NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
1 - Organization and Business Operations
Organization
and General
EUDA Health Holdings Limited, which until
November 17, 2022 was known as 8i Acquisition 2 Corp. (the
“Company”) is a company incorporated on January 21, 2021, under the laws of the British Virgin Islands for the purpose
of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar
business combination with one or more businesses or entities (a “Initial Business Combination”). The Company is an
“emerging growth company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company’s
efforts to identify a prospective target business were not limited to a particular industry or geographic location (excluding
China). The Articles of Association prohibited the Company from undertaking the Initial Business Combination with any entity that
conducts a majority of its business or is headquartered in China (including Hong Kong and Macau).
As
of October 31, 2022, the Company had not yet commenced any operations. All activity for the period from January 21, 2021 (inception)
through October 31, 2022 relates to the Company’s organizational activities and the initial public offering (the “IPO”)
described below. The Company will not generate any operating revenues until after the completion of the Initial Business Combination,
at the earliest. The Company will generate non-operating income in the form of dividend and interest income on investments held in Trust Account
(as defined below) from the proceeds derived from the IPO.
Following the quarter ended October 31, 2022, on
November 17, 2022 (the “Closing Date”), EUDA Health Limited, a British Virgin Islands business company, consummated a
business combination with the Company (the “Business Combination”). The Business Combination was effected by the
purchase by the Company of all of the issued and outstanding shares of EUDA Health Limited, resulting in EUDA Health Limited
becoming a wholly owned subsidiary of the Company. At the time of the Business Combination, the Company changed its name from
“8i Acquisition 2 Corp.” to “EUDA Health Holdings Limited.” Thus, the financial statements for the quarter
ended October 31, 2022 are in the name of 8i Acquisition 2 Corp.
The
Company has selected July 31 as its fiscal year end.
The
Company had 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 an Initial Business Combination (the “Combination Period”).
For
the period from January 21, 2021 (inception) to April 11, 2021, the Company was sponsored by 8i Holdings Limited, a Limited Liability
Exempted Company incorporated in the Cayman Islands on November 24, 2017. On April 12, 2021, 8i Holdings Limited transferred their founder
shares (as defined below) to 8i Holdings 2 Pte Ltd (the “Sponsor”), a Singapore Limited Liability Company incorporated on
April 1, 2021.
The
Trust Account
Upon
the closing of the IPO and the private placement, $86,250,000 was placed in a trust account (the “Trust Account”) with American
Stock Transfer & Trust Company, LLC acting as trustee.
The
funds held in the Trust Account were 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. The proceeds were released from
the Trust Account upon the completion of the Business Combination on November 17, 2022.
Business
Combination
On
April 11, 2022, the Company entered into a Share Purchase Agreement (the “SPA”) with EUDA Health Limited, a British
Virgin Islands business company (“EUDA Health” or “EUDA”), 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, the Business Combination between the Company and
EUDA Health was effected through the purchase by the Company of all of the issued and outstanding shares of EUDA Health from the
Seller (the “Share Purchase”).
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Mr.
Meng Dong (James) Tan, the Company’s then Chief Executive Officer and Chairman of the Company’s board of directors, had
at the time, 10.0%
of the equity interests of the Seller. At the time of the closing of Business Combination, Mr. Tan held a 33.3%
ownership stake in the Seller. The Company received a fairness opinion from EverEdge Global to the effect that the purchase price to
be paid by the Company for the shares of EUDA Health pursuant to the SPA was fair to the Company from a financial point of view (the
“Fairness Opinion”).
On November 17, 2022, the Company completed the closing
of the Business Combination with EUDA Health Limited.
Liquidity
and Capital Resources
At
October 31, 2022 and July 31, 2022, the Company had $265,852
and $193,546
in cash, and working deficit of $1,706,946
and $1,408,615, respectively, (excluding deferred
underwriting commissions and investments held in Trust Account).
The
registration statement for the Company’s IPO (as described in Note 3) was declared effective on November 22, 2021. On November
24, 2021, the Company consummated the IPO of 8,625,000 units (include the exercise of the over-allotment option by the underwriters in
the IPO) at $10.00 per unit (the “Public Units’), generating gross proceeds of $86,250,000. Each Unit consisted of one ordinary
share, one redeemable warrant (each a “Warrant”, and, collectively, the “Warrants”), and one right to receive
one-tenth of an ordinary share upon the consummation of an Initial Business Combination.
Simultaneously
with the IPO, the Company sold to Mr. Meng Dong (James) Tan 292,250 units at $10.00 per unit (the “Private Units”) in a private
placement generating total gross proceeds of $2,922,500, which is described in Note 4.
