F-4 POS 1 formf-4pos.htm

 

As Filed with the Securities and Exchange Commission on June 1, 2020

 

Registration No. 333-234147

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

POST-EFFECTIVE

AMENDMENT NO. 1 TO

FORM F-4/A

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

DIGINEX LIMITED

(Exact name of Registrant as specified in its charter)

 

Singapore   7389   Not Applicable
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

35/F Two International

Finance Street, Central

 

Hong Kong Telephone: +852 2248 0600

 

(Address, including zip code, and telephone number, including area code, of
Registrant’s principal executive offices)

 

CT Corporation System

1015 15th Street, NW

Suite 1000

Washington, District of Columbia 20005

 

Telephone: (202) 572-3133

 

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

Copies of communications to:

Mitchell S. Nussbaum

Giovanni Caruso

Tahra Wright

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

(212) 407-4000

(212) 407-4990 — Facsimile

Joel L. Rubinstein

Elliott M. Smith

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

(212) 294-6700

(212) 294-4700 — Facsimile

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and after all conditions under the Amended Share Exchange Agreement are satisfied or waived.

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) [  ]

 

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) [  ]

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

 

Emerging growth company [X]

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. [  ]

 

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of
Securities to be Registered
  Amount to be Registered   Proposed Maximum Aggregate Price
Per Security(1)
   Proposed Maximum Aggregate Offering Price   Amount of Registration Fee 
Ordinary Shares   7,427,500    10.00    74,275,000    9,640.90  
Ordinary Shares upon conversion of Rights   599,000    10.00    5,990,000    777.51 
Redeemable Warrants   5,990,000            (2)
Ordinary Shares underlying Redeemable Warrants   2,995,000    11.50    34,442,500    4,470.64 
Total   

11,021,500

    17,011,500    

114,707,500

   $14,889.05(3)

 

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

 

(2) No fee pursuant to Rule 457(g).

 

(3) Previously paid.

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 
 

 

The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This proxy statement/prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction or state where the offer or sale is not permitted.

 

Subject to completion dated June 1, 2020

 

FOR A MEETING OF SHAREHOLDERS
OF 8i ENTERPRISES ACQUISITION CORP
AND PROSPECTUS FOR ORDINARY SHARES AND WARRANTS
OF DIGINEX LIMITED

Proxy Statement/Prospectus dated [●], 2020
First mailed to 8i Enterprises Acquisition Corp shareholders on or about February 28, 2020

and subsequently mailed to 8i Enterprises Acquisition Corp shareholders on or about [●], 2020

 

To the Shareholders of 8i Enterprises Acquisition Corp:

 

You are cordially invited to attend a meeting of the shareholders of 8i Enterprises Acquisition Corp (“JFK,” “we”, “our”, or “us”), which will be held at 10:00 a.m., Eastern time, on June 15, 2020, at Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154 (the “Meeting”). In light of developments surrounding the novel coronavirus (also known as COVID-19) we may determine to proceed to hold the Meeting virtually. In the event we decide to hold the Meeting virtually, shareholders would be able to listen, vote, and submit questions from their home or any remote location with Internet connectivity. We will issue a press release with information on how to participate and supplement this proxy statement/prospectus with such information should we proceed with the Meeting virtually.

 

A proxy statement/prospectus and proxy card was first mailed to the JFK shareholders on or about February 28, 2020. On March 20, 2020, the original date for the meeting of the shareholders of JFK (the “Original Meeting”), the shareholders voted in favor of a proposal to adjourn the meeting to June 15, 2020 (the “Adjournment”). This proxy statement/prospectus has been updated through the date hereof, however, the proposals in the proxy statement/prospectus first mailed to JFK shareholders are the same proposals set forth in this proxy statement/prospectus. In accordance with British Virgin Islands law and JFK’s Amended and Restated Memorandum and Articles of Association, only proxy cards that were timely submitted for the Original Meeting will count towards the votes on the proposals presented at the Meeting. Proxy cards submitted after the date of the Original Meeting will not be counted. As a result, if you did not timely submit your proxy card and would like to vote on the proposals, or if would like to revoke your proxy card and change your vote, you must attend the Meeting in person and cast your vote by hand or by ballot (as applicable) in order to vote on the proposals described in this proxy statement/prospectus.

 

JFK is a British Virgin Islands business company incorporated as a blank check company for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” The business combination will be completed through a two-step process consisting of the Reincorporation Merger (as defined below) and the Share Exchange (as defined below). The Reincorporation Merger and the Share Exchange are collectively referred to herein as the “Business Combination.”

 

On July 9, 2019, JFK 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 JFK 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 JFK (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 JFK (the “Reincorporation Merger”), and JFK 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 JFK (the “Merger Agreement”) and a plan of merger by and among JFK 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 JFK’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 JFK 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.

 

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,” 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.

 

At the Meeting, JFK shareholders will be asked to consider and vote upon the following proposals:

 

  approval of the Merger Agreement and the Plan of Merger, which we refer to as the Reincorporation Merger Proposal;
     
  approval of the Amended Share Exchange Agreement, which we refer to as the Share Exchange Proposal; and
     
  approval to adjourn the Meeting under certain circumstances, which is more fully described in the accompanying proxy statement/prospectus, which we refer to as the Adjournment Proposal and, together with the Reincorporation Merger Proposal and Share Exchange Proposal, the “Proposals.”

 

If the JFK shareholders approve the Reincorporation Merger Proposal and the Share Exchange Proposal, immediately prior to the consummation of the Business Combination, all outstanding units of JFK (each of which consists of one JFK ordinary share, one JFK Right and one JFK Warrant) (the “JFK Units”) will separate into their individual components of JFK ordinary shares, JFK Rights, and JFK Warrants and will cease separate existence and trading. Upon the consummation of the Business Combination the current equity holdings of the JFK shareholders shall be exchanged as follows:

 

  (i)

Each JFK ordinary share, issued and outstanding immediately prior to the Effective Date (as defined herein) (other than any redeemed shares and any Dissenting Shares (as hereinafter defined)), will automatically be cancelled and cease to exist and for each such JFK ordinary share, Singapore NewCo shall issue to each JFK shareholder (other than Dissenting Shareholders (as hereinafter defined) and JFK shareholders who exercise their redemption rights in connection with the Business Combination) one validly issued Singapore NewCo Ordinary Share which, unless explicitly stated herein, shall be fully paid;

 

 
 

 

  (ii) Each JFK ordinary share, issued and outstanding immediately prior to the Effective Date held by each holder of JFK ordinary shares who has validly exercised such holder’s right to dissent from the Reincorporation Merger in accordance with Section 179 of the BVI Business Companies Act, 2004, as amended (the “BVI BC Act”) (a “Dissenting Shareholder”), and who has not effectively withdrawn its right to such dissent (collectively, the “Dissenting Shares”) will be cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and such Dissenting Shareholder shall not be entitled to receive any of the Singapore NewCo Ordinary Shares to be issued in connection with the Reincorporation Merger;
     
  (iii) Each warrant to purchase one-half of one JFK ordinary share (collectively, the “JFK Warrants”) issued and outstanding immediately prior to the Effective Date will convert into a warrant to purchase one-half of one Singapore NewCo Ordinary Share (or equivalent portion thereof) (each, a “Singapore NewCo Warrant”). The Singapore NewCo Warrants will have substantially the same terms and conditions as set forth in the JFK Warrants; and
     
  (iv)

The holders of JFK’s rights (exchangeable into one-tenth of one JFK ordinary share) (collectively, the “JFK Rights”) issued and outstanding immediately prior to the Effective Date will receive one-tenth (1/10) of one Singapore NewCo Ordinary Share in exchange for the cancellation of each JFK Right; provided, however, that no fractional shares will be issued and all fractional shares will be rounded to the nearest whole share.

 

It is anticipated that, upon consummation of the Business Combination, JFK’s existing shareholders, including the Sponsor (as defined herein), will own approximately 23.4% of the issued Singapore NewCo Ordinary Shares (excluding treasury shares), and Diginex’s current shareholders will own approximately 71.4% of the issued Singapore NewCo Ordinary Shares (excluding treasury shares). These relative percentages assume (i) that none of JFK’s existing public shareholders exercise their redemption rights or dissenter rights, as discussed herein, (ii) there is no exercise or conversion of Singapore NewCo Warrants or Singapore NewCo Options, (iii) the Notes (as defined herein) have been converted and (iv) assuming the Chardan Commission is not converted into Singapore NewCo Ordinary Shares. If any of JFK’s existing public shareholders exercise their redemption rights or dissenter rights, if the Singapore NewCo Warrants and Singapore NewCo Options are fully exercised, or the Notes are converted, the anticipated percentage ownership of JFK’s existing shareholders will be reduced. You should read “The Amended Share Exchange Agreement — Consideration to be Received in the Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Statements” for further information.

 

The JFK Units, JFK ordinary shares, JFK Warrants, and JFK Rights are currently listed on Nasdaq under the symbols “JFKKU,” “JFK,” “JFKKW,” and “JFKKR,” respectively. Singapore NewCo intends to apply to list the Singapore NewCo Ordinary Shares and Singapore NewCo Warrants on Nasdaq under the symbols “DGNX” and “DGNXW,” respectively, in connection with the closing of the Business Combination. JFK cannot assure you that the Singapore NewCo Ordinary Shares and Singapore NewCo Warrants will be approved for listing on Nasdaq.

 

Investing in Singapore NewCo securities involves a high degree of risk. See “Risk Factors” beginning on page 30 for a discussion of information that should be considered in connection with an investment in Singapore NewCo securities.

 

As of [●], 2020, there was approximately USD$[●] in JFK’s trust account. On [●], 2020, the last sale price of JFK’s ordinary shares was USD$[●].

 

Pursuant to JFK’s Amended and Restated Memorandum and Articles of Association, JFK is providing its public shareholders with the opportunity to elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the business combination, including interest (which shall be net of taxes payable), by (ii) the total number of then-outstanding shares of JFK ordinary shares that were sold as part of the JFK Units in JFK’s initial public offering (“IPO”), which are referred to collectively as “public shares,” subject to the limitations described herein. JFK estimates that the per-share price at which public shares may be redeemed from cash held in the trust account will be approximately USD$10.00 at the time of the Meeting. JFK’s public shareholders may elect to redeem their shares even if they vote for the Reincorporation Merger or do not vote at all. JFK has no specified maximum redemption threshold under its Amended and Restated Memorandum and Articles of Association. It is a condition to closing under the Amended Share Exchange Agreement, however, that JFK has, in the aggregate, not less than $15,000,000 of cash that is available for distribution upon the consummation of the Business Combination. If redemptions by JFK public shareholders cause JFK to be unable to meet this closing condition, then Diginex will not be required to consummate the Business Combination, although it may, in its sole discretion, waive this condition. In the event that Diginex waives this condition, JFK does not intend to seek additional shareholder approval or to extend the time period in which its public shareholders can exercise their redemption rights. In no event, however, will JFK redeem public shares in an amount that would cause its net tangible assets to be less than USD$15,000,000. Holders of outstanding JFK Warrants and JFK Rights do not have redemption rights in connection with the Business Combination.

 

 
 

 

This proxy statement/prospectus provides updates through the date hereof to the information provided in the original proxy statement/prospectus mailed on or about February 28, 2020 in connection with the Original Meeting, however, the proposals are the same proposals set forth in this proxy statement/prospectus. The Sponsor, which owned approximately 19.4% of JFK’s outstanding ordinary shares as of the record date, has agreed to vote its JFK ordinary shares in favor of the Reincorporation Merger Proposal and the Share Exchange Proposal, which transactions comprise the Business Combination, and intends to vote for the Adjournment Proposal, although there is no agreement in place with respect to voting on the Adjournment Proposal.

 

Each shareholder’s vote is very important. In accordance with British Virgin Islands law and JFK’s Amended and Restated Memorandum and Articles of Association, only proxy cards that were timely submitted for the Original Meeting will count towards the votes on the proposals at the Meeting. Proxy cards submitted after the date of the Original Meeting will not be counted. If you did not timely submit your proxy card and would like to vote on the proposals, or if would like to revoke your proxy card and change your vote, you must attend the Meeting in person and cast your vote by hand or by ballot (as applicable) in order to vote on the proposals described in this proxy statement/prospectus. If you are a shareholder of record and you attend the Meeting and wish to vote in person, you may withdraw your proxy and vote in person. Attending the Meeting either in person or by proxy and abstaining from voting will have no effect on any of the Proposals. Similarly, broker non-votes will have no effect on any of the Proposals.

 

We encourage you to read this proxy statement/prospectus carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 30.

 

JFK’s Board of Directors has unanimously approved the Merger Agreement, the Plan of Merger, and the Amended Share Exchange Agreement, and unanimously recommends that JFK shareholders vote “FOR” approval of each of the Proposals. When you consider JFK’s Board of Director’s recommendation of these Proposals, you should keep in mind that JFK’s directors and officers have interests in the Business Combination that may conflict or differ from your interests as a shareholder. See the section titled “Proposals to be Considered by JFK Shareholders: The Business Combination — Interests of JFK’s Directors and Executive Officers in the Business Combination.”

 

On behalf of the JFK Board of Directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

 

/s/ James Tan  
James Tan  
Chief Executive Officer  
8i Enterprises Acquisition Corp  
   
[●], 2020  

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

 
 

 

HOW TO OBTAIN ADDITIONAL INFORMATION

 

If you would like to receive additional information or if you want additional copies of this document, agreements contained in the appendices or any other documents filed by JFK with the Securities and Exchange Commission, such information is available without charge upon written or oral request. Please contact our proxy solicitor, at :

 

Advantage Proxy

 

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

 

If you would like to request documents, please do so no later than [●], 2020 to receive them before the Meeting. Please be sure to include your complete name and address in your request. Please see the section titled “Where You Can Find Additional Information” to find out where you can find more information about JFK, Singapore NewCo and Diginex. You should rely only on the information contained in this proxy statement/prospectus in deciding how to vote on the Business Combination. Neither JFK, Singapore NewCo, nor Diginex has authorized anyone to give any information or to make any representations other than those contained in this proxy statement/prospectus. Do not rely upon any information or representations made outside of this proxy statement/prospectus. The information contained in this proxy statement/prospectus may change after the date of this proxy statement/prospectus. Do not assume after the date of this proxy statement/prospectus that the information contained in this proxy statement/prospectus is still correct.

 

USE OF CERTAIN TERMS

 

Unless otherwise stated in this this proxy statement/prospectus:

 

 

References to “Articles of Merger” and “Plan of Merger” refer respectively to the statutory articles of merger and the statutory plan of merger to be filed with the Registrar of Corporate Affairs in the British Virgin Islands.
     
  References to “BPAMJ” refer to Bletchley Park Asset Management Jersey Limited.
     
  References to the “Business Combination” refer to the Reincorporation Merger, together with the Share Exchange.
     
  References to “BVI NewCo” refer to DIGITAL INNOVATIVE LIMITED, a newly incorporated British Virgin Islands business company and wholly-owned subsidiary of Singapore NewCo.
     
  References to “Closing Date” refer to the date on which the Business Combination is consummated.
     
  References to “Chardan Commission” refer to 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 pursuant to that certain SPAC Financial and M&A Advisory Letter Agreement between the Purchaser and Chardan, dated April 8, 2019.
     
  References to “Diginex” refer to Diginex Limited.
     
  References to “Digital Assets” refer to, collectively or separately as the context requires, Digital Securities, Virtual Currencies and Stablecoins.
     
  References to “Digital Securities” refer to securities issued in tokenized form using distributed ledger technology.
     
  References to “Effective Date” refer to the effective time of the Reincorporation Merger.
     
  References to “Enterprises” refer to 8i Enterprises Pte Ltd, a company wholly owned by Mr. James Tan, JFK’s Chairman and Chief Executive Officer.
     
  References to “ Incentive Plan” refer to the Diginex Limited 2020 Omnibus Incentive Plan.
     
  References to “Exchange Act” refer to the Securities Exchange Act of 1934, as amended.

 

 
 

 

  References to “GDF” refer to Global Digital Finance, an industry body that promotes the adoption of best practices for Digital Assets and digital finance technologies.
     
  References to “Helios” refer to Diginex’s warm storage custody solution for Digital Assets.
     
  References to “HKD” refer to the legal currency of Hong Kong.
     
  References to “IPO” refer to the initial public offering of 5,000,000 units of JFK consummated on April 1, 2019.
     
  References to “JFK,” “we” “us” or “our company” refer to 8i Enterprises Acquisition Corp.
     
  References to “Kelvin” refer to Diginex’s cold storage custody solution for Digital Assets.
     
  References to “Loeb” refer to Loeb & Loeb LLP.
     
  References to “LOI” refer to a letter of intent.
     
  References to “Merger Agreement” refer to the merger agreement between JFK, Singapore NewCo and BVI NewCo.
     
  References to “Nasdaq” refer to The Nasdaq Stock Market, LLC and the Nasdaq Capital Market.
     
  References to “Notes” refer to the July 2, 2019, July 23, 2019, September 25, 2019, October 15, 2019, January 7, 2020, February 3, 2020, March 3, 2020, March 26, 2020 and May 11, 2020 unsecured promissory notes in the principal amounts of $200,000, $100,000 $150,000, $200,000, $70,000, $60,000, $100,000, $575,000 and $16,000 respectively, issued by JFK to Enterprises.
     
  References to “public shares” refer to the JFK ordinary shares that were sold as part of the JFK Units in the IPO.
     
  References to “Reincorporation Merger” refer to the merger of BVI NewCo with and into JFK, with JFK being the surviving entity and a subsequent wholly-owned subsidiary of Singapore NewCo.
     
  References to “Representative” refer to Pelham Limited, as the representative of the Sellers.
     
  References to “SEC” refer to the Securities and Exchange Commission.
     
  References to “Securities Act” refer to the Securities Act of 1933, as amended.
     
  References to “Sellers” refer to the shareholders of Diginex.
     
  References to “Singapore NewCo” refer to Diginex Limited, a newly incorporated Singapore public company limited by shares (formerly known as Digital Innovative Limited) with its ordinary shares and warrants to be publicly listed and traded on The Nasdaq Stock Market, LLC, formed to facilitate the Business Combination.
     
  References to “Sponsor” refer to 8i Holdings Ltd., a company wholly owned by Mr. James Tan, JFK’s Chairman and Chief Executive Officer.
     
  References to “Share Exchange” refer to the acquisition by JFK of 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 25,000,000 Singapore NewCo Ordinary Shares.
     
  References to “Stablecoins” refer to Virtual Currencies that have been issued using distributed ledger technology that are backed by reserve assets such as fiat currencies, Virtual Currencies or exchange-traded commodities.
     
  References to “US Dollars,” “$,” and “USD$” refer to the legal currency of the United States.
     
  References to “Virtual Currencies” refer to non-security tokens and digital currencies that serve as a medium of exchange, store of value or unit of account that have been issued using distributed ledger technology.
     
  References to “VStock” refer to VStock Transfer, LLC, JFK’s transfer agent and registrar.
     
  References to “Winston” refer to Winston & Strawn LLP.

 

 
 

 

8i ENTERPRISES ACQUISITION CORP
6 Eu Tong Sen Street
#08-13 The Central
Singapore 059817
Telephone: +65 67880388

 

NOTICE OF THE MEETING OF
8i ENTERPRISES ACQUISITION CORP SHAREHOLDERS
To Be Held on June 15, 2020

 

To 8i Enterprises Acquisition Corp (“JFK, “we, “our,” or “us”) Shareholders:

 

A meeting of shareholders of JFK will be held at Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154, or virtually as discussed further herein, on June 15, 2020, at 10:00 a.m. (the “Meeting”), for the following purposes:

 

The Reincorporation Merger Proposal – To approve the Merger Agreement, dated October 8, 2019, by and between Diginex Limited, a Singapore public company limited by shares (formerly known as Digital Innovative Limited) (“Singapore NewCo”), DIGITAL INNOVATIVE LIMITED, a British Virgin Islands business company (“BVI NewCo”) and JFK, and the Plan of Merger to be entered into between BVI NewCo and JFK, whereby BVI NewCo will merge with and into JFK with JFK being the surviving entity and a subsequent wholly-owned subsidiary of Singapore NewCo. On the Effective Date (i) all issued and outstanding JFK ordinary shares held by the JFK shareholders immediately prior to the Effective Date will automatically be cancelled and cease to exist, and Singapore NewCo shall issue up to 8,188,310 Singapore NewCo Ordinary Shares to the JFK shareholders, in the aggregate (other than to the Dissenting Shareholders and the JFK shareholders who exercise their redemption rights in connection with the Business Combination) on a one-for-one basis, (ii) each issued and outstanding JFK Warrant held by JFK shareholders immediately prior to the Effective Date will be exchanged for one Singapore NewCo Warrant, and (iii) each holder of JFK Rights issued and outstanding immediately prior to the Effective Date will receive one-tenth (1/10) of one Singapore NewCo Ordinary Share in exchange for the cancellation of each JFK Right; provided, however, that no fractional shares will be issued and all fractional shares will be rounded to the nearest whole share. The effect of the Reincorporation Merger will be that JFK shareholders (other than Dissenting Shareholders and JFK shareholders who exercise their redemption rights) will become shareholders of Singapore NewCo which will be a “foreign private issuer” under the Exchange Act.

 

The Share Exchange Proposal - To approve the Share Exchange Agreement, dated July 9, 2019, by and among Diginex, the Sellers, the Representative, and JFK, as amended by the Amendment and Joinder to Share Exchange Agreement, dated October 8, 2019, by and among, Diginex, the Sellers, the Representative, JFK, Singapore NewCo and BVI NewCo, as amended by the Second Amendment, dated January 28, 2020, as amended by the Third Amendment, dated May 6, 2020 (the “Amended Share Exchange Agreement”). Pursuant to the Amended Share Exchange Agreement, (i) JFK will acquire 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 25,000,000 Singapore NewCo Ordinary Shares, (ii) the Escrow Shares (which will not be fully paid at issuance) will be deposited into an escrow account for a period of twelve months to satisfy any potential indemnification claims brought pursuant to the Share Exchange Agreement, and (iii) each Diginex Option, whether vested or unvested, will be cancelled and the holders of the Diginex Options will receive 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 will be issued to each holder of a Singapore NewCo Option as follows: (i) one-third (1/3) on the date that is fifteen (15) months after the Closing Date, (ii) one-third (1/3) on the date that is eighteen (18) months after the Closing Date and (iii) one-third (1/3) on the date that is twenty-one (21) months after the Closing Date, in the case of each of (i), (ii) and (iii), 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 Incentive Plan. The Sellers will be entitled to receive Earnout Shares after the closing of the Business Combination if the closing price of Singapore NewCo’s Ordinary Shares on Nasdaq (or on another applicable securities exchange) is equal to or greater than the stock prices set forth below during any 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 the fourth anniversary of the Closing Date. All share and per share amounts above shall be proportionally adjusted for share splits, dividends, and similar events.

 

 
 

 

● The Adjournment Proposal - To approve the adjournment of the Meeting in the event JFK does not receive the requisite shareholder vote to approve the Business Combination.

 

All of the proposals set forth above are sometimes collectively referred to herein as the “Proposals.” The Reincorporation Merger Proposal and the Share Exchange Proposal are dependent upon each other. It is important for you to note that in the event that either of the Reincorporation Merger Proposal or the Share Exchange Proposal is not approved, then JFK will not consummate the Business Combination. On March 26, 2020, JFK extended the time it has to complete an initial business combination for an additional three months from April 1, 2020 to June 30, 2020 (the “First Extension Deadline”), by depositing $575,000 into the trust account for the benefit of its public stockholders. If JFK does not consummate the Business Combination and fails to complete an initial business combination by June 30, 2020 or up to September 30, 2020 (18 months after the consummation of the IPO if the time-period is extended again, as described herein), JFK will be required to dissolve and liquidate.

 

As of [●], 2020, there were 7,427,500 ordinary shares of JFK issued and outstanding and entitled to vote. Only JFK shareholders who hold ordinary shares of record as of the close of business on February 20, 2020 are entitled to vote at the Meeting or any adjournment of the Meeting. This proxy statement/prospectus is being mailed to JFK shareholders on or about [●], 2020 for the Meeting. Approval of each of the Proposals will require the affirmative vote of the holders of a majority of the issued and outstanding ordinary shares that are voted at the Meeting or any adjournment thereof; provided, however, that if 4,116,564 or more of the ordinary shares purchased in the IPO demand redemption of their JFK ordinary shares, then the Business Combination may not be completed. Assuming that a quorum is present, attending the Meeting either in person or by proxy and abstaining from voting will have no effect on any of the Proposals. Similarly, broker non-votes will have no effect on any of the Proposals.

 

Holders of JFK ordinary shares will be entitled to dissenter rights under the BVI BC Act in connection with the Reincorporation Merger. In accordance with Section 179 of the BVI BC Act, a holder of JFK ordinary shares is entitled to payment of the fair value of all of its shares upon validly dissenting from the Reincorporation Merger. Holders of JFK ordinary shares may only dissent in respect of all shares that they hold in JFK. Upon a holder of JFK ordinary shares validly exercising its entitlement under Section 179 of the BVI BC Act, such Dissenting Shareholder ceases to have any rights (including redemption rights) of a shareholder of JFK except the right to be paid the fair value of its JFK ordinary shares.

 

A holder of JFK ordinary shares who desires to exercise its entitlement to payment of the fair value of all of its JFK ordinary shares is required to give JFK written objection to the Reincorporation Merger before the Meeting or before the vote on the Reincorporation Merger Proposal at the Meeting. Within 20 days immediately following the date on which the approval of JFK shareholders is obtained at the Meeting (or any adjourned meeting), JFK shall give written notice of the approval to each JFK shareholder who gave a valid written objection to the Reincorporation Merger, except for those JFK shareholders who after giving the written objection subsequently voted to approve the Reincorporation Merger Proposal at the Meeting (or any adjourned meeting). Any such holder of JFK ordinary shares who elects to dissent is required, within 20 days immediately following the date on which the notice of approval by JFK referred to above is given, to give JFK a written notice of its decision to elect to dissent, stating: (a) its name and address; (b) the number of JFK ordinary shares in respect of which it dissents; and (c) a demand for payment of the fair value of its JFK ordinary shares. On the Effective Date, a Dissenting Shareholder shall have its JFK ordinary shares automatically cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and a Dissenting Shareholder shall not be entitled to receive Singapore NewCo Ordinary Shares pursuant to the Reincorporation Merger.

