companies, investment bankers, attorneys and accountants, which we believe should
provide us with a number of business combination opportunities. We intend to deploy a pro-active, thematic sourcing strategy and
to focus on companies where we believe the combination of our relationships, capital and capital markets expertise and operating
experience of James Tan, can help accelerate the target business’ growth and performance.
Investment
Criteria
The
focus of our management team is to create shareholder value by leveraging its experience to improve the efficiency of the business
while implementing strategies to grow revenue and profits organically and/or through acquisitions. Consistent with our strategy,
we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target
businesses. While we intend to use these criteria and guidelines in evaluating prospective businesses, we may deviate from these
criteria and guidelines should we see fit to do so:
As
a result of the Asia region’s strong growth over the past several decades, the region has become home to a large number
of small domestic and regional companies, which are serving the ever-increasing needs of economies locally. While such companies
have performed relatively well, the vast majority of these companies suffer from a lack of insightful strategy, insufficient capital,
operational inefficiencies and various succession issues (as many companies are first-generation and family-owned). This has also
resulted in high degree of market fragmentation, without any established regional market leaders. We will seek target businesses
for which we can provide strategic advice, access to sufficient capital and effective operational expertise, to grow the business.
●
|
Long-term
Revenue Visibility with Defensible Market Position
|
We
intend to seek target companies that are at an inflection point, such as those requiring additional management expertise, are
able to innovate by developing new products or services, or where we believe we can drive improved financial performance and where
an acquisition may help facilitate growth.
●
|
Benefits
from Being a U.S. Public Company (Value Creation and Marketing Opportunities)
|
We
intend to seek target companies that should offer attractive risk-adjusted equity returns for our shareholders. We intend to seek
to acquire a target on terms and in a manner that leverages our experience. We expect to evaluate financial returns based on (i)
the potential for organic growth in cash flows, (ii) the ability to achieve cost savings, (iii) the ability to accelerate growth,
including through the opportunity for follow-on acquisitions and (iv) the prospects for creating value through other value creation
initiatives. Potential upside from growth in the target business’ earnings and an improved capital structure will be weighed
against any identified downside risks.
●
|
Potential
Benefit from Globalization Trends and Possession of Competitive Advantages
|
Target
companies exhibit unrecognized value or other characteristics that we believe have been misevaluated by the marketplace based
on our company specific analysis and due diligence review. For a potential target company, this process will include, among other
things, a review and analysis of the company’s capital structure, quality of earnings, potential for operational improvements,
corporate governance, customers, material contracts, and industry background and trends. We intend to leverage the operational
experience and disciplined investment approach of our team to identify opportunities to unlock value that our experience in complex
situations allows us to pursue.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management may deem relevant.
We
will either (1) seek shareholder approval of our initial business combination at a meeting called for such purpose at which public
shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable) or (2) provide
our public shareholders with the opportunity to sell their public shares to us by means of a tender offer (and thereby avoid the
need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the
trust account (net of taxes payable), in each case subject to the limitations described herein. Notwithstanding the foregoing,
our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by
them into their pro rata share of the aggregate amount then on deposit in the trust account. The decision as to whether
we will seek shareholder approval of our proposed business combination or allow shareholders to sell their shares to us in a tender
offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would otherwise require us to seek shareholder approval. If we so choose and we are legally
permitted to do so, we will have the flexibility to avoid a shareholder vote and allow our shareholders to sell their shares pursuant
to the tender offer rules of the Securities and Exchange Commission, or SEC. In that case, we will file tender offer documents
with the SEC which will contain substantially the same financial and other information about the initial business combination
as is required under the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible
assets of at least $5,000,001 upon such consummation and, solely if we seek shareholder approval, a majority of the issued and
outstanding Ordinary Shares voted are voted in favor of the business combination.
We
will have until September 30, 2020 to consummate our initial business combination. On March 26, 2020, 8i extended the time it
has to complete an initial business combination for an additional three months from April 1, 2020 to June 30, 2020, by depositing
$575,000 into the trust account for the benefit of its public stockholders. Subsequently, on June 24, 2020, 8i extended the time
it has to complete an initial business combination for an additional three months from July 1, 2020 to September 30, 2020 (the
“Second Extension Deadline”), by depositing $575,000 into the trust account for the benefit of its public stockholders.
If 8i does not consummate the Business Combination and fails to complete an initial business combination by September 30, 2020,
8i will be required to dissolve and liquidate. In exchange for these deposits, the insiders received a non-interest bearing, unsecured
promissory note equal to the amount of the deposits 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 will either be paid upon consummation
of our initial business combination, or, at the relevant insider’s discretion, converted upon consummation of our business
combination into additional private units at a price of $10.00 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. Our insiders and their affiliates or designees were not obligated to fund the trust account
to extend the time for us to complete our initial business combination. If we are unable to consummate our initial business combination
within the aforementioned time period, we will, as promptly as possible but not more than ten business days thereafter, redeem
or purchase 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 previously released to us or 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
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.
We
are not required to obtain an opinion from an unaffiliated third party that the target business we select has a fair market value
in excess of at least 80% of the balance of the trust account unless our board of directors cannot make such determination on
its own. We are also not required to obtain an opinion from an unaffiliated third party indicating that the price we are paying
is fair to our shareholders from a financial point of view unless the target is affiliated with our officers, directors, initial
shareholders or their affiliates.
We
currently anticipate structuring our initial business combination to acquire 100% of the equity interests or assets of the target
business or businesses. We may, however, structure our initial business combination where we merge directly with the target business
or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or shareholders or for other reasons, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940,
as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our shareholders prior to the business combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock
of a target. In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of
a substantial number of new shares, our shareholders immediately prior to our initial business combination could own less than
a majority of our issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion
of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test.
Management
Operating and Investment Experience
We
believe that our executive officers possess the experience, skills and contacts necessary to source, evaluate, and execute an
attractive business combination. See the section titled “Management” for complete information on the experience of
our officers and directors. Notwithstanding the foregoing, our officers and directors are not required to commit their full time
to our affairs and will allocate their time to other businesses. We presently expect each of our employees to devote such amount
of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while we are trying
to locate a potential target business to a majority of their time as we move into serious negotiations with a target business
for a business combination). The past successes of our executive officers and directors do not guarantee that we will successfully
consummate an initial business combination.