Offering
costs amounted to $5,876,815 consisting of $1,725,000 of underwriting fees, $3,018,750 of deferred underwriting commissions, $649,588 of other
offering costs and an excess of fair value of the underwriter’s purchase option of $483,477. Except for the $100 for the Unit Purchase
Option and $25,000 of subscription of ordinary shares (as defined in Note 7), the Company received net proceeds of $87,114,830 from the
IPO and the private placement.
On
January 21, 2021 and February 5, 2021, the Company issued an aggregate of ordinary shares to 8i Holding Limited, which were subsequently sold to the Sponsor for an aggregate purchase price of $, or approximately $ per share. On June 14, 2021,
the Sponsor transferred 15,000 founder shares in the aggregate to the directors for nominal consideration. On October 25, 2021, the Company
issued an additional ordinary shares which were purchased by the Sponsor for $, resulting in an aggregate of 2,156,250
ordinary shares outstanding.
Going
Concern
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s
Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,” the Company had until November 24, 2022 (absent any extensions of such period by the Sponsor, pursuant to
the terms described above) to consummate the proposed Business Combination. Prior to the Business Combination, management determined
that the mandatory liquidation, should an Initial Business Combination not occur, and potential subsequent dissolution, raised substantial
doubt about the Company’s ability to continue as a going concern. However, the Business Combination was consummated on November
17, 2022.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
2 - Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position,
results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating
results and cash flows for the periods presented. Interim results are not necessarily indicative of results to be expected for any other
interim period or for the full year. The information included in this Form 10-Q should be read in conjunction with information included
in the Company’s annual report on Form 10-K for the year ended July 31, 2022, filed with the Securities and Exchange Commission
on August 29, 2022.
Emerging
Growth Company Status
The
Company is an emerging growth company as defined by Section 2(a) of the JOBS Act and it may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exceptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payment not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out
of such extended transition period which means that when a standard is issued or revised, and it has different application dates for
public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which
is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of unaudited condensed 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 unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had $265,852 and $193,546 cash as of October 31, 2022 and July 31, 2022, respectively.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Investments
Held in Trust Account
As
of October 31, 2022 and July 31, 2022, the Company’s portfolio of investments held in the Trust Account was comprised of U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, investments
in money market funds that invest in U.S. government securities, cash, or a combination thereof. The Company’s investments held
in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheets at fair value at the
end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in dividends on marketable securities held in Trust Account in the accompanying statements of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
At
October 31, 2022 and July 31, 2022, the Company had $86,972,255 and $86,472,912, respectively, held in the Trust Account, including $722,255
and $222,912, respectively, dividends earned on marketable securities held in the Trust Account.
Concentration
of credit risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. As of October 31, 2022 and July 31, 2022, the Company
had not experienced losses on this account.
Offering
Costs Associated with the IPO
Offering
costs consist of underwriting, legal, accounting, registration and other expenses incurred through the balance sheet date that are directly
related to the IPO. Offering costs totaled $5,876,815 consisting of $1,725,000 of underwriting fees, $3,018,750 of deferred underwriting
commissions, $649,588 of other expenses, and an excess of fair value of representative’s purchase option of $483,477. The Company complies
with the requirements of Accounting Standards Codification (“ASC”) 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A
– “Expenses of Offering”. The Company allocated offering costs between public shares, public warrants and public rights
based on the estimated fair values of public shares, public warrants and public rights at the date of issuance. Offering costs associated
with the ordinary shares are allocated between permanent equity and temporary equity.
Ordinary
Shares Subject to Possible Redemption
The
Company accounted 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 are classified as a liability
instrument and are 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. Prior to the Business Combination. the Company’s ordinary shares featured certain
redemption rights that were considered to be outside of the Company’s control and subject to occurrence of uncertain future
events. Accordingly, ordinary shares that were subject to possible redemption are presented at redemption value (plus any interest
earned and/or dividends accrued on the Trust Account) as temporary equity, outside of the shareholders’ equity section of the
Company’s balance sheets.
Net
Loss Per Ordinary Shares
The
Company complies with accounting and disclosure requirements of FASB ASC 260, Earnings Per Share. The statements of operations include
a presentation of income (loss) per redeemable ordinary share and income (loss) per non-redeemable share following the two-class method
of income (loss) per share. In order to determine the net income (loss) attributable to both the redeemable ordinary shares and the non-redeemable
shares, the Company first considered the total income (loss) allocable to both sets of shares. This is calculated using the total net
income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, any remeasurement of the accretion to
redemption value of the ordinary shares subject to possible redemption was considered to be dividends paid to the public shareholders.
Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated using
a ratio of 78% for the redeemable ordinary shares and 22% for the non-redeemable shares for the three months ended October 31, 2022.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
earnings per share presented in the statements of operations is based on the following:
Schedule
of Earnings Per Share
| |
For the Three Months Ended October 31, 2022 | | |
For the Three Months Ended October 31, 2021 | |
Net income (loss) | |
$ | 201,012 | | |
$ | (45,587 | ) |
Accretion of temporary equity to redemption value | |
| (499,343 | ) | |
| - | |
Net loss including accretion of temporary equity to redemption value | |
$ | (298,331 | ) | |
$ | (45,587 | ) |
| |
Redeemable | | |
Non-redeemable | |
| |
For the Three Months Ended October 31, 2022 | |
| |
Redeemable | | |
Non-redeemable | |
Basic and diluted net income (loss) per ordinary share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Allocation of net loss including accretion of temporary equity | |
$ | (232,366 | ) | |
$ | (65,965 | ) |
Accretion of temporary equity to redemption value | |
| 499,343 | | |
| - | |
Allocation of net income (loss) | |
$ | 266,977 | | |
$ | (65,965 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| 8,625,000 | | |
| 2,448,500 | |
Basic and diluted net income (loss) per ordinary share | |
$ | 0.03 | | |
$ | (0.03 | ) |
| |
Redeemable | | |
Non-redeemable | |
| |
For the Three Months Ended October 31, 2021 | |
| |
Redeemable | | |
Non-redeemable | |
Basic and diluted net loss per ordinary share: | |
| | | |
| | |
Numerator: | |
| | | |
| | |
Net loss | |
$ | - | | |
$ | (45,587 | ) |
| |
| | | |
| | |
Denominator: | |
| | | |
| | |
Weighted average shares outstanding | |
| - | | |
| 1,875,000 | (1) |
Basic and diluted net loss per ordinary share | |
$ | - | | |
$ | (0.02 | ) |
(1) |
This
number excludes an aggregate of up to 281,250 shares exercised in full or in part by the underwriters (see Note 5). As a result of
the full exercise of the over-allotment option by the underwriters upon the consummation of the IPO, these shares are no longer subject
to forfeiture (see Note 7). |
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 825, “Financial
Instruments” approximates the carrying amounts represented in the balance sheets, primarily due to its short-term nature.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair
value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction
between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
● |
Level 1, defined as observable inputs such as quoted
prices (unadjusted) for identical instruments in active markets; |
|
|
|
|
● |
Level 2, defined as inputs other than quoted prices
in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active; and |
|
|
|
|
● |
Level 3, defined as unobservable inputs in which little
or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation
techniques in which one or more significant inputs or significant value drivers are unobservable. |
In
some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In
those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input
that is significant to the fair value measurement.
Income
Taxes
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax
assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities
and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes
a recognition threshold and measurement process for financial statements recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
period, disclosure and transition. The Company has identified the British Virgin Islands as its only “major” tax jurisdiction,
as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring
recognition in the Company’s unaudited condensed financial statements. Since the Company was incorporated on January 21, 2021,
the evaluation was performed for the period from January 21, 2021 (inception) to July 31, 2021 and for the year ended July 31, 2022, which
will be the only periods subject to examination. The Company believes that its income tax positions and deductions would be sustained
on audit and does not anticipate any adjustments that would result in material changes to its financial position. The Company’s
policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense. No interest
or penalties were incurred for the three months ended October 31, 2022 and 2021.
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 on August 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption
permitted beginning on August 1, 2021. The Company determined not to early adopt.
Management
does not believe that this and any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would
have an effect on the Company’s unaudited condensed financial statements.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
3 – Initial Public Offering
On
November 24, 2021, the Company sold 8,625,000
Units at a price of $10.00
per Unit, generating gross proceeds of $86,250,000
related to its IPO. Each
Unit consists of one ordinary share, one redeemable warrant (each a “Warrant”, and, collectively, the
“Warrants”), and one right to receive one-tenth of an ordinary share upon the consummation of an Initial Business
Combination. Each two redeemable warrants entitle the holder thereof to purchase one ordinary share, and each ten rights entitle the
holder thereof to receive one ordinary share at the closing of an Initial Business Combination. Upon the closing of the Business
Combination, no fractional shares were issued upon separation of the Units, and only whole Warrants trade.
American
Opportunities Growth Fund (the “Anchor Investor”), purchased an aggregate of 400,000 units in the IPO, and the Company agreed to direct the underwriters to sell to the Anchor Investor such number of units, subject to the Company’s satisfying
the Nasdaq listing requirement.
The
Anchor Investor was required to not redeem any of the public shares it acquired in the IPO.