 

 
 

 

A JFK shareholder who elects to dissent under Section 179 of the BVI BC Act and validly exercises its entitlement to payment of the fair value of the JFK ordinary shares it holds following the procedures set forth above will not be entitled to have its JFK ordinary shares redeemed. If a JFK shareholder has elected to have its JFK ordinary shares redeemed but later elects to dissent, upon receipt of the written notice of such a JFK shareholder’s decision to elect to dissent, JFK shall instruct its transfer agent to return the JFK ordinary shares (physically or electronically) delivered to the transfer agent in connection with such JFK shareholder’s demand for redemption to the JFK shareholder.

 

In accordance with British Virgin Islands law and JFK’s Amended and Restated Memorandum and Articles of Association, only proxy cards that were timely submitted for the Original Meeting will count towards the votes on the proposals presented at the Meeting. Proxy cards submitted after the date of the Original Meeting will not be counted. As a result, if you did not timely submit your proxy card and would like to vote on the proposals, or if would like to revoke your proxy card and change your vote, you must attend the Meeting in person and cast your vote by hand or by ballot (as applicable) in order to vote on the proposals described in this proxy statement/prospectus. If you failed to return your proxy card and do not attend the Meeting in person, the effect will be that your JFK ordinary shares will not be counted for purposes of determining whether a quorum is present at the Meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

 

JFK’s Board of Directors unanimously recommends that JFK shareholders vote “FOR” approval of each of the Proposals.

 

By order of the Board of Directors,  
   
/s/ James Tan  
James Tan  
Chief Executive Officer of  
8i Enterprises Acquisition Corp  
   
[●], 2020  

 

 
 

 

TABLE OF CONTENTS

 

  PAGE
ABOUT THIS PROXY STATEMENT/PROSPECTUS 1
WHERE YOU CAN FIND MORE INFORMATION 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 2
NOTICE TO PROSPECTIVE INVESTORS IN SINGAPORE 3
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE MEETING 4
DELIVERY OF DOCUMENTS TO JFK’s shareholders 12
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS 13
DIGINEX LIMITED. SUMMARY FINANCIAL INFORMATION 27
COMPARATIVE PER SHARE INFORMATION 28
MARKET PRICE INFORMATION 29
PRICE RANGE OF SECURITIES AND DIVIDENDS 29
RISK FACTORS 30
CAPITALIZATION 66
The meeting 67
PROPOSAL NO. 1 73
PROPOSAL nO. 2 83
PROPOSAL NO. 3 107
BUSINESS OF DIGINEX 108
SELECTED HISTORICAL COMBINED AND CONSOLIDATED FINANCIAL AND OPERATING DATA OF DIGINEX LIMITED. 137
OPERATING AND FINANCIAL REVIEW OF DIGINEX LTD. 138
JFK’s BUSINESS 159
SELECTED HISTORICAL FINANCIAL INFORMATION OF JFK 163
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF JFK 164
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 171
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 173
DIRECTORS, EXECUTIVE OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE of JFK 178
SINGAPORE NEWCO’S DIRECTORS AND EXECUTIVE OFFICERS AFTER THE BUSINESS COMBINATION 183
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO THE BUSINESS COMBINATION 188
SECURITY OWNERSHIP OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION 189
CERTAIN TRANSACTIONS 190
SHARES ELIGIBLE FOR FUTURE SALE 192
DESCRIPTION OF SINGAPORE NEWCO’S SECURITIES 195
COMPARISON OF SHAREHOLDERS’ RIGHTS 198
ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. SECURITIES LAWS 207
LEGAL MATTERS 208
EXPERTS 208
SHAREHOLDER PROPOSALS AND OTHER MATTERS 208
DELIVERY OF DOCUMENTS TO SHAREHOLDERS 208
WHERE YOU CAN FIND ADDITIONAL INFORMATION 208
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS II-1

 

ANNEX A – SHARE EXCHANGE AGREEMENT

ANNEX B – AMENDMENT AND JOINDER AGREEMENT TO SHARE EXCHANGE AGREEMENT

ANNEX B-1 – SECOND AMENDMENT TO SHARE EXCHANGE AGREEMENT

ANNEX B-2 – THIRD AMENDMENT TO SHARE EXCHANGE AGREEMENT

ANNEX C – MERGER AGREEMENT

ANNEX C-1 ARTICLES OF MERGER AND PLAN OF MERGER

ANNEX D –AMENDED AND RESTATED CONSTITUTION OF DIGINEX LIMITED

ANNEX E – DIGINEX LIMITED 2020 OMNIBUS INCENTIVE PLAN

 

 
 

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

This document, which forms part of a registration statement on Form F-4 filed by Singapore NewCo (File No. 333-234147) with the SEC, constitutes a prospectus of Singapore NewCo under Section 5 of the Securities Act, with respect to the issuance of (i) the Singapore NewCo Ordinary Shares to JFK shareholders, (ii) the Singapore NewCo Warrants to holders of JFK Warrants in exchange for the JFK Warrants, and (iii) the Singapore NewCo Ordinary Shares underlying the Singapore NewCo Warrants, if the Business Combination is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act, with respect to the Meeting at which JFK shareholders will be asked to consider and vote upon the Proposals to approve the Reincorporation Merger and the Share Exchange.

 

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is not lawful to make any such offer or solicitation in such jurisdiction.

 

WHERE YOU CAN FIND MORE INFORMATION

 

As a foreign private issuer, after the consummation of the Business Combination, Singapore NewCo will be required to file its Annual Report on Form 20-F with the SEC no later than 120 days following its fiscal year end. JFK files reports, proxy statements and other information with the SEC as required by the Exchange Act. You can read JFK’s SEC filings, including this proxy statement/prospectus, over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document JFK files with the SEC at the SEC public reference room located at 100 F Street, N.E., Room 1580 Washington, D.C., 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the SEC, Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

 

Information and statements contained in this proxy statement/prospectus, or any annex to this proxy statement/prospectus, are qualified in all respects by reference to the copy of the relevant contract or other annex filed with this proxy statement/prospectus.

 

If you would like additional copies of this proxy statement/prospectus, or if you have questions about the Business Combination, you should contact JFK’s proxy solicitor, Advantage Proxy, at 877-870-8565.

 

All information contained in this proxy statement/prospectus relating to JFK has been supplied by JFK, and all information relating to Diginex, Singapore NewCo or BVI NewCo has been supplied by Diginex. Information provided by either of JFK or Diginex does not constitute any representation, estimate or projection of the other party.

 

Neither JFK, Singapore NewCo, BVI NewCo nor Diginex has authorized anyone to give any information or make any representation about the Business Combination or their companies that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that have been incorporated into this proxy statement/prospectus by reference. Therefore, if anyone does give you any such information, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained in this proxy statement/prospectus speaks only as of the date of this proxy statement/prospectus unless the information specifically indicates that another date applies.

 

1
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement/prospectus contains forward-looking statements, including statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, the financial conditions, results of operations, earnings outlook and prospects of Singapore NewCo, JFK and/or Diginex and may include statements for the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this proxy statement/prospectus including, without limitation, in the sections titled “Operating and Financial Review of Diginex,” and “Business of Diginex.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
 

The forward-looking statements are based on the current expectations of the management of JFK and Diginex, as applicable, and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors,” those discussed and identified in public filings made with the SEC by JFK and the following:

 

  expectations regarding Diginex’s strategies and future financial performance, including Diginex’s future business plans or objectives, prospective performance and opportunities and competitors, revenues, ability to raise capital, customer acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and Diginex’s ability to invest in growth initiatives and pursue acquisition opportunities;
     
  the occurrence of any event, change or other circumstances that could give rise to the termination of the Amended Share Exchange Agreement;
     
  the outcome of any legal proceedings that may be instituted against Diginex, JFK and others following announcement of the Amended Share Exchange Agreement and transactions contemplated therein;
     
  the inability to complete the Business Combination due to the failure to obtain JFK shareholder approval;
     
  the risk that the proposed Business Combination disrupts current plans and operations of Diginex as a result of the announcement and consummation of the Business Combination;
     
  the ability to recognize the anticipated benefits of the Business Combination;
     
  unexpected costs related to the proposed Business Combination;
     
  the amount of any redemptions by existing holders of JFK ordinary shares being greater than expected;
     
  the management and board composition of Singapore NewCo following the proposed Business Combination;
     
  the ability to list Singapore NewCo’s securities on Nasdaq;

 

2
 

 

  limited liquidity and trading of JFK’s and Singapore NewCo’s securities;
     
  geopolitical risk and changes in applicable laws or regulations;
     
  the possibility that Diginex, Singapore NewCo and/or JFK may be adversely affected by other economic, business, and/or competitive factors;
     
  the effects of the recent coronavirus (COVID-19) outbreak;
     
  operational risk;
     
  litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Diginex’s resources;
     
  fluctuations in exchange rates between the foreign currencies in which Diginex typically does business and the United States dollar; and
     
  the risks that the consummation of the Business Combination is substantially delayed or does not occur.

 

Should one or more of these risks or uncertainties materialize, or should any of the assumptions made by the management of JFK, Diginex and Singapore NewCo prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

 

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement/prospectus and attributable to Diginex, JFK, Singapore NewCo or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus. Except to the extent required by applicable law or regulation, Singapore NewCo, Diginex and JFK undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

NOTICE TO PROSPECTIVE INVESTORS IN SINGAPORE

 

This proxy statement/prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. This proxy statement/prospectus is directed at persons outside Singapore. Singapore NewCo Ordinary Shares, the Singapore NewCo Options and the Singapore NewCo Warrants may not be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) pursuant to a prospectus registration exemption under Subdivision (4) of Division 1 of Part XIII of the Securities and Futures Act (Cap. 289) of Singapore, or (ii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act (Cap. 289) of Singapore, in each case subject to compliance with conditions set forth therein.

 

By accepting receipt of this proxy statement/prospectus and any other document or material issued in connection with the offer or sale of the Singapore NewCo’s Ordinary Share, the Singapore NewCo Options and the Singapore NewCo Warrants, a person (within the meaning of Singapore law) in Singapore represents or warrants that person is entitled to receive such document in accordance with the conditions and restrictions set out in the Securities and Futures Act (Cap. 289) of Singapore and agrees to be bound by the limitations contained therein. You are solely responsible for complying with the legal and regulatory requirements in your jurisdiction and where in doubt, please consult your professional advisers accordingly.

 

3
 

 

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE MEETING

 

Q: What is the purpose of this document?

 

A: JFK is proposing to consummate the Business Combination. The Business Combination consists of the Reincorporation Merger and the Share Exchange, each of which are described in this proxy statement/prospectus. In addition, the Share Exchange Agreement, the Amendment, the Second Amendment, the Third Amendment, the Merger Agreement, and the Articles of Merger and Plan of Merger are attached to this proxy statement/prospectus as Annex A, Annex B, Annex B-1, Annex B-2, Annex C and Annex C-1, respectively, and are incorporated into this proxy statement/prospectus by reference. This proxy statement/prospectus contains important information about the proposed Business Combination and the other matters to be acted upon at the Meeting. You are encouraged to carefully read this proxy statement/prospectus, including “Risk Factors” and all the annexes hereto.

 

Approval of the Reincorporation Merger and the Share Exchange will each require the affirmative vote of the holders of a majority of the issued and outstanding JFK ordinary shares that are voted at the Meeting or any adjournment thereof; provided, however, that if holders of more than 4,116,564 JFK ordinary shares exercise their redemption rights then the Business Combination may not be completed.

  

4
 

 

Q: What is being voted on at the Meeting?

 

A: Below are the Proposals that the JFK shareholders are being asked to vote on:

 

  The Reincorporation Merger Proposal to approve the Merger Agreement and the Plan of Merger;
  The Share Exchange Proposal to approve the Amended Share Exchange Agreement; and
  The Adjournment Proposal to approve the adjournment of the Meeting in the event JFK does not receive the requisite shareholder vote to approve the Reincorporation Merger Proposal and the Share Exchange Proposal.

 

Approval of each of the Proposals requires the affirmative vote of the holders of a majority of the issued and outstanding JFK ordinary shares that are voted at the Meeting or any adjournment thereof; provided, however, that if holders of more than 4,116,564 JFK ordinary shares exercise their redemption rights then the Business Combination may not be completed. As of the record date, 1,437,500 shares held by the Sponsor, or approximately 19.4% of the outstanding JFK ordinary shares, would be voted in favor of each of the Proposals.

 

Q. Are any of the proposals conditioned on one another?

 

A: Yes, the Reincorporation Merger Proposal and the Share Exchange Proposal are dependent upon each other. It is important for you to note that in the event that either of the Reincorporation Merger Proposal or the Share Exchange Proposal is not approved, JFK will not consummate the Business Combination. On March 26, 2020, JFK 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. If JFK does not consummate the Business Combination and fails to complete an initial business combination by June 30, 2020 or up to September 30, 2020 (18 months after the consummation of the IPO if the time-period is extended, as described herein), JFK will be required to dissolve and liquidate.

 

Adoption of the Adjournment Proposal is not conditioned upon the adoption of any of the other Proposals.

 

Q: Do any of JFK’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

 

A: JFK’s directors and officers may have interests in the Business Combination that are different from your interests as a shareholder. In November 2017, April 2018, and July 2018, JFK issued an aggregate of 1,437,500 ordinary shares to the Sponsor, which we refer to herein as “insider shares,” for an aggregate purchase price of $25,000. Simultaneously with the closing of the IPO, JFK consummated a private placement with Enterprises of 221,250 units (the “Private Units”) at a price of USD$10.00 per Private Unit. Simultaneously with the sale of the over-allotment units in the IPO, JFK consummated a private sale of an additional 18,750 Private Units to Enterprises.

 

If JFK does not consummate the Business Combination by the First Extension Deadline, or up to September 30, 2020 (18 months after the consummation of the IPO if the time-period is extended, as described herein), JFK will be required to dissolve and liquidate and the securities held by the Sponsor will be worthless because the Sponsor has agreed to waive its rights to any liquidation distributions.

 

The exercise of JFK’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes or waivers are appropriate and in JFK shareholders’ best interests.

 

Q: When and where is the Meeting?

 

A: The Meeting will take place at Loeb & Loeb LLP, 345 Park Avenue, New York, NY 10154 on June 15, 2020, at 10:00 a.m. In light of developments surrounding the novel coronavirus (also known as COVID-19) we may determine to proceed to hold the Meeting virtually. In the event we decide to hold the Meeting virtually, shareholders would be able to listen, vote, and submit questions from their home or any remote location with Internet connectivity. We will issue a press release with information on how to participate and supplement this proxy statement/prospectus with such information should we proceed with the Meeting virtually.

 

Q: Who may vote at the Meeting?

 

A: Only holders of record of JFK ordinary shares as of the close of business on February 20, 2020 (the record date set for the Original Meeting) may vote at the Meeting. The record date was not changed as a result of the Adjournment. As of February 20, 2020, there were 7,427,500 JFK ordinary shares outstanding and entitled to vote. Please see the section titled “The Meeting—Record Date; Who is Entitled to Vote” for further information.

 

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Q: What is the quorum requirement for the Meeting?

 

A: Shareholders representing not less than one-third of the votes of the JFK ordinary shares issued and outstanding as of the record date and entitled to vote at the Meeting must be present in person or represented by proxy in order to hold the Meeting and conduct business. This is called a quorum. JFK ordinary shares will be counted for purposes of determining if there is a quorum if the shareholder (i) is present and entitled to vote at the meeting, or (ii) properly submitted a proxy card or voting instructions through a broker, bank or custodian by the Original Meeting Date. In the absence of a quorum, the Meeting will be adjourned to the next business day at the same time and place or to such other time and place as the directors may determine.

 

Q: What vote is required to approve the Proposals?

 

A: Approval of each of the Proposals will require the affirmative vote of the holders of a majority of the issued and outstanding JFK ordinary shares that are voted at the Meeting or any adjournment thereof. Since each of the Proposals require the affirmative vote of a majority of the JFK ordinary shares that are voted at the Meeting or any adjournment thereof, abstentions and broker non-votes will not count as votes cast either “FOR” or “AGAINST.”

 

Q: How will the Sponsor vote?

 

A: JFK’s Sponsor, who as of February 20, 2020 owned 1,437,500 JFK ordinary shares, or approximately 19.4% of the outstanding JFK ordinary shares, has agreed to vote the ordinary shares acquired by it prior to or concurrently with the IPO, and any JFK ordinary shares purchased in the open market after the IPO, in favor of the Reincorporation Merger Proposal and the Share Exchange Proposal, and intends to vote in favor of the Adjournment Proposal, although there is no agreement in place with respect to voting on the Adjournment Proposal.

 

Q: What do I need to do now?

 

A: We urge you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and consider how the Business Combination will affect you as a JFK shareholder. In accordance with British Virgin Islands law and JFK’s Amended and Restated Memorandum and Articles of Association, only proxy cards that were timely submitted for the Original Meeting will count towards the votes on the proposals presented at the Meeting. Proxy cards submitted after the date of the Original Meeting will not be counted. As a result, if you did not timely submit your proxy card and would like to vote on the proposals, or if would like to revoke your proxy card and change your vote, you must attend the Meeting in person and cast your vote by hand or by ballot (as applicable) in order to vote on the proposals described in this proxy statement/prospectus..

 

Q: Do I need to attend the Meeting to vote my shares?

 

A: You are invited to attend the Meeting to vote on the Proposals described in this proxy statement/prospectus. In accordance with British Virgin Islands law and JFK’s Amended and Restated Memorandum and Articles of Association, only proxy cards that were timely submitted for the Original Meeting will count towards the votes on the proposals presented at the Meeting. Proxy cards submitted after the date of the Original Meeting will not be counted. As a result, if you did not timely submit your proxy card and would like to vote on the proposals, or if would like to revoke your proxy card and change your vote, you must attend the Meeting in person and cast your vote by hand or by ballot (as applicable) in order to vote on the proposals described in this proxy statement/prospectus. .

 

Q: Am I required to vote against the Reincorporation Merger and the Share Exchange Proposal in order to have my ordinary shares redeemed?

 

A: No. You are not required to vote against the Reincorporation Merger Proposal and the Share Exchange Proposal in order to have the right to demand that JFK redeem your JFK ordinary shares for cash equal to your pro rata share of the aggregate amount then on deposit in the trust account (including interest earned on your pro rata portion of the trust account, net of taxes payable) before payment of deferred underwriting commissions. These redemption rights in respect of the JFK ordinary shares are sometimes referred to herein as “redemption rights.” If the Business Combination is not completed holders of JFK ordinary shares electing to exercise their redemption rights will not be entitled to receive such payments and their JFK ordinary shares will be returned to them.

 

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Q: How do I exercise my redemption rights?

 

A: If you are a public shareholder and you seek to have your shares redeemed, you must (i) demand, no later than 5:00 p.m., Eastern time on June 11, 2020 (two business days before the Meeting), that JFK redeem your shares for cash, and (ii) submit your request in writing to VStock at the address listed at the end of this section and deliver your shares to VStock (physically, or electronically using the DWAC system) at least two business days prior to the vote at the Meeting.

 

Any corrected or changed written demand of redemption rights must be received by JFK’s transfer agent two business days prior to the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to the transfer agent at least two business days prior to the vote at the Meeting.

 

Public shareholders may seek to have their shares redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of JFK ordinary shares as of the record date. Any public shareholder who holds JFK ordinary shares on or before June 11, 2020 (two business days before the Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

 

A JFK shareholder who elects to dissent under Section 179 of the BVI BC Act and validly exercises its entitlement to payment of the fair value of the JFK ordinary shares it holds will not be entitled to have its JFK ordinary shares redeemed.

 

Q: How can I vote?

 

A: If you were a holder of record of JFK ordinary shares on February 20, 2020, the record date for the Meeting, you may vote with respect to the Proposals in person at the Meeting, or if you submitted a proxy by mail so that it was received prior to 10:00 a.m. on March 20, 2020, in accordance with the instructions provided to you under the section titled “The Meeting.” If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, your broker or bank or other nominee may provide voting instructions (including any telephone or Internet voting instructions). You should contact your broker, bank or nominee in advance to ensure that votes related to the shares you beneficially own will be properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the Meeting and vote in person, obtain a proxy from your broker, bank or nominee.

 

Q: If my shares are held in “street name” by my bank, brokerage firm or nominee, will they automatically vote my shares for me?

 

A: No. Under Nasdaq rules, your broker, bank or nominee cannot vote your JFK ordinary shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. JFK believes the Proposals are non-discretionary and, therefore, your broker, bank or nominee cannot vote your JFK ordinary shares without your instruction. Broker non-votes will not be considered present for the purposes of establishing a quorum and will have no effect on the Proposals. If you did not provide instructions with your proxy, your bank, broker or other nominee may have submitted a proxy card expressly indicating that it is NOT voting your JFK ordinary shares; this indication that a bank, broker or nominee is not voting your JFK ordinary shares is referred to as a “broker non-vote.” Your bank, broker or other nominee can vote your JFK ordinary shares only if you had provided instructions on how to vote in the proxy card.

 

Q: What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee?

 

A: JFK will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for the purposes of determining whether a quorum is present at the Meeting. For purposes of approval, an abstention on any Proposals will not have an effect on whether or not a Proposal is approved at the Meeting. However, the failure to elect to exercise your redemption rights will preclude you from having your JFK ordinary shares redeemed for cash. If you wish to exercise your redemption rights, you must make an election to redeem such JFK ordinary shares by submitting a request in writing to JFK’s transfer agent at VStock Transfer, LLC, 18 Lafayette Place, Woodmere, New York 11598, and deliver your JFK ordinary shares to JFK’s transfer agent physically or electronically through DTC prior to the Meeting.

 

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Q: May I seek statutory dissenter rights with respect to my shares?

 

A: Yes. Dissenter rights are available to holders of JFK ordinary shares in connection with the Reincorporation Merger. Upon a holder of JFK ordinary shares validly exercising its entitlement under Section 179 of the BVI BC Act, such Dissenting Shareholder ceases to have any rights (including the redemption rights) of a shareholder of JFK except the right to be paid the fair value of its JFK ordinary shares.

 

In accordance with Section 179 of the BVI BC Act, a holder of JFK ordinary shares is entitled to payment of the fair value of all of its shares upon validly dissenting from the Reincorporation Merger. Holders of JFK ordinary shares may only dissent in respect of all shares that they hold in JFK. A holder of JFK ordinary shares who desires to exercise their entitlement to payment of the fair value of all of its shares is required to give to JFK written objection to the Reincorporation Merger before the Meeting or before the vote on the Reincorporation Merger Proposal at the Meeting.

 

Within 20 days immediately following the date on which the approval of JFK shareholders is obtained at the Meeting (or any adjourned meeting), JFK shall give written notice of the approval to each JFK shareholder who gave a valid written objection to the Reincorporation Merger, except for those JFK shareholders who after giving the written objection, subsequently voted to approve the Reincorporation Merger Proposal at the Meeting (or any adjourned meeting). Any such holder of JFK ordinary shares who elects to dissent is required, within 20 days immediately following the date on which the notice of approval by JFK referred to above is given, to give JFK a written notice of its decision to elect to dissent, stating: (a) its name and address; (b) the number of JFK ordinary shares in respect of which it dissents; and (c) a demand for payment of the fair value of its shares. On the Effective Date, a Dissenting Shareholder shall have its JFK ordinary shares automatically cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and such Dissenting Shareholder shall not be entitled to receive Singapore NewCo Ordinary Shares pursuant to the Reincorporation Merger.

 

A JFK shareholder who elects to dissent under Section 179 of the BVI BC Act and validly exercises its entitlement to payment of the fair value of the JFK ordinary shares it holds following the procedures set forth above will not be entitled to have its JFK ordinary shares redeemed. If a JFK shareholder has elected to have its JFK ordinary shares redeemed but later elects to dissent, upon receipt of the written notice of such a JFK shareholder’s decision to elect to dissent, JFK shall instruct its transfer agent to return the JFK ordinary shares (physically or electronically) delivered to the transfer agent in connection with such JFK shareholder’s demand for redemption to the JFK shareholder.

 

For additional information, please see the section titled “The Meeting—Dissenter Rights.” JFK shareholders who elect redemption rights will receive their cash payment in respect of their redeemed JFK ordinary shares earlier than shareholders who exercise dissenter rights.

 

Q: What happens if I sell my JFK ordinary shares before the Meeting?

 

A: The record date for the Meeting is earlier than the date that the Business Combination is expected to be consummated. If you transfer your JFK ordinary shares after the record date, but before the Meeting, unless the transferee obtains from you a proxy to vote those shares, you would retain your right to vote at the Meeting. However, you would not be entitled to receive any Singapore NewCo Ordinary Shares following the consummation of the Business Combination because only JFK’s shareholders at the time of the consummation of the Business Combination will be entitled to receive Singapore NewCo Ordinary Shares in connection with the Business Combination.

 

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Q: Will I experience dilution as a result of the Business Combination?

 

A: Prior to the Business Combination, the JFK shareholders who hold shares issued in the IPO own approximately 77.4% of JFK’s issued and outstanding ordinary shares. After giving effect to the Business Combination and to (i) the issuance of the 25,000,000 Singapore NewCo Ordinary Shares to the Sellers in the Share Exchange, (ii) the issuance of up to 8,188,310 Singapore NewCo Ordinary Shares to the JFK shareholders in connection with the Reincorporation Merger (assuming there are no Dissenting Shareholders and JFK shareholders who exercise their redemption rights), (iii) the conversion of the Notes into 147,100 Private Units, (iv) assuming no exercise of the Singapore NewCo Warrants or of the Singapore NewCo Options, and (v) assuming the Chardan Commission is not converted into Singapore NewCo Ordinary Shares, JFK’s current shareholders who hold shares issued in the IPO will own approximately 18.1% of Singapore NewCo.