As
more fully discussed in “Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination
opportunity that falls within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations,
he may be required to present such business combination opportunity to such entity, subject to his or her fiduciary duties under
British Virgin Islands law, prior to presenting such business combination opportunity to us. Most of our officers and directors
currently have certain pre-existing fiduciary duties or contractual obligations.
Emerging
Growth Company Status and Other Information
We
are an emerging growth company as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as
modified by the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act). As such, we are eligible
to 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 of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
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 statement with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the date of the IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed
to be a large accelerated filer, which means the market value of our Ordinary Shares that are held by non-affiliates exceeds $700
million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during
the prior three year period.
We
are currently a “foreign private issuer” as defined in Rule 405, but are voluntarily choosing to register and report
using domestic forms. We are required to determine our status as a foreign private issuer for the 2018 fiscal year as of the last
day of our second quarter, or June 30. On such date, if we no longer qualify as a “foreign private issuer” (as set
forth in Rule 3b-4 of the Exchange Act), we will then become subject to the U.S. domestic issuer rules as of the first day of
our 2019 fiscal year, or January 1, 2019.
Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there may be numerous potential target businesses that we could acquire with the net proceeds of the IPO, our ability
to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek shareholder approval of a business combination or obtain the necessary financial information to be sent
to shareholders in connection with such business combination may delay or prevent the completion of a transaction;
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our
obligation to convert public shares held by our public shareholders may reduce the resources available to us for a business
combination;
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Nasdaq
may require us to file a new listing application and meet its initial listing requirements to maintain the listing of our
securities following a business combination;
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our
outstanding warrants, rights and unit purchase options and the potential future dilution they represent;
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our
obligation to pay the deferred underwriting discounts and commissions to Chardan Capital Markets, LLC upon consummation of
our initial business combination;
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our
obligation to either repay or issue units upon conversion of up to $500,000 of working
capital loans that may be made to us by our initial shareholders, officers, directors
or their affiliates;
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our
obligation to register the resale of the insider shares, as well as the private units (and underlying securities) and any
securities issued to our initial shareholders, officers, directors or their affiliates upon conversion of working capital
loans; and
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the
impact on the target business’ assets as a result of unknown liabilities under the securities laws or otherwise depending
on developments involving us prior to the consummation of a business combination.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management
believes, however, that our status as a public entity and potential access to the United States public equity markets may give
us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business
with significant growth potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Employees
We
have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend
to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for the business combination and the stage of the business combination
process the company is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time
investigating such target business and negotiating and processing the business combination (and consequently spend more time to
our affairs) than they would prior to locating a suitable target business. We presently expect our executive officers to devote
such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while
we are trying to locate a potential target business to a majority of their time as we move into serious negotiations with a target
business for a business combination). We do not intend to have any full-time employees prior to the consummation of a business
combination.
ITEM
1A. RISK FACTORS
As
a smaller reporting company, we are not required to make disclosures under this Item.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
2. PROPERTIES
We
do not own any real estate or other physical properties materially important to our operations. We maintain our principal executive
offices at 6 Eu Tong Sen Street, #08-13 The Central, Singapore 059817. 8i Enterprises Pte Ltd, a company wholly owned by Mr. James
Tan, is providing us this space free of charge. We consider our current office space adequate for our current operations.
ITEM
3. LEGAL PROCEEDINGS
We
may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We
are not currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any
legal proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material
adverse effect on our business, financial condition or results of operations.
ITEM
4. MINE SAFETY DISCLOSURES
Not
Applicable.
part
II
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following table sets forth information about our directors and executive officers as of September 10, 2020.
Name
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Age
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Position
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Meng Dong (James) Tan
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58
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Chief Executive Officer and Director
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Guan Hong (William) Yap
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56
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Chief Financial Officer and Director
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Kwong Yeow Liew
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65
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Director
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Ajay Rajpal
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50
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Director
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Alexander Arrow
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49
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Director
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Below
is a summary of the business experience of each our executive officers and directors:
Meng
Dong (James) Tan has been our Chief Executive Officer and director since March 2018. Mr. Tan has more than 20 years’
experience in managing private and public companies based in Asia and in the USA. He is the Director and CEO of 8i Capital Limited,
a company focusing on investments and merger and acquisitions. He served as the Chairman and Chief Executive Officer of Moxian
Inc., a NASDAQ listed company, from 2013 to 2017. From 2003 to 2006, he was the Chairman and CEO of Vashion Group Ltd, a company
listed on the Singapore Stock Exchange, and from 2005 to 2008, he was the CEO and director of Vantage Corporation Limited, a company
listed on the Singapore Stock Exchange. From 2006 to 2009, he served as a director on the Board of Pacific Internet Limited, a
company listed on NASDAQ, until its sale to Connect Holdings Limited, a group comprising of Ashmore Investment Management Limited,
Spinnaker Capital Limited and Clearwater Capital Partners, LLC. Mr. Tan graduated from the National University of Singapore (NUS)
with a Bachelor of Arts in 1985.
Guan
Hong (William) Yap, CFA, has been our Chief Financial Officer and Director since March 2018. Mr. Yap served as the Head of
Investment Banking for Shanghai Pingmei Shenma Finance Leasing Private Limited, a company based in Shanghai, China from March
2016 to February 2019. He founded Cataya Pte Ltd, a business that focuses on originating private equity transactions, loans and
M&A deals in Asia, with an emphasis on China, Myanmar and Indonesia, in January 2011. Prior to this, he specialized in originating
proprietary private equity and venture deals in China for investment funds in Singapore for Hupomone Capital Partners (Singapore)
Pte Ltd (2009-2011) and Evia Capital Partners Pte Ltd (2006-2009). Prior to then, between 1995 and 2004, he worked in various
positions for Ascendas Land (Singapore) Pte Ltd, Singapore Telecom Ltd, PrimePartners Asia Capital Ltd, and IPCO International
Ltd. He was appointed as an independent director on the board of Moxian, Inc in May 2019. Mr. Yap graduated from the University
of Oxford with a degree in Physics and has been a member of the CFA Institute since 2000.
