DEFM14A 1 venusacquisition_defm14a.htm DEFM14A

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 

SCHEDULE 14A

 

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

 

Filed by the Registrant  
Filed by a Party other than the Registrant  
Check the appropriate box:    

 

Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material under §240.14a-12

 

VENUS ACQUISITION CORPORATION

(Name of Registrant as Specified In Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.
   
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
   
  (1) Title of each class of securities to which transaction applies: Ordinary Share, par value $0.001
     
  (2) Aggregate number of securities to which transaction applies: 39,603,961
     
  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): $10.10
     
  (4) Proposed maximum aggregate value of transaction: $400,000,000
     
  (5) Total fee paid: $37,080.00
     
Fee paid previously with preliminary materials.
   
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   
  (1) Amount Previously Paid: $37,080.00
     
  (2) Form, Schedule or Registration Statement No.: Form S-4 (File No. 333-257518)
     
  (3) Filing Party: Venus Acquisition Corporation
     
  (4) Date Filed: June 29, 2021

 

 

 

 

 

PROXY STATEMENT FOR THE

EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS OF

VENUS ACQUISITION CORPORATION

DATED OCTOBER 3, 2022

 

The Board of Directors of Venus Acquisition Corporation, a Cayman Islands exempt company has unanimously approved the transaction (collectively, the “Business Combination”) contemplated by that certain Merger Agreement dated as of June 10, 2021, as amended (“Business Combination Agreement” or “Merger Agreement”) by and among Venus Acquisition Corporation (“Venus”), Venus Acquisition Merger Subsidiary Inc. (“Venus Merger Sub”), a Cayman Islands exempted company formed for the purpose of effectuating the Business Combination, VIYI Algorithm Inc. (“VIYI”), a Cayman Islands exempted company, and WiMi Hologram Cloud Inc. (“WiMi” or the “Majority Shareholder”), a Cayman Islands exempted company and the legal and beneficial owner of 73% of the issued and outstanding voting securities of VIYI. As used in this proxy statement, “New Venus” refers to Venus after giving effect to the consummation of the Business Combination. As the Majority Shareholder, WiMi will effectively control New Venus after the Business Combination by holding 63.32% of the voting power of the issued and outstanding ordinary shares of New Venus. As a result, New Venus will be a “controlled company” within the meaning of the applicable Nasdaq Stock Market (“Nasdaq”) listing rules and may qualify for exemptions from certain corporate governance requirements of Nasdaq.

 

A copy of the Business Combination Agreement without exhibits is attached to this Proxy Statement as Annex A. After giving effect to the consummation of the Business Combination, assuming shareholder approval, Venus will be renamed to “MicroAlgo Inc.”

 

Pursuant to the Business Combination Agreement, VIYI will merge with Venus Merger Sub and VIYI will survive the merger as a wholly-owned subsidiary of Venus and continue its business operations through its subsidiaries. At the Effective Time of the Business Combination, the current shareholders of VIYI, including its Majority Shareholder, will receive an aggregate of 39,603,961 Venus ordinary shares equal to approximately 85.84% of the post transaction ordinary shares issued and outstanding of Venus, (i) assuming that none of the current shareholders of Venus elect to redeem the ordinary shares; (ii) excluding shares underlying the warrants issued by Venus in its initial public offering completed on February 11, 2021 (“IPO”); and (iii) giving effect to the conversion of Venus Rights issued in its IPO and private placement into 482,500 ordinary shares. The time that the Business Combination becomes effective is referred to as the “Effective Time.”

 

VIYI is not an operating company in the PRC but a Cayman Islands holding company with its operations conducted through its subsidiaries. Historically VIYI had a series of contractual arrangements with Shenzhen Yitian, a PRC company that functioned as a variable interest entity and is referred to as “the VIE” or “Yitian” in this proxy statement. Prior to April 1, 2022, VIYI did not own any equity interest in Shenzhen Yitian, instead, VIYI controlled and received the economic benefits of Shenzhen Yitian’s business operations through certain contractual arrangements. VIYI was the primary beneficiary and accordingly, under U.S. GAAP, the financial results of the VIE were consolidated in VIYI’s financial statements. The VIE structure provides contractual exposure to foreign investment in the VIE rather than replicating an investment and you will not and may never have direct ownership in the VIE.

 

Shenzhen Yitian and its subsidiary used to provide Internet information consulting services which required the possession of the Internet Content Provision (“ICP”) licenses and were subject to foreign investment restrictions under relevant PRC laws and regulations. Due to subsequent business strategy adjustment, Shenzhen Yitian and its subsidiary have terminated such Internet information consulting services since March 1, 2022. As a result of the termination of such services, Shenzhen Yitian and its subsidiary were later notified by relevant PRC government authority that the ICP licenses were no longer required and their business was no longer subject to foreign investment restrictions, therefore VIYI can own direct equity interest in Shenzhen Yitian and its subsidiaries. On April 1, 2022, VIYI and Shenzhen Yitian terminated the VIE arrangements and, as a result, VIYI’s WFOE holds 100% of the issued and outstanding shares of Shenzhen Yitian. VIYI now controls and receives the economic benefits of Shenzhen Yitian and its subsidiaries through equity ownership.