Conditionally
anchor shares are classified as temporary equity. Accordingly, anchor shares are presented at initial carrying value of $8.24
per share as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheets plus dividend
earned of $0.03
per share. As of October 31, 2022 and July 31, 2022, total carrying value of the anchor shares amounted to $3,329,682 and $3,306,524, respectively.
The
Company granted the underwriters a 45-day option from the date of the IPO to purchase up to an additional 1,125,000 Public Units to cover
over-allotments. On November 24, 2021, the underwriters exercised the over-allotment option in full to purchase 1,125,000 Public Units,
at a purchase price of $10.00 per Public Unit, generating gross proceeds to the Company of $11,250,000 (see Note 6).
As
of October 31, 2022 and July 31, 2022, the ordinary shares subject to redemption reflected on the balance sheets are reconciled in the
following table:
Schedule
of Ordinary Shares Subject to Possible Redemption
| |
As of | | |
As of | |
| |
October 31, 2022 | | |
July 31, 2022 | |
Gross proceeds | |
$ | 86,250,000 | | |
$ | 86,250,000 | |
Less: | |
| | | |
| | |
Proceeds allocated to pubic warrants and public rights | |
| (9,979,125 | ) | |
| (9,979,125 | ) |
Redeemable ordinary shares issuance costs allocated to public warrants and public rights | |
| (5,196,868 | ) | |
| (5,196,868 | ) |
Plus: | |
| | | |
| | |
Accretion of carrying value to redemption value (Deemed dividend) | |
| 15,194,433 | | |
| 14,695,090 | |
Ordinary shares subject to possible redemption | |
$ | 86,268,440 | | |
$ | 85,769,097 | |
Note
4 - Private Placement
Concurrently
with the closing of the IPO, Mr. Meng Dong (James) Tan purchased an aggregate of 292,250 Private Units at a price of $10.00 per Private
Unit for an aggregate purchase price of $2,922,500 in a private placement. The Private Units are identical to the public Units except
with respect to certain registration rights and transfer restrictions. The proceeds from the Private Units were added to the proceeds
from the IPO to be held in the Trust Account. If the Company failed to complete an Initial Business Combination within the Combination Period,
the proceeds from the sale of the Private Units would have been used to fund the redemption of the Public Shares (subject to the requirements
of applicable law), and the Private Units and all underlying securities would have expired worthless. However, the Business Combination was consummated on November 17, 2022.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
5 - Related Party Transactions
Founder
Shares
On
January 21, 2021 and February 5, 2021, 8i Holdings Limited paid an aggregate price of $,
or approximately $per share, to cover certain offering costs in
consideration for ordinary shares (the “Insider Shares”
or “Founder Shares”). On April 12, 2021, 8i Holdings Limited transferred an aggregate of Founder Shares to the Sponsor for $.
On June 14, 2021, the Sponsor transferred 15,000
Founder Shares in the aggregate to the Company’s
directors for nominal consideration. On October 25, 2021, the Company issued an additional ordinary shares which were purchased by the Sponsor
for $,
resulting in an aggregate of 2,156,250
ordinary shares outstanding. The issuance was
considered as a nominal issuance, in substance a recapitalization transaction, which was recorded and presented retroactively. The Founder
Shares are identical to the ordinary shares included in the Units sold in the IPO. The Sponsor agreed to forfeit Founder Shares to the extent that the over-allotment
option was not exercised in full by the underwriters. On November 24, 2021, the underwriters exercised the over-allotment option in
full, so there are
All
of the Founder Shares issued and outstanding prior to the date of the IPO were placed in escrow with an escrow agent until the earlier
of six months after the date of the consummation of an Initial Business Combination and the date on which the closing price of the Company’s
ordinary shares equals or exceeds $per share (as adjusted for share splits, share
capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after an
Initial Business Combination or earlier, if, subsequent to an Initial Business Combination, the Company consummated a liquidation, merger,
share exchange or other similar transaction which resulted in all of its shareholders having the right to exchange their shares for cash,
securities or other property. On November 24, 2021, the underwriters exercised the over-allotment option in full, so there are no founder
shares subject to forfeiture.
Promissory
Note - Related Party
On
January 12, 2022, Mr. Meng Dong (James) Tan, the Company’s then Chief Executive Officer and Chairman of the Company’s
board of directors, agreed to loan the Company up to $300,000
to cover expenses related to the IPO pursuant to a promissory note (the “January Note”). On March 18, 2022, Mr. Tan
entered into a promissory note with the Company for $500,000
(the “March Note”). On August 16, 2022, the
Company entered into a promissory note with Mr. Tan for $200,000 (the “August Note”, together with the January Note and
the March Note, collectively, the “Promissory Notes”). The Promissory Notes were non-interest bearing and payable
promptly after the date on which the Company consummated an Initial Business Combination. As of October 31, 2022 and July 31, 2022,
the total amount borrowed under the Promissory Notes was $1,000,000
and $800,000,
respectively.