Kwong
Yeow Liew has been our director since November 2017. Mr. Liew has more than 25 years of experience in several multi-national
organizations, such as Matsushita Denki, General Motors, Intel as well as Urmet Telecoms Italy. He served as a director of Moxian,
Inc from March 2014 to August 2016. Mr. Liew served as the President, Chief Executive Officer and director of Rebel Group, Inc.,
a Singapore company, from February 2013 to January 2015. In 2006, Mr. Liew was instrumental in setting up the first manufacturing
plant of Urmet Telecommunications S.p.A in China and fine-tuning its supply chain. Prior to that, Mr. Liew was the General Manager
of Aztech Singapore Pte Ltd’s plant in China from 2001 through 2005. From 1992 through 2001, he served as the Head of Operations
of the manufacturing facilities of Phoenix Mecano S E Asia Pte Ltd in Singapore. Mr. Liew received his certificate in Electrical
Engineering from Singapore Technical Education in 1974. He also completed the management study programs in City and Guilds regarding
Electrical and Electronics in 1974, Industrial Training Board at MOE Singapore in 1976, Matsushita DENKI Management Development
Program in 1978, General Motors Institute in 1983 and Intel University in 1987. Mr. Liew is fluent in English and Chinese. We
believe that Mr. Liew is qualified to serve as our director because he brings many years of experience in operations and management
in both Singapore and in China.
Ajay
Rajpal, ACA, has been our director since March 27, 2019. Mr. Rajpal is a Chartered Accountant and member of the Institute
of Chartered Accountants in England & Wales (ICAEW). During his career, he has gained broad-ranging commercial experience
developed in the US, Europe, Middle East and Far East, with a particular focus on M&A, financial management and insolvency/restructuring.
Post qualification, Mr. Rajpal held a number of finance-related roles which involved working for periods in the US, Europe, Middle
East and Far East. Since 2011, Mr. Rajpal has run his own consultancy business, NAS Corporate Services Ltd, providing companies
with various corporate services, such as assistance with their pre-IPO funding, the IPO process and post IPO management. Mr. Rajpal
has project managed the initial public offering process and assisted with the associated funding of two businesses on AIM, namely
New Trend Lifestyle Group Plc, which provides Feng Shui products and services across Asia, and Zibao Metals Recycling Group Plc,
a Hong Kong and China based metals recycling company. He currently acts as a non-executive director for New Trend Lifestyle Group
Plc, Zibao Metals Recycling Group Plc, and Early Equity Plc. Mr. Rajpal assisted AIM-listed MNC Strategic Investments Plc (“MNC
Strategic”) with the restructuring of its debt and overseeing the disposal of the non-performing assets of the company.
Following disposal of its main assets, MNC Strategic became an investing company on AIM, seeking acquisitions in the telecom,
media and technology sectors. Mr. Rajpal has also listed Grand Vision Media Holdings Plc, a special purpose acquisition company
on the London Stock Exchange, which successfully completed a reverse takeover of an outdoor media business in Hong Kong/China.
Mr. Rajpal was previously an independent director of Moxian, Inc., a US company with a China based internet business listed on
NASDAQ. We believe that Mr. Rajpal is qualified to serve as our director because of his experience with publicly traded companies
in a number of jurisdictions.
Alexander
K. Arrow, MD, CFA has been our director since March 27, 2019. Dr. Arrow has been the Chief Financial Officer of Protagenic
Therapeutics, Inc., a Delaware company, since November 2015, and the Chief Executive Officer of Zelegent, Inc., a medical technology
company that has developed a minimally-invasive tool for otolaryngologist sleep specialists to treat snoring in a simple office-based
procedure, since January 2015. He previously served on the Board of Neumedicines, Inc. (from January 2015 to December 2015), an
immuno-oncology company developing a first-in-class broad-spectrum anti-cancer agent. He served as a Director of Biolase, Inc.
(NASDAQ: BIOL), a manufacturer of dental lasers, from June 2010 to December 2014. From June 2010 to June 2013, he chaired the
Audit and Compensation committees of the Board of Directors of Biolase, Inc. and was the President and Chief Operating Officer
of the company from June 2013 to December 2014. Prior to Biolase, Inc, from June 2012 to May 2013, Dr. Arrow was the Chief Medical
Officer of Stanford-affiliated neuroscience company Circuit Therapeutics, Inc. Prior to that, he spent five years as the Chief
Financial Officer of cardiovascular device manufacturer Arstasis, Inc. Before entering medical technology operating roles, Dr.
Arrow spent nine years running medical technology equity research at three Wall Street firms, the last five years as the head
of medical technology research at Lazard, Ltd. He also served as the Chief Financial Officer of the Patent & License Exchange,
Inc. He began his surgical residency at the UCLA Medical Center in 1996 before leaving to go into business. He has an MD from
Harvard Medical School and a BA in Biophysics, magna cum laude, from Cornell University. He serves as an independent director
on the Boards of medical technology companies Rindex Medical, Inc, and Gel-e, Inc., and a director and acting CEO of Machine Learning
start-up company Lab NINE, Inc. We believe that Dr. Arrow is qualified to serve as our director because of his experience in C-level
operating roles of medical technology companies in multiple stages of development, corporate governance, finance, and his experience
in medical technology equity research.
Our
directors and officers will play a key role in identifying, evaluating, and selecting target businesses, and structuring, negotiating
and consummating our initial acquisition transaction. Except as described below and under “Conflicts of Interest,”
none of these individuals is currently a principal of or affiliated with a public company or blank check company that executed
a business plan similar to our business plan. We believe that the skills and experience of these individuals, their collective
access to acquisition opportunities and ideas, their contacts, and their transaction expertise should enable them to identify
successfully and effect an acquisition transaction, although we cannot assure you that they will, in fact, be able to do so.
Officer
and Director Qualifications
Our
officers and board of directors are composed of a diverse group of leaders with a wide array of professional roles. In these roles,
they have gained experience in core management skills, such as strategic and financial planning, financial reporting, compliance,
risk management, and leadership development. Many of our officers and directors also have experience serving on boards of directors
and board committees of other companies, and have an understanding of corporate governance practices and trends, which provides
an understanding of different business processes, challenges, and strategies. Further, our officers and directors also have other
experience that makes them valuable, managing and investing assets or facilitating the consummation of business combinations.
We,
along with our officers and directors, believe that the above-mentioned attributes, along with the leadership skills and other
experiences of our officers and board members described below, provide us with a diverse range of perspectives and judgment necessary
to facilitate our goals of consummating an acquisition transaction.
Board
Committees
The
Board has a standing audit, nominating and compensation committee. The independent directors oversee director nominations. Each
audit committee and compensation committee has a charter, which was filed with the SEC as exhibits to the Registration Statement
on Form S-1 on March 4, 2019.
