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 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.
On April 11, 2022, we entered into a Share Purchase Agreement (the "SPA") with
Euda Health Limited, a British Virgin Islands business company ("EUDA Health"),
Watermark Developments Limited, a British Virgin Islands business company (the
"Seller") and Kwong Yeow Liew, acting as Representative of the Indemnified
Parties (the "Indemnified Party Representative"). Pursuant to the terms of the
SPA, a business combination between us and EUDA Health will be effected through
the purchase by us of all of the issued and outstanding shares of EUDA Health
from the Seller (the "Share Purchase").
Our board of directors have (i) approved and declared advisable the SPA, the
Share Purchase and the other transactions contemplated thereby, and (ii)
resolved to recommend approval of the SPA and related transactions by our
shareholders.
Mr. Meng Dong (James) Tan, our Chief Executive Officer and Chairman of our board
of directors, owns 10% of the equity interests of the Seller. We anticipate that
it will receive a fairness opinion from EverEdge Global to the effect that the
purchase price to be paid by us for the shares of EUDA Health pursuant to the
SPA is fair to us from a financial point of view (the "Fairness Opinion").
In connection with the closing of the transactions under the SPA the current
officers and directors of EUDA Health will become our officers and directors.
Our sponsor, 8i Holdings 2 Pte. Ltd. (the "Sponsor"), will have the right to
nominate one director to serve as an independent director on the post-closing
board of director.
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Liquidity and Capital Resources
At April 30, 2022 and July 31, 2021, we had $546,887 and $0 in cash and working
deficit of $175,726 and $218,797 (excluding deferred offering costs and deferred
underwriting commissions), 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 Business Combination pursuant to a promissory note (the "Note 1"). The Note
1 was non-interest bearing and payable promptly after the date on which the
Company consummates an Initial Business Combination. As of April 30, 2022, the
total amount borrowed under the Note 1 was $300,000.
On March 18, 2022, Mr. Meng Dong (James) Tan, Chief Executive Officer of the
Company, agreed to loan the Company up to another $500,000 to cover expenses
related to the Business Combination pursuant to a promissory note (the "Note
2"). The Note 2 was non-interest bearing and payable promptly after the date on
which the Company consummates an Initial Business Combination. As of April 30,
2022, the total amount borrowed under the Note 2 was $500,000.
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 April 30, 2022 and July 31, 2021, we had not commenced any operations. All
activity for the period from January 21, 2021 (inception) through April 30, 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 three months ended April 30, 2022, we had net loss of $472,989, which
consisted of $8,649 of dividends earned on marketable securities held in the
Trust Account, offset by formation and operating costs of $481,638.
For the three months ended April 30, 2021, we had a net loss of $6,660
consisting of formation and operating costs.
For the nine months ended April 30, 2022, we had net loss of $743,466, which
consisted of $9,395 of dividends earned on marketable securities held in the
Trust Account, offset by operating costs of $752,861.
For the period from January 21, 2021 (inception) through April 30, 2021, we had
a net loss of $7,849 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 and Estimates
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 and
estimates:
Ordinary Shares Subject to Possible Redemption
We account for out 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 our control) are classified as temporary
equity. At all other times, ordinary shares are classified as shareholders'
equity. Our ordinary shares features certain redemption rights that are
considered to be outside of our 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 our balance
sheets.
Net Loss Per Ordinary Shares
We comply 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, we 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, we split the amount to be allocated using a ratio of 78%
for the redeemable ordinary shares and 22% for the non-redeemable shares for the
three months ended April 30, 2022 and 68% for the redeemable ordinary shares and
32% for the non-redeemable shares for the nine months ended April 30, 2022,
reflective of the respective participation rights.
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.
We have determined not to early adopt.
Management does not believe that this and any other recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would have an effect
on our financial statements.
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