 

Q: Are Diginex’s shareholders required to approve the Share Exchange?

 

A: Yes. Diginex’s shareholders have already approved the Share Exchange. Diginex shareholders are not required to approve the Reincorporation Merger Proposal.

 

Q: Is the consummation of the Business Combination subject to any conditions?

 

A: Yes. The obligations of each of JFK, Diginex, BVI NewCo and Singapore NewCo to consummate the Business Combination are subject to conditions, as more fully described in the section titled “The Share Exchange Agreement” in this proxy statement/prospectus.

 

Q: Can I change my vote after I have mailed my proxy card?

 

A: Yes. Although you can no longer submit another proxy to revoke your earlier proxy, you may change your vote at any time before your proxy is voted at the Meeting by attending the Meeting in person and casting your vote by hand or by ballot (as applicable). If you hold your JFK ordinary shares through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies.

 

Q: Should I send in my share certificates now?

 

A: Yes. JFK shareholders who intend to have their ordinary shares redeemed should send their certificates or tender their shares electronically no later than two business days before the Meeting. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your ordinary shares for cash.

 

Q: When is the Business Combination expected to occur?

 

A: Assuming the requisite shareholder approvals are received, JFK expects that the Business Combination will occur as soon as practicable following the Meeting. However, if JFK anticipates that it may not be able to consummate its initial business combination by June 30, 2020, JFK may, but is not obligated to, extend the period of time to consummate a business combination by an additional three months through September 30, 2020. Pursuant to the terms of JFK’s Amended and Restated Memorandum and Articles of Association and the Trust Agreement entered into between JFK and Wilmington Trust Company, in order to extend the time available for JFK to consummate its initial business combination, JFK’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.

 

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Q: Who will manage Singapore NewCo?

 

A: Richard Byworth, who currently serves as Chief Executive Officer of Diginex, and Paul Ewing, who currently serves as Chief Financial Officer of Diginex, will serve in those respective roles at Singapore NewCo following the consummation of the Business Combination. For more information on Singapore NewCo’s current and anticipated management, see the section titled “Singapore Newco’s Directors and Executive Officers after the Business Combination” in this proxy statement/prospectus.

 

Q: What happens if the Business Combination is not consummated?

 

A: If the Business Combination is not consummated, JFK may seek another suitable business combination. If JFK does not consummate a business combination by the date that is 15 months from the closing of the IPO (or extended up to 18 months, as previously described), then pursuant to Article 23.8 of its Amended and Restated Memorandum and Articles of Association, JFK’s officers must take all actions necessary in accordance with the BVI BC Act to dissolve and liquidate JFK as soon as reasonably practicable. Following dissolution, JFK will no longer exist as a company. In any liquidation, the funds held in the trust account, plus any interest earned thereon (net of taxes payable), together with any remaining out-of-trust net assets will be distributed pro-rata to holders of JFK ordinary shares who acquired such ordinary shares in JFK’s IPO or in the aftermarket. The estimated consideration that each JFK share would be paid at liquidation would be approximately $10.[●] per share for shareholders based on amounts on deposit in the trust account as of [●], 2020. The closing price of JFK’s ordinary shares on Nasdaq as of [●], 2020 was $10.[●]. The Sponsor, and officers and directors of JFK waived the right to any liquidation distribution with respect to any JFK ordinary shares held by them.

 

Q: What happens to the funds deposited in the trust account following the Business Combination?

 

A: Following the closing of the Business Combination, holders of JFK ordinary shares exercising redemption rights will receive their per share redemption price out of the funds in the trust account. The balance of the funds will be released to Singapore NewCo and utilized to fund working capital needs of Singapore NewCo. As of [●], 2020, there was approximately $[●] in JFK’s trust account. JFK estimates that approximately $10.[●] per outstanding share issued in JFK’s IPO will be paid to the public investors exercising their redemption rights. Any funds remaining in the trust account after such uses will be used for future working capital and other corporate purposes of the combined entity.

 

Q: What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A: In the event that a U.S. Holder elects to redeem its JFK ordinary shares for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as sale or exchange of the JFK ordinary shares under Section 302 of the Internal Revenue Code (the “Code”). If the redemption qualifies as a sale or exchange of the JFK ordinary shares, the U.S. Holder will be treated as recognizing capital gain or loss equal to the difference between the amount realized on the redemption and such U.S. Holder’s adjusted tax basis in the JFK ordinary shares surrendered in such redemption transaction. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the JFK ordinary shares redeemed exceeds one year. Long-term capital gains recognized by non-corporate U.S. Holders will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations. See the section titled “Material U.S. Federal Income Tax Consequences — Certain U.S. Federal Income Tax Consequences of Exercising Redemption Rights.”

 

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Q: Will holders of JFK ordinary shares, JFK Rights or JFK Warrants be subject to U.S. federal income tax on the Singapore NewCo Ordinary Shares or Singapore NewCo Warrants received in the Business Combination?

 

A: Subject to the limitations and qualifications described in “Material U.S. Federal Income Tax Consequences of the Business Combination,” if the Reincorporation Merger qualifies as a “reorganization” within the meaning of Section 368 of the Internal Revenue Code, then a U.S. Holder (as defined below) should not recognize gain or loss on the exchange of JFK ordinary shares, JFK Rights, or JFK Warrants for Singapore NewCo Ordinary Shares or Singapore NewCo Warrants, as applicable, pursuant to the Reincorporation Merger. Notwithstanding the foregoing, there is a substantial risk that JFK would be characterized as a passive foreign investment company (“PFIC”) and U.S. Holders may then be required to recognize gain on the exchange. Please see the section titled “Material U.S. Federal Income Tax Consequences of the Business Combination — U.S. Federal Income Tax Consequences of the Business Combination to U.S. Holders — Passive Foreign Investment Company Status” for a more detailed discussion with respect to JFK’s potential PFIC status and certain tax implications thereof.

 

If the Reincorporation Merger does not qualify as a reorganization, then a U.S. Holder that exchanges its JFK ordinary shares, JFK Rights, or JFK Warrants for the consideration under the Business Combination will recognize gain or loss equal to the difference between (i) the sum of (a) the fair market value of the Singapore NewCo Ordinary Shares and Singapore NewCo Warrants received and (b) the fair market value of any other consideration received pursuant to the Business Combination and (ii) the U.S. Holder’s adjusted tax basis in the JFK ordinary shares, JFK Rights, and JFK Warrants exchanged. For a more detailed discussion of certain U.S. federal income tax consequences of the Reincorporation Merger and the Business Combination, see the section titled “Material U.S. Federal Income Tax Consequences of the Business Combination” in this proxy statement/prospectus. Holders should consult their own tax advisors to determine the tax consequences to them (including the application and effect of any state, local or other income and other tax laws) of the Business Combination.

 

Q: Who can help answer my questions?

 

A: If you have questions about the Proposals or if you need additional copies of this proxy statement/prospectus or you should contact JFK’s proxy solicitor at:

 

Advantage Proxy

 

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

 

You may also obtain additional information about JFK from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

 

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DELIVERY OF DOCUMENTS TO JFK’s shareholders

 

Pursuant to the rules of the SEC, JFK and vendors that it employs to deliver communications to its shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of this proxy statement/prospectus, unless JFK has received contrary instructions from one or more of such shareholders. Upon written or oral request, JFK will deliver a separate copy of this proxy statement/prospectus to any shareholder at a shared address to which a single copy of this proxy statement/prospectus was delivered and who wishes to receive separate copies in the future. Shareholders receiving multiple copies of the proxy statement may likewise request that JFK deliver single copies of this proxy statement/prospectus in the future. Shareholders may notify JFK of their requests by contacting Advantage Proxy as follows:

 

Advantage Proxy

 

P.O. Box 13581

Des Moines, WA 98198

Toll Free: 877-870-8565

Collect: 206-870-8565

Email: KSmith@advantageproxy.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

This summary highlights selected information from this proxy statement/prospectus but may not contain all of the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement/prospectus, including the Share Exchange Agreement attached as Annex A, the Amendment attached as Annex B, the Second Amendment attached as Annex B-1, the Third Amendment attached as Annex B-2, the Merger Agreement attached as Annex C , and the Articles of Merger and Plan of Merger attached as Annex C-1. Please read these documents carefully as they are the legal documents that govern the Business Combination and your rights in the Business Combination.

 

Unless otherwise specified, all share calculations assume no exercise of the redemption rights or dissenter rights by JFK’s shareholders.

 

The Parties to the Business Combination

 

8i Enterprises Acquisition Corp

 

JFK was incorporated as a blank check company on November 24, 2017, under the laws of the British Virgin Islands, for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities, which we refer to as a “target business.” JFK’s efforts to identify prospective target businesses were not limited to any particular industry or geographic location.

 

On April 1, 2019, we consummated the IPO of 5,000,000 JFK Units. The JFK Units were sold at an offering price of USD$10.00 per JFK Unit, generating total gross proceeds of USD$50,000,000. We granted the underwriters a 45-day option to purchase up to 750,000 additional JFK Units to cover over-allotments at IPO price, less the underwriting discounts and commissions. On April 4, 2019, the underwriters in the IPO exercised the over-allotment option in full. The closing of the sale of 750,000 over-allotment units generating gross proceeds of USD$7,500,000 took place on April 8, 2019.

 

Simultaneously with the closing of the IPO, JFK consummated a private placement with Enterprises of 221,250 “Private Units at a price of USD$10.00 per Private Unit, generating total proceeds of $2,212,500. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Simultaneously with the sale of the over-allotment units, JFK consummated a private sale of an additional 18,750 Private Units.

 

The Private Units are identical to the JFK Units sold in the IPO except that the warrants included in the Private Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the Sponsor or its permitted transferees. Additionally, because the Private Units were issued in a private transaction, the Sponsor and its permitted transferees are 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. The Sponsor agreed not to transfer, assign or sell any of the Private Units or underlying securities (except in limited circumstances), until the completion of the JFK’s initial business combination. The Sponsor was granted certain demand and piggyback registration rights in connection with the purchase of the Private Units.

 

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In accordance with JFK’s Amended and Restated Memorandum and Articles of Association, the amounts held in the trust account may only be used by JFK upon the consummation of a business combination, except that there can be released to JFK, from time to time, any interest earned on the funds in the trust account that it may need to pay its tax obligations. The remaining interest earned on the funds in the trust account will not be released until the earlier of the completion of a business combination and JFK’s liquidation. JFK must liquidate unless a business combination is consummated by June 30, 2020. However, if JFK anticipates that it may not be able to consummate an initial business combination by June 30, 2020, JFK may, but is not obligated to, extend the period of time to consummate a business combination by an additional three months to September 30, 2020 (for a total of up to 18 months post IPO to complete a business combination). Pursuant to the terms of JFK’s Amended and Restated Memorandum and Articles of Association and the Trust Agreement entered into between JFK and Wilmington Trust Company, in order to extend the time available for JFK to consummate the initial business combination, JFK’s insiders or their affiliates or designees, upon five days’ advance notice prior to the applicable deadline, must deposit into the trust account $575,000 on or prior to the date of the applicable deadline.

 

After deducting the underwriting discounts, offering expenses, and commissions from the IPO and the sale of the Private Units, a total of $57,500,000 was deposited into a trust account established for the benefit of JFK’s public shareholders, and the remaining proceeds became available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. As of April 2, 2019, we had approximately $647,890 of unused net proceeds that were not deposited into the trust account to pay future general and administrative expenses. The net proceeds deposited into the trust account remain on deposit earning interest. As of April 30, 2020, there was $58,670,294 held in the trust account (including $595,439 of accrued interest which we can withdraw to pay taxes).

 

JFK’s units, shares, warrants and rights are each quoted on Nasdaq, under the symbols “JFKKU,” “JFK,” “JFKKW” and “JFKKR,” respectively. Each JFK unit consists of one ordinary share, one warrant entitling its holder to purchase one-half of one ordinary share at a price of $11.50 per whole share, and one right to receive one-tenth (1/10) of an ordinary share upon the consummation of the Business Combination. JFK’s units, JFK’s ordinary shares and public warrants commenced trading on Nasdaq on April 2, 2019.

 

Diginex Limited

 

Diginex is a financial technology company that builds products, delivers services and develops solutions that utilize distributed ledger and other technologies to improve the efficiency of financial markets. Diginex believes in a future where all financial and non-financial transaction data is recorded on distributed ledgers, such as blockchains. This will enable the financial services industry to reduce the cost of originating, distributing and executing transactions of financial assets, all of which depend on access to secure and trusted data.

 

Diginex was founded by Miles Pelham in June 2017, and Pelham Limited, an entity indirectly owned by Mr. Pelham, is the largest Diginex shareholder. Mr. Pelham is the former Global Head of Convertible Bonds at Mizuho Securities Asia Limited (“Mizuho Securities”). Mr. Pelham founded Diginex based on his understanding that the combination of both technology and an extensive knowledge of the intricacies of capital markets would be required to achieve potential efficiency gains using distributed ledger technology within financial markets. He believed that existing players would struggle to transition to the new paradigm of conducting business and would be resistant to change given their cost base and legacy business models in place. He identified an opportunity to create a new class of financial institution.

 

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Diginex has established several complementary lines of business to deliver products and services to its clients. These lines of business fall under two divisions: Markets and Asset Management. Diginex’s Markets division consists of products and services required for institutional and retail clients to trade Digital Assets in a compliant and secure way. There are five business lines within the Markets division: (i) the Exchange Business, (ii) the Custody Business (“Digivault”), (iii) the Trading Business, (iv) the Investment Products Business and (v) the Capital Markets Business. The Exchange Business consists of a Virtual Currency Exchange (the “VCE”) and a Digital Securities Exchange (the “DSE”) (together with the VCE, the “Exchanges”), operating under the brand name, EQUOS. The VCE was internally beta launched for testing in the fourth quarter of 2019 and began operations in the second quarter of 2020 in Singapore. On February 28, 2020, the VCE was granted an exemption from holding a license under the Payment Services Act in Singapore, allowing it to continue operating until such time as a decision on a full license application has been made by the regulator. The full license application was submitted on May 17, 2020, and it is anticipated that a decision will be reached within six months. The DSE is targeted to be launched and licensed in Singapore in the first quarter of 2021. The VCE and the DSE are expected to be licensed in Jersey in the fourth quarter of 2020. The Exchanges will have an initial focus on serving clients in Europe and Asia. Digivault consists of a cold storage custody solution (“Kelvin”) for bitcoin and Ethereum-based Digital Assets that was launched in the fourth quarter of 2019, and a warm storage custody solution (“Helios”) (together with Kelvin, the “custody solutions”) supporting the same assets that was launched in the second quarter of 2020. The Trading Business consists of a facilitation trading desk and an over-the-counter (“OTC”) desk. At present and in the near term, the Trading Business does not expect to trade, or provide OTC services for, Digital Securities. The Investment Products Business is expected to launch in the third quarter of 2020, and will design and issue securitized products that can be accessed via traditional stock exchanges and structured investment products for high net worth individuals and institutional investors. The Capital Markets Business provides investment banking advice and services to institutional clients on successfully utilizing distributed ledger technology to raise capital using Digital Securities.

 

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The Asset Management Business aims to be a leading provider of regulated Digital Asset fund offerings for institutional and professional investors. As of the date of this proxy statement/prospectus, this is via (i) the Bletchley Park Multi-Strategy Fund (the “BPMSF”), a fund of hedge funds investing in Virtual Currencies that targets non-directional, risk adjusted returns through investment in funds employing a range of alpha focused liquid investment strategies and (ii) Bletchley Park Asset Management Jersey Limited (“BPAMJ”), which seeks to invest globally to achieve capital appreciation through active management of a portfolio of Digital Assets via a combination of timed beta, arbitrage, and relative value strategies.

 

Diginex has aspired to build an institutional brand since its founding, and has counted the likes of Microsoft, the United Nations and Fidelity National Information Services (“FIS”) among its partners and/or clients. Diginex also aims to be a global leader in the regulation of Digital Assets, and is a founding member of Global Digital Finance (“GDF”), an industry body that promotes the adoption of best practices for Digital Assets and digital finance technologies.

 

As of the date of this proxy statement/prospectus, Diginex has approximately 145 employees operating out of offices in Hong Kong, Tokyo, Singapore, London, Jersey, Ho Chi Minh and Dubai. Diginex intends to consolidate its geographic footprint by closing its office in Tokyo in the near term. In 2019, the Capital Markets Business, BPAMJ and the Trading Business generated revenue, though not at a material level.

 

For more information on Diginex, please see the sections titled “Business of Diginex,” and “Operating and Financial Review of Diginex.”

 

Recent Developments

 

On May 15, 2020, Diginex sold its Solutions Business to Rhino Ventures Limited, a company controlled by Mr. Pelham (“Rhino Ventures”), as well as Diginex USA, LLC (“Diginex USA”) and the rights to the Diginex brand, in return for a $6 million reduction in the amount due under the Credit Facility (as defined herein) with Pelham Limited. Due to the related party nature of this transaction an independent valuation expert, Ascent Partners, was engaged to assist with the valuation. The Solutions Business built distributed ledger, technology-based solutions designed to achieve a broad range of outcomes (e.g. operational and cost efficiency, operational transparency, compliance reporting) for corporates, governments, and non-governmental organizations (“NGOs”).

 

The Diginex trademarks for Hong Kong, the U.S.A., Switzerland, Germany, Sweden, Japan, the UK, Australia, Singapore, Taiwan, the Republic of Korea and the People’s Republic of China and the Diginex logo for Hong Kong, the U.S.A., Switzerland, Japan, the European Union, Australia, Singapore, Taiwan, the Republic of Korea and the People’s Republic of China along with certain Diginex web and email domains were sold to Rhino Ventures along with the Solutions Business.

 

Rhino Ventures has granted Diginex a royalty free license to continue to use the Diginex brand and trademarks until June 30, 2021, by which time Diginex expects to have changed its name and rebranded.

 

At present, Diginex intends to satisfy its obligations in the Diginex Subsequent Equity Private Placement through the issuance of at least $15 million aggregate principal amount of senior convertible notes (the “Convertible Notes”). Unless earlier converted, the Convertible Notes will mature on May 30, 2022 and will accrue interest at a rate of 10.00% per annum, payable semi-annually, with the first payment due on November 30, 2020. The Convertible Notes will be mandatorily convertible into Diginex ordinary shares immediately prior to the consummation of the Business Combination at a conversion rate equal to the lower of (i) the latest per share price for which Diginex has issued its ordinary shares to investors and (ii) USD$79.91.

 

At the time of Diginex’s founding, Mr. Pelham owned a Digital Asset mining business, Diginex High Performance Computing Limited (“DHPC”). In January 2018, Mr. Pelham transferred this investment to Diginex. In July 2018, 51% of DHPC was sold to Madison Holdings Group Limited (“Madison”), a Hong Kong listed company, for $60m, with consideration consisting of $10m in cash and $50m in Madison’s stock. DHPC’s mining equipment was turned off in late 2019 and there is no current intention to resume mining activities.

 

Diginex Limited

 

Singapore NewCo was incorporated on October 1, 2019 under the laws of Singapore for the purpose of effecting the Business Combination and to serve as the publicly traded parent company of Diginex following the Business Combination.

 

DIGITAL INNOVATIVE LIMITED, a British Virgin Islands business company

 

BVI NewCo was incorporated on October 7, 2019 under the laws of the British Virgin Islands, as a wholly-owned subsidiary of Singapore NewCo for the purpose of effecting the Business Combination and to serve as the vehicle for, and be subsumed by, JFK pursuant to the Reincorporation Merger.

 

The Business Combination

 

Overview of the Merger Agreement

 

The Merger Agreement was entered into by and among Singapore NewCo, BVI NewCo and JFK on October 8, 2019. Upon the approval of the Merger Agreement and the Plan of Merger by the JFK shareholders, BVI NewCo and JFK will execute the Articles of Merger and the Plan of Merger which shall be filed with the Registrar of Corporate Affairs in the British Virgin Islands prior to the Effective Date. On the Effective Date, BVI NewCo will merge with and into JFK, the corporate existence of BVI NewCo will cease and JFK, as the surviving company, will become a wholly-owned subsidiary of Singapore NewCo. As a result of the Reincorporation Merger, the JFK shareholders will no longer be shareholders of JFK and (other than the Dissenting Shareholders and JFK shareholders who exercise their redemption rights) will instead become shareholders of Singapore NewCo.

 

Pursuant to the Merger Agreement, on the Effective Date:

 

(a)Each JFK ordinary share, issued and outstanding immediately prior to the Effective Date (other than any redeemed shares and Dissenting Shares, will automatically be cancelled and cease to exist and for each such JFK ordinary share, Singapore NewCo will issue to each JFK shareholder (other than the Dissenting Shareholders and JFK shareholders who exercise their redemption rights) one (1) Singapore NewCo Ordinary Share;
(b)each share in BVI NewCo in issue immediately prior to the Effective Date will be automatically converted into one validly issued and fully paid ordinary share with no par value in JFK as the surviving company;
(c)each Dissenting Share held by a Dissenting Shareholder (who has not effectively withdrawn its right to such dissent) will be cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and such Dissenting Shareholders will not be entitled to receive any of the Singapore NewCo ordinary shares to be issued in connection with the Reincorporation Merger;
(d)each JFK Warrant will be cancelled and cease to exist and for each such JFK Warrant, Singapore NewCo will issue to each holder thereof an identical Singapore NewCo Warrant to purchase Singapore NewCo Ordinary Shares; and
(e)each JFK Right will be cancelled and cease to exist and for each such JFK Right, Singapore NewCo will issue to each holder thereof one-tenth (1/10) of one Singapore NewCo ordinary share.

 

Overview of the Amended Share Exchange Agreement

 

On July 9, 2019, JFK entered into the Share Exchange Agreement, which provided for the Business Combination by and among JFK and Diginex. Pursuant to the terms of the Share Exchange Agreement, the Sellers agreed to sell, transfer, convey, assign and deliver to JFK 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 JFK ordinary shares.

 

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On October 8, 2019, each of the parties to the Share Exchange Agreement entered into the Amendment with Singapore NewCo and BVI NewCo for the purpose of joining both entities as parties to the Share Exchange Agreement. The Amendment reflects, among other things, that the Reincorporation Merger will be effected prior to the consummation of the Share Exchange whereby JFK will be the surviving entity and become a wholly-owned subsidiary of Singapore NewCo pursuant to the Merger Agreement and the Plan of Merger. At the closing of the Reincorporation Merger, Singapore NewCo will issue ordinary shares and warrants to JFK’s shareholders, 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 JFK ordinary shares, (ii) that references to the proxy statement in the Share Exchange Agreement are replaced with references to this proxy statement/prospectus, and (v) 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.

 

On January 28, 2020, each of the parties to the Amendment entered into 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 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 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 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.

 

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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.

 

For more information about the Business Combination, please see the sections titled “Proposal No. 1 – The Reincorporation Merger Proposal” and “Proposal No. 2 – The Share Exchange Proposal.” A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex C and, the Articles of Merger and Plan of Merger are attached to this proxy statement/prospectus as Annex C-1.

 

Consideration to the Sellers

 

The aggregate consideration for the Share Exchange to the Sellers is USD$250,000,000, payable in the form of 25,000,000 newly issued Singapore NewCo Ordinary Shares valued at USD$10.00 per share. Upon the closing of the Business Combination, JFK will acquire 100% of the issued and outstanding shares of Diginex, in exchange for the issuance of 25,000,000 Singapore NewCo Ordinary Shares to the Sellers. Of the 25,000,000 Singapore NewCo Ordinary Shares issuable by Singapore NewCo to the Sellers, 2,000,000 Escrow Shares (issued as partly paid) shall be deposited into an escrow account for the Escrow Period to satisfy any potential indemnification claims brought against the Sellers pursuant to the Amended Share Exchange Agreement. Singapore NewCo Options to purchase 5,600,000 Singapore NewCo Ordinary Shares will be issued at closing in exchange for the cancellation of the Diginex Options.

 

The Escrow Shares will be issued as partly paid. If any claims for indemnification are to be satisfied by withholding part of or all of the Escrow Shares from the Sellers at the end of the Escrow Period, those Escrow Shares shall be forfeited and cancelled. Any Escrow Shares released from the escrow account to the Representative for distribution to the Sellers shall be deemed fully paid Singapore NewCo Ordinary Shares as of the time of such release and no Seller shall be required to pay any additional amount (in cash or otherwise) to Singapore NewCo in connection with the receipt of fully paid Singapore NewCo Ordinary Shares as part of the aforementioned escrow arrangement.

 

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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 acquired in exchange for the cancellation of Diginex Options will be non-transferable and will, automatically and without any required action or payment on the part of any holder or beneficiary thereof, be converted into one (1) Singapore NewCo Ordinary Share, which Singapore NewCo Ordinary Shares will 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. The conversion of a Singapore NewCo Option into Singapore NewCo Ordinary Shares is subject, in each case, to the following: (i) with respect to a holder of Singapore NewCo Options who is an employee of Singapore NewCo, Diginex or their affiliates, such holder has not resigned from such employment or been terminated for cause, and (ii) with respect to a holder of Singapore NewCo Options who is an independent contractor of Singapore NewCo, Diginex or their affiliates, the contractual relationship that gave rise to the original issuance of the Singapore NewCo has not been terminated on the date that is fifteen (15) months after the Closing Date as set forth in a customary option award agreement to be entered into between Singapore NewCo and each holder who is issued a Singapore NewCo Option. The Singapore NewCo Options will not convert if a holder resigns or is terminated for cause during the fifteen (15) month period.

 

The Sellers will be entitled to receive an additional 12,000,000 Singapore NewCo Ordinary Shares or “Earnout Shares” after the closing of the Business Combination if the closing price of Singapore NewCo Ordinary Shares on Nasdaq (or other applicable securities exchange) is equal to or greater than the stock prices set forth below during any 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 the fourth anniversary of the Closing Date. All share and per share amounts above shall be proportionally adjusted for share splits, dividends, and similar events.