 

After the completion of the Business Combination, VIYI will continue conducting its business operations through its subsidiaries. In addition, VIYI is subject to legal and operational risks associated with having the majority of operations in China, including risks related to the legal, political and economic policies of the Chinese government, the relations between China and the United States, and changes in Chinese laws and regulations, which could result in a material change in VIYI’s operations and/or cause the value of VIYI’s ordinary shares to significantly decline or become worthless and affect VIYI’s ability to offer or continue to offer securities to investors.

 

The PRC government has authority to exert political and economic influence on the ability of a company with operations in mainland China and Hong Kong to conduct business, accept foreign investment or list on the U.S. or other foreign exchanges. In light of the recent statements and regulatory actions by the PRC government, such as those related to data security, and anti-monopoly concerns, VIYI may be subject to the risks of the uncertainty of any future actions of the PRC government in this regard, which may result in a material change in VIYI’s operations, including the ability of VIYI to carry on its current business or accept foreign investments, and the resulting adverse change in value to New Venus’ ordinary shares. As of the date of this Proxy Statement, the three Hong Kong subsidiaries of VIYI do not have any material operation in Hong Kong and they have not collected, stored, or managed any personal information in Hong Kong. Therefore, VIYI has concluded that currently it does not expect that laws and regulations in Mainland China on data security, data protection, cybersecurity or anti-monopoly to be applied to its Hong Kong subsidiaries or that the oversight of the Cyberspace Administration of China will be extended to its operations outside of Mainland China. VIYI may also be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the Chinese Securities Regulatory Commission (“CSRC”), if it fails to comply with such rules and regulations, which could adversely affect the ability of New Venus to continue to be listed for trading on Nasdaq or another foreign exchange, which may cause the value of New Venus securities to significantly decline or become worthless.

 

The Holding Foreign Companies Accountable Act (the “HFCA Act”) and related regulations call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors and could add uncertainties to VIYI’s offering that trading in VIYI’s securities may be prohibited under the HFCA Act. Pursuant to the HFCA Act, the Public Company Accounting Oversight Board (United States) (the “PCAOB”) issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in (1) mainland China of the PRC because of a position taken by one or more authorities in mainland China and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”). The bill, if enacted, would shorten the three-consecutive-year compliance period under the HFCA Act to two consecutive years. As a result, the time period before VIYI’s securities may be prohibited from trading or delisted will be reduced. On August 26, 2022, the PCAOB signed a Statement of Protocol (“SOP”) with the China Securities Regulatory Commission and the Ministry of Finance of PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S law. Pursuant to the SOP, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. However, uncertainties still exist as to whether the applicable parties, including governmental agencies, will fully comply with the framework. Depending on the implementation of the SOP, if the PCAOB continues to be prohibited from conducting complete inspections and investigations of PCAOB-registered public accounting firms in China, then China-based companies will be delisted pursuant to the HFCA Act despite the SOP. Therefore, there is no assurance that the SOP could give relief to China-based companies against the delisting risk from the application of the HFCA Act or AHFCAA. Currently, VIYI’s auditor is headquartered in New York and has been inspected by the PCAOB on a regular basis. Therefore, it is not subject to the determinations announced by the PCAOB on December 16, 2021. Please refer to “Risk Factor — Risks Factors Relating to Doing Business in China — The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China, upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.” on page 57 of this proxy statement. For a detailed description of the risks facing New Venus, VIYI and the offering associated with the VIE structure, please refer to “Risk Factors — Risk Factors Relating to Doing Business in China — The PRC government exerts substantial influence over the manner in which VIYI, its subsidiaries, and the VIE must conduct its business activities. VIYI is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if VIYI was required to obtain approval in the future and was denied permission from Chinese authorities to list on U.S. exchanges, VIYI will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.”

