Business Context and Reporting Period
The filing is a Form 10-K for the fiscal year ended December 31, 2020. The filing identifies the registrant as Venus Acquisition Corporation, not Microalgo Inc.; investors should verify the issuer identity and filing metadata.
Venus was a Cayman Islands blank-check company formed to pursue a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination, with an intended focus on businesses connected to Asian markets. At December 31, 2020, it had not commenced operating activities, had no target under binding agreement and had not generated revenue.
Financial and Operating Metrics
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Net loss | $117,787 | $4,975 |
| Basic and diluted loss per share | $0.12 | $0.01 |
| Cash used in operating activities | $77,815 | $4,975 |
| Cash at year-end | $239 | $428,307 |
| Total assets | $191,543 | $497,910 |
| Total current liabilities | $295,205 | $483,785 |
| Shareholders’ equity/(deficit) | $(103,662) | $14,125 |
2020 expenses consisted of formation and operating costs. No operating margin or meaningful profitability measure is applicable because the company had no operating revenue. The company reported no long-term debt, capital leases or off-balance-sheet financing arrangements. At year-end, it owed $228,483 under a non-interest-bearing related-party promissory note and had $26,750 of related-party advances.
The company reported $3,303 of security deposits and $188,001 of deferred offering costs at December 31, 2020. The deferred offering costs were expected to be charged to equity upon completion of the offering, or to operations if the offering failed.
Material Changes Versus the Prior Comparable Period
- Net loss increased to $117,787 from $4,975, primarily reflecting higher formation, offering-preparation and operating costs.
- Cash used in operating activities increased to $77,815 from $4,975.
- Year-end cash declined by $428,068 to $239, while total assets decreased by $306,367.
- The company moved from positive shareholders’ equity of $14,125 to a shareholders’ deficit of $103,662.
- The related-party promissory note declined from $450,000 to $228,483; the remaining balance was repaid upon the February 2021 IPO closing.
Subsequent Events, Outlook and Risks
On February 11, 2021, the company completed an IPO of 4,600,000 units at $10.00 per unit, including the underwriters’ full over-allotment exercise, for gross proceeds of $46.0 million. It also sold 225,000 private placement units for $2.25 million. After offering costs and related adjustments, $46.46 million was deposited into a trust account on February 18, 2021. The company reported approximately $413,075 of IPO proceeds available outside the trust account for working capital, although certain sections also describe interim cash and escrow balances.
The company expects to use trust-account funds to complete an initial business combination. It must complete that transaction by February 11, 2022, subject to up to nine one-month extensions, for a maximum period of 21 months, if the sponsor deposits the required extension loans. No specific target or binding transaction had been identified as of the filing.
- The proposed business combination must generally have a fair market value of at least 80% of the trust-account balance, net of specified exclusions, and the post-transaction company must acquire a controlling interest in the target.
- Public shareholders may redeem shares for their pro rata trust-account amount, initially approximately $10.10 per share, subject to applicable limitations and potential reductions from claims or other liabilities.
- If no business combination is completed within the permitted period, public shares will be redeemed and the company will liquidate; rights and warrants would expire worthless.
- The sponsor may provide interest-free extension or working-capital loans, but is not obligated to do so. Up to $1.5 million of working-capital loans may be convertible into private units.
- Key risks include the inability to identify or complete a transaction, redemption pressure, insufficient funds or unavailable acquisition financing, dilution from founder shares, rights and warrants, sponsor and management conflicts, COVID-19 disruption, foreign-market exposure and potential claims against the trust account.
- COVID-19 was identified as a potential adverse factor, but the specific financial impact was not determinable at the reporting date.
The independent auditor, Friedman LLP, issued an unqualified opinion on the 2020 and 2019 financial statements. Management concluded that disclosure controls and procedures were effective as of December 31, 2020. The filing does not include management’s internal-control assessment or an auditor attestation because of the applicable transition period for a newly public emerging growth company.
Facts an Investor Should Verify
- Confirm whether the intended subject is Venus Acquisition Corporation or Microalgo Inc.; the supplied filing is for Venus Acquisition Corporation.
- Reconcile the IPO proceeds, trust-account funding and outside-trust liquidity, including the reported $46.46 million trust deposit and approximately $413,075 available for working capital.
- Review the audited balance sheet and notes for related-party liabilities, deferred offering costs, redemption-classified shares and subsequent repayment of the sponsor note.
- Confirm whether a business combination has since been announced or completed and whether any extension payments, redemptions or liquidation events occurred.
- Assess dilution from 6,050,000 post-IPO ordinary shares, rights convertible into approximately 482,500 shares and warrants exercisable for ordinary shares, together with founder and private-placement securities.
- Review the sponsor’s indemnification obligations and financial capacity because third-party claims could reduce trust-account proceeds available to public shareholders.