Mr.
Meng Dong (James) Tan had the right, but not the obligation, to convert the Promissory Notes, in whole or in part, into private
units (the “Units”) of the Company containing the same securities as issued in the Company’s IPO and by providing
the Company with written notice of its intention to convert the Promissory Notes at least one business day prior to the closing of
an Initial Business Combination. The number of Units to be received by the Mr. Meng Dong (James) Tan in connection with such
conversion was to be an amount determined by dividing (x) the sum of the outstanding principal amount payable to Mr. Meng Dong
(James) Tan, by (y) $10.00. The Business Combination was consummated on November 17, 2022 and Mr. Meng Dong (James) Tan did not exercise his
right to convert the Promissory Notes.
Due
to Related Parties
As
of October 31, 2022 and July 31, 2022, the total amount contains administrative service fee of $ and $ accrued by the Company’s
Sponsor, respectively.
For
the year ended July 31, 2022, Mr. Meng Dong (James) Tan, the Company’s then Chief Executive Officer and Chairman of the Company’s
board of directors, loaned the Company $3,894 to cover certain
operating expenses of the Company. As of July 31, 2022, the total amount due to Mr. Tan was $3,894 and such balance was converted into
promissory note on August 16, 2022. As of October 31, 2022, the total amount due to Mr. Tan was $0.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Administrative
Service Fee
The
Company agreed, commencing on the effective date of the IPO, to pay the affiliate of the Company’s Sponsor a monthly fee of
an aggregate of $ for office space, utilities and personnel. This arrangement terminated upon the completion of the Business
Combination. For the three months ended October 31, 2022 and 2021,
the Company has incurred $30,000 and $0, respectively, of administrative service fee, which is included in formation and operating costs
on the statements of operations.
Note
6 - Commitments and Contingencies
Underwriters
Agreement
The
Company granted the underwriters a 45-day option to purchase up to 1,125,000 units (over and above the 7,500,000 units referred to above)
solely to cover over-allotments at $10.00 per unit.
On
November 24, 2021, the Company paid cash underwriting commissions of 2.0% of the gross proceeds of the IPO, or $1,725,000.
The
underwriters are entitled to a deferred underwriting commission of 3.5% of the gross proceeds of the IPO, or $3,018,750, which was
paid from the funds held in the Trust Account upon completion of the Business Combination subject to the terms
of the underwriting agreement.
On
November 24, 2021, the underwriters exercised the over-allotment option in full to purchase 1,125,000 Public Units at a purchase price
of $10.00 per Public Unit, generating gross proceeds to the Company of $11,250,000 (see Note 3), and were, in aggregate, paid a fixed
underwriting discount of $225,000.
Unit
Purchase Option
The
Company sold to Maxim Group LLC (and/or its designees) an option for $100 to purchase up to a total of 431,250 units exercisable, in
whole or in part, at $11.00 per unit, between the first and fifth anniversary dates of the effective date of the registration statement
of which the IPO forms a part. The purchase option may be exercised for cash or on a cashless basis, at the holder’s option. The
option and the 431,250 units, as well as the 474,375 shares (which includes the 43,125 ordinary shares issuable for the rights included
in the units), and the warrants to purchase 215,625 shares that may be issued upon exercise of the option, have been deemed compensation
by FINRA and are therefore subject to a lock-up for a period of 180 beginning on the date of commencement of sales of the IPO pursuant
to Rule 5110(e)(1) of FINRA’s Rules, during which time the option may not be sold, transferred, assigned, pledged or hypothecated,
or be subject of any hedging, short sale, derivative or put or call transaction that would result in the economic disposition of the
securities.
Registration
Rights
The
holders of the Founder Shares issued and outstanding at the closing of the IPO, as well as the holders of the private units (and underlying
securities) and any securities issued to the initial shareholders, officers, directors or their affiliates in payment of working capital
loans made to the Company, are entitled to registration rights pursuant to a registration rights agreement. The holders of a majority
of these securities are entitled to make up to two demands that the Company registers such securities. In addition, the holders have
certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s
consummation of the Business Combination. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Risks
and Uncertainties
Management
is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that
the virus could have a negative effect on the company’s financial position, results of its operations and/or search for a target
company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited
condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Professional
and Other Listing Fees
The
Company has engaged various professionals, including but not limited, legal advisor, financial advisor, independent registered public
accounting firm, investor relation advisor and other professional firms and listing fees, to provide services in connection with the
Company’s public filings with the U.S. Securities and Exchange Commission and the Business Combination. As of October 31,
2022, the professional fees and other listing fees to be incurred up until November 24, 2022, the date which the Company had to consummate
the Business Combination, were estimated to be $0.4 million.