 

For the year ended December 31, 2020, VIYI and its subsidiary in Singapore, Fe-da Electronics, had intercompany transfers in cash of approximately RMB 8.0 million (USD 1.2 million) and the VIE had intercompany transfer of approximately RMB 106 million to VIYI’s WFOE. For the year ended December 31, 2021, VIYI and VIYI Ltd. had intercompany transfers in cash of approximately RMB 16.8 million (USD 2.5 million) and VIYI’s WFOE transferred RMB 12.7 million to the VIE. From January 1, 2022 to April 1, 2022, historical VIE had intercompany transfer of approximately RMB 17.6 million to VIYI’S WFOE. For further details, please refer to “Summary Financial Information of VIYI”. There were no dividends or distribution made between or among VIYI, its subsidiaries and the historical VIE. VIYI has established controls and procedures for cash flows within its organization. Each transfer of cash between or among the Cayman Islands holding company, a subsidiary, and the historical VIE is subject to internal approvals. In general, cash is maintained in the holding company level (i.e. VIYI for companies outside of PRC and VIYI’s WFOE for companies inside PRC, respectively) for a more efficient cash management. VIYI’s PRC subsidiaries and the historical VIE generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. Under VIYI’s current corporate structure and internal policy, VIYI may transfer funds to its subsidiaries via capital contributions or shareholder loans; and subsidiaries may transfer funds to VIYI via dividends or distributions. VIYI may rely on dividend payments from its PRC subsidiaries to fund any cash and financing requirements VIYI may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of the State Administration for Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of VIYI’s PRC subsidiaries may be used to pay dividends to VIYI. VIYI has no present plans to distribute earnings or settle amounts owed under the VIE agreements and plans to retain VIYI’s retained earnings to continue to grow VIYI’s business. No dividends or distributions have been declared to pay VIYI from its subsidiaries or the VIE affiliated entities, and no dividends or distributions have been made to any U.S. investors. For further details, please refer to “Summary of the Proxy Statement — Transfer of Cash within VIYI’s organization” and “Summary Financial Information of VIYI”.

 

Venus’ ordinary shares are listed on Nasdaq under the symbol “VENA”. Venus will apply for listing of the ordinary shares to be issued to the VIYI shareholders, and in connection therewith, apply for listing of the New Venus ordinary shares on the Nasdaq Capital Market (including the presently outstanding Venus ordinary shares) under a new symbol “MLGO” to reflect the change of business resulting from the Business Combination and the anticipated name change of Venus to MicroAlgo Inc. following the Business Combination. It is a condition to the consummation of the Business Combination that Venus receives confirmation from Nasdaq that New Venus has been conditionally approved for listing on the Nasdaq Capital Market following completion of the Business Combination. There can be no assurance that such listing condition will be satisfied or that Venus will receive confirmation from Nasdaq. If such listing condition is not met or if Venus does not receive confirmation, the Business Combination will not be consummated unless the parties waive the Nasdaq listing condition.

 

The accompanying proxy statement provides shareholders of Venus with detailed information about the Business Combination and other matters to be considered at the Extraordinary General Meeting (defined below) of Venus. We encourage you to read the entire accompanying proxy statement, including the Annexes and other documents referred to therein, carefully and in its entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 39 of the accompanying proxy statement.

 

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

 

The accompanying Proxy Statement is dated October 3, 2022
and first mailed to the shareholders of Venus Acquisition Corporation on or about October 7, 2022

 

 

 

VENUS ACQUISITION CORPORATION

 

477 Madison Avenue

6th Floor

New York, NY 10022

 

To the Shareholders of Venus Acquisition Corporation:

 

You are cordially invited to attend the Extraordinary General Meeting of Venus Acquisition Corporation. (“Venus,” “VENA,” “we”, “our”, or “us”), which will be held at 10:00 a.m., Eastern Time, on October 21, 2022 (the “Extraordinary General Meeting”). The Extraordinary General Meeting will be a completely virtual Meeting of shareholders, which will be conducted via live webcast. You will be able to attend the Extraordinary General Meeting online, vote and submit your questions during the Extraordinary General Meeting by visiting https://www.cleartrustonline.com/venus. Venus is a blank check company incorporated as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to as a “target business” (the “Business Combination”). Venus completed its initial public offering on February 11, 2021.

 

One of the matters you will be asked to vote on at the Extraordinary General Meeting is the approval of a merger agreement and plan of merger, dated as of June 10, 2021 (as it may be amended from time to time, the “Merger Agreement”), which provides for a Business Combination between Venus, Venus Acquisition Merger Subsidiary Inc. (“Venus Merger Sub”), a Cayman Islands exempted company formed for the purpose of effectuating the Business Combination, VIYI Algorithm Inc. (“VIYI”), a Cayman Islands exempted company, and WiMi Hologram Cloud Inc. (“WiMi” or the “Majority Shareholder”), a Cayman Islands exempted company and the legal and beneficial owner of a majority of the issued and outstanding voting securities of VIYI. Pursuant to the Merger Agreement, the Venus Merger Sub will merge with and into VIYI, with VIYI being the surviving entity and becoming a wholly owned subsidiary of Venus. For the purposes of this proxy statement, “New Venus” refers to Venus after the consummation of the Business Combination.

 

The aggregate consideration for the Business Combination is $400,000,000, payable to the shareholders of VIYI in the form of approximately 39,603,961 newly issued Venus ordinary shares valued at $10.10 per ordinary share.