 

For more information about the consideration to the Diginex shareholders, please see the section titled “Proposal No. 2 — The Share Exchange Proposal.”

 

Post-Business Combination Structure

 

The following chart illustrates the ownership structure of Singapore NewCo immediately following the Business Combination. The equity interests shown in the diagram below were calculated based on the assumptions that (i) no JFK shareholder exercises its redemption or dissenter rights, (ii) none of the parties in the chart below purchase JFK ordinary shares in the open market, and (iii) there are no other issuances of equity by JFK prior to or in connection with the consummation of the Business Combination except for JFK converting all amounts outstanding under the Notes into 147,100 Private Units issuable to Enterprises, pursuant to the terms of the respective Notes. Notwithstanding the foregoing, the ownership percentages set forth below do not take into account (a) the Singapore NewCo Options, (b) the Earnout Shares, (c) the exercise of any Singapore NewCo Warrants, (d) the issuance of any Singapore NewCo Ordinary Shares following the Business Combination pursuant to the Incentive Plan and (e) the conversion of the Chardan Commission.

 

 

Effect of the Business Combination on JFK’s ordinary shares

 

If the parties consummate the Business Combination, the current equity holdings of the JFK shareholders shall be exchanged as follows:

 

  (i) Each JFK ordinary share, issued and outstanding immediately prior to the Effective Date (other than any redeemed shares and any Dissenting Shares), will automatically be cancelled and cease to exist and for each such JFK ordinary share, Singapore NewCo shall issue to each JFK shareholder (other than Dissenting Shareholders and JFK shareholders who exercise their redemption rights in connection with the Business Combination) one Singapore NewCo Ordinary Share;

 

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  (ii) Each Dissenting Share held by a Dissenting Shareholder (who has not effectively withdrawn its right to such dissent) will be cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and such Dissenting Shareholders shall not be entitled to receive any of the Singapore NewCo Ordinary Shares to be issued in connection with the Reincorporation Merger;
     
  (iii) Each JFK Warrant issued and outstanding immediately prior to the Effective Date will convert into one Singapore NewCo Warrant. The Singapore NewCo Warrants will have substantially the same terms and conditions as the JFK Warrants; and
     
  (iv) The holders of JFK Rights issued and outstanding immediately prior to the Effective Date will receive one-tenth (1/10) of one Singapore NewCo Ordinary Share in exchange for the cancellation of each JFK Right, provided that no fractional shares will be issued and all fractional shares will be rounded to the nearest whole share.

 

Impact of the Business Combination on the Company’s Public Float

 

Assuming (i) there are no redemptions of our public shares and no Dissenting Shares, and (ii) there is no exercise of the Singapore NewCo Warrants or the Singapore NewCo Options, and (iii) the Chardan Commission has not been converted, it is anticipated that upon completion of the Business Combination, the ownership of the post-combination company will be as follows:

 

  JFK public shareholders will own approximately 18.1%, excluding shares beneficially owned by our Sponsor and Enterprises;
     
  Our Sponsor and Enterprises will own approximately 4.1% and 1.2%, respectively, and
     
  The Sellers will own approximately 71.4%.

 

If the actual facts are different than these assumptions, the percentage ownership retained by our public shareholders following the business combination will be different. The public warrants and private placement warrants will become exercisable on the later of the completion of the Business Combination and 12 months from the closing of the IPO and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

 

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Management and Board of Directors Following the Business Combination

 

Effective as of the closing of the Business Combination the board of directors of Singapore NewCo will consist of seven members. All members of the Singapore NewCo board of directors will be designated by the Sellers. See section titled “Singapore NewCo’s Directors and Executive Officers after the Business Combination” for additional information.

 

Other Agreements Relating to the Business Combination

 

Registration Rights Agreements

 

In connection with the IPO, JFK entered into a registration rights agreement with the Sponsor and Enterprises (the “Sponsor Registration Rights Agreement”) for the registration for resale under the Securities Act of the insider shares, Private Units, and securities issuable upon conversion of the Notes (collectively, the “Sponsor Registrable Securities”). The holders of a majority of (i) the Sponsor Registrable Securities are entitled to make up to two demands that JFK register the Sponsor Registrable Securities and have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a business combination; (ii) the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the insider shares are to be released from escrow, and (iii) the Private Units and securities issuable upon conversion of the Notes can elect to exercise these registration rights at any time after JFK consummates a business combination (the “Insider Rights”).

 

As a condition to the consummation of the Business Combination, JFK, the Sponsor and Singapore NewCo agreed to amend and restate the Sponsor Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”) to (a) replace any references to “8i Enterprises Acquisition Corp.” and “the Company” with “Singapore NewCo,” and (b) include certain rights relating to the registration of (i) the 25,000,000 Singapore NewCo Ordinary Shares issued to Diginex shareholders who are not affiliates of Diginex or Singapore NewCo, (ii) all other securities of Singapore NewCo (including derivatives thereof, such as options and warrants) held by Singapore NewCo’s officers, directors, nominees, and direct and indirect parents, control persons, affiliates and associates immediately after the Business Combination, and (iii) 1,850,000 Singapore NewCo Ordinary Shares issuable to certain service providers in connection with the closing of the Business Combination (the “Additional Registrable Securities”). Under the terms of the Amended and Restated Registration Rights Agreement, Singapore NewCo will be obligated to file a registration statement for the resale of the Sponsor Registrable Securities and collectively, the Additional Registrable Securities, within seven trading days after the consummation of the Business Combination and to have such registration statement declared effective within sixty days after the consummation of the Business Combination. The Amended and Restated Registration Rights Agreement will include the Insider Rights, and will also provide that the holders of a majority of the Additional Registrable Securities can, at any time after the consummation of the Business Combination, make up to two demands that Singapore NewCo register the Additional Registrable Securities. In addition, the holders of the Additional Registrable Securities have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of the Business Combination. Singapore NewCo will bear the expenses incurred in connection with the filing of any such registration statements.

 

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Lock-up Agreements

 

As a condition to the consummation of the Share Exchange, each Seller will enter into a lock-up agreement with Singapore NewCo with respect to the 25,000,000 Singapore NewCo Ordinary Shares issuable to the Sellers in the Share Exchange. The length of the lock-up period shall be as follows: (i) six months from the Closing Date for Sellers who will hold less than 2.5% of the issued Singapore NewCo Ordinary Shares (excluding treasury shares) after the consummation of the Business Combination, and (ii) 12 months from the Closing Date for Sellers who will hold greater than 2.5% of the issued Singapore NewCo Ordinary Shares (excluding treasury shares) after the consummation of the Business Combination. Up to 5,000,000 Diginex ordinary shares issued in the Diginex Subsequent Equity Private Offering will not be subject to a lock-up.

 

Escrow Agreements

 

Pursuant to an escrow agreement, dated March 27, 2019, by and among JFK, VStock and the Sponsor, all of the insider shares issued and outstanding prior to the date of the IPO were deposited into an escrow account with VStock, as escrow agent (the “Sponsor Escrow Agreement”). In accordance with the Sponsor Escrow Agreement, the Sponsor will not transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (i) with respect to 50% of the insider shares, the earlier of six months after the date of the consummation of the Business Combination and the date on which the closing price of the post-Business Combination company’s shares on Nasdaq 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 date of the consummation of the Business Combination, and (2) with respect to the remaining 50% of the insider shares, six months after the date of the consummation of the Business Combination, or earlier, in either case, if, subsequent to the date of the consummation of the Business Combination, the post-Business Combination company consummates a liquidation, merger, share exchange or other similar transaction which results in all of the shareholders having the right to exchange their shares for cash, securities or other property.

 

In connection with Diginex’s indemnification obligations under the Amended Share Exchange Agreement, Singapore NewCo, the Representative and VStock Transfer, LLC, the escrow agent to be elected by the parties (the “Escrow Agent”), will enter into an escrow agreement at the time of the consummation of the Business Combination. The Escrow Shares (which will not be fully paid at issuance) will be deposited into an escrow account with the Escrow Agent for the Escrow Period to satisfy any potential Claims against the Sellers brought pursuant to the Amended Share Exchange Agreement.

 

The Escrow Shares will be issued as partly paid. During the escrow period, the Sellers shall be entitled to vote and to receive dividends on the Escrow Shares. If any Claims are to be satisfied by withholding part of or all of the Escrow Shares from the Sellers at the end of the Escrow Period, those Escrow Shares will be forfeited and cancelled by Singapore NewCo. Any Escrow Shares released from the escrow account to the Representative for distribution to the Sellers will be deemed fully paid Singapore NewCo Ordinary Shares as of the time of such release and no Seller will be required to pay any additional amount (in cash or otherwise) to Singapore NewCo in connection with the receipt of fully paid Singapore NewCo Ordinary Shares.

 

Redemption Rights

 

Pursuant to JFK’s Amended and Restated Memorandum and Articles of Association, holders of public shares may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the business combination, including interest (net of taxes payable), by (ii) the total number of then-outstanding public shares. As of [●], 2020, this would have amounted to approximately USD$10.[●] per share.

 

You will be entitled to receive cash for any public shares to be redeemed only if you:

 

(i) (a) hold public shares or

 

(b) hold public shares through JFK Units and you elect to separate your JFK Units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

(ii) prior to 5:00 p.m., Eastern Time, on June 11, 2020, (a) submit a written request to the Transfer Agent that JFK redeem your public shares for cash and (b) deliver your public shares to the Transfer Agent, physically or electronically through DTC; and

 

(iii) do not elect to dissent from the Reincorporation Merger in accordance with Section 179 of the BVI BC Act.

 

22
 

 

Holders of outstanding JFK Units must separate the underlying JFK ordinary shares, JFK Warrants and JFK Rights prior to exercising redemption rights with respect to the JFK ordinary shares. If JFK Units are registered in a holder’s own name, the holder must deliver the certificate for its JFK Units to VStock with written instructions to separate the JFK Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the JFK ordinary shares from the JFK Units.

 

If a broker, dealer, commercial bank, trust company or other nominee holds JFK Units for an individual or entity (such individual or entity, the “beneficial owner”), the beneficial owner must instruct such nominee to separate the beneficial owner’s JFK Units into their individual component parts. The beneficial owner’s nominee must send written instructions by facsimile to VStock. Such written instructions must include the number of JFK Units to be separated and the nominee holding such JFK Units. The beneficial owner’s nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant JFK Units and a deposit of an equal number of JFK ordinary shares, JFK Warrants and JFK Rights. This must be completed far enough in advance to permit the nominee to exercise the beneficial owner’s redemption rights upon the separation of the JFK ordinary shares from the JFK Units. While this is typically done electronically the same business day, beneficial owners should allow at least one full business day to accomplish the separation. If beneficial owners fail to cause their JFK ordinary shares to be separated in a timely manner, they will likely not be able to exercise their redemption rights.

 

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with our consent, until the Closing.

 

Notwithstanding the foregoing, a holder of the public shares, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the JFK ordinary shares.

 

If a holder exercises its redemption rights, then such holder will be exchanging its public shares for cash and will no longer own shares of the post-combination company. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our Transfer Agent in accordance with the procedures described herein. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your public shares for cash.

 

The Proposals

 

At the Meeting, the JFK shareholders will be asked to vote on the following:

 

  the Reincorporation Merger Proposal;
     
  the Share Exchange Proposal; and

 

the Adjournment Proposal. Please see the sections titled “The Meeting” on page 67 for more information on the foregoing Proposals.

 

Voting Securities, Record Date

 

As of [●], 2020, there were 7,427,500 JFK ordinary shares issued and outstanding. Only JFK shareholders who hold ordinary shares of record as of the close of business on February 20, 2020 are entitled to vote at the Meeting or any adjournment of the Meeting. Approval of the Reincorporation Merger Proposal, the Share Exchange Proposal, and the Adjournment Proposal will require the affirmative vote of the holders of a majority of the issued and outstanding JFK ordinary shares present and entitled to vote and voting at the Meeting; provided, however, that if holders of more than 4,116,564 of the JFK ordinary shares exercise their redemption rights then the Business Combination may not be completed.

 

As of [●], 2020, the Sponsor owned and was entitled to vote 1,437,500 JFK ordinary shares, or approximately 19.4% of JFK’s outstanding ordinary shares. With respect to the Business Combination, the Sponsor, which owns approximately 19.4% of JFK’s outstanding ordinary shares as of the record date, has agreed to vote its JFK ordinary shares in favor of the Reincorporation Merger Proposal and the Share Exchange Proposal, and intends to vote for the Adjournment Proposal although there is no agreement in place with respect to voting on the Adjournment Proposal.

 

23
 

 

Anticipated Accounting Treatment

 

The Business Combination will be accounted for as a reverse recapitalization in accordance with IFRS. Under this method of accounting, JFK will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the expectation that the former shareholders of Diginex will have a majority of the voting power of the combined company, that the business of Diginex will comprise the ongoing operations of the combined entity, that persons designated by Diginex will comprise a majority of the governing body of the combined company, and that Diginex’s senior management will comprise the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Diginex issuing shares for the net assets of JFK accompanied by a recapitalization. The net assets of JFK will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be deemed to be those of Diginex.

 

Regulatory Approvals

 

The Reincorporation Merger, the Share Exchange and the other transactions contemplated by the Amended Share Exchange Agreement are not subject to any additional U.S. federal or state regulatory requirements or approvals, or any regulatory requirements or approvals under the laws of the British Virgin Islands or Singapore law, except for the registration by the Registrar of Corporate Affairs in the British Virgin Islands of the Articles of Merger.

 

Dissenter Rights

 

Holders of JFK ordinary shares are entitled to dissenter rights under the BVI BC Act in connection with the Reincorporation Merger. In accordance with Section 179 of the BVI BC Act, a holder of JFK ordinary shares is entitled to payment of the fair value of all of its shares upon validly dissenting from the Reincorporation Merger. Holders of JFK ordinary shares may only dissent in respect of all shares that they hold in JFK.

 

Upon a holder of JFK ordinary shares validly exercising its entitlement under Section 179 of the BVI BC Act, such Dissenting Shareholder ceases to have any rights (including the redemption rights) of a shareholder of JFK except the right to be paid the fair value of its JFK ordinary shares.

 

A holder of JFK ordinary shares who desires to exercise its entitlement to payment of the fair value of all of its shares is required to give to JFK written objection to the Reincorporation Merger before the Meeting or before the vote on the Reincorporation Merger Proposal at the Meeting.

 

Within 20 days immediately following the date on which the approval of JFK shareholders is obtained at the Meeting (or any adjourned meeting), JFK shall give written notice of the approval to each JFK shareholder who gave a valid written objection to the Reincorporation Merger, except for those JFK shareholders who after giving the written objection, subsequently voted to approve the Reincorporation Merger Proposal at the Meeting (or any adjourned meeting). Any such holder of JFK ordinary shares who elects to dissent is required, within 20 days immediately following the date on which the notice of approval by JFK referred to above is given, to give JFK a written notice of its decision to elect to dissent, stating: (a) its name and address; (b) the number of JFK ordinary shares in respect of which it dissents; and (c) a demand for payment of the fair value of its shares. On the Effective Date, a Dissenting Shareholder shall have its JFK ordinary shares automatically cancelled in exchange for the right to receive payment resulting from the procedure in Section 179 of the BVI BC Act and such Dissenting Shareholder shall not be entitled to receive Singapore NewCo Ordinary Shares pursuant to the Reincorporation Merger.

 

24
 

 

A JFK shareholder who elects to dissent under Section 179 of the BVI BC Act and validly exercises its entitlement to payment of the fair value of the JFK ordinary shares it holds following the procedures set forth above will not be entitled to have its JFK ordinary shares redeemed. If a JFK shareholder has elected to have its JFK ordinary shares redeemed but later elects to dissent, upon receipt of the written notice of such a JFK shareholder’s decision to elect to dissent, JFK shall instruct its transfer agent to return the JFK ordinary shares (physically or electronically) delivered to the transfer agent in connection with such JFK shareholder’s demand for redemption to the JFK shareholder.

 

Holders of outstanding JFK Units must separate the underlying JFK ordinary shares, JFK Warrants and JFK Rights prior to objecting to the Reincorporation Merger and exercising their dissenter rights under Section 179 of the BVI BC Act. If JFK Units are registered in a holder’s own name, the holder must deliver the certificate for its JFK Units to VStock with written instructions to separate the JFK Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may object to the Reincorporation Merger and then exercise his, her or its dissenter rights upon the separation of the JFK ordinary shares from the JFK Units.

 

If a broker, dealer, commercial bank, trust company or other nominee holds JFK Units for an individual or entity (such individual or entity, the “beneficial owner”), the beneficial owner must instruct such nominee to separate the beneficial owner’s JFK Units into their individual component parts. The beneficial owner’s nominee must send written instructions by facsimile to VStock. Such written instructions must include the number of JFK Units to be separated and the nominee holding such JFK Units. The beneficial owner’s nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant JFK Units and a deposit of an equal number of JFK ordinary shares, JFK Warrants and JFK Rights. This must be completed far enough in advance to permit the mailing of a physical certificate back to the holder so that the holder may object to the Reincorporation Merger and then exercise his, her or its dissenter rights upon the separation of the JFK ordinary shares from the JFK Units. While this is typically done electronically the same business day, beneficial owners should allow at least one full business day to accomplish the separation. If beneficial owners fail to cause their JFK ordinary shares to be separated in a timely manner, they will likely not be able to object to the Reincorporation Merger and exercise their dissenter rights.

 

Interests of Certain Persons in the Business Combination

 

When you consider the recommendation of JFK’s Board of Directors in favor of adoption of the Reincorporation Merger Proposal, the Share Exchange Proposal and the other related Proposals, you should keep in mind that JFK’s directors and officers have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including the following:

 

  If the proposed Business Combination is not completed by June 30, 2020 (or September 30, 2020, the date that is 18 months from the closing of the IPO, if the time period is extended as previously described herein), JFK will be required to liquidate. In such event, the 1,437,500 ordinary shares held by the Sponsor, which were acquired prior to the IPO for an aggregate purchase price of USD$25,000 will be worthless. Such ordinary shares had an aggregate market value of approximately [●] based on the closing price of JFK’s ordinary shares of USD$10.[●] on Nasdaq as of [●], 2020;
     
  If the proposed Business Combination is not completed by June 30, 2020 (or September 30, 2020, the date that is 18 months from the closing of the IPO, if the time period is extended as previously described herein), the 240,000 Private Units purchased by Enterprises for a total purchase price of USD$2,400,000, will be worthless. Such Private Units had an aggregate market value of approximately [●], based on the closing price of JFK’s private units of USD$10.[●] on Nasdaq as of [●], 2020;
     
  As of [●], 2020, JFK had Notes due to Enterprises that will be converted into 147,100 Private Units immediately prior to the closing of the Business Combination. If the proposed Business Combination is not completed by June 30, 2020 (or September 30, 2020, the date that is 18 months from the closing of the IPO, if the time period is extended as previously described herein), then such loans may not be repaid;
     
  The exercise of JFK’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our shareholders’ best interest; and
     
  If the Business Combination with Diginex is completed, Diginex will designate all members of the board of directors of Singapore NewCo.

 

25
 

 

Recommendations of the JFK Board of Directors to the JFK Shareholders

 

After careful consideration of the terms and conditions of the Merger Agreement and the Amended Share Exchange Agreement, the JFK Board of Directors has determined that Business Combination and the transactions contemplated thereby are fair to and in the best interests of JFK and its shareholders. In reaching its decision with respect to the Reincorporation Merger and the Share Exchange, the JFK Board of Directors reviewed various industry and financial data and the due diligence and evaluation materials provided by Diginex. The JFK Board of Directors did not obtain a fairness opinion on which to base its assessment. JFK’s Board of Directors recommends that JFK shareholders vote:

 

  FOR the Reincorporation Merger Proposal;
     
  FOR the Share Exchange Proposal; and
     
  FOR the Adjournment Proposal.

 

Risk Factors

 

In evaluating the Business Combination and the Proposals to be considered and voted on at the Meeting, you should carefully review and consider the risk factors set forth under the section titled “Risk Factors” beginning on page 30 of this proxy statement/prospectus. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) JFK’s ability to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of Singapore NewCo following consummation of the Business Combination.

 

26
 

 

DIGINEX LIMITED SUMMARY FINANCIAL INFORMATION

 

The data below as of March 31, 2019, and 2018 and for the year ended March 31, 2019 and for the period from June 1, 2017 to March 31, 2018 has been derived from Diginex’s audited combined and consolidated financial statements, which are included in this proxy statement/prospectus. The data below for the six months ended September 30, 2019 and 2018 has been derived from Diginex’s unaudited combined and consolidated financial statements, which are included in this proxy statement/prospectus. Historical results are not necessarily indicative of the results to be expected for future periods.

 

The information is only a summary and should be read in conjunction with Diginex’s audited and unaudited combined and consolidated financial statements and related notes, and the section titled “Operating and Financial Review of Diginex” contained elsewhere in this proxy statement/prospectus.

 

  

Year ended

March 31, 2019

  

Period from

June 1, 2017 to
March 31, 2018

   Six months ended
September 30, 2019
   Six months ended
September 30, 2018
 
   USD   USD   USD   USD 
                 
CONTINUING OPERATIONS                    
Revenue   1,344,404    -    444,030    834,858 
                     
    1,344,404    -           
General and administrative expenses   (19,613,149)   (1,232,607)   (14,338,366)   (6,332,096)
                     
OPERATING LOSS   (18,268,745)   (1,232,607)   (13,894,336)   (5,497,238)
                     
Other gains (losses), net   30,628,170    (21,879)   (157,005)   36,381,893 
Impairment losses on financial assets, net   (39,090,851)   -    (10,105,671)   - 
Impairment of goodwill   (457,818)   -    -    - 
Finance (costs) income, net   (1,139,211)   12    (945,488)   (393,875)
Share of loss of an associate   (12,270,686)   -    -    (634,199)
                     
LOSS BEFORE TAX   (40,599,141)   (1,254,474)   (25,102,500)   29,856,581 
Income tax expense   -    (27,680)   -    - 
                     
LOSS FROM CONTINUING OPERATIONS   (40,599,141)   (1,282,154)   (25,102,500)   29,856,581 
                     
DISCONTINUED OPERATIONS                    
Profit from discontinued operation (attributable to the ordinary equity holders of the Company)   57,319,854    997,077    -    57,319,854 
                     
PROFIT (LOSS) FOR THE YEAR/PERIOD   16,720,713    (285,077)   (25,102,500)   87,176,435 
                     
Profit (loss) attributable to:                    
Owners of the Company   16,810,157    (285,077)   (24,946,118)   87,176,435 
Non-controlling interests   (89,444)   -    (156,382)   - 
                     
    16,720,713    (285,077)   (25,102,500)   87,176,435 
                     
(LOSS) PER SHARE FOR PROFIT (LOSS) FROM CONTINUING OPERATIONS ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY                    

Basic (loss) earnings per share

  $(40.86)  $(1.26)  $(24.69)  $29.32 
Diluted (loss) earnings per share  $(40.86)  $(1.26  $(24.69)  $27.60 
EARNINGS (LOSS) PER SHARE FOR PROFIT (LOSS) FROM DISCONTINUED OPERATIONS ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY                    

Basic (loss) earnings per share

  $57.69   $0.98   $-   $56.30 
Diluted earnings per share  $57.69   $0.98   $-   $52.99 
EARNINGS (LOSS) PER SHARE FOR PROFIT (LOSS) ATTRIBUTABLE TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY                    
Basic (loss) earnings per share  $16.83   $(0.28)  $(24.69)  $85.62 
Diluted earnings (loss) per share  $16.83   $(0.28)  $(24.69)  $80.59 
DIVIDEND PER SHARE DECLARED  $20.24   $-   $-   $- 
WEIGHTED AVERAGE SHARES OUTSTANDING                    
Used as the denominator in calculating basic (loss) earnings per share   

993,604

    

1,020,400

    

1,016,911

    

1,018,191

 

Used as the denominator in calculating diluted (loss) earnings per share

   993,604    1,020,400    1,016,911    

1,081,682

 

 

Combined and Consolidated Statements of Financial Position Data, USD:

 

   As of March 31,   As of
September 30,
 
   2019   2018   2019 
Cash and cash equivalents   740,061    6,111,657    1,497,761 
Total assets   21,453,276    11,365,373    15,713,746 
Current liabilities   14,522,755    1,093,119    16,389,459 
Accumulated losses   (10,094,383)   (285,077)   (35,040,501)
Total equity   3,852,190    10,272,254    (2,702,046)

 

27
 

 

COMPARATIVE PER SHARE INFORMATION

 

The following table sets forth the per share data of each of JFK and Diginex on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended July 31, 2019 and for the six months ended January 31, 2020 after giving effect to the Business Combination assuming (1) no redemption of JFK ordinary shares and (2) maximum redemption of JFK ordinary shares. The pro forma book value per share information as of July 31, 2019 was computed as if the Business Combination had been completed on July 31, 2019, and the pro forma book value per share information as of January 31, 2020 was computed as if the Business Combination had been completed on January 31, 2020. The pro forma earnings information for the year ended July 31, 2019 and for the six months ended January 31, 2020 were computed as if the Business Combination had been completed on August 1, 2018, and carried forward through the interim period.

 

The historical book value per share is computed by dividing total common shareholders’ equity by the number ordinary shares outstanding of JFK and Diginex, respectively, at the end of the period. The pro forma combined book value per ordinary share is computed by dividing total pro forma common shareholders’ equity by the pro forma number of ordinary shares outstanding at the end of the period for each of JFK and Diginex, respectively. The pro forma earnings per share of the combined company is computed by dividing the pro forma income available to the combined company’s common shareholders by the pro forma weighted-average number of JFK ordinary shares outstanding over the period.

 

You should read the information in the following table in conjunction with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of JFK and Diginex and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited JFK and Diginex pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.

 

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of JFK and Diginex would have been had the companies been combined during the periods presented.