Audit
Committee
The
Audit Committee, which is established in accordance with Section 3(a)(58)(A) of the Exchange Act, engages Company’s independent
accountants, reviewing their independence and performance; reviews the Company’s accounting and financial reporting processes
and the integrity of its financial statements; the audits of the Company’s financial statements and the appointment, compensation,
qualifications, independence and performance of the Company’s independent auditors; the Company’s compliance with
legal and regulatory requirements; and the performance of the Company’s internal audit function and internal control over
financial reporting. The Audit Committee held 4 formal meetings during 2020.
The
members of the Audit Committee are Kwong Yeow Liew, Ajay Rajpal, and Alexander Arrow, each of whom is an independent director
under NASDAQ’s listing standards. Ajay Rajpal is the Chairperson of the audit committee. The Board has determined that Ajay
Rajpal qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the SEC.
Nominating
Committee
The
Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on our Board. Specifically,
the Nominating Committee makes recommendations to the Board regarding the size and composition of the Board, establishes procedures
for the director nomination process and screens and recommends candidates for election to the Board. On an annual basis, the Nominating
Committee recommends for approval by the Board certain desired qualifications and characteristics for board membership. Additionally,
the Nominating Committee establishes and administers a periodic assessment procedure relating to the performance of the Board
as a whole and its individual members. The Nominating Committee will consider a number of qualifications relating to management
and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership
on the Board. The Nominating Committee may require certain skills or attributes, such as financial or accounting experience, to
meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members
to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by
shareholders and other persons. The Nominating Committee held no meetings during 2020.
The
members of the Nominating Committee are Kwong Yeow Liew, Ajay Rajpal, and Alexander Arrow, each of whom is an independent director
under NASDAQ’s listing standards. Ajay Rajpal is the Chairperson of the Nominating Committee.
Compensation
Committee
The
Compensation Committee reviews annually the Company’s corporate goals and objectives relevant to the officers’ compensation,
evaluates the officers’ performance in light of such goals and objectives, determines and approves the officers’ compensation
level based on this evaluation; makes recommendations to the Board regarding approval, disapproval, modification, or termination
of existing or proposed employee benefit plans, makes recommendations to the Board with respect to non-CEO and non-CFO compensation
and administers the Company’s incentive-compensation plans and equity-based plans. The Compensation Committee has the authority
to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. The chief executive
officer of the Company may not be present during voting or deliberations of the Compensation Committee with respect to his compensation.
The Company’s executive officers do not play a role in suggesting their own salaries. Neither the Company nor the Compensation
Committee has engaged any compensation consultant who has a role in determining or recommending the amount or form of executive
or director compensation. The Compensation Committee held no meetings during 2020.
Notwithstanding
the foregoing, as indicated above, no compensation of any kind, including finders, consulting or other similar fees, will be paid
to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services
they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation
of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any
compensation arrangements to be entered into in connection with such initial business combination.
The
members of the Compensation Committee are Kwong Yeow Liew, Ajay Rajpal, and Alexander Arrow, each of whom is an independent director
under NASDAQ’s listing standards. Ajay Rajpal is the Chairperson of the Compensation Committee.
Conflicts
of Interest
Investors
should be aware of the following potential conflicts of interest:
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None
of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts
of interest in allocating their time among various business activities.
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In
the course of their other business activities, our officers and directors may become aware of investment and business opportunities
which may be appropriate for presentation to our company as well as the other entities with which they are affiliated. Our
management has pre-existing fiduciary duties and contractual obligations and may have conflicts of interest in determining
to which entity a particular business opportunity should be presented.
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Our
officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in
business activities similar to those intended to be conducted by our company.
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The
insider shares owned by our officers and directors will be released from escrow only if a business combination is successfully
completed and subject to certain other limitations. Additionally, our officers and directors will not receive distributions
from the trust account with respect to any of their insider shares if we do not complete a business combination. In addition,
our officers and directors may loan funds to us after the IPO and may be owed reimbursement for expenses incurred in connection
with certain activities on our behalf which would only be repaid if we complete an initial business combination. For the foregoing
reasons, the personal and financial interests of our directors and executive officers may influence their motivation in identifying
and selecting a target business, completing a business combination in a timely manner and securing the release of their shares.
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Under
British Virgin Islands law, our directors owe fiduciary duties at both common law and under statute, including:
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a
duty to act honestly, in good faith and in what they believe to be in our best interests and not for a collateral purpose;
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a
duty to exercise powers for the purposes for which those powers were conferred and not act in contravention to the BVI Business
Companies Act, 2004 (as amended) or the memorandum and articles of association of the company; and
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a
duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal
interests.
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In
addition, when exercising powers or performing duties as a director, the director is required to exercise the care, diligence
and skill that a reasonable director would exercise in the same circumstances taking into account, without limitation the nature
of the company, the nature of the decision and the position of the director and the nature of the responsibilities undertaken
by him. A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected
from a person of his knowledge and experience.
As
set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in
self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach
of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors.
This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval
at general meetings. A director shall, forthwith after becoming aware of the fact that he is interested in a transaction entered
into or to be entered into by the company, disclose the interest to the board of the company.
As
set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in
self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach
of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors.
This can be done by way of permission granted in the memorandum and articles of association or alternatively by shareholder approval
at general meetings.
Accordingly,
as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting
business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when
our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any
of the above mentioned conflicts will be resolved in our favor. Furthermore, most of our officers and directors have pre-existing
fiduciary obligations to other businesses of which they are officers or directors. To the extent they identify business opportunities
which may be suitable for the entities to which they owe pre-existing fiduciary obligations, our officers and directors will honor
those fiduciary obligations. Accordingly, it is possible they may not present opportunities to us that otherwise may be attractive
to us unless the entities to which they owe pre-existing fiduciary obligations and any successors to such entities have declined
to accept such opportunities.
In
order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and
directors has contractually agreed, pursuant to a written agreement with us, until the earliest of a business combination, our
liquidation or such time as he ceases to be an officer or director, to present to our company for our consideration, prior to
presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to us, subject
to any pre-existing fiduciary or contractual obligations he might have.
The
following table summarizes the current pre-existing fiduciary or contractual obligations of our officers and directors.
