References to the "Company," "our," "us" or "we" refer to 8i Acquisition 2 Corp.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited interim
condensed financial statements and the notes thereto contained elsewhere in this
report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act. We have based these forward-looking statements
on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Factors that might cause or contribute to
such a discrepancy include, but are not limited to, those described in our other
SEC filings.
Overview
We are a newly organized blank check company incorporated on January 21, 2021 as
a British Virgin Islands corporation and formed for the purpose of effect a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses (the
"Business Combination").
Our sponsor is 8i Holdings 2 Pte Ltd., a Singapore Limited Liability Company
(the "Sponsor"). The registration statement for our initial public offering was
declared effective on November 22, 2021. On November 24, 2021, we consummated
our initial public offering (the "Initial Public Offering") of 8,625,000 Units,
including the full exercise of the underwriters' over-allotment option to
purchase 1,125,000 units, at a purchase price of $10.00 per Unit. Transaction
costs amounted to $5,876,815 consisting of $1,725,000 of underwriting fees,
$3,018,750 of deferred underwriting fees, $483,477 excess of fair value of
representative's purchase option and $649,588 of other offering costs, and was
all charged to shareholders' equity.
Upon the closing of the IPO and the private placement, $86,250,000 was placed in
a trust account (the "Trust Account") with American Stock Transfer & Trust
Company, LLC acting as trustee.
The funds held in the Trust Account will be invested only in United States
government treasury bills, bonds or notes having a maturity of 180 days or less,
or in money market funds meeting the applicable conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940 and that invest solely in
United States government treasuries. Except with respect to interest earned on
the funds held in the Trust Account that may be released to the Company to pay
its income or other tax obligations, the proceeds will not be released from the
Trust Account until the earlier of the completion of a business combination or
the Company's liquidation.
We will have 12 months from the closing of the IPO (or up to 18 months, with
extension of two times by an additional three months each time) to consummate a
Business Combination (the "Combination Period"). If the Company fails to
consummate a Business Combination within the Combination Period, it will trigger
its automatic winding up, liquidation and subsequent dissolution pursuant to the
terms of our amended and restated memorandum and articles of association. As a
result, this has the same effect as if we had formally gone through a voluntary
liquidation procedure under the Companies Law. Accordingly, no vote would be
required from our shareholders to commence such a voluntary winding up,
liquidation and subsequent dissolution.
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Liquidity and Capital Resources
At January 31, 2022 and July 31, 2021, we had $587,430 and $0 in cash and
working capital/ (deficit) of $305,912 and $218,797 (excluding deferred offering
costs), respectively.
The registration statement for our IPO was declared effective on November 22,
2021. On November 24, 2021, we consummated the IPO of 8,625,000 units (include
the exercise of the over-allotment option by the underwriters in the IPO) at
$10.00 per unit (the "Public Units'), generating gross proceeds of $86,250,000.
Each Unit consists of one ordinary share, one redeemable warrant, and one right
to receive one-tenth of an ordinary share upon the consummation of an Initial
business combination.
Simultaneously with the IPO, we sold to Mr. Meng Dong (James) Tan 292,250 units
at $10.00 per unit in a private placement generating total gross proceeds of
$2,922,500.
Offering costs amounted to $5,876,815 consisting of $1,725,000 of underwriting
fees, $3,018,750 of deferred underwriting fees, $649,588 of other offering costs
and an excess of fair value of representative's purchase option of $483,477.
Except for the $100 for the Unit Purchase Option and $25,000 of subscription of
ordinary shares, we received net proceeds of $87,114,830 from the IPO and the
private placement.
On January 21, 2021 and February 5, 2021, we issued an aggregate of 1,437,500
ordinary shares to 8i Holding Limited, which have been subsequently sold to our
sponsor for an aggregate purchase price of $25,000, or approximately $0.017 per
share. On June 14, 2021, our sponsor transferred 15,000 founder shares in the
aggregate to the directors for nominal consideration. On October 25, 2021, we
issued an additional 718,750 ordinary shares which were purchased by our sponsor
for $12,500, resulting in an aggregate of 2,156,250 ordinary shares outstanding.