 

           Pro Forma   Pro Forma 
Six Months Ended January 31, 2020   Diginex   JFK   Equivalent Per Share Data Diginex (1)   Combined Assuming no redemption of shares   Equivalent Per Share Data Diginex (1)   Combined Assuming maximum redemption of shares 
Exchange ratio (2)              22.13           22.13       
Net loss from continuing operations  $   (26,125,986 )  $ (89,380 )  $-   $   (36,994,547 )  $-   $   (36,994,547 )
Total equity    (4,527,152 )    5,000,015     -     52,097,443     -     10,563,015  
Weighted average shares outstanding —basic and diluted (3)    1,076,690     7,427,500    -     35,038,310     -     30,921,746  
Total shares outstanding as of January 31, 2020     1,129,527      2,367,142     -     35,038,310     -     30,921,746  
Basic and diluted loss per share    (24.27 )   (0.01)    (23.46 )    (1.06 )    (26.56 )    (1.20 )
Book value per share as of January 31, 2020     (4.01 )    2.11      32.97      1.49      7.52      0.34  

 

           Pro Forma   Pro Forma 
Year Ended July 31, 2019  Diginex   JFK   Equivalent Per Share Data Diginex (1)   Combined Assuming no redemption of shares   Equivalent Per Share Data Diginex (1)   Combined Assuming maximum redemption of shares 
Exchange ratio (2)              22.13           22.13       
Net loss from continuing operations  $  (45,971,251)  $(376,548)  $-   $   (89,247,435 )  $-   $   (89,247,435 )
Total equity   4,261,781    5,000,010    -     60,975,756     -     19,513,725  
Weighted average shares outstanding —basic and diluted (3)   986,237    3,289,818    -     30,900,628     -     29,528,238  
Total shares outstanding as of July 31, 2019   1,025,961    2,358,203    -     35,038,310     -     30,892,107  
Basic and diluted loss per share   (46.61)   (0.11)    (63.96 )    (2.89 )    (66.83 )    (3.02 )
Book value per share as of July 31, 2019   4.15    2.12     38.51      1.74      13.94      0.63  
Dividend per share declared   20.24    -    -    -    -    - 

 

(1) The equivalent pro forma per share data for Diginex is derived by multiplying the exchange ratio (22.13) in the Business Combination by the unaudited pro forma per share data.

 

(2) Pursuant to the Amended Share Exchange Agreement, JFK will acquire 100% of the issued and outstanding ordinary shares of Diginex, in exchange for 25 million Singpore NewCo Ordinary Shares, or 22.13 Singapore NewCo Ordinary Shares for each ordinary share of Diginex.

 

(3) Weighted average shares outstanding - basic and diluted for JFK include those shares subject to possible redemption

 

28
 

 

MARKET PRICE INFORMATION

 

JFK’s ordinary shares are traded on NASDAQ under the ticker symbol “JFK.” The following table sets forth the closing price of JFK’s ordinary shares on July 8, 2019, the last full trading day prior to the public announcement date of the proposed transaction.

 

   JFK ordinary share 
   Historical 
July 8, 2019  $9.88 

 

There is no historical market price for Diginex shares as there is no public market for Diginex shares.

 

PRICE RANGE OF SECURITIES AND DIVIDENDS

 

JFK’s units, shares, warrants and rights are each quoted on Nasdaq, under the symbols “JFKKU,” “JFK,” “JFKKW,” and “JFKKR,” respectively. Each unit consists of one ordinary share, one warrant entitling its holder to purchase one-half of one ordinary share at a price of USD$11.50 per whole share, and one right to receive one-tenth (1/10) of an ordinary share upon the consummation of the Business Combination. JFK’s Units commenced trading on Nasdaq on April 2, 2019. JFK’s ordinary shares, JFK Warrants and JFK Rights commenced trading on Nasdaq on April 2, 2019.

 

JFK has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon JFK’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to the Business Combination will be within the discretion of the Singapore NewCo board of directors. It is the present intention of JFK’s board of directors to retain all earnings, if any, for use in its business operations and, accordingly, JFK’s board does not anticipate declaring any dividends in the foreseeable future.

 

Singapore NewCo and Diginex’s securities are not currently publicly traded. We are applying to list the Singapore NewCo Ordinary Shares and Singapore NewCo Warrants on Nasdaq in connection with the Business Combination.

 

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RISK FACTORS

 

Shareholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus before they decide whether to vote or instruct their vote to be cast to approve the Proposals described in this proxy statement/prospectus. These risks could have a material adverse effect on the business, financial conditioning and results of operations of Singapore NewCo, and could adversely affect the trading price of Singapore NewCo’s securities following the business combination.

 

Risks Related to Diginex’s Business and Industry

 

Diginex has a limited operating history and has incurred operating losses since its inception as it has been investing in the build out of its business lines. Its business lines are nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and are not assured to be profitable.

 

Diginex has a limited operating history on which an investor might evaluate its performance. It is therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel and financing sources and lack of revenues, any of which could have a material adverse effect on Diginex and may force it to reduce or curtail its operations. Diginex is not currently profitable and has incurred operating losses since its inception. There is no assurance that Diginex will achieve a return on shareholders’ investments and the likelihood of success must be considered in light of the early stage of its operations. Even if Diginex accomplishes its objectives, it may not generate positive cash flows or profits.

 

Furthermore, Diginex’s business lines are nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction, including those applicable due to its use of distributed ledger technology, and are not assured to be profitable. In 2019, the Capital Markets Business, BPAMJ and the Trading Business generated revenue, though not at a material level. Diginex may fail to develop its business lines or produce a return for its investors. It is possible that some of Diginex’s business lines may be difficult to enter and/or it may become evident that a particular business line is not a productive use of capital or time. This could result in Diginex modifying its business and focus away from such business lines. For Diginex’s business lines that have access to client or counterparty assets, the regulatory requirements associated with shutting down such businesses may be costly and expose Diginex to inquiries, investigations, lawsuits and proceedings by clients, counterparties, other third parties and regulatory and other governmental agencies.

 

From time to time, Diginex may also launch new business lines, offer new products and services within existing business lines or undertake other strategic projects. For example, Diginex is currently working to launch the Investment Products Business. There are substantial risks and uncertainties associated with these efforts and Diginex could invest significant capital and resources into such efforts. Regulatory requirements can affect whether initiatives are able to be brought to market in a manner that is timely and attractive to Diginex’s customers. Initial timetables for the development and introduction of new business lines or new products or services and price and profitability targets may not be met. New products or services may need to be initially launched on a limited basis prior to their full lanuch. In addition, Diginex’s revenues and costs may fluctuate because new business lines, products and services generally require startup costs while revenues take time to develop, which may adversely impact Diginex’s results of operations.

 

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If Diginex is unable to successfully build its business while controlling expenses, its ability to continue in business could depend on the ability to raise sufficient additional capital, obtain sufficient financing and monetize assets. There can be no guarantee that Diginex will be able to raise funding in sufficient quantity or at acceptable terms to fund the continued development of its business lines.

 

The occurrence of any of the foregoing risks would have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

Digital Assets and distributed ledger technology may not be widely adopted.

 

Digital Assets are a new asset class that, as of yet, have not been widely adopted, particularly by institutional investors and corporate securities issuers. The majority of Diginex’s business lines rely, or will rely, on the acceptance and use by such investors and issuers of Digital Assets at a scale to create demand for Diginex’s products and services sufficient to make Diginex’s business lines commercially viable. Though Diginex believes that the anticipated benefits of Digital Assets will create such demand, there can be no assurance that this will occur, or if it does occur that it will be in the near term.

 

Furthermore, the growth of the distributed ledger industry in general, as well as the distributed ledger technology on which Diginex will rely, is subject to a high degree of uncertainty. The factors affecting the further development of distributed ledger technology and Digital Assets, include, without limitation:

 

  worldwide growth in the adoption and use of Digital Assets and distributed ledger technology;
     
  government and quasi-government regulation of Digital Assets and distributed ledger technology and their use, or restrictions on or regulation of access to and operation of distributed ledger technology or similar systems;
     
  the maintenance and development of the open-source software protocol of smart contracts;
     
  changes in consumer demographics and public tastes and preferences;
     
  the availability and popularity of other forms or methods of buying and selling goods and services, or trading assets including new means of using government-backed currencies or existing networks;
     
  general economic conditions and the regulatory environment relating to Digital Assets; and
     
  a decline in the popularity or acceptance of Digital Assets.

 

The distributed ledger industry as a whole has been characterized by rapid changes and innovations and is constantly evolving. Although it has experienced significant growth in recent years, the slowing or stopping of the development, general acceptance and adoption and usage of distributed ledger technology and Digital Assets may materially adversely affect Diginex’s business plans.

 

Diginex’s business lines may require regulatory licenses and qualifications that Diginex does not currently have and that may be costly and time-consuming to obtain and, even if obtained, may subsequently be revoked.

 

Diginex’s business lines involve certain activities which require regulatory licenses and qualifications such as custody services, broker-dealer services, securities trading, asset management and advisory activities. These activities are subject to material, costly and constraining financial regulation in jurisdictions worldwide. The process of acquiring and maintaining these licenses and qualifications will be costly and time-consuming, will occupy material management attention and is not certain to be successful. Diginex may not meet the requirements for such licenses or qualifications, including, for example, minimum capital requirements, or may fail to secure discretionary approval of relevant regulatory bodies. A failure or delay in receiving approval for a license or qualification, or approval that is more limited in scope than initially requested, could have a significant and negative effect on Diginex, including the risk that a competitor gains a first-mover advantage.

 

In particular, Diginex is seeking the below licenses.

 

Jersey:
   
Exchange Business
   
Schedule 2 Business pursuant to Article 13 of the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008
   
Exchange Business
   
Class A Investment Business pursuant to the Financial Services (Jersey) Law 1998

 

Singapore:
   
Exchange Business
   
Major Payment Institution license pursuant to the Payment Services Act
   
Exchange Business
   
Recognized Market Operator license pursuant to the Securities and Futures Act
   
Digivault
   
Capital Market Services License pursuant to the Securities and Futures Act

 

Hong Kong:
   
Capital Markets Business
   
Type 1 Dealing in Securities License pursuant to the Securities and Futures Ordinance

 

United Kingdom:
   
Digivault
   
Safeguarding and Administering Investments license pursuant to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001

 

Dubai:
   
Capital Markets Business
   

 Category 4 Investment Advisor license pursuant to Regulatory Law 2004

 

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The law and regulation surrounding the operation of Diginex’s businesses with respect to Digital Assets is unclear, uncertain, rapidly evolving and not assured to develop in a way that is favorable to Diginex. The anticipated business activities of Diginex may cause regulatory bodies to delay, or refuse to issue, licenses and qualifications to Diginex that it would otherwise receive. For example, a regulatory authority may delay or refuse to issue a broker-dealer license to Diginex due to concerns about its focus on Digital Securities as opposed to more traditional securities. There is a risk that Diginex’s business could be outlawed in jurisdictions in which it seeks to do business, which could materially affect Diginex’s ability to expand its business and become profitable.

 

When a decision to enter a jurisdiction is made, Diginex utilizes local law firms to ensure it is informed of the local regulatory requirements needed to operate therein. Diginex also maintains regular face-to-face contact with the regulators in the jurisdictions in which it holds or wishes to seek licenses. In addition, to ensure that Diginex maintains regulatory compliance, Diginex intends to build internal capabilities to monitor regulatory changes as well as obtaining supplementary support from external experts. Diginex’s business lines are developing a regulatory roadmap to identify additional relevant licenses and qualifications they will need to operate; however, this has been done for only a small number of jurisdictions and significant further investment will be needed. This may result in unplanned costs and/or delayed or cancelled launches into particular jurisdictions.

 

Diginex’s senior management originate from multi-jurisdictional regulated financial service institutions. As such, Diginex’s senior management have accumulated experience in operating within a regulated environment and understand the importance of compliance with regulations, including securities. Diginex’s Chief Compliance Officer is a noted thought leader with regards to the emerging global regulatory landscape relating to AML and counter terrorist financing (“CFT”). However, except for anti-money laundering (“AML”) compliance, Diginex’s senior management do not have direct experience of dealing with regulatory requirements in relation to Digital Assets.

 

Diginex may be unable to establish partnerships with entities to satisfy regulatory requirements.

 

To the extent it is unable or not cost-effective to procure the necessary licenses or qualifications to conduct its business in jurisdictions any of Diginex’s business lines seek to enter, Diginex plans to partner with existing entities that have such licenses or qualifications to enable it to offer its products and services. However, there can be no assurance that it will be able to do so, or that it will be able to do so now, in the future or at an acceptable price. Prospective partners may (i) not exist, (ii) be unwilling or unable to engage in activities involving distributed ledger technology, (iii) not offer terms that are acceptable to Diginex, (iv) have a conflict of interest with one or more of Diginex’s business lines that makes such a partnership impermissible, (v) be otherwise unable or unwilling to partner with Diginex, or (vi) terminate their relationship with Diginex. If Diginex is not able to establish and maintain such partnerships, it may be unable to pursue its business in certain jurisdictions which could have a material adverse effect on its business, financial condition and results of operations.

 

Diginex may be unable to maintain partnerships with entities to satisfy regulatory requirements.

 

Where Diginex does not obtain licenses, and seeks to build partnerships with regulated firms such as Starmark Investment Management Limited in the United Kingdom, which provides regulatory coverage for the Capital Markets Business through an umbrella licensing scheme, a risk exists that a partner may lose its own regulatory status for reasons beyond Diginex’s control, or a partner may choose to exit from a partnership that it establishes with Diginex, either of which may leave Diginex without regulatory cover to provide services within the market the partner supports.

 

Changes in law or regulation could subject Diginex to further material, costly and constraining regulation, licensing qualifications and other requirements.

 

Legal or regulatory changes or interpretations of Diginex’s existing and planned activities could require the licensing or qualification of Diginex, or impose costly and contradictory regulatory burdens on Diginex, outside of management’s current expectations. In addition, jurisdictions that do not currently require licensing or qualifications to conduct Diginex’s existing and planned activities may adopt regulatory regimes that do require them. For example, in June 2019, the Financial Action Task Force (the “FATF”) adopted new guidance on the registration and licensing requirements that should be applicable to Digital Assets and entities that provide services for the holders and issuers of Digital Assets. Among other things, this guidance urges countries which do not yet have regulatory systems in place to mitigate the issues presented by the potential misuse of Digital Assets to create them rapidly using a risk-based approach. Such additional requirements could cause Diginex to incur additional expenses, which could materially and adversely affect its business, financial condition and results of operations. In addition, even where activities have been approved and obtained necessary licenses, a change in the legal framework may render such activities illegal or no longer economically sustainable.

 

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Diginex faces substantial litigation and regulatory risks.

 

As an enterprise whose material business lines include financial services, Diginex depends to a significant extent on its relationships with its clients and its reputation for integrity and high-caliber professional services. As a result, if a client is not satisfied with Diginex’s services or if there are allegations of improper conduct, including improper conduct by any of Diginex’s partners, by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to Diginex, or if there is negative publicity and press speculation about Diginex, whether or not valid, it may harm Diginex’s reputation and may be more damaging to Diginex than to businesses in other, non-financial industries.

 

Many of Diginex’s business lines are subject to significant regulation and oversight, including periodic examination by regulatory authorities. Diginex could be the subject of inquiries, investigations, sanctions, cease and desist orders, terminations of licenses or qualifications, lawsuits and proceedings by counterparties, clients, other third parties and regulatory and other governmental agencies, which could lead to increased expenses or reputational damage. Responding to inquiries, investigations, audits, lawsuits and proceedings, regardless of the ultimate outcome of the matter, is time-consuming and expensive and can divert the attention of senior management. The outcome of such proceedings may be difficult to predict or estimate until late in the proceedings, which may last a number of years.

 

The risks described above may be greater for companies in the distributed ledger industry as it is relatively new and clients, counterparties and regulators are expected to need significant education to understand the mechanics of products and services that rely on distributed ledger technology.

 

Furthermore, while Diginex maintains insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts refundable. Even if Diginex believes a claim is covered by insurance, insurers may dispute Diginex’s entitlement for a variety of different reasons, which may affect the timing and, if the insurers prevail, the amount of Diginex’s recovery. Any claims or litigation, even if fully indemnified or insured, could damage Diginex’s reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.

 

If Diginex and/or any governmental agency believe that it has accepted capital contributions by, or is otherwise holdings assets of, any person or entity that is acting directly or indirectly in violation of any money laundering or corruption laws, rules, regulations, treaties, sanctions or other restrictions, or on behalf of any suspected terrorist or terrorist organization, suspected drug trafficker or senior foreign political figure(s) suspected in engaging in foreign corruption, Diginex and/or such governmental agency may “freeze the assets” of such person or entity. Diginex may also be required to report and remit or transfer those assets to a governmental agency. Any such action may harm Diginex’s reputation and materially and adversely affect its business, financial condition and results of operations.

 

If Diginex is unable to successfully identify, hire and retain skilled individuals, it will not be able to implement its growth strategy successfully.

 

Diginex’s growth strategy is based, in part, on its ability to attract and retain highly skilled senior financial service professionals and software engineers. To date, Diginex has been able to locate and engage such employees; however, because of competition from other firms, Diginex may face difficulties in recruiting and retaining professionals of a caliber consistent with its business strategy in the future. If Diginex is unable to successfully identify and retain qualified professionals, it could materially and adversely affect Diginex’s business, financial condition and results of operations.

 

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Competition, including from new market entrants in the future, may cause Diginex’s revenue and earnings to decline.

 

Diginex is entering multiple business lines that have traditionally been dominated by large businesses that have access to substantially greater resources than Diginex. Many of these businesses and other competitors have significant competitive advantages, including longer operating histories, the ability to leverage their sales efforts and marketing expenditures across a broader portfolio of services, greater global presence, more established third-party relationships, greater brand recognition, greater financial strength, greater numbers of company and investor clients, larger research and development teams, larger marketing budgets and other advantages over Diginex.

 

While Diginex believes its focus on providing products and services that take advantage of distributed ledger technology differentiates it from many such competitors, many of its business lines have relatively low barriers to entry and Diginex anticipates that such barriers to entry will become lower in the future. Diginex currently expects that, as Digital Assets become more mainstream, additional competitors, potentially in large numbers, may begin to provide equivalent products and services. A number of investment banks have already participated in the issuance of Digital Assets and are continuing to grow their expertise. In addition, the introduction of new technologies, as well as regulatory changes, may significantly alter the competitive landscape for Diginex’s business lines. This could lead to fee compression or require Diginex to spend more to modify or adapt its offerings to attract and retain customers and remain competitive with the products and services offered by new competitors in the industry. Increased competition on the basis of any of these factors, including competition leading to fee reductions, could materially and negatively impact Diginex’s business, financial condition and results of operations.

 

Some market participants may oppose the development of distributed ledger-based technology products and services like those central to Diginex’s business lines, which could adversely affect Diginex’s ability to do business.

 

Many participants in the financial industry (including certain regulators) and other industries may oppose the development of products and services that utilize distributed ledger technology. The market participants who may oppose such products and services may include entities with significantly greater resources, including financial resources and political influence, than Diginex has. The ability of Diginex to operate and achieve its commercial goals could be adversely affected by any actions of any such market participants that result in additional regulatory requirements or other activities that make it more difficult for Diginex to operate.

 

Diginex may not successfully develop technology to service its business lines.

 

Diginex relies heavily on the use of technology that it has created or plans to create by itself or with other third-parties as much of the existing technology for the financial services business was not built to service Digital Assets, which require a unique set of considerations. If Diginex’s technology solutions do not work as planned, or do not meet or continue to meet the level of quality required by Diginex, its clients or its regulators, it may make transacting business less efficient, more expensive and potentially prone to errors, thereby reducing the positive effects Diginex seeks to make available to its clients through the adoption of distributed ledger technology.

 

Diginex may not be able to keep pace with rapidly changing technology and client or regulatory requirements.

 

Diginex’s success depends on its ability to develop new products and services for its business lines, while improving the performance and cost-effectiveness of its existing products and services, in each case in ways that address current and anticipated client and regulatory requirements. Such success is dependent upon several factors, including functionality, competitive pricing, licensing and integration with existing and emerging technologies. The distributed ledger industry is characterized by rapid technological change, and new technologies could emerge that might enable Diginex’s competitors to offer products and services with better combinations of price and performance, or that better address client requirements, than Diginex’s products and services. Competitors may be able to respond more quickly and effectively than Diginex can to new or changing opportunities, technologies, standards or client requirements.

 

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Due to the significant lead time involved in bringing a new product or service to market, Diginex is required to make a number of assumptions and estimates regarding the commercial feasibility of new products and services. As a result, it is possible that Diginex may introduce a new product or service that uses technologies that have been displaced by the time of launch, addresses a market that no longer exists or is smaller than previously thought or otherwise is not competitive at the time of launch. The expenses or losses associated with an unsuccessful product or service development or launch, or a lack of market acceptance of Diginex’s new products and services, could adversely affect Diginex’s business, financial condition or results of operations.

 

Diginex’s ability to attract new clients and increase revenue from existing clients also depends on its ability to deliver any enhanced or new products and services to its clients in a format where they can be easily and consistently deployed by most or all clients without significant client service. If Diginex’s clients believe that deploying its products and services would be overly time-consuming, confusing or technically challenging, then Diginex’s ability to grow its business would be substantially harmed.

 

Cybersecurity incidents and other systems and technology problems may materially and adversely affect Diginex.

 

Cybersecurity incidents and cyber-attacks have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future. The distributed ledger industry is a particular target for cybersecurity incidents, which may occur through intentional or unintentional acts by individuals or groups having authorized or unauthorized access to Diginex’s systems or Diginex’s clients’ or counterparties’ information, or exchanges on which Diginex trades, all of which may include confidential information. These individuals or groups include employees, third-party service providers, customers and hackers. The information and technology systems used by Diginex and its service providers are vulnerable to unauthorized access, damage or interruption from, among other things: hacking, ransomware, malware and other computer viruses; denial of service attacks; network failures; computer and telecommunication failures; phishing attacks; infiltration by unauthorized persons; fraud; security breaches; usage errors by their respective professionals; power outages; terrorism; and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. Recently, the Virtual Currency exchange industry has become a significant target for fraud. To date, Diginex has only experienced phishing incidents, none of which have been material. While Diginex will deploy a range of defenses, it is possible Diginex could suffer an impact or disruption that could materially and adversely affect Diginex. The security of the information and technology systems used by Diginex and its service providers may continue to be subjected to cybersecurity threats that could result in material failures or disruptions in Diginex’s business. If these systems are compromised, become inoperable for extended periods of time or cease to function properly, Diginex or a service provider may have to make a significant investment to fix or replace them. As a company whose material business lines include financial services, Diginex has and will continue to have access to sensitive, confidential information of clients and counterparties and, in certain business lines, access to such clients and counterparties’ assets, which makes the cybersecurity risks identified above more important than they may be to other non-financial services companies.

 

Concerns about Diginex’s practices with regard to the collection use, disclosure, or safekeeping of confidential information, personal data, and assets, even if unfounded, could adversely affect its operating results. Furthermore, failures of Diginex’s cybersecurity system could harm Diginex’s reputation, subject it to legal claims and otherwise materially and adversely affect Diginex’s business, financial condition and results of operations.

 

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Diginex’s business lines rely on third-party service providers.

 

Diginex’s operations could be interrupted or disrupted if Diginex’s third-party service providers, or even the vendors of such third-party service providers, experience operational or other systems difficulties, terminate their service, fail to comply with regulations or raise their prices. Diginex may also suffer the consequences of such third-party providers’ mistakes. Diginex outsources some of its operational activities and accordingly depends on relationships with many third-party service providers. For example, Diginex relies on third parties for certain services, including know-your-customer (“KYC”) and AML background checks, and systems development and maintenance. The failure or capacity restraints of third-party services, a cybersecurity breach involving any third-party service providers or the termination or change in terms or price of a third-party software license or service agreement on which Diginex relies could interrupt Diginex’s operations. Replacing third-party service providers or addressing other issues with Diginex’s third-party service providers could entail significant delay, expense and disruption of service. As a result, if these third-party service providers experience difficulties, are subject to cybersecurity breaches, terminate their services or raise their prices, and Diginex is unable to replace them with other service providers, particularly on a timely basis, Diginex’s operations could be interrupted. If an interruption were to continue for a significant period, Diginex’s business, financial condition and results of operations could be adversely affected. Even if Diginex can replace third-party providers, it may be at a higher cost to Diginex, which could also adversely affect Diginex’s business, financial condition and results of operations.

 

Finally, notwithstanding Diginex’s efforts to implement and enforce strong policies and practices regarding third-party service providers, Diginex may not successfully detect and prevent fraud, incompetence or theft by its third-party service providers, which could adversely affect Diginex’s business, financial condition and results of operations.

 

Competitors will likely attempt to imitate Diginex’s services, products and technology. If Diginex is unable to protect or preserve its proprietary rights, its business may be harmed.

 

As Diginex’s business continues to expand, its competitors will likely imitate its products, services, and technology, which could harm Diginex’s business. Only a portion of the intellectual property used in the operation of Diginex’s business lines is patentable, and therefore it will rely significantly on trade secrets, trade and service marks and copyright. Diginex also relies on trade secret protection and confidentiality agreements with its employees, consultants, suppliers, third-party service providers, and others to protect its intellectual property and proprietary rights. Nevertheless, the steps Diginex takes to protect its intellectual property and proprietary rights against infringement or other violation may be inadequate and it may experience difficulty in effectively limiting the unauthorized use of its patents, trade secrets, trade and service marks, copyright and other intellectual property and proprietary rights worldwide. Diginex also cannot guarantee that others will not independently develop technology with the same or similar function to any proprietary technology it relies on to conduct its business and differentiate itself from competitors.

 

Diginex could incur significant costs and management distraction in pursuing claims to enforce its intellectual property and proprietary rights through litigation, and defending any alleged counterclaims. If Diginex is unable to protect or preserve the value of its patents, trade secrets, trade and service marks, copyright, or other intellectual property and proprietary rights for any reason, its brand and reputation could be damaged and its business, financial condition and results of operations could be materially adversely affected.