 

Upon the closing of the Business Combination, the following transactions and events will also be consummated:

 

The board of directors of Venus will be reconstituted to be comprised of a total of five (5) persons, four (4) of whom shall be nominees of VIYI and one of whom shall be a nominee of Venus;

 

Venus shall change its name to MicroAlgo Inc.;

 

Venus shall increase its authorized share capital to consist of 200,000,000 ordinary shares;

 

The VIYI shareholders shall enter into a registration rights agreement whereby the ordinary shares of Venus to be received by them shall be registered for resale under the Securities Act;

 

The Sponsor of Venus (Yolanda Management Corporation) and the members of management and the Board of Directors, and the VIYI shareholders will execute a lock-up agreement where such persons will agree not to sell, transfer or assign, except for estate planning purposes or to persons who agree to the terms of the lock-up period, other than 2,500,000 ordinary shares being acquired by two VIYI shareholders in the Business Combination, any securities of New Venus held by them (an aggregate of 37,103,961 ordinary shares) until the earlier of (i) six (6) months after the date of the consummation of Business Combination or (ii) the date on which the closing price of Venus ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Business Combination; and

 

792,079 New Venus ordinary shares to be issued to the Majority Shareholder will be held in escrow to satisfy any potential indemnification claim(s) which may be made by Venus under the Business Combination Agreement.

 

 

 

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

 

1. Approval of the Business Combination (the “Business Combination Proposal” or “Proposal 1”);

 

2. Approval of the election of five (5) members to the Board of directors of Venus (the “Director Election Proposal” or “Proposal 2”);

 

3. Approval for purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635(d), the issuance by Venus an aggregate of 39,603,961 Venus ordinary shares to the VIYI shareholders pursuant to the Merger Agreement (the “Nasdaq Stock Issuance Proposal” or “Proposal 3”);

 

4. Approval of amendments to increase the number of authorized ordinary shares to 200,000,000 ordinary shares (“Share Increase Proposal” or “Proposal 4”). For the purposes of the laws of the Cayman Islands, the full text of the resolution is as follows: “RESOLVED, as an ordinary resolution, that the authorized share capital of the Company be amended from USD50,000 divided into 50,000,000 ordinary shares of par value USD0.001 each into USD200,000 divided into 200,000,000 ordinary shares of par value USD0.001 each;

 

5. Approval by way of special resolution of amendments to Venus’ memorandum and articles of association to change its name to MicroAlgo Inc. (the “Name Change Proposal” or “Proposal 5”) For the purposes of the laws of the Cayman Islands, the full text of the resolution is as follows: “RESOLVED, as a special resolution, that the Company change its name from Venus Acquisition Corporation” to “MicroAlgo Inc.” and, subject to the provisions of the Companies Act (Revised), the change of name take effect immediately from the passing this resolution;”

 

6. Approval by way of special resolution of all other changes in connection with the amendment, restatement and replacement of the Venus’ memorandum and articles of association including, among other things, (1) making New Venus’ corporate existence perpetual, and (2) removing certain provisions related to Venus’ status as a blank check company that will no longer be applicable upon consummation of the Business Combination (the “Articles Amendment Proposal” or “Proposal 6”). For the purposes of the laws of the Cayman Islands, the full text of the resolution is as follows: “RESOLVED, as a special resolution, that the Memorandum of Association and the Articles of Association, copies of which are attached to the accompanying proxy statement, be and are hereby adopted as the memorandum and articles of association of the Company in substitution for and to the exclusion of the Company’s existing Memorandum of Association and Articles of Association;” and

 

7. Approval to adjourn the Extraordinary General Meeting under certain circumstances, which is more fully described in the accompanying proxy statement, which we refer to as the “Adjournment Proposal” or Proposal 7”) and, together with the Business Combination Proposal, the Director Election Proposal, the Nasdaq Stock Issuance Proposal, the Share Increase Proposal, the Name Change Proposal, the Articles Amendment Proposal and the Adjournment Proposal, the “Proposals.”

 

If the Business Combination Proposal is not approved, neither the Director Election Proposal, the Nasdaq Stock Issuance Proposal, the Share Increase Proposal, Name Change Proposal, nor the Articles Amendment Proposal will be presented to the Venus shareholders for a vote. The approval of all of the Proposals other than the Adjournment Proposal are preconditions to the closing of the Business Combination with VIYI.

 

It is anticipated that, upon the consummation of the Business Combination, Venus’ existing shareholders, including the Sponsor (as defined below), will own approximately 14.16% of the issued New Venus ordinary shares, and VIYI shareholders will own of approximately 85.84% of the issued New Venus ordinary shares.