On January 12, 2022, Mr. Meng Dong (James) Tan, Chief Executive Officer of the
Company, agreed to loan the Company up to $300,000 to cover expenses related to
the IPO pursuant to a promissory note (the "Note"). The Note was non-interest
bearing and payable promptly after the date on which the Company consummates an
Initial Business Combination. As of January 31, 2022, the total amount borrowed
under the promissory note was $300,000.
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on the company's financial position, results of its
operations and/or search for a target company, the specific impact is not
readily determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Results of Operations
As of January 31, 2022 and July 31, 2021, we had not commenced any operations.
All activity for the period from January 21, 2021 (inception) through January
31, 2022 relates to our formation and the IPO. We have neither engaged in any
operations nor generated any revenues to date. We will not generate any
operating revenues until after the completion of our initial business
combination, at the earliest. We will generate non-operating income in the form
of interest income on cash and cash equivalents from the proceeds derived from
the IPO. We expect to incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses.
For the six months ended January 31, 2022, we had net loss of $270,477, which
consisted of $746 of interest earned on marketable securities held in the Trust
Account, offset by operating costs of $271,223.
For the three months ended January 31, 2022, we had net loss of $224,890, which
consisted of $746 of interest earned on marketable securities held in the Trust
Account, offset by formation and operating costs of $225,636.
For the period from January 21, 2021 (inception) through January 31, 2021, we
had a net loss of $1,189 consisting of formation and operating costs.
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Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations,
operating lease obligations, purchase obligations or long-term liabilities.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
ordinary shares (including ordinary shares that feature redemption rights that
is either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company's control) are
classified as temporary equity. At all other times, ordinary shares are
classified as shareholders' equity. The Company's ordinary shares features
certain redemption rights that are considered to be outside of the Company's
control and subject to occurrence of uncertain future events. Accordingly,
ordinary shares subject to possible redemption are presented at redemption value
(plus any interest earned on the Trust Account) as temporary equity, outside of
the shareholders' equity section of the Company's balance sheets.
Net Loss Per Ordinary Shares
The Company complies with accounting and disclosure requirements of FASB ASC
260, Earnings Per Share. The statements of operations include a presentation of
income (loss) per redeemable ordinary share and income (loss) per non-redeemable
share following the two-class method of income (loss) per share. In order to
determine the net income (loss) attributable to both the redeemable ordinary
shares and the non-redeemable shares, the Company first considered the total
income (loss) allocable to both sets of shares. This is calculated using the
total net income (loss) less any dividends paid. For purposes of calculating net
income (loss) per share, any remeasurement of the accretion to redemption value
of the ordinary shares subject to possible redemption was considered to be
dividends paid to the public shareholders. Subsequent to calculating the total
income (loss) allocable to both sets of shares, the Company split the amount to
be allocated using a ratio of 73% for the redeemable ordinary shares and 27% for
the non-redeemable shares for the three months ended January 31, 2022 and 59%
for the redeemable ordinary shares and 41% for the non-redeemable shares for the
six months ended January 31, 2022, reflective of the respective participation
rights.
Deferred Offering Costs
We comply with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff
Accounting Bulletin Topic 5A -"Expenses of Offering." Deferred offering costs
consist of costs incurred in connection with formation and preparation for the
IPO. Offering costs are allocated to the Public Warrants, Public Rights and
Public Shares issued in the IPO based on its fair value at inception compared to
the total IPO proceeds received. Offering costs associated with the ordinary
shares are allocated between permanent equity and temporary equity.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board issued Accounting
Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity
(Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial
instruments. ASU 2020-06 eliminates the current models that require separation
of beneficial conversion and cash conversion features from convertible
instruments and simplifies the derivative scope exception guidance pertaining to
equity classification of contracts in an entity's own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity's own equity. ASU
2020-06 amends the diluted earnings per share guidance, including the
requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is effective January 1, 2024 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
The Company has determined not to early adopt.
Management does not believe that any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have an effect
on our financial statements.
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