 

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Diginex may face the risk that one or more competitors will obtain patents covering technology critical to the operation of one or more of its business lines and that it may infringe on the intellectual property rights of others.

 

If one or more other persons, companies or organizations obtains a valid patent covering technology critical to the operation of one or more of Diginex’s business lines, there can be no guarantee that such an entity would be willing to license such technology at acceptable prices or at all, which could have a material adverse effect on Diginex’s business, financial condition and results of operations. Moreover, if for any reason Diginex were to fail to comply with its obligations under an applicable license agreement, it may be unable to operate, which would also have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

Due to the fundamentally open-source nature of distributed ledger technology, Diginex may not always be able to determine that it is using or accessing protected information or software. For example, there could be issued patents of which Diginex is not aware that its products infringe. Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which Diginex is unaware that may later result in issued patents that its products infringe.

 

Diginex could expend significant resources defending against patent infringement and other intellectual property right claims, which could require it to divert resources away from operations. Any damages Diginex is required to pay or injunctions against its continued use of such intellectual property in resolution of such claims may cause a material adverse effect to its business, financial condition and results of operations.

 

Managing different business lines could present conflicts of interest.

 

Diginex is building an ecosystem of products and services. While Diginex will take steps to prevent or mitigate conflicts of interests, there are certain inherent and potential conflicts of interest in managing different business lines. Due to the broad scope of Diginex’s anticipated business lines, potential conflicts of interest include situations where its services to a particular client, or Diginex’s own investments or other interests, conflict, or are perceived to conflict, with the interests of another client, as well as situations where one or more of Diginex’s business lines have access to material non-public information that may not be shared with its other business lines and situations where Diginex may be an investor in an entity with which it also has an advisory or other relationship. Furthermore, the allocation of investment opportunities among its investors could also present a conflict of interest. In managing these different conflicts, fiduciary duty obligations may require Diginex to resolve conflicts in favor of clients over itself or other third parties. Employees and executives may also have conflicts of interest in allocating their time and activity between the business lines. Appropriately identifying and dealing with conflicts of interest is complex and difficult, and Diginex’s reputation could be damaged and the willingness of clients to enter into transactions with Diginex may be affected if Diginex fails, or appears to fail, to identify, disclose and deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. As a result, failures to appropriately identify and address potential conflicts of interest could materially adversely affect Diginex’s business, financial condition and results of operations.

 

Diginex could be victim to employee misconduct.

 

In recent years, there have been a number of highly publicized cases involving fraud, conflicts of interest, or other misconduct by employees, and there is a risk that an employee of, or contractor to, Diginex or any of its affiliates could engage in misconduct that adversely affects Diginex’s business. It is not always possible to deter such misconduct, and the precautions Diginex takes to detect and prevent such misconduct may not be effective in all cases. Misconduct by an employee of, or contractor to, Diginex or any of its affiliates, or even unsubstantiated allegations of such misconduct, could result in direct financial harm to Diginex.

 

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Diginex’s loss of access to its private keys or its experience of a data loss relating to its Digital Asset investments could adversely affect Diginex.

 

Certain Digital Assets are controllable only by the possessor of the private key or keys relating to the “digital wallet” in which the Digital Asset is held. Private keys must be safeguarded and kept private in order to prevent a third party from accessing the Digital Assets while held in such wallet. To the extent a private key is lost, destroyed or otherwise compromised by Diginex or another digital party and no backup of the private key is accessible, Diginex will be unable to access the Digital Assets held in the related digital wallet. Any loss of private keys relating to digital wallets used to store Diginex’s Digital Assets could adversely affect its business, financial condition and results of operations.

 

In addition, if Diginex’s Digital Assets are lost, stolen or destroyed under circumstances rendering a party liable to Diginex, the responsible party may not have the financial resources sufficient to satisfy Diginex’s claims.

 

Diginex may not be able to effectively manage its growth.

 

As Diginex grows its business, its employee headcount and the scope and complexity of its business lines may increase dramatically. Diginex only has a limited operating history at its current scale and its management team does not have substantial tenure working together. Consequently, if Diginex’s business grows at a rapid pace, it may experience difficulties maintaining this growth and building the appropriate processes and controls. Growth may increase the strain on resources, cause operating difficulties, including difficulties in sourcing, logistics, maintaining internal controls, marketing, designing products and services and meeting customer needs.

 

In addition, Diginex is seeking to run many business lines and, while these business lines are anticipated to be complimentary, there can be no assurance that Diginex will be able to effectively deliver internal or external resources effectively to each business line as and when needed, particularly when multiple business lines are experiencing high levels of need at the same time. Finally, many of Diginex’s business lines are interlinked. For example, the Capital Markets Business is expected to be closely related to Digivault and the Exchange Business. Delays or the inability to roll out products in one business line may pose corresponding issues in other business lines.

 

If Diginex does not adapt to meet these challenges, it could have a material adverse effect on its business, financial condition and results of operations.

 

Operational risk may materially and adversely affect Diginex’s performance and results.

 

Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes, people, systems or external events. Diginex’s exposure to operational risk arises from routine processing errors, as well as extraordinary incidents, such as major systems failures or legal and regulatory matters. Because Diginex’s business lines are reliant on both technology and human expertise and execution, Diginex is exposed to material operational risk arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of third-party service providers, counterparties or other third parties, failed or inadequate processes, design flaws and technology or system failures and malfunctions.

 

Operational errors or significant operational delays could materially negatively impact Diginex’s ability to conduct its business or service its clients, which could adversely affect results of operations due to potentially higher expenses and lower revenues, create liability for Diginex or its clients or negatively impact its reputation. Recurring operational issues may also raise concerns among regulators regarding Diginex’s governance and control environment.

 

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Diginex may not be effective in mitigating risk.

 

Diginex is establishing risk management and oversight policies and procedures to provide a sound operational environment for the types of risk to which it is subject, including operational risk, credit risk, market risk and liquidity risk. However, as with any risk management framework, there are inherent limitations to Diginex’s current and future risk management strategies, including risks that it has not appropriately anticipated or identified and that certain policies may be insufficient when used in connection with Digital Assets. Accurate and timely enterprise-wide risk information is necessary to enhance management’s decision-making in times of crisis. If Diginex’s risk management framework proves ineffective or if Diginex’s enterprise-wide management information is incomplete or inaccurate, it could suffer unexpected losses or fail to generate the expected revenue, which could materially adversely affect its business, financial condition and results of operations.

 

The regulation of Digital Assets and distributed ledger technology continues to evolve in every jurisdiction, and regulatory changes or actions may restrict the use of Digital Assets, the operation of distributed ledger technology that supports such Digital Assets and platforms that facilitate the trading of such Digital Assets.

 

As distributed ledger technology and Digital Assets have grown in popularity and in market size, governments, regulators and self-regulators (including law enforcement and national security agencies) around the world are examining the operations of distributed ledger technology and Digital Asset issuers, users, investors and platforms. To the extent that any government or quasi-governmental agency exerts regulatory authority over the Digital Asset industry in general, the issuance of Digital Assets, and trading and ownership of and transactions involving the purchase and sale or pledge of such Digital Assets, may be adversely affected, which could materially adversely affect Diginex’s business, financial condition and results of operations.

 

The prices of Digital Assets are extremely volatile. Fluctuations in the price of Digital Assets could materially and adversely affect Diginex’s business.

 

The prices of Virtual Currencies, such as bitcoin and ether, and other Digital Assets have historically been subject to dramatic fluctuations and are highly volatile. A decrease in the price of a single Digital Asset may cause volatility in the entire Digital Asset industry. For example, a security breach that affects purchaser or user confidence in bitcoin or ether may affect the industry as a whole. This volatility may adversely affect interest in and demand for the products and services Diginex seeks to offer, which would materially adversely affect Diginex’s business, financial condition and results of operations.

 

Distributed ledger networks, Digital Assets and the exchanges on which such assets are traded are dependent on internet infrastructure and susceptible to system failures, security risks and rapid technological change.

 

The success of distributed ledger technology-based products and services will depend on the continued development of a stable infrastructure, with the necessary speed, data capacity and security, and complementary products such as high-speed networking equipment for providing reliable internet access and services. Digital Assets have experienced, and are expected to continue to experience, significant growth in the number of users and amount of content. There is no assurance that the relevant public infrastructure will continue to be able to support the demands placed on it by this continued growth or that the performance or reliability of distributed ledger technology will not be adversely affected by this continued growth. There is also no assurance that the infrastructure or complementary products or services necessary to make Digital Assets a viable product for their intended use will be developed in a timely manner, or that such development will not result in the requirement of incurring substantial costs to adapt to changing technologies. The failure of these technologies or platforms or their development could materially and adversely affect Diginex’s business, financial condition and results of operation.

 

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Furthermore, Digital Assets are created, issued, transmitted, and stored according to protocols run by nodes within the blockchain network. It is possible these protocols have undiscovered flaws or could be subject to network scale attacks which could result in losses to Diginex. Finally, advancements in quantum computing could break the cryptographic rules of protocols which support certain Digital Assets.

 

Malicious actors could manipulate distributed ledger networks and smart contract technology upon which Digital Assets rely and increase the vulnerability of the distributed ledger networks.

 

If a malicious actor, including a state-sponsored actor, is able to hack or otherwise exert unilateral control over a particular distributed ledger network, or the Digital Assets on such a network, that actor could attempt to divert assets from that distributed ledger or otherwise prevent the confirmation of transactions recorded on that distributed ledger. Such an event could materially and adversely affect Diginex’s business. Digital Assets have been the subject of attempted manipulation by hackers to use them for malicious purposes. For example, misuses could occur if a malicious actor obtains a majority of the processing power controlling the Digital Asset validating activities and altering the distributed ledger on which Digital Asset transactions rely. Moreover, if the award for solving transaction blocks for a particular Digital Asset declines, and transaction fees are not sufficiently high, the incentive to continue validating distributed ledger transactions would decrease and could lead to a stoppage of validation activities. The collective processing power of that distributed ledger would be reduced, which would adversely affect the confirmation process for transactions by decreasing the speed of the adaptation and adjustment in the difficulty for transaction block solutions. Such slower adjustments would make the distributed ledger network more vulnerable to malicious actors’ obtaining control of the processing power over distributed ledger network processing.

 

The network contributors for certain Digital Assets could propose amendments to the network protocols and software for Digital Assets that, if accepted and authorized by the network for the Digital Assets, could adversely affect Diginex.

 

The networks for certain Digital Assets are based on a protocol governing the peer-to-peer interactions between computers connected to each other within that network. The development team for a network (if any) might propose and implement amendments to a network’s source code through software upgrades altering the original protocol, including fundamental ideas such as the irreversibility of transactions and limitations on the validation of blockchain software distributed ledgers. Such changes to original protocols and software could materially and adversely affect Diginex’s business.

 

Banks or other third-party services providers may decline to provide services to companies engaged in distributed ledger-related businesses, including Diginex.

 

A number of companies that provide distributed ledger technology-related products and services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to distributed ledger technology-related companies, including Diginex, for a number of reasons, such as perceived compliance risks or costs. Similarly, continued general banking difficulties may decrease the utility or value of Digital Assets or harm public perception of those assets. In addition to banks, other third-party service providers including accountants, lawyers and insurance providers may also decline to provide services to companies engaged in distributed ledger technology-related businesses because of the perceived risk profile associated with such businesses or the lack of regulatory certainty. The failure of distributed ledger technology-related businesses to be banked or obtain services could materially and adversely affect Diginex’s business, financial condition and results of operation.

 

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The extent to which Digital Assets are used to fund criminal or terrorist enterprises or launder the proceeds of illegal activities could materially impact Diginex’s business.

 

The potential, or perceived potential, for anonymity in transfers of Digital Assets, as well as the decentralized nature of distributed ledger networks, has led some terrorist groups and other criminals to solicit certain Digital Assets for capital raising purposes. As Digital Assets have grown in both popularity and market size, government authorities have been examining the operations of distributed ledger technology and Digital Assets, their users, investors and exchanges, concerning the use of Digital Assets for the purpose of laundering the proceeds of illegal activities or funding criminal or terrorist enterprises. In addition to the current market, new distributed ledger networks or similar technologies may be developed to provide more anonymity and less traceability.

 

The use of Digital Assets for illegal purposes, or the perception of such use, even if such use does not involve Diginex’s services or products, could result in significant damage to Diginex’s reputation, damage to the reputation of Digital Assets and a loss of confidence in the services provided by the distributed ledger technology community as a whole.

 

Political or economic crises may motivate large-scale sales of Digital Assets, which would result in a reduction in values and materially and adversely affect Diginex.

 

As an alternative to fiat currencies that are backed by central governments, Virtual Currencies, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. For example, political or economic crises could motivate large-scale acquisitions or sales of Digital Assets either globally, regionally or locally. Large-scale sales of certain Digital Assets would result in a reduction in their value and could materially and adversely affect Diginex’s business, financial condition and results of operations.

 

Economic, political and market conditions, both in Hong Kong and worldwide, can adversely affect Diginex’s business, results of operations and financial condition.

 

Diginex’s business is influenced by a range of factors that are beyond its control and that it has no comparative advantage in forecasting. These include, among others:

 

  general economic and business conditions;
     
  overall demand for Diginex’s products and services; and
     
  general legal, regulatory and political developments.

 

Macroeconomic developments, like the developments associated with the United Kingdom’s vote to exit the EU (Brexit), evolving trade policies between the U.S. and international trade partners, including the People’s Republic of China (the “PRC”) or the occurrence of similar events in other countries that lead to uncertainty or instability in economic, political or market conditions could negatively affect Diginex’s business, operating results and financial conditions and/or any of its third-party service providers. Furthermore, any general weakening of, and related declining confidence in, the global economy or the curtailment of government or corporate spending could cause potential clients to delay, decrease or cancel purchases of Diginex’s products and services and the adoption of distributed ledger technology in general.

 

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While Diginex is shifting its incorporation from Hong Kong to Singapore in connection with the business combination, the majority of Diginex’s operations are expected to remain in Hong Kong. Hong Kong has been governed by the basic law, which guarantees a high degree of autonomy from the PRC in certain matters until 2047. If the PRC were to exert its authority to alter the economic, political or legal structures or the existing social policy of Hong Kong, investor and business confidence in Hong Kong could be negatively affected, which in turn could negatively affect markets and business performance and have an adverse effect on Diginex. There is uncertainty as to the political, economic and social status of Hong Kong. Hong Kong’s evolving relationship with the PRC’s central government in Beijing has been a source of political unrest that has periodically resulted in large-scale protests, including those that have arisen since March 2019 in response to an extradition bill proposed by the Hong Kong government. These protests have created disruptions for businesses operating in Hong Kong and have negatively impacted the overall economy.

 

Diginex’s business lines and its acceptance of currencies other than the U.S. Dollar will subject it to currency risk.

 

Nearly all of Diginex’s business occurs, and is anticipated to occur in the medium term, outside of the U.S. As a result, some of Diginex’s expenses are, and are anticipated to be, denominated in currencies other than the U.S. dollar. Because Diginex’s financial statements are presented in U.S. dollars, it must translate non-U.S. dollar denominated revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. These fluctuations may materially impact the translation of Diginex’s non-U.S. results of operations and financial condition.

 

Furthermore, increases or decreases in the value of the currencies Diginex receives may affect its operating results and the value of its assets and liabilities.

 

Due to the nature of Diginex’s business, Diginex may at some point choose to relocate certain sections of its operations from Hong Kong to Singapore.

 

The main operations of Diginex’s business are currently located in Hong Kong. It is possible that Diginex may decide to relocate certain operations from Hong Kong to Singapore in the future. In doing so, it is also possible that Diginex may not be able to retain certain expert staff. If Diginex loses the services of any member of management or other such key personnel as a result of relocating, it may not be able to find suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could materially disrupt Diginex’s business and growth.

 

Force majeure events may materially and adversely affect the business continuity of Diginex.

 

Diginex may be affected by events beyond its control, including acts of nature, fires, floods, earthquakes, outbreaks of an infectious disease, pandemic or any other serious public health concern, war, terrorism, civil unrest, change in overall legal framework and labor strikes. Some such events may adversely affect the ability of Diginex or a counterparty to Diginex to perform its obligations. In addition, the cost to Diginex of repairing or replacing its damaged reputation or assets as a result of such an event could be considerable. Certain events such as war or an outbreak of an infectious disease could have a broader negative impact on the world economy and international business activity generally, or in any location in which Diginex may invest or conduct its business specifically.

 

Diginex is susceptible to general economic conditions, natural catastrophic events and public health crises, that could adversely affect Diginex’s operating results in the near future.

 

Diginex is subject to the impact of natural catastrophic events, such as earthquakes, floods, public health crisis, such as disease outbreaks, epidemics, or pandemics, and all these could result in a decrease or sharp downturn of economies, including the markets and business locations in the current and future periods of Diginex.

 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and the world. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.” In early 2020, Hong Kong, Singapore and governments around the world took a number of actions, including prohibiting residents from free travel, encouraging employees of enterprises to work from home, cancelling public activites, and closing corporate offices. In addition, as the outbreak continues to threaten global economies, it may continue to cause significant market volatility and declines in general economic activities.

 

Diginex has taken a series of measures in response to the outbreak to protect its employees, including, among others, temporary closure of some offices, remote working arrangements for its employees and travel restrictions or suspension. In general, while these measures reduced the efficiency of its operations, Diginex was not significantly impacted through the first quarter and early part of the second quarter of 2020. The extent to which COVID-19 impacts Diginex’s results of operations during the remainder of 2020 will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable. In addition, Diginex’s results of operations could be adversely affected to the extent that the outbreak harms the global economy in general.

 

Any potential impact to Diginex’s results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by government authorities and other entities to contain COVID-19 or treat its impact, almost all of which are beyond Diginex’s control. Diginex may experience impact from quarantines, market downturns and changes in customer behavior related to the pandemic and impact on its workforce if the virus continues to spread. One or more Diginex customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment, file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. Currently, there is no vaccine or specific anti-viral treatment for COVID-19. Relaxation of restrictions on economic and social life may lead to new cases which may lead to the re-imposition of restrictions. Given the general slowdown in economic conditions, volatility in the capital markets as well as the general negative impact of the COVID-19 outbreak on the brokerage and wealth management industry, Diginex can provide no assurance that it can launch new products and services or that it reach its anticipated growth rate. Because of the uncertainty surrounding the COVID-19 outbreak, the financial impact related to the outbreak of and response to the coronavirus cannot be reasonably estimated at this time, but Diginex’s financial condition and operating results for 2020 and beyond may be adversely affected.

 

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Risks Related to the Asset Management Business

 

Changes in the value of Diginex’s assets under management (“AUM”) may cause revenue and earnings to decline.

 

The Asset Management Business is expected to be primarily comprised of fees based on a percentage of the value of AUM and, in some cases, performance fees which are normally expressed as a percentage of returns to the client. Numerous factors, including price movements in the assets in the markets in which Diginex manages assets, could cause:

 

  the value of AUM, or the returns that Diginex realizes on AUM, to decrease;
     
  the withdrawal of funds from any products offered by Diginex in favor of products offered by competitors; or
     
  a decrease in the value of seed or co-investment capital or a decrease in the amount of such capital available to invest.

 

The occurrence of any of these events may cause Diginex’s AUM, revenue and earnings, if any, to decline and may negatively impact the success of the Asset Management Business.

 

The Asset Management Business is highly regulated and regulators may apply or interpret these regulations with respect to Digital Assets in novel and unexpected ways.

 

Asset management is a highly regulated business subject to numerous legal and regulatory requirements. These regulations are intended to protect customers whose assets are under management and, as such, may limit Diginex’s ability to develop, expand or carry out its asset management business in the intended manner. Furthermore, the funds in which Diginex invests will be subject to regulatory regimes that are not clear or are not yet developed. To the extent that there is any ambiguity as to whether an asset under the management of a fund in which Diginex invests is deemed a security, the applicability of many regulations to such fund, will not be clear and could indirectly adversely affect the Asset Management Business. Furthermore, Diginex must address conflicts of interest, as well as the perception of conflicts of interest, between itself (including the other business lines of Diginex) and its clients and funds. In particular, Diginex will be required to act in the best interest of its clients and funds, which may include allocating opportunities to its clients and funds rather than to its own principal business lines. In addition, regulators have substantial discretion in determining what is in the best interest of a client of a fund and have increased their scrutiny of potential conflicts. Appropriately dealing with conflicts of interest is complex and if Diginex fails, or appears to fail, to deal appropriately with any of these conflicts of interest, it may face reputational damage, litigation, regulatory proceedings, or penalties, fines or sanctions, any of which may have a material and negative impact on Diginex’s business, financial condition and results of operations. In addition, to the extent that Diginex is required to obtain client or investor consent in connection with any potential conflict, any failure or delay in obtaining such consent may have a material and negative impact on Diginex’s ability to take advantage of certain business opportunities.

 

Diginex’s investments in other investment vehicles may be subject to substantial risk.

 

On behalf of itself and its managed funds, Diginex may make direct or indirect investments in pooled investment vehicles, which may expose Diginex to all of the risks of those vehicles’ investments. The values of pooled investment vehicles are subject to change as the values of their respective assets fluctuate. To the extent that Diginex invests in managed pooled investment vehicles, the performance of Diginex’s investments in such vehicles will be dependent on the investment and research abilities of persons other than Diginex. The securities offered by such vehicles typically are not registered under applicable securities laws and are offered in transactions that are exempt from registration.

 

The Digital Assets funds in which Diginex invests are by their nature small and unproven.

 

Given that Diginex may invest in funds with little or no track record, there is a risk that such funds may not generate the returns anticipated by Diginex and may even result in the complete loss of the investment allocated to such funds.

 

Risks Related to the Trading Business

 

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Short sales of Digital Assets may be especially risky.

 

Diginex may make short sales of Digital Assets. In such a short sale, Diginex would sell Digital Assets that it does not own, typically borrowed from a third party. Borrowing and lending markets for Digital Assets are currently limited and are unlikely to become as developed and stable as those for securities or other established assets in the near term, if ever, which exposes Diginex to risks.

 

Because Diginex would remain liable to return any Digital Assets that it borrowed, Diginex would be required to purchase an equivalent amount of Digital Assets prior to the date on which delivery to the third party is required. Diginex will incur a loss as a result of a short sale if the price of the Digital Assets increases between the date of the short sale and the date on which Diginex replaces the borrowed Digital Assets. The amount of any loss will be increased by the amount of the premium or interest that Diginex may be required to pay in connection with a short sale. Short selling exposes Diginex to unlimited risk with respect to the borrowed Digital Assets because of the lack of an upper limit on the prices to which those Digital Assets can rise. Purchasing Digital Assets to close out a short position can itself cause the price of the Digital Assets to rise further, thereby exacerbating any losses. Under adverse market conditions, Diginex may have difficulty purchasing Digital Assets to meet its short sale delivery obligations, and may have to sell other Digital Assets to raise the necessary capital at a time when it would be unfavorable to do so. If a request for return of borrowed assets occurs at a time when other short sellers are receiving similar requests, a “short squeeze” can occur, and Diginex may be compelled to replace borrowed Digital Assets previously sold short with purchases on the open market at the most disadvantageous time, possibly at prices significantly in excess of the proceeds received in originally selling the assets short. In addition, Diginex may have difficulty purchasing assets to meet its delivery obligations if the assets sold short by Diginex have a limited daily trading volume or limited market capitalization. Short sales by Diginex and “short” derivative positions are forms of investment leverage, and the amount of Diginex’s potential loss is theoretically unlimited.

 

Diginex’s trades in options may be subject to substantial risk.

 

Diginex may trade in options on Digital or non-Digital Assets. Purchasing and writing put and call options are highly specialized activities that entail greater-than-ordinary investment risks. An investment in an option may be subject to greater fluctuation than an investment in the underlying asset. An uncovered call writer’s loss is theoretically unlimited. The ability to trade in or exercise options may be restricted in the event that trading in the underlying asset becomes restricted. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of over-the-counter options (options not traded on exchanges) are generally established through negotiation with the other party to the option contract. While this type of arrangement allows greater flexibility to tailor an option, over-the-counter options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. As of this writing, the availability of exchange-traded and over-the-counter options on Digital Assets is extremely limited, so terms may be unfavorable in comparison to those available for more firmly established types of options.

 

Diginex’s trades in derivatives may be subject to substantial risk.

 

Derivatives are financial instruments the value of which is based on the value of one or more reference assets or indicators, such as a security, currency, interest rate or index. Diginex’s use of derivatives involves risks different from, and possibly greater than, the risks associated with investing directly in securities and other more traditional investments. Moreover, although the value of a derivative is based on an underlying asset or indicator, a derivative typically does not carry the same rights as would be the case if Diginex invested directly in the underlying asset.

 

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Derivatives are subject to a number of risks, such as potential changes in value in response to market developments, and the risk that a derivative transaction may not have the effect that Diginex anticipated. Derivatives also involve the risk of mispricing or improper valuation and the risk that changes in the value of a derivative may not achieve the desired correlation with the underlying asset or indicator. Derivative transactions may be highly volatile, and Diginex could lose more than the amount it invests. Moreover, derivative transactions permit Diginex to create investment leverage, which may exacerbate any losses on these positions. A liquid secondary market may not always exist for Diginex’s derivative positions at any time, and Diginex may not be able to initiate or liquidate a derivative position at an advantageous time or price, which may result in significant losses.

 

In addition, derivative products are specialized instruments that require investment techniques and risk analyzes different from those associated with direct investments. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself. In particular, the complexity of derivatives requires the maintenance of adequate controls to monitor the transactions entered into and the ability to assess the risk that a derivative adds to Diginex’s portfolio.

 

Diginex’s trades in currencies may be subject to substantial risk.

 

Diginex may trade currencies in the interbank market, a global network of commercial banking institutions that make markets in foreign currencies. There is no limitation on daily price moves of contracts traded through banks and dealers. Banks and dealers may require Diginex to deposit margin with respect to such trading. Banks and dealers are not required to continue to make markets in currencies.