 

Following the Business Combination, Venus will have the following securities issued and outstanding:

 

46,136,461 ordinary shares;

 

Warrants to acquire an aggregate of 2,300,000 ordinary shares with an exercise price of $11.50 per share held by existing shareholders, other than the Sponsor; and

 

 

 

Warrants held by our Sponsor to acquire 112,500 ordinary shares with an exercise price of $11.50 per share.

 

These relative percentages assume that (i) none of Venus’ existing public shareholders exercise their redemption rights, as discussed herein; (ii) Venus Rights are automatically converted to New Venus ordinary shares upon the consummation of the Business Combination, and (iii) there is no exercise of Venus Warrants prior to the consummation of the Business Combination. If any of Venus’ existing public shareholders exercise their redemption rights, the anticipated percentage ownership of Venus’ existing shareholders will be reduced. You should read “Summary of the Proxy Statement The Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Statements” for further information.

 

The Venus Units, Venus ordinary shares, Venus Rights and Venus Warrants are currently listed on the Nasdaq Capital Market under the symbols “VENAU,” “VENA,” “VENAR” and “VENAW,” respectively. New Venus intends to apply to list the New Venus ordinary shares on the Nasdaq Capital Market under the symbols “MGLO”, in connection with the closing of the Business Combination. Venus cannot assure you that the New Venus ordinary shares will be approved for listing on Nasdaq Capital Market.

 

Investing in New Venus securities involves a high degree of risk. See “Risk Factors” beginning on page 39 for a discussion of information that should be considered in connection with an investment in New Venus securities.

 

As of June 30, 2022, there was approximately $47,306,580 in Venus’ trust account. On June 30, 2022, the closing price of Venus ordinary shares was $10.22. As of August 24, 2022, the closing price was $10.34 per ordinary share.

 

Pursuant to Venus’ amended and restated articles of association, Venus is providing its public shareholders with the opportunity to redeem all or a portion of their shares of Venus ordinary shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in Venus’ trust account as of two (2) business days prior to the consummation of the Business Combination, including interest, less taxes payable, divided by the number of then outstanding shares of Venus ordinary shares that were sold in Venus’ IPO. Venus estimates that the per-share price at which public shares may be redeemed from cash held in the trust account will be approximately $10.10 at the time of the Extraordinary General Meeting. Venus’ public shareholders may elect to redeem their shares even if they vote for the Business Combination or the other Proposals or do not vote at all. Venus has no specified maximum redemption threshold under the Venus’ memorandum and articles of association.

 

Venus is providing this proxy statement and accompanying proxy card to its shareholders in connection with the solicitation of proxies to be voted at the Extraordinary General Meeting and at any adjournments or postponements of the Extraordinary General Meeting. Only holders of Venus ordinary shares are entitled to vote on the Proposals. The Sponsor and Ladenburg Thalmann & Co Inc., which own in the aggregate approximately 23.97% of Venus ordinary shares as of the record date, have agreed to vote their respective Venus ordinary shares in favor of the Business Combination Proposal, and have indicated that they intend to vote for the Director Election Proposal, the Nasdaq Stock Issuance Proposals, the Share Increase Proposal, the Name Change Proposal, the Articles Amendment Proposal and the Adjournment Proposal, although there is no agreement in place with respect to voting on those proposals. In light of the fact that the Sponsor and Ladenburg Thalmann & Co Inc., which own in the aggregate approximately 23.97% of Venus ordinary shares as of the record date, the percentage of remaining ordinary shares needed to vote for the Business Combination Proposal if only a quorum of Venus’ shares are present is any number greater that 26.03%. Each Venus shareholder’s vote is very important. Whether or not you plan to attend the Extraordinary General Meeting in person, please submit your proxy card without delay. Venus’ shareholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a Venus shareholder from voting in person if such shareholder subsequently chooses to attend the Extraordinary General Meeting. If you are a holder of record and you attend the Extraordinary General Meeting and wish to vote in person, you may withdraw your proxy and vote in person. Assuming that a quorum is present, attending the Extraordinary General Meeting either in person or by proxy and abstaining from voting will have the same effect as voting against all the Proposals. And broker non-votes will have no effect on any of the Proposals.

 

 

 

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the Proposals presented at the Extraordinary General Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Extraordinary General Meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the Extraordinary General Meeting of shareholders and, if a quorum is present, will have the effect of a vote against the Business Combination Proposal and no effect on the Adjournment Proposal. If you are a Venus shareholder of record and you attend the Extraordinary General Meeting and wish to vote in person, you may withdraw your proxy and vote in person.

 

We encourage you to read this proxy statement carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 39.

 

Venus board of directors has unanimously approved the Merger Agreement and the transactions contemplated therein and described elsewhere in this the Proxy Statement, and unanimously recommends that Venus shareholders vote “FOR” approval of each of the Proposals. When you consider Venus board of director’s recommendation of these Proposals, you should keep in mind that Venus’ 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 Venus Shareholders: The Business Combination Proposal — Interests of Venus’ Directors and Executive Officers in the Business Combination.”