Name
of Individual
|
|
Name
of Affiliated Company
|
|
Affiliation
|
|
Priority/Preference
relative to 8i Enterprises Acquisition Corp
|
Meng
Dong (James) Tan
|
|
8i
Holdings Limited
Bright
Growth Capital Ltd
Good
Eastern Investment Holdings Ltd
8i
Capital Limited
|
|
Director
& shareholder
Director
Director
& shareholder
Director
& shareholder
|
|
We
will have priority over 8i Holdings Limited, Bright Growth Capital Ltd, Good Eastern Investment Holdings Ltd, and 8i Capital
Limited. We will have the right of first refusal over any potential acquisition targets
|
|
|
|
|
|
|
|
|
|
8i
Enterprises Pte Ltd
|
|
Director
& shareholder
|
|
We
do not expect a conflict of interest with 8i Enterprises Pte Ltd as it is not seeking acquisitions.
|
|
|
|
|
|
|
|
Guan
Hong (William) Yap
|
|
Lushwell
Pte Ltd
Elve
Ceramcrete Pte Ltd
Southfield
Pte ltd
Nonstop
Pte Ltd
|
|
Director
& shareholder
Shareholder
|
|
We
will have priority over Lushwell Pte Ltd, Nonstop Pte Ltd, Southfield Pte Ltd, and Elve
Ceramcrete Pte Ltd. However, we do not expect them to have a conflict of interest with
us because these companies are dormant and are not seeking acquisitions.
|
|
|
Moxian,
Inc
|
|
Independent
Director
|
|
We
do not expect a conflict as it is not an executive position. In cases of conflict, we will have priority over Moxian.
|
|
|
|
|
|
|
|
Ajay
Rajpal
|
|
NAS
Corporate Services Ltd
Brookmans
Park Roads Ltd
New
Trend Lifestyle Group Plc
Zibao
Metals Recycling Holdings Plc
MEC
Asian Fund
Grand
Vision Media Holdings Plc
Early
Equity Plc
Stormont
School
Cyber
Lion Limited
Dozens
Savings Plc
|
|
Director
& shareholder
Director
& shareholder
Director
Director
Director
Director
Director
Director
& shareholder
Director
Director
|
|
Although
each of the companies listed have a pre-existing fiduciary obligation, we do not expect
them to have a conflict of interest because each of these companies are not seeking acquisitions
of a size and nature that may lead to a possible conflict. In cases of conflict, they
will have priority over us.
|
Alexander
Arrow
|
|
Zelegent,
Inc., Carlsmed, Inc.
Protagenic
Therapeutics, Inc
|
|
Director
&
Employee
Employee
Employee
|
|
Zelegent,
Inc., Carlsmed, Inc., and Protagenic Therapeutics, Inc. will have priority over us; however,
as none of these three companies are acquisition corporations, we anticipate being given
the opportunity to review all potential targets of any size of which that our management
team becomes aware. Zelegent and Carlsmed are for-profit medical device manufacturers,
and Protagenic Therapeutics is a for-profit early-stage biopharmaceutical company.
|
|
|
Paragonix
Technologies, Inc. Lab NINE, Inc.
Medcura
(previously called Gel-e), Inc.
Rindex
Medical, Inc.
|
|
Director
& option holder, Director & shareholder
Director
& shareholder
Director
& shareholder
|
|
We
do not expect them to have a conflict of interest because each of these companies are not seeking acquisitions.
|
|
|
|
|
|
|
|
Kwong
Yeow Liew
|
|
|
|
|
|
No
current pre-existing fiduciary or contractual obligations.
|
In
connection with the vote required for any business combination, all of our existing shareholders, including all of our officers
and directors, have agreed to vote their respective insider shares and private shares in favor of any proposed business combination.
In addition, they have agreed to waive their respective rights to participate in any liquidation distribution with respect to
those ordinary shares acquired by them prior to the IPO. If they purchased ordinary shares in the IPO or in the open market, however,
they would be entitled to participate in any liquidation distribution in respect of such shares but have agreed not to convert
such shares (or sell their shares in any tender offer) in connection with the consummation of our initial business combination
or an amendment to our amended and restated memorandum and articles of association relating to pre-business combination activity.
All
ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms
believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require
prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of
our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent
legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent”
directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with
respect to such a transaction from unaffiliated third parties.
To
further minimize conflicts of interest, we have agreed not to consummate our initial business combination with an entity that
is affiliated with any of our officers, directors or initial shareholders, unless we have obtained (i) an opinion from an independent
investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view
and (ii) the approval of a majority of our disinterested and independent directors (if we have any at that time). Furthermore,
in no event will any of our initial shareholders, officers, directors, special advisors or their respective affiliates be paid
any finder’s fee, consulting fee or other similar compensation prior to, or for any services they render in order to effectuate,
the consummation of our initial business combination.
Code
of Ethics
We
adopted a code of conduct and ethics applicable to our directors, officers and employees in accordance with applicable federal
securities laws. The code of ethics codifies the business and ethical principles that govern all aspects of our business.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our executive officers, directors and
persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of our ordinary shares and other equity securities.
These executive officers, directors, and greater than 10% beneficial owners are required by SEC regulation to furnish us with
copies of all Section 16(a) forms filed by such reporting persons.
Based
solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that
all filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were filed in a
timely manner.
ITEM
11. EXECUTIVE COMPENSATION
Employment
Agreements
We
have not entered into any employment agreements with our executive officers and have not made any agreements to provide benefits
upon termination of employment.
Executive
Officers and Director Compensation
No
executive officer has received any cash compensation for services rendered to us. No compensation of any kind, including finders,
consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective
affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However,
such individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as
identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the
amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than
our board of directors and audit committee, which includes persons who may seek reimbursement, or a court of competent jurisdiction
if such reimbursement is challenged.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The
following table sets forth as of September 10, 2020 the number of ordinary shares beneficially owned by (i) each person who is
known by us to be the beneficial owner of more than five percent of our issued and outstanding ordinary shares (ii) each of our
officers and directors; and (iii) all of our officers and directors as a group. As of September 10, 2020, we had 7,427,500 ordinary
shares issued and outstanding.
Unless
otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all
ordinary shares beneficially owned by them. The following table does not reflect record of beneficial ownership of any ordinary
shares issuable upon exercise of the warrants.