 

There have been periods during which certain banks have refused to quote prices for currency contracts or have quoted prices with an unusually wide bid-ask spread. Arrangements to trade currency contracts may be made with only one or a few banks, and liquidity problems might therefore be greater than if such arrangements were made with numerous banks. The imposition of credit controls by government authorities might limit such trading to less than that which Diginex would otherwise undertake. In respect of such trading, Diginex is subject to the risk of bank failure or the inability of, or refusal by, a bank to perform with respect to such contracts. Most, if not all, of these contracts are directly affected by changes in interest rates. The effects of governmental intervention may also be particularly significant at certain times in the interbank market.

 

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Diginex’s trading transactions may be subject to credit risk.

 

Credit risk is the risk that an issuer of a security or a counterparty will be unable or unwilling to satisfy payment or delivery obligations when due and the related risk that the value of a trade may decline because of concerns about the issuer’s or the counterparty’s ability to make such payments. In addition to the risk of an issuer of a security in which Diginex trades failing or declining to perform on an obligation under the security, Diginex is exposed to the risk that third parties, including trading counterparties, exchanges, custodians, administrators and other financial intermediaries that may owe Diginex money, securities or other assets will not perform their obligations. Any of these parties might default on their obligations to Diginex because of bankruptcy, lack of liquidity, operational failure or other reasons, in which event Diginex may lose all or substantially all of the value of any such trading transaction. To the extent Diginex trades on exchanges that specialize in Digital Asset futures and derivatives, it is exposed to the credit risk of that exchange.

 

Diginex is not obligated to hedge its exposures, and, if it does, hedging transactions may be ineffective or reduce Diginex’s overall performance.

 

Diginex is not obligated to, and often times may not, hedge its exposures. However, from time to time, it may use a variety of financial instruments and derivatives, such as options, swaps and forward contracts, for risk management purposes, including to: protect against possible changes in the market value of Diginex’s investment or trading assets resulting from fluctuations in the securities markets and changes in interest rates; protect Diginex’s unrealized gains in the value of its investments or trading assets; facilitate the sale of any such assets; enhance or preserve returns, spreads or gains on any trade or investment; hedge the interest-rate or currency-exchange risk on any of Diginex’s liabilities or assets; protect against any increase in the price of any assets that Diginex anticipates purchasing at a later date; or to any other end that Diginex deems appropriate. The success of any hedging activities by Diginex will depend, in part, on its ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the assets being hedged. Since the characteristics of many assets change as markets change or time passes, the success of Diginex’s hedging strategy will also be subject to its ability to continually recalculate, readjust and execute hedges in an efficient and timely manner. In addition, while Diginex may enter into hedging transactions to seek to reduce risk, such transactions may actually increase risk or result in a poorer overall performance for Diginex than if it had not engaged in such hedging transactions.

 

Diginex may make, or otherwise be subject to, trade errors.

 

Errors may occur with respect to trades executed on behalf of Diginex. Trade errors can result from a variety of situations, including, for example, when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold. Trade errors frequently result in losses, which could be material. To the extent that an error is caused by a third party, Diginex may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.

 

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Diginex’s trading orders may not be executed in a timely matter.

 

Diginex’s trading strategies depend on the ability to establish and maintain an overall market position in a combination of financial instruments. Diginex’s trading orders may not be executed in a timely and efficient manner because of various circumstances, including, for example, trading volume surges or systems failures attributable to Diginex or its counterparties, brokers, dealers, agents or other service providers. In such an event, Diginex might only be able to acquire or dispose of some, but not all, of the components of its positions, or if the overall positions were to need adjustments, Diginex might not be able to make such adjustments. As a result, Diginex would not be able to achieve its desired market position, which may result in a loss. In addition, Diginex can be expected to rely heavily on electronic execution systems (and may rely on new systems and technology in the future), which may be subject to certain systemic limitations or mistakes, causing the interruption of trading orders made by Diginex.

 

Diginex is exposed to losses due to lack of perfect information.

 

As a facilitation trader in Digital Assets, Diginex will trade in a variety of assets with a number of different counterparties. Diginex may at times trade with others who have information that is more accurate or complete than Diginex’s, and as a result Diginex may accumulate unfavorable positions at unfavorable prices preceding large price movements in a given instrument. If the frequency or magnitude of these events increases, Diginex’s losses would likely increase correspondingly, which could have a material and adverse effect on Diginex.

 

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Risks Related to the Investment Products Business

 

Regulatory authorities may never permit, or severely limit the ability of, Diginex to issue Investment Products.

 

Numerous regulatory authorities may need to permit Diginex to issue investment products. If any regulatory authority, or other authority whose permission is required, such as a stock exchange listing authority, objected to the investment products or to certain aspects of them, such regulatory authority could prevent the investment products from ever becoming issued in that jurisdiction. The regulatory landscape that Diginex needs to navigate in order to provide investment products is complex, extensive and changing, and Diginex may never be able to do so successfully.

 

Furthermore, laws and regulations may change over time. Therefore, even if Diginex were to acquire necessary approvals or licenses, an ongoing threat to Diginex’s business would remain that such permission to operate could be subsequently revoked or materially altered over time, which could have a material adverse effect on the Investment Products Business and its customers.

 

Competition will likely increase in investment products referencing Digital Assets.

 

While the Digital Asset industry is at an early stage, there are examples in several countries of securitized products or collective investment schemes being created in order to provide exposure to Digital Assets. These, as well as those companies who provide access to Digital Asset exchanges, including several significant exchanges, present competition to the Investment Products Business. Such competition is likely to grow as new entrants emerge, including large financial institutions such as investment banks, which have greater resources, technology and distribution channels than Diginex. Such increased competition could result in, among other things, the Investment Products Business losing market share, the emergence of superior products and to compression of margins, any of which could have a material adverse effect on the Investment Products Business’ business, financial condition and results of operations.

 

Diginex may be unable to establish distributor networks necessary to successfully grow the business.

 

A material component of the sales strategy of the Investment Products Business involves reaching agreements with distributors. There can be no guarantee that such distribution agreements will be executed and there is a risk that distributors reject Diginex’s proposals and/or do not wish to engage in the distribution of products linked to Digital Assets.

 

The failure to accurately describe investment products may lead to financial and regulatory exposure.

 

The business plan of the Investment Products Business will seek clients of varying expertise, including retail clients, to whom the greatest duty of care may be owed and to whom the greatest regulatory protection may be given. If an investment product is not described accurately or completely, either in print or orally, investors may not be able to make an informed decision as to the risk profile of the investment product, which may result in litigation, regulatory fines, investigations and restitution. Even if such inaccurate disclosure is alleged but not proven, the Investment Products Business and Diginex may face significant reputational damage as a result. Any of the above may have a material adverse effect on the business, financial condition and operations results of Diginex.

 

The Investment Products Business is subject to technology failure.

 

The Investment Products Business will utilize and rely on technology, and such technology is potentially subject to failure and errors. Applications are expected to be used to price products and if pricing models were inaccurate, products could be issued at prices considerably different to fair value, resulting in a loss to Diginex and/or potential harm to investors which could cause financial restitution to clients and potential regulatory sanctions and fines. There is also a risk for subsequent valuations of products being potentially inaccurate and/or a mis-estimation of the way in which such products should be risk managed and hedged. Furthermore, the investment products business intends to list products on various exchanges and some exchanges may require market making to ensure there is liquidity available to investors. Diginex would therefore require market making systems with a very high degree of automation, and, if such systems were to malfunction, Diginex could be in breach of various regulations and face fines as well as potentially having to compensate investors who may have suffered as a result. Such ‘market making’ activities would also include the issuance of new securities which requires automation and cohesive technology required to create the product and to automatically execute the underlying exposure in the correct way, which, if erroneous, could cause Diginex to be either under of over hedged in such a product and to potentially face resulting losses.

 

Risks Related to the Capital Markets Business

 

Diginex may be unable to establish issuer and investor networks necessary to successfully execute offerings.

 

The Capital Markets Business is being developed to assist issuers seeking to access global capital markets through issuing Digital Securities. To this end, the Capital Markets business will advise, issue and distribute offerings of Digital Securities from its clients to investors.

 

To be successful, Diginex will have to source offerings from clients and there can be no assurance that it will be able to do so. Thus far, there have been limited issuers willing to explore the possibility of making use of distributed ledger technology for their securities offerings. Furthermore, it will be important that the offerings Diginex assists on offer attractive terms and trustworthy clients, both to be able to execute the transactions and receive payments and to demonstrate the ability to use Digital Securities on high quality offerings that will be attractive to larger market participants.

 

Furthermore, Diginex will have to source investors to participate in offerings. There is still significant education required for investors on the potential of Digital Securities. There can be no assurance that, even if Diginex sources high quality offerings from issuers, it can source investors, particularly institutional investors, many of which have investment mandates that do not include Digital Securities, to purchase the Digital Securities offered.

 

If Diginex is not able to source either attractive offerings and/or investors to participate in them, it could have a material adverse effect on its business, results of operation and financial condition.

 

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The Capital Markets Business is highly dependent on the closing of offerings to produce revenue.

 

Placement agents, brokers, underwriters and other participants and advisors to issuers in the capital markets industry generally receive payment as a percentage of the total capital raised in an offering. Such fees are where the Capital Markets Business expects to make the majority of its revenue. As a result, successfully hitting revenue targets is highly dependent on a very small number of transactions closing, particularly in the near term as the Capital Markets Business is in its early stages. Failure to close offerings and receive fees could have a material adverse effect on Diginex’s business, results of operation and financial condition.

 

The development of Digital Securities poses technological and regulatory challenges and Diginex may not be able to successfully develop, market and launch such Tokens.

 

The development of Digital Securities requires significant technical expertise on the part of Diginex or its sub-contractors in order to be operational and secure. Diginex may not have or may not be able to obtain the technical skills, expertise, or regulatory approvals needed to successfully create or market Digital Securities. Even if successfully developed and created, Digital Securities may not meet investor expectations. Furthermore, Digital Securities may experience technical failures or fail to fulfil their primary goal.

 

Digital Securities may not be widely adopted and may have limited users.

 

It is possible that Digital Securities will not be used by a large number of issuers, broker-dealers or holders or that there will be limited public interest in the continued creation and development of Digital Securities. Such a lack of use or interest could negatively impact the Capital Markets Business.

 

Specific legal and regulatory risks exist in the provision of advice and assistance in regards to the issuance and distribution of Digital Securities that may give rise to claims against Diginex.

 

Providing advice and assistance in regards to the issuance and distribution of Digital Securities raises legal and regulatory risk in each of the jurisdictions that Diginex seeks to do business. The legal and regulatory landscape relating to offerings of Digital Securities is uncertain and subject to both change and inconsistencies. Such a challenging landscape could result in Diginex providing advice and service in jurisdictions where it has no a regulatory coverage to do so. Furthermore, Digital Securities may be distributed in jurisdictions or to investors that are not permitted to receive such Digital Securities pursuant to local laws.

 

In the near term, Diginex expects the key markets for its Capital Markets Business will include the following (with the related license that will be required to operate):

 

·Hong Kong (Type 1 Dealing in Securities License);
·Singapore (Capital Markets Services License); and
·UAE (DFSA Category 4 Investment Advisor).

 

If licenses are not obtained for the Capital Markets Business to provide its services in these jurisdictions, Diginex will seek to partner with local firms.

 

Diginex does not intend to effect any transactions in, nor induce or attempt to induce the purchase or sale of any security with any U.S. persons without ensuring that it is acting in compliance with U.S. laws relating to the offer and sale of securities. To the extent that in the future Diginex seeks to effect any transactions in, or induce or attempt to induce the purchase or sale of any security with any U.S. person, Diginex will either seek to register as a U.S. broker-dealer as required by Section 15(b) of the Exchange Act, or partner with a U.S. broker-dealer.

 

Risks Related to the Exchange Business

 

The development of the Exchanges poses financial, technological and regulatory challenges and Diginex may not be able to successfully develop, market and launch the Exchanges.

 

The Exchange Business is building two exchanges, the VCE and the DSE. The development of the Exchanges requires significant capital funding, expertise on the part of Diginex’s management and time and effort in order to be successful. For either of the Exchanges, Diginex may have to make changes to the specifications for any number of reasons or it may be unable to develop the Exchanges in a way that realizes those specifications or any form of a functioning network. The Exchanges, even if successfully developed and maintained, may not meet investor expectations. For example, there can be no assurance that the Exchanges will provide less expensive or more efficient trading than is possible on currently available trading platforms for traditional assets (or even other Digital Asset exchanges). Furthermore, the Exchanges may experience malfunctions or otherwise fail to be adequately developed or maintained, which may negatively impact the Exchanges and the assets being traded on the Exchanges.

 

There can be no guarantee that the Exchange Business by itself or together with Diginex’s other business lines will be able to produce sufficient cash flows to fund the capital requirements and expenditures necessary to run the Exchanges. Furthermore, Diginex may not have or may not be able to obtain the technical skills, expertise, or regulatory approvals needed to successfully develop the Exchanges. While Diginex has sought to retain and continues to competitively recruit experts, there may, from time to time, be a scarcity of management, technical, scientific, research and marketing personnel with appropriate training to develop and maintain development of the Exchanges. In addition, there are significant legal and regulatory considerations that will need to be addressed in order to develop and maintain the Exchanges and addressing such considerations will require significant time and resources. For example, the Exchanges will need systems in place to ensure the necessary KYC and AML checks are performed on both clients and digital wallets. There can be no assurance that Diginex will be able to develop the Exchanges in a way that fully achieves its goals and satisfies the complex regulatory requirements that will be applicable to it. If Diginex is not successful in its efforts to develop the Exchanges in a way that is compliant with all regulatory and legal requirements, and demonstrate to users the utility and value of such an exchange, or there is not sufficient demand for the Digital Assets required for the Exchanges to be commercially viable, the Exchange Business may not be viable, which could have an adverse effect on the Diginex’s business, financial condition and results of operations.

 

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Regulatory authorities may never permit the Exchanges to become operational.

 

Numerous regulatory authorities may need to permit the Exchanges to become operational. If any regulatory authority objected to the Exchanges or to certain aspects of them, such regulatory authority could prevent the Exchanges from ever becoming operational, or continuing to operate, in that jurisdiction. The regulatory landscape that Diginex needs to navigate is complex, extensive and changing, and Diginex may never be able to do so successfully.

 

Regulatory authorities may not permit the Exchanges to list certain products.

 

Diginex intends to develop multiple products and to make such products available on the Exchanges. Regulatory authorities may not permit the Exchanges to list certain products or may restrict the markets or demographics to which products can be offered (e.g. to restrict retail customer involvement). Such restrictions may adversely impact projected revenues. Additionally, should products be inadvertently offered in jurisdictions where regulatory approval is required and where no such approval has been received, regulatory action may be taken against Diginex.

 

Digital Asset exchanges may not be widely adopted and may have limited users.

 

It is possible that Digital Asset exchanges will not be used by a large number of issuers, broker-dealers or holders of Digital Assets or that there will be limited public interest in the continued creation and development of Digital Asset exchanges. Such a lack of use or interest could negatively impact the volatility of the Exchanges.

 

Alternative Digital Asset exchanges may be established that compete with or are more widely used than the Exchanges.

 

It is possible that Digital Asset exchanges could be established that utilize the same or similar protocols as those underlying the Exchanges or that facilitate services that are materially similar to the services provided by the Exchanges. The Exchanges may face competition from any such alternative networks, which could negatively impact the Exchanges and have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

There are already several Virtual Currency exchanges that the VCE will compete with. If the VCE is unable to offer features that differentiate it from such competitors, or such competitors create pricing pressure that results in lower-than-anticipated revenues, the VCE may not be viable, which could have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

The Exchanges, and any distributed ledger technology on which they rely, may be the target of cyber-attacks or may contain exploitable flaws in its underlying code, which may result in security breaches and the loss or theft of Digital Assets that trade on the Exchanges. If such attacks occur or security is compromised, this could expose Diginex to liability and reputational harm, could seriously curtail the utilization of Digital Assets, cause a decline in the market price of the affected Digital Assets and result in claims against Diginex.

 

The Exchanges, their structural foundation, and the software applications and other interfaces or applications upon which they will rely (including distributed ledger technology), are unproven, and there can be no assurances that the Exchanges and the creation, transfer or storage of Digital Assets on those system will be uninterrupted or fully secure, which may result in impermissible transfers, a complete loss of investors’ Digital Assets on those systems or an unwillingness of market participants to access, adopt and utilize Digital Assets or the Exchanges. Further, the Exchanges and any technology, including distributed ledger technology, on which they rely may also be the target of cyber-attacks (such as “double-spend” attacks or “51%” attacks) seeking to identify and exploit weaknesses, which may result in the loss or theft of Digital Assets, which, in turn, may materially and adversely affect the adoption and success of the Exchanges and Diginex. Any of these risks could have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

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The unregulated nature and lack of transparency surrounding the operations of some Digital Asset exchanges may cause the marketplace to lose confidence in such exchanges.

 

Digital Asset exchanges are relatively new and, in some cases, unregulated. Furthermore, while some exchanges provide information regarding their ownership structure, management teams, corporate practices and regulatory compliance, many other exchanges do not. As a result, the marketplace may lose confidence in the less transparent or unregulated exchanges, including prominent exchanges that handle a significant volume of trading in Digital Assets. In recent years, there have been a number of Digital Asset exchanges that have closed because of fraud, business failure or security breaches. Additionally, larger Digital Asset exchanges have been targets for hackers and malware and may be targets of regulatory enforcement actions. A lack of stability in these exchange markets and the temporary or permanent closure of such exchanges may reduce confidence in the Digital Asset marketplace in general and result in greater volatility in the price of Digital Assets. These potential consequences could materially and adversely affect the adoption and success of the Exchanges.

 

Risks Related to Digivault

 

Development of a Digital Assets custody business poses financial, technological and regulatory challenges and Diginex may not be able to successfully develop and market the custody solutions.

 

The continued development of the custody solutions (Kelvin and Helios), which have now launched, requires significant capital funding, expertise on the part of Diginex’s management and time and effort in order to be successful. Digivault may have to make changes to the specifications of the custody solutions for any number of reasons and it may be unable to further develop the service in a way that realizes those specifications. The custody solutions, even if successfully developed and maintained, may not meet investor expectations. For example, there can be no assurance that the custody solutions will provide less expensive or more efficient services than are currently available for traditional assets (or even other Digital Assets). Furthermore, the custody solutions may experience malfunctions or otherwise fail to be adequately developed or maintained, which may negatively impact the Digital Assets being held.

 

There can be no assurance that Digivault by itself or together with Diginex’s other business lines will be able to produce sufficient cash flows to fund the ongoing capital requirements and expenditures necessary to run the custody solutions. Digivault may not have or may not be able to obtain the technical skills, expertise, or regulatory approvals needed to successfully further develop the custody solutions. While Diginex has sought to retain and continues to competitively recruit experts, there may, from time to time, be a scarcity of management, technical, scientific, research and marketing personnel with appropriate training to develop and maintain the custody solutions. In addition, there are significant legal and regulatory considerations that will need to be addressed in order to develop and maintain the custody solutions, and addressing such considerations will require significant time and resources. Despite launching both Kelvin and Helios, there can be no assurance that Digivault will be able to develop the custody solutions in such a way as to fully achieves its goals and satisfy the complex regulatory requirements that are applicable to them and acquire the necessary licenses to operate. If Diginex is not successful in its efforts to develop and maintain the custody solutions in ways that are compliant with all regulatory and legal requirements, and demonstrate to users the utility and value of such a service, or if there is not sufficient demand for the custody solutions for them to be commercially viable, Digivault may not be feasible, which could have a material adverse effect on Diginex’s business, financial condition and results of operations.

 

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Numerous Regulatory authorities may never permit the custody solutions to become operational.

 

Numerous regulatory authorities may need to permit the custody solutions to become operational. If any regulatory authority objected to the custody solutions or to certain aspects of them, such regulatory authority could prevent them from ever becoming operational in that jurisdiction. The regulatory landscape that Diginex needs to navigate in order to run a viable Digital Asset custody business is complex, extensive and changing and Digivault may never be able to do so successfully. Any such regulatory issues including fines or injunctions from regulatory, could have a material adverse impact on Diginex’s business, financial condition and results of operations.

 

The custody solutions may not be widely adopted and may have limited users.

 

It is possible that the custody solutions will not be used by a large number of holders of Digital Assets or that there will be limited public interest in the continued creation and development of Digital Asset custody services. Such a lack of use or interest may result in insufficient demand for the custody solutions to be commercially viable, which could have an adverse effect on Diginex’s business, financial condition and results of operation.

 

The custody solutions, and any distributed ledger technology on which they rely, may be the target of cyber-attacks or may contain exploitable flaws in their underlying code, which may result in security breaches and the loss or theft of Digital Assets that are held or deposited. If such attacks occur or Digivault’s security is compromised, Digivault could be exposed to liability and reputational harm, and such attacks could seriously curtail the utilization of Digital Assets and cause a decline in the market price of the affected Digital Assets which could result in claims against Digivault.

 

The custody solutions, their structural foundation, and the software applications and other interfaces or applications upon which they rely (including distributed ledger technology), are unproven, and there can be no assurances that the custody solutions are or will be fully secure, which may result in a complete loss of investors’ Digital Assets and an unwillingness of market participants to access, adopt and utilize Digital Assets or the custody solutions. Examples of the above include, but are not limited to:

 

  a cyber-attack causing a client withdrawal instruction or a withdrawal address being altered;
     
  a client receiving an incorrect deposit address;
     
  hardware failures delaying or preventing deposits and withdrawals;
     
  the tampering or spoofing of client instructions and materials;
     
  deposit addresses being incorrectly stored;
     
  the hacking or unavailability of client portals rendering clients unable to access their account;
     
  vulnerabilities within the applicable distributed ledger code arising or the distributed ledger being manipulated by a malicious actor;
     
  a cyber-attack causing the individual to lose otherwise valid credentials;
     
  the tampering with of laptop codes to cause withdrawals to incorrect withdrawal addresses; and
     
  bad acts by employees, third-party service providers and others.

 

While Digivault has taken, and will continue to take, steps to ensure that the custody solutions are secure and protected against such incidents, no assurance can be given that the custody solutions are or will be fully secure and protected from attack, and any failure in this regard could materially and adversely affect Diginex’s business, financial condition and results of operations.

 

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There can be no guarantee that Digivault will be able to acquire necessary insurance coverage or that it will be able to offer insurance to its clients.

 

The failure of Digivault to secure insurance cover may have an adverse effect on its ability to attract clients and hence reduce its revenue generating abilities.

 

Risks Related to Taxation

 

The tax treatment of Digital Assets is unclear.

 

The treatment of Digital Assets under the tax laws of the jurisdictions in which Diginex does business is unclear. The operations and dealings of Diginex, in or in connection with Digital Assets, could be subject to adverse tax consequences in one or more jurisdictions, including as a result of development of the legal regimes surrounding Digital Assets, and Diginex’s operating results could be adversely affected thereby.

 

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Risk Factors Relating to JFK’s Business

 

JFK will be forced to liquidate the trust account if it cannot consummate a business combination within 15 months from the closing of the IPO (or 18 months, as previously described), JFK’s public shareholders will receive USD $10.00 per share and the JFK rights will expire worthless.

 

If JFK is unable to complete a business combination within 15 months from the closing of the IPO (or up 18 months, as previously described), and is forced to liquidate, the per-share liquidation distribution will be USD$10.00, plus interest earned on amounts held in trust that have not been used to pay for taxes. Furthermore, there will be no distribution with respect to the JFK rights, which will expire worthless as a result of JFK’s failure to complete a business combination.

 

JFK’s independent registered public accounting firm, UHY’s, report contains an explanatory paragraph that expresses substantial doubt about JFK’s ability to continue as a “going concern.”

 

As of January 31, 2020, JFK had $28,759 in cash and a working capital deficiency of $686,532. UHY’s report on our financial statements includes an explanatory paragraph stating that our ability to continue as a going concern is dependent on the consummation of a business combination before June 30, 2020. The financial statements do not include any adjustments that might result from our inability to consummate the Business Combination. There is no assurance that the Reincorporation Merger and the Share Exchange will be approved by the JFK shareholders at the Meeting. If the Proposals are not approved, the Business Combination may not be consummated. These factors raise substantial doubt about our ability to continue as a going concern.

 

You must tender your JFK ordinary shares in order to validly seek redemption at the Meeting.

 

In connection with tendering your shares for redemption, you must elect either to physically tender your share certificates to JFK’s transfer agent by two (2) business days before the Meeting, or deliver your ordinary shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, which election would likely be determined based on the manner in which you hold your ordinary shares. The requirement for physical or electronic delivery by two (2) business days before the Meeting ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is consummated. Any failure to observe these procedures will result in your loss of redemption rights in connection with the vote on the Business Combination.

 

A JFK shareholder who elects to dissent under Section 179 of the BVI BC Act and validly exercises its entitlement to payment of the fair value of the JFK ordinary shares it holds following the procedures set forth above will not be entitled to have its JFK ordinary shares redeemed. If a JFK shareholder has elected to have its JFK ordinary shares redeemed but later elects to dissent, upon receipt of the written notice of such a JFK shareholder’s decision to elect to dissent, JFK shall instruct its transfer agent to return the JFK ordinary shares (physically or electronically) delivered to the transfer agent in connection with such JFK shareholder’s demand for redemption to the JFK shareholder.

 

If third parties bring claims against JFK, the proceeds held in trust could be reduced and the per-share liquidation price received by JFK’s shareholders may be less than USD$10.00.

 

JFK’s placing of funds in trust may not protect those funds from third party claims against JFK. Although JFK has received from many of the vendors, service providers (other than its independent accountants) and prospective target businesses with which it does business executed agreements waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of JFK’s public shareholders, they may still seek recourse against the trust account. Additionally, a court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of JFK’s public shareholders. If JFK liquidates the trust account before the completion of a business combination and distributes the proceeds held therein to its public shareholders, James Tan, JFK’s Chief Executive Officer and President, has contractually agreed that he will be liable to ensure that the proceeds in JFK’s trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, JFK cannot assure you that they will be able to meet such obligation. Therefore, the per-share distribution from the trust account for our shareholders may be less than USD$10.00 due to such claims.