 

On behalf of the Venus board of directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

 

  Sincerely,
   
  /s/ Yanming Liu
  Yanming Liu
  Chief Executive Officer and Chairman
  Venus Acquisition Corporation
  October 3, 2022

 

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. 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 Venus with the Securities and Exchange Commission, such information is available without charge upon written or oral request. Please contact:

 

Venus Solicitation Agent:

 

Advantage Proxy, Inc.
P.O. Box 13581
Des Moines, WA 98198
Toll Free Telephone: (877) 870-8565
Main Telephone: (206) 870-8565
E-mail: ksmith@advantageproxy.com

 

or

 

Venus Acquisition Corporation

477 Madison Avenue, 6th Floor

New York,

New York 10022

Tel.: (917) 267-4568

 

If you would like to request documents, please do so no later than one week prior to the meeting date to receive them before the Extraordinary General 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 Venus, Venus Merger Sub and VIYI. You should rely only on the information contained in this proxy statement in deciding how to vote on the Business Combination. Neither of Venus, New Venus, Venus Merger Sub, WiMi nor VIYI has authorized anyone to give any information or to make any representations other than those contained in this proxy statement. Do not rely upon any information or representations made outside of this proxy statement. The information contained in this proxy statement may change after the date of this proxy statement. Do not assume after the date of this proxy statement that the information contained in this proxy statement is still correct.

 

 

 

USE OF CERTAIN TERMS

 

Unless otherwise stated in this proxy statement, references to:

 

“AI” are to artificial intelligence;

 

“Backstop Investor” are to WiMi Hologram Cloud, Inc, a company incorporated in the Cayman Islands;

 

“Backstop Agreement” are to the backstop agreement dated January 24, 2022 by and among Venus and certain Backstop Investor;

 

“Beijing WiMi” are to Beijing Hologram WiMi Cloud Internet Technology Co., Ltd.;

 

“Business Combination” are to the transaction contemplated by Merger Agreement;

 

“CAGR” are to compound annual growth rate;

 

“China” or “PRC” are to the People’s Republic of China;

 

“CIC” refer to China Insights Consultancy Limited, a third-party professional industry research firm;

 

“CIC Report” refer to the independent market research for the PRC central processing algorithm service industry prepared by CIC;

 

“Closing Date” are to the date on which the Business Combination is consummated;

 

“Exchange Act” are to the Securities Exchange Act of 1934, as amended:

 

“Extraordinary General Meeting” are to the extraordinary general meeting of Venus to be held at 10:00 a.m., Eastern time, on October 21, 2022:

 

“Fe-da electronics” are to Fe-da Electronics Company Private Limited;

 

“HKD” are to the legal currency of Hong Kong;

 

“Hong Kong” or “HK” are to the Hong Kong Special Administrative Region of the PRC;

 

“IPO” refer to the initial public offering of 4,600,000 units of Venus consummated on February 11, 2021;

 

“IoT” refer to internet of things;

 

“LOI” are to a letter of intent;

 

“Merger” are to the transaction between Venus, Venus Merger Sub, WiMi and VIYI under the Merger Agreement;

 

“Merger Agreement” or “Business Combination Agreement dated June 10, 2021, as amended, by and among Venus, Venus Merger Sub, VIYI, and WiMi Hologram Cloud, Inc. whereby the Venus Merger Sub will merge with and into VIYI and becoming a wholly owned subsidiary of Venus;

 

“Plan of Merger” are to the statutory plan of merger (the form of which is attached as Annex A to the Merger Agreement) to be filed with the Registrar of Companies in the Cayman Islands;

 

“Proposals” are to the Business Combination Proposal, the Director Election Proposal, the Nasdaq Stock Issuance Proposal, the Share Increase Proposal, the Name Change Proposal, the Article Amendment Proposal and the Adjournment Proposal;

 

“New Venus” are to Venus after the consummation of the Business Combination whereby the Venus Merger Sub will merge with and into VIYI as the surviving company and becoming a wholly owned subsidiary of Venus;

 

 

 

“RMB” or “Renminbi” are to the legal currency of the PRC;

 

“SAFE” are to the State Administration for Foreign Exchange;

 

“SEC” are to the Securities and Exchange Commission;

 

“Shenzhen Weiyixin” are to Shenzhen Weiyixin Technology Co., Ltd., a wholly-owned subsidiary of VIYI and a wholly foreign-owned enterprise (“WFOE”) formed under the laws of the PRC;

 

“Shenzhen Yitian” are to Shenzhen Yitian Internet Technology Co., Ltd.;

 

“Shenzhen Yiyou” are to Shenzhen Yiyou Online Technology Co., Ltd.;

