MicroAlgo (MLGO) - 2021 Q4 - Annual Report

PART I Item 1. Business Venus Acquisition Corporation, a blank check company, aims to complete a business combination, having raised $46 million in its IPO and agreed to merge with VIYI Algorithm Inc. for $400 million - Initial Public Offering (IPO) Details | Metric | Value | | :--- | :--- | | IPO Date | February 11, 2021 | | Units Offered | 4,600,000 (inclusive of over-allotment) | | Price Per Unit | $10.00 | | Gross Proceeds | $46,000,000 | | Amount in Trust Account | $46,460,000 (from IPO and Private Placement) | - The company entered into a definitive merger agreement with VIYI Algorithm Inc. ("VIYI") on June 10, 2021, valuing VIYI at $400 million, with VIYI stockholders receiving approximately 39.6 million ordinary shares of the combined company[32][34] - The company's acquisition criteria focuses on middle-market growth businesses with an enterprise value between $150 million and $250 million, particularly in sectors strategically significant to Asian markets[44] - The company extended the deadline to complete a business combination, with the sponsor depositing $153,333 into the trust account on February 11, 2022, and March 11, 2022, for each one-month extension[51] Item 1A. Risk Factors The company faces significant risks as a SPAC, including potential failure to complete a business combination, shareholder redemptions, and regulatory uncertainties, particularly with a China-based target - The company is an early-stage entity with no operating history, and failure to complete a business combination within the prescribed timeframe will lead to liquidation, with public shareholders receiving approximately $10.10 per share and warrants expiring worthless[83][96] - The ability of public shareholders to redeem shares may make the company's financial condition unattractive to targets, potentially hindering the completion of a desirable business combination or optimizing its capital structure[90][91] - A business combination with a company in the PRC, such as the target VIYI which operates through a VIE structure, exposes the company to significant risks, including the PRC government finding the VIE structure non-compliant[228][233] - Recent PRC government actions regarding data security, anti-monopoly, and overseas listings create uncertainty, potentially subjecting the company to review by the Cyberspace Administration of China (CAC) and other regulatory bodies[231][272][295] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - As of the report date, there are no unresolved comments from the SEC staff[306] Item 2. Properties The company does not own real estate, leasing office space in Shanghai and New York, which is deemed adequate for current operations - The company leases office space in Shanghai, China for a one-year period at a cost of 16,000 RMB per month, effective February 1, 2021[308] - For the year ended December 31, 2021, the company incurred rent expense of $23,639[307] Item 3. Legal Proceedings The company is not involved in any material legal proceedings or aware of claims that could adversely affect its business - The company is not currently involved in any material litigation or other legal proceedings[309] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine safety disclosures are not applicable[310] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's units, shares, rights, and warrants trade on Nasdaq, with 6,050,000 ordinary shares outstanding as of March 21, 2022, and no dividends paid - The company's securities began trading on NASDAQ in February 2021 (Units) and April 2021 (separate components)[313] - Holders of Record (as of March 21, 2022) | Security | Issued and Outstanding | Holders of Record | | :--- | :--- | :--- | | Units | 354,743 | 2 | | Ordinary Shares | 6,050,000 | 3 | | Rights | 4,825,000 | 2 | | Warrants | 4,825,000 | 2 | - The sponsor purchased 1,150,000 founder shares for $25,000 in August 2019 and 225,000 Private Units at $10.00 per unit ($2,250,000 total) simultaneously with the IPO[318][319] Item 6. Reserved This item is not applicable Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a blank check entity, reported a $812,413 net loss in 2021, with limited working capital raising substantial doubt about its going concern ability - Results of Operations | Period | Net Loss | Key Components | | :--- | :--- | :--- | | Year ended Dec 31, 2021 | $812,413 | Consists of $785,096 in formation and operating costs | | Year ended Dec 31, 2020 | $117,787 | Consists of $117,787 in formation and operating costs | - As of December 31, 2021, the company had $32,090 in cash held outside the Trust Account for working capital purposes[354] - The company's financial condition raises substantial doubt about its ability to continue as a going concern if a Business Combination is not consummated[358] - The company has an agreement to pay an affiliate of its sponsor a monthly fee of $10,000 for office space, administrative, and support services, which began on February 8, 2021[360] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company faces no material market or interest rate risk, as IPO funds are invested in short-term U.S. government treasury securities - Proceeds from the IPO are invested in U.S. government treasury bills with maturities of 180 days or less or in money market funds investing solely in U.S. treasuries, resulting in no material exposure to interest rate risk[371] Item 8. Financial Statements and Supplemental Data This section refers to the financial statements and supplemental data located after Item 15 of the report - The company's financial statements are included at the end of the report, starting on page F-1[372] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting and financial disclosure - There were no disagreements with accountants on accounting and financial disclosure[373] Item 9A. Controls and Procedures Disclosure controls were ineffective as of December 31, 2021, due to a material weakness in accounting for warrants and redeemable ordinary shares, with a remediation plan implemented - Management identified a material weakness in internal control over financial reporting related