Note
7 - Shareholder’s Equity
Ordinary
Shares
The
Company is authorized to issue unlimited ordinary shares of no par value. Holders of the Company’s ordinary shares are entitled
to one vote for each ordinary share.
As
of July 31, 2021, the Company had issued an aggregate of 1,437,500
ordinary shares for $25,000,
of which 187,500
shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in the IPO. On
October 25, 2021, the Company issued additional
ordinary shares which were purchased by the Sponsor for $,
resulting in an aggregate of 2,156,250
ordinary shares outstanding. The Sponsor agreed to forfeit
ordinary shares to the extent that the over-allotment option was not exercised in full by the underwriters. All shares and
associated amounts have been retroactively restated to reflect the share capitalization. On November 24, 2021, the underwriters
exercised the over-allotment option in full, so there are no longer any shares subject to forfeiture.
Warrants
Each
warrant entitles the holder to purchase one ordinary share at a price of $11.50
per share commencing 30 days after the completion of the Business Combination, and expiring five years after the completion of the
Business Combination. No
fractional warrants were issued and only whole warrants trade. The Company may redeem the warrants at a price of $0.01
per warrant upon 30 days’ notice, only in the event that the last sale price of the ordinary shares is at least $16.50 per
share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption
is given, provided there is an effective registration statement and current prospectus in effect with respect to the ordinary shares
underlying such warrants during the 30 day redemption period. If a registration statement is not effective within 60 days following
the consummation of the Business Combination, warrant holders may, until such time as there is an effective registration statement
and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a
cashless basis pursuant to an available exemption from registration under the Securities Act.
In
addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection
with the closing of the Business Combination at an issue price or effective issue price of less than $9.50 per share (with such
issue price or effective issue price to be determined in good faith by our board of directors), (y) the aggregate gross proceeds from
such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business
combination, and (z) the volume weighted average trading price of the ordinary shares during the 20 trading day period starting on the
trading day prior to the day on which the Company consummated the Business Combination (such price, the “Market Value”)
is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market
Value, and the last sales price of the ordinary shares that triggers the Company’s right to redeem the Warrants will be adjusted
(to the nearest cent) to be equal to 165% of the Market Value.
8i
ACQUISITION 2 CORP.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note
8 - Recurring Fair Value Measurements
As
of October 31, 2022 and July 31, 2022, investment securities in the Company’s Trust Account consisted of a treasury securities
fund in the amount of $86,972,255 and $86,472,912, respectively, which was held as money market funds. The following table presents information
about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of October 31, 2022 and July
31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.
Schedule
of Fair Value Assets
| |
| | |
Quoted | | |
Significant | | |
Significant | |
| |
| | |
Prices | | |
Other | | |
Other | |
| |
Value | | |
in Active | | |
Observable | | |
Unobservable | |
| |
Carrying | | |
Markets | | |
Inputs | | |
Inputs | |
As of October 31, 2022 | |
Value | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Investments held in Trust Account – Money Market Fund | |
$ | 86,972,255 | | |
$ | 86,972,255 | | |
$ | - | | |
$ | - | |
| |
$ | 86,972,255 | | |
$ | 86,972,255 | | |
$ | - | | |
$ | - | |
| |
| | |
Quoted | | |
Significant | | |
Significant | |
| |
| | |
Prices | | |
Other | | |
Other | |
| |
Value | | |
in Active | | |
Observable | | |
Unobservable | |
| |
Carrying | | |
Markets | | |
Inputs | | |
Inputs | |
As of July 31, 2022 | |
Value | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Investments held in Trust Account – Money Market Fund | |
$ | 86,472,912 | | |
$ | 86,472,912 | | |
$ | - | | |
$ | - | |
| |
$ | 86,472,912 | | |
$ | 86,472,912 | | |
$ | - | | |
$ | - | |
Note
9 - Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to November 21, 2022, the date the
unaudited condensed financial statements were available to be issued. Based upon the review, except as disclosed below, the Company did
not identify any other subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
Redemption
of Ordinary Shares
As
of November 14, 2022, the end of the redemption period for the Ordinary Shares issued as part of the units in the Company’s
IPO consummated on November 24, 2021, an aggregate of 6,033,455 Ordinary
Shares were tendered for redemption in connection with the Special Meeting. The final redemption price was $10.0837
per share redeemed with the total redemption value of approximately $60.8 million.