 

“Sponsor” are to Yolanda Management Corporation, a British Virgin Islands company;

 

“US Dollars,” “$,” or “US$” are to the legal currency of the United States;

 

“U.S. GAAP” are to accounting principles generally accepted in the United States;

 

“variable interest entities,” “VIE(s),” or “VIE Arrangements” are to Shenzhen Yitian in which VIYI or its subsidiaries do not have equity interests but whose financial results have been consolidated into VIYI’s consolidated financial statements in accordance with U.S. GAAP, due to VIYI or its subsidiaries having effective control over, and VIYI’s being the primary beneficiary of, such entity;

 

“Venus”, “the Company”, “we”, “our” or “us” are to Venus Acquisition Corporation;

 

“Venus Merger Sub” are to Venus Acquisition Merger Subsidiary Inc.;

 

“Venus Rights” with respect to each right, are to the right of a holder to receive one-tenth (1/10) of a New Venus ordinary share upon the consummation of the Business Combination;

 

“Venus Units” with respect to each unit, are to a combination of one Venus ordinary share, one Venus Right and one Venus Warrant;

 

“Venus Warrants” with respect to each warrant, are to one warrant that is exercisable to purchase one-half (1/2) of one Venus ordinary share prior to the consummation of the Business Combination, or one New Venus ordinary share after the consummation of the Business Combination;

 

“VIYI” are to VIYI Algorithm Inc., a Cayman Islands holding company, and its subsidiaries, consolidated affiliated entities and variable interest entity, or VIE, as the context requires;

 

“VIYI Shareholders” are collectively to WiMi Hologram Cloud Inc., Guosheng Holding Limited, MIDI Capital Markets LLC and Milestone Investment Limited;

 

“WFOE” or “VIYI’s WFOE” are to Shenzhen Weiyixin; and

 

“WiMi” or “Majority Shareholder” are to WiMi Hologram Cloud Inc.

 

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this proxy statement were calculated at the rate of RMB 1.00 to USD 0.1568, representing the mid-point reference rate set by Peoples’ Bank of China on December 31, 2021. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate, or at any other rate.

 

 

 

TABLE OF CONTENTS

 

    Page
WHERE YOU CAN FIND MORE INFORMATION   iii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   iv
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND THE EXTRAORDINARY GENERAL MEETING   1
DELIVERY OF DOCUMENTS TO VENUS’ SHAREHOLDERS   10
SUMMARY OF THE PROXY STATEMENT   11
SUMMARY FINANCIAL INFORMATION OF VIYI   27
SECURITIES AND DIVIDENDS   38
RISK FACTORS   39
CAPITALIZATION   86
THE BUSINESS COMBINATION PROPOSAL   87
DIRECTOR ELECTION PROPOSAL   115
NASDAQ STOCK ISSUANCE PROPOSAL   116
SHARE INCREASE PROPOSAL   117
NAME CHANGE PROPOSAL   118
ARTICLES AMENDMENT PROPOSAL   119
ADJOURNMENT PROPOSAL   120
BUSINESS OF VIYI   121
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA OF VIYI   137
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VIYI   139
INDUSTRY OVERVIEW   161
BUSINESS OF VENUS   171
SELECTED HISTORICAL FINANCIAL INFORMATION OF VENUS   175
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF VENUS   176
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION   183
DIRECTORS, EXECUTIVE OFFICERS, EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE OF VENUS   194
NEW VENUS’ DIRECTORS AND EXECUTIVE OFFICERS AFTER THE BUSINESS COMBINATION   198
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO THE BUSINESS COMBINATION   203
SECURITY OWNERSHIP OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION   205
REGULATIONS APPLICABLE TO VIYI   206
CERTAIN TRANSACTIONS   217
SHARES ELIGIBLE FOR FUTURE SALE   220
DESCRIPTION OF NEW VENUS’ SECURITIES   222
ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. SECURITIES LAWS   229
LEGAL MATTERS   231
EXPERTS   231
SHAREHOLDER PROPOSALS AND OTHER MATTERS   231
DELIVERY OF DOCUMENTS TO SHAREHOLDERS   231
WHERE YOU CAN FIND ADDITIONAL INFORMATION   232
ANNEX A — MERGER AGREEMENT   A-1
ANNEX B — AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION OF MICROALGO, INC. AND AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF MICROALGO, INC.   B-1
ANNEX C — FAIRNESS OPINION OF KING KEE APPRAISAL AND ADVISORY LIMITED   C-1

 

i

 

ABOUT THIS PROXY STATEMENT

 

This document constitutes a notice of meeting and a proxy statement under Section 14(a) of the Exchange Act, with respect to the Extraordinary General Meeting at which Venus’ shareholders will be asked to consider and vote upon the Proposals to approve the Business Combination.