to the accounting for warrants and ordinary shares subject to possible redemption[379] - Due to the material weakness, management concluded that disclosure controls and procedures were not effective as of December 31, 2021[375] - The company has implemented a remediation plan to enhance its system for evaluating and applying complex accounting standards[380] Item 9B. Other Information There is no other information to report - None[386] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[386] PART III Item 10. Directors, Executive Officers and Corporate Governance The company's management team is led by Chairman and CEO Yanming Liu and CFO River Chi, with a five-member board, three independent, and established Audit and Compensation Committees - Directors and Executive Officers | Name | Age | Position | | :--- | :--- | :--- | | Yanming Liu | 59 | Chairman and Chief Executive Officer | | River Chi | 41 | Chief Financial Officer | | Yu Chen | 55 | Director (Independent) | | Guojian Chen | 29 | Director (Independent) | | Shan Cui | 49 | Director (Independent) | - The Audit Committee is chaired by Shan Cui, who qualifies as an "audit committee financial expert," and the Compensation Committee is chaired by Guojian Chen[399][401] - The company has adopted a code of ethics and outlines procedures for handling potential conflicts of interest, noting that officers and directors have fiduciary duties to other entities[407][415] Item 11. Executive Compensation No cash compensation has been paid to executive officers, though an affiliate of the sponsor receives $10,000 monthly for administrative services - No cash compensation has been paid to executive officers for services rendered[421] - An affiliate of the sponsor receives $10,000 per month for office space, administrative, and support services[422] Item 12. Security Ownership of Certain Beneficial Owners and Management As of March 21, 2022, the sponsor, Yolanda Management Corporation, beneficially owned 22.7% of outstanding ordinary shares, attributed to Chairman and CEO Yanming Liu - Beneficial Ownership (as of March 21, 2022) | Name of Beneficial Owner | Amount of Beneficial Ownership | Approximate Percentage of Outstanding Shares | | :--- | :--- | :--- | | Yolanda Management Corporation | 1,375,000 | 22.7% | | Yanming Liu | 1,375,000 | 22.7% | | All directors and officers as a group (5 individuals) | 1,375,000 | 22.7% | | Feis Equities LLC | 582,931 | 9.64% | | Karpus Investment Management | 566,915 | 9.37% | | Mizuho Financial Group, Inc. | 482,497 | 7.98% | | WEISS ASSET MANAGEMENT LP | 342,006 | 5.65% | Item 13. Certain Relationships and Related Transactions The company has related party transactions with its sponsor, including the sale of founder shares, private placement units, and a $10,000 monthly administrative services agreement - The sponsor purchased 1,150,000 founder shares for $25,000 and 225,000 Private Units for $2,250,000[432][433] - The company pays an affiliate of the sponsor $10,000 per month for administrative services[434] - The sponsor provided loans for initial expenses, which were repaid upon the IPO, and may provide up to $1,500,000 in additional working capital loans, convertible into units at $10.00 per unit[436][438] Item 14. Principal Accountant Fees and Services Friedman LLP served as the principal accountant, with audit fees of $82,000 in 2021 and $25,000 in 2020, and no other fees incurred - Accountant Fees (Friedman LLP) | Fee Type | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Audit Fees | $82,000 | $25,000 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | PART IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Form 10-K, including the Merger Agreement with VIYI, with no financial statement schedules - The report includes the company's consolidated financial statements and notes[450] - Exhibits filed include the Merger Agreement with VIYI Algorithm Inc. and its subsequent amendment, along with governance and financing documents[453] Item 16. Form 10-K Summary No summary is provided under this item - None[554] Financial Statements and Notes Report of Independent Registered Public Accounting Firm Friedman LLP issued an opinion on the financial statements, including a 'Going Concern' paragraph expressing substantial doubt about the company's ability to continue operations - The auditor's report contains a "Going Concern" paragraph, highlighting substantial doubt about the company's ability to continue operations due to its reliance on a future business combination and limited working capital[455] Consolidated Financial Statements For 2021, the company reported a net loss of $812,413, with total assets of $46.5 million and a shareholders' deficit of $1.98 million as of December 31, 2021 - Key Financial Data (as of and for the year ended Dec 31, 2021) | Metric | Value (USD) | | :--- | :--- | | Balance Sheet | | | Cash and investments held in trust account | $46,469,183 | | Total Assets | $46,518,212 | | Total Liabilities | $2,026,979 | | Ordinary shares, subject to possible redemption | $46,469,183 | | Total shareholders' deficit | $(1,977,950) | | Statement of Operations | | | Net Loss | $(812,413) | | Basic and diluted net loss per share | $(0.81) | Notes to Consolidated Financial Statements The notes detail the company's SPAC organization, IPO, proposed $400 million business combination with VIYI, key accounting policies, related party transactions, and subsequent event extensions - The proposed business combination with VIYI Algorithm Inc. has an aggregate consideration of $400 million, payable in approximately 39.6 million newly issued ordinary shares valued at $10.10 per share[480] - The company accounts for its 4,600,000 public shares as ordinary shares subject to possible redemption, classifying them as temporary equity outside of the shareholders' deficit section[499] - Private warrants are treated as liabilities and measured at fair value, which was $410,000 as of December 31, 2021[536][537] - Subsequent to year-end, the company extended its business combination deadline to March 11, 2022, and then again to April 11, 2022, by depositing $153,333 into the Trust Account for each extension[553]