Name and Address of Beneficial Owner(1)
|
|
Amount and Nature of Beneficial Ownership of Ordinary Shares
|
|
|
Approximate Percentage of Outstanding Ordinary Shares
|
|
8i Holdings Limited(2)
|
|
|
1,437,500
|
|
|
|
19.35
|
%
|
8i Enterprises Pte Ltd(2)
|
|
|
240,000
|
|
|
|
*
|
|
Meng Dong (James) Tan
|
|
|
1,677,500
|
(3)
|
|
|
22.58
|
%
|
Guan Hong (William) Yap
|
|
|
0
|
|
|
|
0
|
|
Kwong Yeow Liew
|
|
|
0
|
|
|
|
0
|
|
Ajay Rajpal
|
|
|
0
|
|
|
|
0
|
|
Alexander Arrow
|
|
|
0
|
|
|
|
0
|
|
Mizuho Securities USA LLC(4)
|
|
|
696,421
|
|
|
|
9.38
|
%
|
Periscope Capital Inc (5)
|
|
|
441,000
|
|
|
|
5.94
|
%
|
Oxford Asset Management LLP (6)
|
|
|
414,750
|
|
|
|
5.58
|
%
|
Cowen Investment Management LLC (7)
|
|
|
450,000
|
|
|
|
6.06
|
%
|
Weiss Asset Management LP(8)
|
|
|
282,610
|
|
|
|
3.80
|
|
WAM GP LLC (8)
|
|
|
282,610
|
|
|
|
3.80
|
%
|
Andrew M. Weiss, PH.D (8)
|
|
|
282,610
|
|
|
|
3.80
|
%
|
BIP GP LLC(8)
|
|
|
242,804
|
|
|
|
|
|
All directors and executive officers (five individuals) and as a group
|
|
|
|
|
|
|
22.58
|
%
|
(1)
|
Unless
otherwise indicated, the business address of each of the individuals is c/o 8i Enterprises Acquisition Corp, 6 Eu Tong Sen
Street, #08-13 The Central, Singapore 059817.
|
|
|
(2)
|
Mr.
James Tan owns and controls 8i Holdings Limited and 8i Enterprises Pte Ltd.
|
|
|
(3)
|
Consists
of shares owned by 8i Holdings Limited and 8i Enterprises Pte Ltd, both of which Mr. James Tan owns and controls.
|
|
|
(4)
|
Based
on a Schedule 13G filed by the reporting persons. The address for the reporting persons is 320 Park Ave, 12 Floor, New York,
NY 10022.
|
|
|
(5)
|
Based
on a Schedule 13G filed by the reporting persons. The address for the reporting persons is 333 Bay Street, Suite 1240, bay
Adelaide Centre, Toronto A6 M5H 2R2.
|
|
|
(6)
|
Based
on a Schedule 13G filed by the reporting persons. The address for the reporting persons is Oxfam House, 6 George Street, Oxford
X0 OX1 2BW
|
|
|
(7)
|
Based
on a Schedule 13G filed by the reporting persons. The address for the reporting persons is 599 Lexington Avenue, 20th Floor,
New York NY 10022.
|
|
|
(8)
|
Based
on a Schedule 13G filed by the reporting persons. The address for the reporting persons is 222 Berkeley St., 16th floor, Boston,
Massachusetts 02116. Shares reported for BIP GP include shares beneficially owned by a private investment partnership (the
“Partnership”) of which BIP GP is the sole general partner. Weiss Asset Management is the sole investment manager
to the Partnership. WAM GP is the sole general partner of Weiss Asset Management. Andrew Weiss is the managing member of WAM
GP and BIP GP. Shares reported for WAM GP, Andrew Weiss and Weiss Asset Management include shares beneficially owned by the
Partnership (and reported above for BIP GP).
|
All
of the insider shares issued and outstanding prior to the IPO were placed in escrow with VStock Transfer, LLC, as escrow agent,
until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of our initial
business combination and the date on which the closing price of our 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 our initial business combination and (2) with respect to the remaining 50% of the insider shares,
one year after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to
our initial business combination, we consummate a liquidation, merger, share exchange or other similar transaction which results
in all of our shareholders having the right to exchange their shares for cash, securities or other property.
During
the escrow period, the holders of these shares will not be able to sell or transfer their securities except (i) for transfers
to our officers, directors or their respective affiliates (including for transfers to an entity’s members upon its liquidation),
(ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death,
(iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with
purchases of our securities, (vi) by private sales made at or prior to the consummation of a business combination at prices no
greater than the price at which the shares were originally purchased or (vii) to us for no value for cancellation in connection
with the consummation of our initial business combination, in each case (except for clause (vii)) where the transferee agrees
to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without limitation, the
right to vote their Ordinary Shares and the right to receive cash dividends, if declared. If dividends are declared and payable
in Ordinary Shares, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate
the trust account, none of our initial shareholders will receive any portion of the liquidation proceeds with respect to their
insider shares.
In
order to meet our working capital needs following the IPO, our initial shareholders, officers and directors or their affiliates
may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their
sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial
business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon
consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in
the holders being issued units to acquire 55,000 Ordinary Shares (which includes 5,000 shares issuable upon conversion of rights)
and warrants to purchase 25,000 Ordinary Shares if $500,000 of notes were so converted). Our shareholders have approved the issuance
of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the
time of the consummation of our initial business combination. If we do not complete a business combination, the loans will not
be repaid.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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 31, 2018, the Company issued 1,437,499 shares to 8i Holdings Limited for $24,999.
On
April 1, 2019, simultaneously with the consummation of the IPO, we consummated a private placement with Enterprises of 221,250
Private Units at a price of $10.00 per Private Unit, generating total proceeds of $2,212,500. The underwriters exercised the over-allotment
option in full and, on April 4, 2019, the underwriters purchased 750,000 over-allotment option Units, which were sold at an offering
price of $10.00 per Unit, generating gross proceeds of $7,500,000. On April 4, 2019, simultaneously with the sale of the over-allotment
Units, the Company consummated the private sale of an additional 18,750 Private Units to Enterprises, generating gross proceeds
of $187,500.
In
order to meet our working capital needs, our initial shareholders, officers and directors and their respective affiliates may,
but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable in their sole
discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of our initial
business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon
consummation of our business combination into private units at a price of $10.00 per unit (which, for example, would result in
the holders being issued units to acquire 55,000 Ordinary Shares (which includes 5,000 shares issuable upon conversion of rights)
and warrants to purchase 25,000 Ordinary Shares if $500,000 of notes were so converted). Our shareholders have approved the issuance
of the units and underlying securities upon conversion of such notes, to the extent the holder wishes to so convert them at the
time of the consummation of our initial business combination. If we do not complete a business combination, the loans would not
be repaid. As discussed in the immediately following paragraph notes for an aggregate amount of up to $300,000 were issued in
July 2019.