Forward
Purchase Agreement
On
November 1, 2022, the Company and Greentree Financial Group, Inc., a Florida corporation “Greentree”) entered into
an agreement (the “Forward Purchase Agreement”) pursuant to which, among other things, (a) Greentree intends, but is not
obligated, to purchase the Company’s Ordinary Shares, after the date of the Forward Purchase Agreement from holders of the Ordinary
Shares, other than the Company or its affiliates, who have redeemed their Ordinary Shares or indicated an interest in redeeming the Ordinary
Shares they hold pursuant to the redemptions rights set forth in the Company’s Current Charter in connection with the Business
Combination; and (b) Greentree has agreed to waive any redemption rights in connection with the Business Combination with respect to
any Ordinary Shares it purchases in accordance with the Forward Purchase Agreement. Such waiver by Greentree may reduce the number of
Ordinary Shares redeemed in connection with the Share Purchase, which reduction could alter the perception of the potential strength
of the Business Combination transaction contemplated by the SPA. To the extent Greentree purchases
the Company’s Ordinary Shares in accordance with the Forward Purchase Agreement, Greentree may elect to sell and transfer to the
Company, and the Company has agreed to purchase, in the aggregate up to 125,000 Ordinary Shares (the “Investor Shares”) then
held by Greentree on the sixty (60) day anniversary of the date of the closing of the Share Purchase, and pay Greentree at
a price of $10.41 per Investor Share (the “Investor Shares Purchase Price”), out of
the funds held in the Trust Account, the Escrowed Funds.
On November 9, 2022, 8i and Greentree entered into a Termination Agreement
terminating the Forward Purchase Agreement.
Prepaid
Forward Agreements
On
November 9, 2022, the Company, EUDA and certain institutional investor (the “Seller 1”) entered into an agreement (the
“Prepaid Forward Agreement 1”) for an equity prepaid forward transaction (the “Prepaid Forward Transaction
1”). Pursuant to the terms of the Prepaid Forward Agreement 1, Seller 1 may (i) purchase through a broker in the open market,
from holders of Shares (as defined below) other than the Company or affiliates thereof, the Company’s ordinary shares, no par
value, (the “Shares”), or (ii) reverse Seller 1’s prior exercise of redemption rights as to Shares in connection
with the Business Combination (all such purchased or reversed Shares, the “Recycled Shares 1”). While Seller 1 has no
obligation to purchase any Shares under the Prepaid Forward Agreement 1, the aggregate total Recycled Shares 1 that may be purchased
or reversed under the Prepaid Forward Agreement 1 shall be no more than 1,400,000
shares. Seller 1 agreed to hold the Recycled Shares 1, for the benefit of (a) the Company until the closing of the Business
Combination (the “Closing”) and (b) EUDA after the Closing (each a “Counterparty”). Seller 1 also may not
beneficially own greater than 9.9%
of issued and outstanding Shares following the Business Combination.
On
November 13, 2022, the Company, EUDA Health and certain institutional investor (the “Seller 2”) entered into
another agreement (the “Prepaid Forward Agreement 2”) for an equity prepaid forward transaction (the “Prepaid
Forward Transaction 2”). Pursuant to the terms of the Prepaid Forward Agreement 2, Seller 2 may (i) purchase through a broker
in the open market, from holders of Shares (as defined below) other than the Company or affiliates thereof, the Company’s
Shares, or (ii) reverse Seller 2’s prior exercise of redemption rights as to Shares in connection with the Business
Combination (all such purchased or reversed Shares, the “Recycled Shares 2”). While Seller 2 has no obligation to
purchase any Shares under the Prepaid Forward Agreement 2, the aggregate total Recycled Shares 2 that may be purchased or reversed
under the Prepaid Forward Agreement 2 shall be no more than 1,125,000
shares. Seller 2 agreed to hold the Recycled Shares 2 for the benefit of (a) the Company until the closing of the Business
Combination (the “Closing”) and (b) EUDA after the Closing (each a “Counterparty”). Seller 2 also may not
beneficially own greater than 9.9%
of issued and outstanding Shares following the Business Combination.