 

Additionally, if JFK is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in JFK’s bankruptcy estate and subject to the claims of third parties with priority over the claims of its shareholders. To the extent any bankruptcy claims deplete the trust account, JFK may not be able to return USD$10.00 to JFK’s public shareholders.

 

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Any distributions received by JFK shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, JFK was unable to pay its debts as they fell due in the ordinary course of business and the value of its assets does not exceed its liabilities.

 

JFK’s Amended and Restated Memorandum and Articles of Association provide that it will continue in existence only until September 30, 2020 (assuming the deadline for consummation is extended in accordance with the Amended and Restated Memorandum and Articles of Association). If JFK is unable to consummate a transaction within the required time period, upon notice from JFK, the trustee of the trust account will distribute the amount in its trust account to its public shareholders. Concurrently, JFK shall pay, or reserve for payment, from funds not held in trust, its liabilities and obligations, although JFK cannot assure you that there will be sufficient funds for such purpose. If there are insufficient funds held outside the trust account for such purpose, James Tan, JFK’s Chief Executive Officer and President, contractually agreed that, if it liquidates prior to the consummation of a business combination, he 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 JFK for services rendered or contracted for or products sold to it, but only if such a vendor or prospective target business does not execute such a waiver. However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or shareholder will not file a petition with the British Virgin Islands court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of JFK’s assets to its public shareholders.

 

Thereafter, JFK’s sole business purpose will be to voluntarily liquidate and dissolve in accordance with British Virgin Islands law. In such a situation under British Virgin Islands law, a liquidator would be appointed and, subject to the terms of the required plan of liquidation, the liquidator would give at least 21 days’ notice to creditors of his intention to make a distribution by notifying known creditors (if any) and by placing a public advertisement in the appropriate newspaper in the British Virgin Islands. However, in practice the procedure to be followed by the liquidator will be subject to the terms of the plan of liquidation and the memorandum and articles of association of the company and the mentioned notice may not necessarily delay the distribution of assets particularly if the liquidator is satisfied that no creditors would be adversely affected as a consequence of a distribution before this time period has expired. In practice, as soon as the affairs of the company are fully-wound up, the liquidator would normally lay a final report and accounts before a final general meeting. Upon completion of a voluntary liquidation, the liquidator must file a statement that the liquidation has been completed with the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”) and thereafter the company will be dissolved on the date of the certificate issued by the Registrar. It is JFK’s intention to liquidate the trust account to its public shareholders as soon as reasonably possible and JFK’s insiders have agreed to take any such action necessary to liquidate the trust account and to dissolve the company as soon as reasonably practicable if JFK does not complete a business combination within the required time period. Pursuant to JFK’s Amended and Restated Memorandum and Articles of Association, failure to consummate a business combination by September 30, 2020 will trigger an automatic winding up of the company.

 

If at any time the voluntary liquidator of a company in voluntary liquidation is of the opinion that the company is insolvent (that is to say, either the value of the company’s liabilities exceeds, or will exceed, its assets or, the company is, or will be, unable to pay its debts as they fall due), he shall forthwith send a written notice to the British Virgin Islands Official Receiver in the approved form. The voluntary liquidator shall then call a meeting of creditors of the company to be held within twenty-one days of the date of the aforesaid notice to the Official Receiver. The said creditors’ meeting shall be treated as if it were the first meeting of the creditors of a company called under section 179 of the Insolvency Act, 2003 of the British Virgin Islands (as the same may be amended from time to time, “Insolvency Act”) by a liquidator appointed by the members of a company and sections 179 and 180 of the Insolvency Act shall apply to the calling and holding of such a meeting.

 

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Where a voluntary liquidator is not an eligible licensed insolvency practitioner with respect to the company, the Official Receiver may apply to the British Virgin Islands High Court ex parte for the appointment of himself or an eligible licensed insolvency practitioner as the liquidator of the company and the court may make the appointment subject to such conditions as it considers appropriate. From the time that a voluntary liquidator appointed first becomes aware that the company is not, or will not be, able to pay its debts he shall conduct the liquidation as if he had been appointed liquidator under the Insolvency Act. The Insolvency Act will apply to the liquidation of the company subject to such modifications as are appropriate and the liquidation of the company shall be deemed to have commenced on the date of the appointment of the voluntary liquidator. If JFK is deemed insolvent, then there are also circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act if it was proved that immediately following the date on which the distribution was made, JFK was unable to pay its debts as they fall due in the ordinary course of business. A voidable transaction would be, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part. Furthermore, JFK’s directors may be viewed as having breached their fiduciary duties to JFK or JFK’s creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. JFK cannot assure you that claims will not be brought against JFK for these reasons.

 

If JFK is forced to enter into an insolvent liquidation, any distributions received by JFK shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, JFK was unable to pay its debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by JFK’s shareholders. Furthermore, JFK’s Board of Directors may be viewed as having breached its fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and JFK to claims of damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. JFK cannot assure you that claims will not be brought against it for these reasons.

 

If JFK’s due diligence investigation of Diginex was inadequate, then shareholders of JFK following the Business Combination could lose some or all of their investment.

 

Even though JFK conducted a due diligence investigation of Diginex, it cannot be sure that this diligence uncovered all material issues that may be present inside Diginex or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Diginex and its business and outside of its control will not later arise.

 

The Sponsor and Enterprises collectively own JFK ordinary shares and JFK Units and will not participate in liquidation distributions and, therefore, the Sponsor may have a conflict of interest in determining whether the Business Combination is appropriate.

 

The Sponsor and Enterprises own 1,437,500 JFK ordinary shares and 240,000 JFK Units respectively. They have waived their right to redeem these shares, or to receive distributions with respect to these shares upon the liquidation of the trust account if JFK is unable to consummate a business combination. Accordingly, the JFK ordinary shares purchased by our Sponsor, as well as the JFK Units purchased by Enterprises, will be worthless if JFK does not consummate a business combination. Based on a market price of USD$10.[●] per ordinary share of JFK on [●], 2020 and USD$10.[●] per JFK Unit on [●], 2020, the value of the JFK ordinary shares and JFK Units was approximately USD$[●]. The JFK ordinary shares acquired prior to the IPO, as well as the JFK Units will be worthless if JFK does not consummate a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting Diginex as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in JFK’s shareholders’ best interest.

 

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JFK is requiring shareholders who wish to redeem their ordinary shares in connection with the Business Combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

 

JFK is requiring public shareholders who wish to redeem their ordinary shares to either tender their certificates to JFK’s transfer agent or deliver their shares to the transfer agent electronically using the Depository Trust Company’s, or DTC, DWAC (Deposit/Withdrawal At Custodian) System two (2) business days before the Meeting. In order to obtain a physical certificate, a shareholder’s broker and/or clearing broker, DTC and JFK’s transfer agent will need to act to facilitate this request. It is JFK’s understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because JFK does not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While JFK has been advised that it takes a short time to deliver shares through the DWAC System, JFK cannot assure you of this fact. Accordingly, if it takes longer than JFK anticipates for shareholders to deliver their ordinary shares, shareholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their ordinary shares.

 

JFK will require its public shareholders who wish to redeem their ordinary shares in connection with the Business Combination to comply with specific requirements for redemption described above, such redeeming shareholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

 

If JFK requires public shareholders who wish to redeem their ordinary shares in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the Business Combination is not consummated, JFK will promptly return such certificates to its public shareholders. Accordingly, investors who attempted to redeem their ordinary shares in such a circumstance will be unable to sell their securities after the failed acquisition until JFK has returned their securities to them. The market price for JFK’s ordinary shares may decline during this time and you may not be able to sell your securities when you wish to, even while other shareholders that did not seek redemption may be able to sell their securities.

 

The Sponsor controls a substantial interest in JFK and thus may influence certain actions requiring a shareholder vote.

 

The Sponsor and Enterprises collectively own approximately 22.6% of its issued and outstanding ordinary shares. However, if a significant number of JFK shareholders vote, or indicate an intention to vote, against the Business Combination, the Sponsor or its affiliates, could make such purchases in the open market or in private transactions in order to influence the vote. The Sponsor and its affiliates have agreed to vote any shares they own in favor of the Business Combination.

 

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If the current JFK’s security holders exercise their registration rights with respect to their securities after the Business Combination, it may have an adverse effect on the market price of Singapore NewCo’s securities.

 

As a condition to the closing of the Business Combination, Singapore NewCo, JFK, the Sponsor and Enterprises agreed that Singapore NewCo will execute an Amended and Restated Registration Rights Agreement, pursuant to which, among other things, Singapore NewCo will assume all the rights, duties, obligations, benefits, interest, duties and liabilities of JFK in, to and under the Sponsor Registration Rights Agreement. Holders of a majority of the Sponsor Registrable Securities are entitled to make up to two demands that Singapore NewCo register the Sponsor Registrable Securities. Holders of a majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which the insider shares are to be released from escrow. The holders of a majority of the Private Units and securities issuable upon conversion of the Notes can elect to exercise these registration rights at any time after JFK consummates a business combination. If such persons exercise their registration rights with respect to all of their securities, then there will be an additional 1,901,500 Singapore NewCo Ordinary Shares eligible for trading in the public market. The presence of these additional ordinary trading in the public market may have an adverse effect on the market price of Singapore NewCo Ordinary Shares after the consummation of the Business Combination.

 

JFK will not obtain an opinion from an unaffiliated third party as to the fairness of the Business Combination to its shareholders.

 

JFK is not required to obtain an opinion from an unaffiliated third party that the price it is paying is fair to its public shareholders from a financial point of view. JFK’s public shareholders, therefore, must rely solely on the judgment of JFK’s Board of Directors.

 

If the Business Combination’s benefits do not meet the expectations of financial or industry analysts, the market price of Singapore NewCo’s securities may decline after the Business Combination.

 

The market price of Singapore NewCo’s securities may decline as a result of the Business Combination if:

 

  Singapore NewCo does not achieve the perceived benefits of the acquisition as rapidly as, or to the extent anticipated by, financial or industry analysts; or
     
  The effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts.

 

Accordingly, investors may experience a loss as a result of decreasing stock prices.

 

JFK’s directors and officers may have certain conflicts in determining to recommend the acquisition of Diginex, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a shareholder.

 

JFK’s management and directors have interests in and arising from the Business Combination that are different from, or in addition to, your interests as a shareholder, which could result in a real or perceived conflict of interest. These interests include the fact that certain of the JFK’s ordinary shares owned by JFK’s management and directors, or their affiliates and associates, would become worthless if the Business Combination is not approved and JFK otherwise fails to consummate a Business Combination prior to its liquidation.

 

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Legislation enacted in the British Virgin Islands as to Economic Substance may affect JFK’s operations

 

Pursuant to the Economic Substance (Companies and Limited Partnerships) Act, 2018 of the British Virgin Islands (“BVI ES Act”) that came into force on 1 January 2019, a “legal entity” (which includes a business company incorporated in the British Virgin Islands but does not include an entity that is resident for tax purposes outside the British Virgin Islands in a jurisdiction that is not on the European Union’s list of non-cooperative jurisdictions for tax purposes) carrying on any “relevant activity” is required to satisfy the economic substance test as set out in the BVI ES Act. The BVI ES Act may require in-scope British Virgin Islands business companies which are engaged in any “relevant activity” to be directed and managed in the British Virgin Islands, have an adequate number of qualified employees in the British Virgin Islands, incur an adequate level of expenditure in the British Virgin Islands, maintain physical offices or premises in the British Virgin Islands and perform core income-generating activities in the British Virgin Islands. The list of “relevant activities” includes the carrying on as a business of any one or more of banking business, insurance business, fund management business, finance and leasing business, distribution and service centre business, shipping business, holding business, intellectual property business and headquarters business.

 

Based on the BVI ES Act currently, and to the extent that we are carrying on “holding business” on a passive basis, we may be subject to more limited substance requirements. However, as the legislation is new and remains subject to further clarification and interpretation, it is not currently possible to ascertain the precise impact of the BVI ES Act on us.

 

To the extent that we are required to increase our economic substance in the British Virgin Islands to satisfy the requirements as set out in the BVI ES Act, it could result in additional costs that could adversely affect our financial condition or results of our operations.

 

In the event that we are required to have economic substance in the British Virgin Islands according to the BVI ES Act but fail to satisfy such requirements, we may initially be liable to financial and other penalties in accordance with the BVI ES Act.

 

Risk Factors Relating to the Business Combination

 

JFK and Diginex have incurred and expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by JFK if the Business Combination is completed or by JFK if the Business Combination is not completed.

 

JFK and Diginex expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, JFK expects to incur approximately USD$1.1 million in expenses. These expenses will reduce the amount of cash available to be used for other corporate purposes by JFK if the Business Combination is completed or by JFK if the Business Combination is not completed.

 

In the event that a significant number of JFK’s ordinary shares are redeemed, the Singapore NewCo Ordinary Shares may become less liquid following the Business Combination.

 

If a significant number of JFK’s ordinary shares are redeemed, Singapore NewCo may be left with a significantly smaller number of shareholders. As a result, trading in the shares of Singapore NewCo following the Business Combination may be limited and your ability to sell your shares in the market could be adversely affected.

 

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JFK may waive one or more of the conditions to the Business Combination without resoliciting shareholder approval for the Business Combination.

 

JFK may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The JFK Board of Directors will evaluate the materiality of any waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is warranted. In some instances, if the JFK Board of Directors determines that a waiver is not sufficiently material to warrant resolicitation of shareholders, JFK has the discretion to complete the Business Combination without seeking further shareholder approval. For example, it is a condition to JFK’s obligations to close the Business Combination that there be no restraining order, injunction or other order restricting Diginex’s conduct of its business, however, if the JFK Board of Directors determines that any such order or injunction is not material to the business of Diginex, then the JFK Board of Directors may elect to waive that condition and close the Business Combination.

 

There will be a substantial number of Singapore NewCo Ordinary Shares available for sale in the future that may adversely affect the market price of Singapore NewCo Ordinary Shares.

 

Singapore NewCo may issue such number of shares as may be approved by its shareholders and authorized by its directors, in accordance with the terms of its constitution. The shares to be issued in the Share Exchange to the Sellers, will be subject to certain restrictions on sale and cannot be sold for six months from the date of the Business Combination for those shareholders owning less than 2.5% of the Singapore NewCo Ordinary Shares after the Business Combination, and twelve months from the date of the Business Combination for those shareholders owning 2.5% or more of the Singapore NewCo Ordinary Shares after the Business Combination. In addition, the 1,437,500 JFK ordinary shares held by our Sponsor that are currently in an escrow account will be released and available for sale as early as six months from the date of the Business Combination. After the expiration of this restricted period, there will then be an additional 1,437,500 shares that are eligible for trading in the public market. The availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of Singapore NewCo’s Ordinary Shares.

 

JFK’s shareholders will experience immediate dilution as a consequence of the issuance of Singapore NewCo Ordinary Shares as consideration in the Business Combination. Having a minority share position may reduce the influence that JFK’s current shareholders have on the management of JFK.

 

After the Business Combination, assuming (i) there are no redemptions of our public shares and no Dissenting Shares, and (ii) there is no exercise of the Singapore NewCo Warrants or the Singapore NewCo Options, JFK’s current public shareholders will own approximately 18.1% of Singapore NewCo, JFK’s current directors, officers and affiliates will own approximately 5.3% of Singapore NewCo, and the Sellers will own approximately 71.4% of Singapore NewCo. Assuming redemption by holders of 4,116,564 JFK’s outstanding ordinary shares, JFK’s current public shareholders will own approximately 7.1% of Singapore NewCo, JFK’s current directors, officers and affiliates will own approximately 6.0% of Singapore NewCo, and the Sellers will own approximately 80.8% of Singapore NewCo. The minority position of the former JFK shareholders will give them limited influence over the management and operations of the post-Business Combination company.

 

JFK may be or may have been a passive foreign investment company (“PFIC”) during a U.S. Holder’s holding period.

 

If JFK is a PFIC or has been a PFIC during a U.S. Holder’s holding period, such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences as a result of the Reincorporation Merger. There is no assurance that JFK is not currently or has not been a PFIC during a U.S. Holder’s holding period. If (a) JFK has been a PFIC for any taxable year during the holding period of a U.S. Holder (and a U.S. Holder of JFK ordinary shares, JFK Rights, or JFK Warrants has not made certain elections with respect to its JFK ordinary shares, JFK Rights, or JFK Warrants), and (b) Singapore NewCo is not a PFIC in the taxable year of the Business Combination, such U.S. Holder would likely recognize gain (but not loss if the Reincorporation Merger qualifies as a reorganization) upon the exchange of JFK ordinary shares, JFK Rights, and JFK Warrants, as applicable, for Singapore NewCo Ordinary Shares or Singapore NewCo Warrants pursuant to the Business Combination. Please see the section titled “Material U.S. Federal Income Tax Consequences of the Business Combination — U.S. Federal Income Tax Consequences of the Business Combination to U.S. Holders — Passive Foreign Investment Company Status” for a more detailed discussion with respect to JFK’s potential PFIC status and certain tax implications thereof.

 

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Risks Relating to Singapore NewCo

 

If Singapore NewCo ceases to qualify as a foreign private issuer, it would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and it would incur significant additional legal, accounting and other expenses that it would not incur as a foreign private issuer.

 

As a foreign private issuer, Singapore NewCo will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and its officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, it will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and it will not be required to disclose in its periodic reports all of the information that United States domestic issuers are required to disclose. If it ceases to qualify as a foreign private issuer in the future, it would incur significant additional expenses that could have a material adverse effect on its results of operations.

 

Because Singapore NewCo is a foreign private issuer and is exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if it were a domestic issuer.

 

Singapore NewCo’s status as a foreign private issuer exempts it from compliance with certain Nasdaq corporate governance requirements if it instead complies with the statutory requirements applicable to a Singapore company. The statutory requirements of Singapore NewCo’s home country of Singapore, do not strictly require a majority of its board to consist of independent directors. Thus, although a director must act in the best interests of Singapore NewCo, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management the company may decrease as a result. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to have an independent compensation committee with a minimum of two members, a nominating committee, and an independent audit committee with a minimum of three members. Singapore NewCo, as a foreign private issuer, with the exception of needing an audit committee composed solely of at least one independent member, is not subject to these requirements. The Nasdaq Listing Rules may also require shareholder approval for certain corporate matters that Singapore NewCo’s home country’s rules do not. Following Singapore governance practices, as opposed to complying with the requirements applicable to a U.S. company listed on Nasdaq, may provide less protection to you than would otherwise be the case.

 

Although as a Foreign Private Issuer Singapore NewCo is exempt from certain corporate governance standards applicable to US domestic issuers, if Singapore NewCo cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of Nasdaq, Singapore NewCo’s securities may not be listed or may be delisted, which could negatively impact the price of its securities and your ability to sell them.

 

Singapore NewCo will seek to have its securities approved for listing on Nasdaq in connection with the Business Combination. Singapore NewCo cannot assure you that it will be able to meet those initial listing requirements at that time. Even if Singapore NewCo’s securities are listed on Nasdaq, it cannot assure you that its securities will continue to be listed on Nasdaq.

 

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In addition, following the Business Combination, in order to maintain its listing on Nasdaq, Singapore NewCo will be required to comply with certain rules of Nasdaq, including those regarding minimum shareholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if Singapore NewCo initially meets the listing requirements and other applicable rules of Nasdaq, Singapore NewCo may not be able to continue to satisfy these requirements and applicable rules. If Singapore NewCo is unable to satisfy Nasdaq criteria for maintaining its listing, its securities could be subject to delisting.

 

If Nasdaq does not list Singapore NewCo’s securities, or subsequently delists its securities from trading, Singapore NewCo could face significant consequences, including:

 

  a limited availability for market quotations for its securities;
  reduced liquidity with respect to our securities;
  a determination that its ordinary shares is a “penny stock,” which will require brokers trading in our Ordinary Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Shares;
  limited amount of news and analyst coverage; and
  a decreased ability to issue additional securities or obtain additional financing in the future.

 

Singapore NewCo is incorporated in Singapore and its shareholders may have more difficulty in protecting their interests than they would as shareholders of a corporation incorporated in the United States.

 

The corporate affairs of Singapore NewCo are governed by its constitution and by the laws governing corporations incorporated in Singapore. The rights of the shareholders of Singapore NewCo and the responsibilities of the members of the board of directors under Singapore law are different from those applicable to a corporation incorporated in the United States and, therefore, the shareholders of Singapore NewCo may have more difficulty protecting their interests in connection with actions by the management or members of the board of directors than they would as shareholders of a corporation incorporated in the United States.

 

In addition, only persons who are registered as shareholders in the shareholder register of Singapore NewCo are recognized under Singapore law as shareholders of Singapore NewCo. Only registered shareholders have legal standing to institute shareholder actions against Singapore NewCo or otherwise seek to enforce their rights as shareholders. Investors in the shares of Singapore NewCo who are not specifically registered as shareholders in its shareholder register (for example, where such shareholders hold shares indirectly through the Depository Trust Company) are required to become registered as shareholders in the shareholder register of Singapore NewCo in order to institute or enforce any legal proceedings or claims in the Singapore courts against Singapore NewCo, its directors or its executive officers relating to shareholder rights. Holders of book-entry interests in the shares of Singapore NewCo may become registered shareholders by exchanging their book-entry interests in the shares of Singapore NewCo for certificated shares and being registered in the shareholder register of Singapore NewCo. Such process could result in administrative delays which may be prejudicial to any legal proceeding or enforcement action.

 

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Singapore NewCo is a Singapore company, and because the rights of shareholders under Singapore law differ from those under U.S. law, you may have difficulty in enforcing any judgment obtained in the United States against Singapore NewCo or its affiliates.

 

Singapore NewCo’s corporate affairs are governed by its constitution and by the applicable laws governing corporations incorporated in Singapore. The rights of Singapore NewCo shareholders and the responsibilities of members of its board of directors under Singapore law are different from those applicable to a corporation incorporated in the United States and, therefore, Singapore NewCo shareholders may have more difficulty protecting their interests in connection with actions by the management or members of the board of directors than they would as shareholders of a corporation incorporated in the United States.

 

All of Singapore NewCo’s directors and senior management reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Singapore NewCo or any of these persons or to enforce in the United States any judgment obtained in the U.S. courts against Singapore NewCo or any of these persons, including judgments based upon the civil liability provisions of the U.S. federal securities laws or the laws of any state or territory of the United States.

 

There is no treaty between the United States and Singapore providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters and a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the federal securities laws, would, therefore, not be automatically enforceable in Singapore. It is not clear whether a Singapore court may impose civil liability on Singapore NewCo or Singapore NewCo’s directors and officers in a suit brought in the Singapore courts against Singapore NewCo or such persons with respect to a violation solely of the federal securities laws of the United States.

 

Singapore NewCo is subject to the laws of Singapore, which differ in certain material respects from the laws of the United States.

 

As a company incorporated under the laws of the Republic of Singapore, Singapore NewCo is required to comply with the laws of Singapore, certain of which are capable of extraterritorial application, as well as Singapore NewCo’s constitution. In particular, Singapore NewCo is required to comply with certain provisions of the Securities and Futures Act, (Cap 289) of Singapore (the “Singapore Securities and Futures Act”), which prohibit certain forms of market conduct and information disclosures, and impose criminal and civil penalties on corporations, directors and officers in respect of any breach of such provisions. Singapore NewCo is also required to comply with the Singapore Code on Take-Overs and Mergers (the “Singapore Code”), which specifies, among other things, certain circumstances in which a general offer is to be made upon certain change in effective control situation(s) as defined within the Singapore Code, and further specifies the manner and price at which voluntary and mandatory general offers are to be made. The laws of Singapore and of the United States differ in certain significant respects. The rights of Singapore NewCo’s shareholders and the obligations of its directors and officers under Singapore law are different from those applicable to a company incorporated in the United States in material respects, and Singapore NewCo’s shareholders may have more difficulty and less clarity in protecting their interests in connection with actions taken by Singapore NewCo’s management, directors or controlling shareholders than would otherwise apply to a company incorporated in the United States. See “Comparison of Shareholder Rights” for a discussion of differences between Singapore and U.S. corporation law.

 

In addition, the application of Singapore law, in particular, the Companies Act, (Cap. 50) of Singapore (the “Singapore Companies Act”), may in certain circumstances impose more restrictions on Singapore NewCo and its shareholders, directors and officers than would otherwise be applicable to a company incorporated in the United States. For example, the Singapore Companies Act requires directors to act with a reasonable degree of diligence and, in certain circumstances, imposes criminal liability for specified contraventions of particular statutory requirements or prohibitions.

 

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In addition, pursuant to the provisions of the Singapore Companies Act, shareholders holding 10% or more of the total number of paid-up shares carrying the right of voting in general meetings may require the convening of an extraordinary general meeting of shareholders by the directors. If the directors fail to comply with such request within 21 days of the receipt thereof, shareholders holding more than 50% of the voting rights represented by the original requisitioning shareholders may proceed to convene such meeting, and Singapore NewCo will be liable for the reasonable expenses incurred by such requisitioning shareholders by reason of the failure of the directors to convene a meeting. Singapore NewCo is also required by the Singapore Companies Act to deduct corresponding amounts from fees or other remuneration payable by Singapore NewCo to such non-complying directors by reason of the failure of the directors to convene a meeting.

 

Anti-takeover provisions under the Singapore Securities and Futures Act and the Singapore Code on Take-overs and Mergers may delay, deter or prevent a future takeover or change of control of Singapore NewCo, which could adversely affect the price of our ordinary shares.

 

The Singapore Code, issued pursuant to Section 321 of the Singapore Securities and Futures Act, regulates the acquisition of ordinary shares of, inter alia, listed public companies and contains certain provisions that may delay, deter or prevent a future takeover or change of control of Singapore NewCo. Any person acquiring an interest, either on his own or together with parties acting in concert with him or her, in 30% or more of the voting shares in Singapore NewCo must, except with the prior consent of the Singapore Securities Industry Council (