On
each of July 2, 2019, July 23, 2019, September 25, 2019, October 15, 2019, January 7, 2020, February 3, 2020, March 3, 2020, March
26, 2020, May 11, 2020, June 24, 2020, July 24, 2020, August 3, 2020 and September 4, 2020, 8i issued the Notes in the aggregate
principal amount of $200,000, $100,000, $150,000, $200,000, $70,000, $60,000, $100,000, $575,000, $16,000, $287,500, $132,000,
$50,000 and $280,000, respectively (the “Notes”), to Enterprises. Pursuant to the terms of the Notes, the Notes do
not bear interest and mature upon closing of a business combination by the Company. Each Note is convertible at Enterprises’
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 convertible into Private Units.
However, in order to comply with 8i’s obligations under the Third Amendment to convert all of the Notes, 8i’s Board
authorized and approved the conversion of Notes in excess of $500,000 to such amount as necessary to fulfill 8i’s obligations
but not exceeding $3,000,000. Enterprises has provided 8i with written notice to convert the Notes into 175,850 Private Units
immediately prior to the closing of the Business Combination.
The
holders of our insider shares issued and outstanding on the date of the IPO, as well as the holders of the private units (and
all underlying securities) and any securities our initial shareholders, officers, directors or their affiliates may be issued
in payment of working capital loans made to us, will be entitled to registration rights pursuant to an agreement to be signed
prior to or on the effective date of the IPO. The holders of a majority of these securities are entitled to make up to two demands
that we register such securities. The holders of the majority of the insider shares can elect to exercise these registration rights
at any time commencing three months prior to the date on which these Ordinary Shares are to be released from escrow. The holders
of a majority of the private units or securities issued in payment of working capital loans made to us can elect to exercise these
registration rights at any time after we consummate a business combination. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to our consummation of a business combination. We
will bear the expenses incurred in connection with the filing of any such registration statements.
We
will reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by them in connection with
certain activities on our behalf such as identifying and investigating possible target businesses and business combinations. There
is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed
the available proceeds not deposited in the trust account and the interest income earned on the amounts held in the trust account,
such expenses would not be reimbursed by us unless we consummate an initial business combination. Our audit committee will review
and approve all reimbursements and payments made to any initial shareholder or member of our management team, or our or their
respective affiliates, and any reimbursements and payments made to members of our audit committee will be reviewed and approved
by our Board of Directors, with any interested director abstaining from such review and approval.
No
compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, will be paid to
any of our initial shareholders, officers or directors who owned our Ordinary Shares prior to the IPO, or to any of their respective
affiliates, prior to or with respect to the business combination (regardless of the type of transaction that it is).
All
ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms
believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions, including
the payment of any compensation, will require prior approval by a majority of our uninterested “independent” directors
(to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had
access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our
disinterested “independent” directors (or, if there are no “independent” directors, our disinterested
directors) determine that the terms of such transaction are no less favorable to us than those that would be available to us with
respect to such a transaction from unaffiliated third parties.
Related
Party Policy
Our
Code of Ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential
conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions
are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar
year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election
as a director, (b) greater than 5% beneficial owner of our Ordinary Shares, or (c) immediate family member, of the persons referred
to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director
or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions
or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may
also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
We
also require each of our directors and executive officers to annually complete a directors’ and officers’ questionnaire
that elicits information about related party transactions.
Our
audit committee, pursuant to its written charter, will be responsible for reviewing and approving related-party transactions to
the extent we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors
or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated
third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested “independent”
directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense,
to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority
of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to
us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally,
we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that
elicits information about related party transactions.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents
a conflict of interest on the part of a director, employee or officer.
To
further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which
is affiliated with any of our initial shareholders unless we obtain an opinion from an independent investment banking firm that
the business combination is fair to our unaffiliated shareholders from a financial point of view. Furthermore, in no event will
any of our existing officers, directors or initial shareholders, or any entity with which they are affiliated, be paid any finder’s
fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of
a business combination.
Director
Independence
Nasdaq
listing standards require that within one year of the listing of our securities on the Nasdaq Capital Market we have at least
three independent directors and that a majority of our board of directors be independent. For a description of the director independence,
see above Part III, Item 10 - Directors, Executive Officers and Corporate Governance.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Public
Accounting Fees
During
the period from November 24, 2017 (inception) through July 31, 2020, the firm of UHY LLP, has acted as our principal independent
registered public accounting firm. The following is a summary of fees paid or to be paid to UHY LLP for services rendered.
Audit
Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements
and services that are normally provided by UHY LLP in connection with regulatory filings. The aggregate fees billed by UHY LLP
for professional services rendered for the audit of our annual financial statements, review of the financial information included
in our Forms 10-Q for the respective periods, the registration statement, the closing 8-K and other required filings with the
SEC for the years ended July 31, 2019 and 2020 totaled $132,147 and $76,118, respectively. The above amounts include interim procedures
and audit fees, as well as attendance at audit committee meetings.
Audit-Related
Fees. We did not pay UHY LLP for consultations concerning financial accounting and reporting standards during the years ended
July 31, 2019 and 2020.
Tax
Fees. We did not pay UHY LLP for tax planning and tax advice for the years ended July 31, 2019 and 2020.
All
Other Fees. For the year ended July 31, 2019, we paid UHY LLP $70,575 to conduct financial due diligence services and background
checks associated with the Business Combination. For the year ended July 31, 2020, there were no fees paid to UHY LLP to conduct
financial due diligence services and background checks associated with the Business Combination.