Waiver
Agreement to the SPA
On
each of November 7, 2022 and November 15, 2022, 8i and the Seller entered into a Waiver Agreement (the “Waiver
Agreements”) waiving among other things, the following conditions to closing of the SPA (the “Closing”), effective
as of the date of Closing:
|
● |
that
United Overseas Bank Limited has consented in writing to the consummation of the SPA under each of the Banking Facility Agreement
dated August 21, 2019 between Kent Ridge Healthcare Singapore Private Limited (formerly known as Sheares HMO Private Limited) and
United Overseas Bank Limited and the Deed of Debenture dated October 16, 2019 between Kent Ridge Healthcare Singapore Private Limited
and United Overseas Bank Limited; |
|
● |
that
Funding Societies Private Limited has consented in writing to the consummation of the Transaction under the Note issuance agreement
(bolt term financing) dated February 23, 2022, along with the investment note certificate dated February 24, 2022 representing the
aggregate value of SGD100,000
between Kent Ridge Healthcare Singapore Private
Limited as issuer, Chen Weiwen Kelvin as guarantor, Funding Societies Private Limited as an agent acting on behalf of the investors,
and DBS Bank Limited Singapore as escrow agent; |
|
● |
that
EUDA will have aggregate cash equal to or exceed $10.0
million immediately prior to Closing; |
|
● |
that
certain designees of the Seller, who will receive an aggregate of 1,000,000
ordinary shares of the Company at Closing
will be required to sign the Lock-Up Agreement; and |
|
● |
that
Kent Ridge Health Private Limited shall have irrevocably amended its organizational documents to remove “Kent Ridge”
from its official name; and |
|
● |
that the Purchaser shall cause the Company to obtain and fully pay the
premium for the “tail” insurance policies for the extension of the directors’ and officers’ liability coverage
of the Company’s existing directors’ and officers’ insurance policy and the Company’s existing fiduciary liability
insurance policies. |
Settlement
Agreements
On November 17, 2022, the Company executed a
settlement agreement with one of its vendors (“Vendor 1”) reflecting the agreed terms of addition terms and fees of
$300,000,
which is set forth in a Promissory Note (“Note 1”) with maturity date on November
17, 2023 and subject to the terms and conditions of certain letter agreement. The Company shall issue 60,000
restricted ordinary shares to the Vendor 1 at an assumed price of $5.00
per Share. In the event that the Note 1 is paid in full, the Vendor 1 shall return all 60,000
shares to the Company for cancellation. If any shares sold prior to the maturity date of the Note 1, it shall reduce the amount due and
owing under the Note 1. In the event the principal amount of $300,000
is not paid in full on or prior to November 17, 2023, such amounts shall automatically be converted into the Company’s
ordinary shares with conversion price using the five day volume-weighted average price of the Company’s ordinary shares
immediately preceding November 17, 2023.
Promissory
Notes
On November 17, 2022, the Company executed a
convertible promissory note in the principal amount of $2,113,125
due on November
17, 2023 with one of its vendors. In the event the principal amount is not paid in full on or prior to November 17, 2023,
such amounts shall automatically be converted into the Company’s ordinary shares with conversion price of $5.00
per share.
On November 17, 2022, the Company executed a promissory
note (“Note 2”) in the principal amount of $170,000 due on February 15, 2023 with one of EUDA’s vendors. Note 2 shall
bear no interest. From and after February 15, 2023, if any amount payable is not paid when due, such Note 2 will bear a 15% interest
rate per annum until paid in full.
On November 17, 2022, the Company executed a convertible
promissory note in the principal amount of $82,600 due on November 17, 2023 with the Company’s Sponsor. In the event the principal
amount is not paid in full on or prior to November 17, 2023, such amount shall automatically be converted into the Company’s ordinary
shares with conversion price using the five day volume-weighted average price of the Company’s ordinary shares immediately preceding
November 17, 2023.
On November 17, 2022, the Company executed a
convertible promissory note in the principal amount of $87,500
due on November
17, 2023 with one of EUDA Health’s vendors. In the event the principal amount is not paid in full on or prior to
November 17, 2023, such amounts shall automatically be converted into the Company’s ordinary shares with conversion price
using the five day volume-weighted average price of the Company’s ordinary shares immediately preceding November 17, 2023.
On November 17, 2022, the Company executed a
convertible promissory note in the principal amount of $119,000
due on November
17, 2023 with one of EUDA Health’s vendors. In the event the principal amount is not paid in full on or
prior to November 17, 2023, such amount shall automatically be converted into the Company’s ordinary shares with conversion
price using the five day volume-weighted average price of the Company’s ordinary shares immediately preceding November 17,
2023.
On November 17, 2022, the Company executed a
convertible promissory note in the principal amount of $700,000
due on November
17, 2023 with Mr. Meng Dong (James) Tan, the Company’s former Chief Executive Officer and Chairman of the
Company’s board of directors. In the event the principal amount is not paid in full on or prior to November 17, 2023, such
amount shall automatically be converted into the Company’s ordinary shares with conversion price using the five day
volume-weighted average price of the Company’s ordinary shares immediately preceding November 17, 2023.
Completion
of the Business Combination
On
November 17, 2022, the Company completed the closing of the Business Combination with EUDA Health.