Pre-Approval
of Services
Since
our audit committee had not yet been formed when the work commenced in 2017, the audit committee was not able to pre-approve all
of the foregoing services, although all such services were approved by our board of directors. All services subsequent to the
formation of the audit committee have been approved by the audit committee.
part
IV
NOTES
TO THE FINANCIAL STATEMENTS
JULY
31, 2020
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 (the “inception”), 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 July 31, 2020, the Company had not yet commenced any operations. All activity for the period from November 24, 2017 through
July 31, 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 the 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”). As a result, the Company
was unable to complete the Business Combination by the initial deadline of March 31, 2020, which was 12 months after the closing
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. On June 24, 2020, the Company deposited another $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 for an additional three (3) months from July 1, 2020 to September 30, 2020 (the “Second
Extension Deadline”), which is 18 months from the closing of the IPO. Pursuant to the terms of our Amended and Restated
Memorandum and Articles of Association and the Trust Agreement entered into between the Company and Wilmington Trust Company,
in order to extend the time available for it to consummate its initial business combination, the Company’s insiders or its
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 the Company is 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 the Company’s initial business combination, or, at the lender’s discretion, converted upon consummation of the
Company’s business combination into additional Private Units at a price of USD10.00 per unit. The Company’s 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 the Company receives notice from
its insiders five days prior to the applicable deadline of its intent to effect an extension, the Company intends to issue a press
release announcing such intention at least three days prior to the applicable deadline. In addition, the Company intends to issue
a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Company’s
insiders and its affiliates or designees are not obligated to fund the trust account to extend the time for it to complete its
initial business combination. To the extent that some, but not all, of the Company’s insiders, decide to extend the period
of time to consummate its initial business combination, such insiders (or their affiliates or designees) may deposit the entire
amount required. If the Company’s is unable to consummate its initial business combination within 15 months from the closing
of the IPO (or within 18 months, as previously described), the Company will, as promptly as possible but not more than ten business
days thereafter, redeem 100% of its 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, the Company may not be able to distribute such amounts as a result of claims of creditors
which may take priority over the claims of its public shareholders. In the event of the Company’s dissolution and liquidation,
the public rights will expire and will be worthless.
If
the Company is not able to consummate a Business Combination before October 1, 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
the Company is unable to consummate its initial business combination within this time period, it will liquidate the trust account
and distribute the proceeds held therein to the Company’s public shareholders and dissolve. If the Company is forced to
liquidate, it anticipates that the Company would distribute to its 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, the
Company would be required to assess all claims that may be potentially brought against it by its creditors for amounts they are
actually owed and make provision for such amounts, as creditors take priority over the Company’s public shareholders with
respect to amounts that are owed to them. The Company cannot assure you that it will properly assess all claims that may be potentially
brought against it. As such, the Company’s 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 the Company enter an insolvent liquidation.
Pursuant
to the Nasdaq listing rules, the Company’s 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 the Company’s 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). The
Company’s 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 the Company acquires 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.
On
June 24, 2020, each of the parties to the Third Amendment entered into a fourth amendment to the Share Exchange Agreement (the
“Fourth Amendment,” and together with the Share Exchange Agreement, the Amendment, the Second Amendment and the Third
Amendment, the “Amended Share Exchange Agreement”) to, among other things, (a) extend the outside Closing Date of
the Business Combination to September 28, 2020 and (b) agree to hold the Meeting no later than September 15, 2020.
The
Fourth Amendment includes new covenants that all of the parties will, (i) take all steps required to extend the time available
to consummate the Business Combination for an additional three months to September 30, 2020, including, sharing payment of the
extension fees payable to the 8i trust account in the amount of $575,000, (ii) use their commercially reasonable efforts to hold
the Meeting no later than September 15, 2020 and hold the closing of the Business Combination no later than September 28, 2020,
and (iii) use their commercially reasonable efforts to have 6,411,100 of the Singapore NewCo Ordinary Shares issuable, in the
aggregate, to various parties pursuant to the Share Exchange Agreement be freely tradeable from the day immediately following
the Closing Date.
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 July 31, 2020, the Company had cash outside the Trust Account of $5,382 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 July 31, 2020, none of the amount on deposit in the
Trust Account was available to be withdrawn as described above.
Through
July 31, 2020, the Company’s liquidity needs were satisfied through receipt of an aggregate of $2,217,601 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 $387,500 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 Second Extension
Deadline, the Company may commence an automatic winding up, dissolution and liquidation. 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 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”). In the opinion of management, all adjustments (consisting of normal recurring adjustments)
have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows.
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 year ended July 31, 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 July 31, 2020 and 2019.
Cash
Held in Trust Account
At
July 31, 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 July 31, 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 July 31, 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 July 31, 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.
If
the Company does not complete a Business Combination by September 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 July 31, 2020, 8i Enterprises Pte. Ltd.
had advanced the Company an aggregate of $2,217,601, 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, May 11, 2020, June 24, 2020, July 24, 2020, August 3, 2020, and September 4, 2020, the Company issued unsecured promissory
notes in the aggregate principal amount of up to $2,220,500 (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 189,050 Private Units immediately prior to the Closing.
Note
6 – Due to Diginex
On
March 3, 2020 and June 24, 2020, the Company issued unsecured promissory notes to Diginex in the aggregate principal amount of
up to $387,500 (the “Diginex Notes”). The Diginex Notes do not bear interest and mature upon closing of a business
combination by the Company. The proceeds of the Diginex Notes will be used for the Company’s share of the cost arising from
an additional services agreement with Chardan (see Note 7) and for the cost of extending the combination period by an additional
3 months (until the end of September 2020).
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.
On
March 2, 2020, the Company entered into an additional services agreement with Chardan (the Chardan Services Agreement) to provide
the Company with professional advisory, consulting and other investment banking services. Under the Chardan Services Agreement,
the Company will pay Chardan a fee of $200,000 no later than 14 days prior to the Company’s first announced shareholder
meeting date.
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 July 31, 2020, the Company has issued an aggregate of 2,442,594 ordinary shares, excluding 4,984,906 shares subject to possible
redemption, none of which are subject to forfeiture.
Preferred
Stock
As
of July 31, 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:
1.
|
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.
|
|
|
2.
|
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.
|
|
|
3.
|
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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Note
9 – Subsequent Events
On
August 5, 2020, the “Company received a letter from the Nasdaq Stock Market LLC (“Nasdaq”), which stated that
the Company no longer complies with Nasdaq’s continued listing rules due to the Company not having held an annual meeting
within 12 months of the Company’s fiscal year end, as required pursuant to rule 5620(a). In accordance with Nasdaq Rule
5810(c)(2)(G), the Company has 45 calendar days to submit a plan to regain compliance and, if Nasdaq accepts the plan, Nasdaq
can grant the Company an exception of up to 180 calendar days from the fiscal year end, or until January 27, 2021, to regain compliance.
The Company plans to submit a compliance plan within the specified period.
In
accordance with the Third Amendment to the Share Exchange Agreement, if the business combination is not consummated and such failure
is not the result of a default or breach of any party to the Share Exchange Agreement, the Company will reimburse Diginex for
Diginex’s expenses related to certain professional and accounting fees incurred.
As
of September 11, 2020, a total of 3,423,625 shares of the Company’s ordinary shares were requested to be redeemed upon consummation
of the Business Combination.