 

This proxy statement 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.

 

ii

 

WHERE YOU CAN FIND MORE INFORMATION

 

Venus files periodic report under the Securities Exchange Act of 1934, as amended with the SEC which can be found at http://www.sec.gov. After the consummation of the Business Combination, New Venus will continue to file its Annual Report on Form 10-K with the SEC no later than 90 days following its fiscal year end. You can read Venus’ SEC filings, including this proxy statement, over the Internet at the SEC’s website at http://www.sec.gov.

 

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

 

If you would like additional copies of this proxy statement, or if you have questions about the Business Combination, you should contact Venus’ proxy solicitor, Advantage Proxy, Inc, toll-free at +1 (877) 870-8565 or by email at ksmith@advantageproxy.com.

 

All information contained in this proxy statement relating to Venus and Venus Merger Sub has been supplied by Venus, and all such information relating VIYI has been supplied by VIYI. Information provided by either of Venus or VIYI does not constitute any representation, estimate or projection of the other party.

 

Neither Venus, New Venus, Venus Merger Sub, WiMi, nor VIYI 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 or in any of the materials that have been incorporated into this proxy statement 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 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 does not extend to you. The information contained in this proxy statement speaks only as of the date of this proxy statement unless the information specifically indicates that another date applies.

 

iii

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement 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 New Venus, Venus and/or VIYI 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 including, without limitation, in the sections headed “Management’s Discussion and Analysis of Financial Condition and Results of Operations of VIYI,” and “Business of VIYI.” 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 Venus and VIYI, 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 Venus and the following:

 

expectations regarding VIYI’s strategies and future financial performance, including VIYI’s future business plans or objectives, prospective performance and opportunities and competitors, revenues, customer acquisition and retention, products and services, pricing, marketing plans, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and VIYI’s ability to invest in growth initiatives and pursue acquisition opportunities;

 

VIYI’s Key Projected Financial Metrics are subject to significant risks, assumptions, estimates and uncertainties, including assumptions regarding future market and changes in regulations. As a result, New Venus’ projected revenues, market share, expenses and profitability may differ materially from its expectations.

 

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

the outcome of any legal proceedings that may be instituted against VIYI, Venus and others following announcement of the Merger Agreement and transactions contemplated therein;

 

the inability to complete the Business Combination due to the failure to obtain Venus’ shareholders’ approval;

 

the risk that the proposed Business Combination disrupts current plans and operations of VIYI 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 Venus ordinary shares being greater than expected;

 

the management and board composition of New Venus following the proposed Business Combination;

 

the ability to list New Venus’ securities on the Nasdaq Capital Market;

 

limited liquidity and trading of Venus and New Venus’ securities;

 

geopolitical risk and changes in applicable laws or regulations;

 

iv

 

the possibility that VIYI and/or Venus may be adversely affected by other economic, business, and/or competitive factors;

 

operational risks;

 

legal and other changes or actions by the PRC government to exert more oversight and control over offerings that are conducted overseas and / or foreign investment in China-based issuers which may significantly limit or completely hinder New Venus’ ability to offer or continue to offer securities to investors and cause the value of New Venus’ securities (including ordinary shares and other securities issued by Venus in its IPO) to significantly decline or be worthless;

 

litigation and regulatory enforcement risks, which may result in the diversion of management time and attention and the additional costs and demands on VIYI’s resources;

 

fluctuations in exchange rates between the foreign currencies in which VIYI 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 Venus, VIYI and New Venus 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 and attributable to VIYI, Venus, New Venus 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. Except to the extent required by applicable law or regulation, New Venus, VIYI and Venus undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement or to reflect the occurrence of unanticipated events.

 

v

 

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND
THE EXTRAORDINARY GENERAL MEETING

 

Q: What is the purpose of this document?

 

A: Venus is proposing to consummate the Business Combination and complete the additional transactions contemplated under the Merger Agreement and related matters, including increasing the number of authorized ordinary shares, change of name and reconstituting its Board of Directors, other changes of Venus’ Memorandum and Articles of Association, and adjournment of the Extraordinary General Meeting. The Business Combination and other transactions are described in this proxy statement. In addition, the Merger Agreement is attached to this proxy statement as Annex A, and is incorporated into this proxy statement by reference. This proxy statement contains important information about the proposed Business Combination and the other matters to be acted upon at the Extraordinary General Meeting. You are encouraged to carefully read this proxy statement, including “Risk Factors” and all the annexes hereto.

 

Q: What is being voted on at the Extraordinary General Meeting?

 

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

 

the Business Combination Proposal;

 

the Director Election Proposal;

 

the Nasdaq Stock Issuance Proposal;

 

the Share Increase Proposal;

 

the Name Change Proposal;

 

the Article Amendment Proposal; and

 

the Adjournment Proposal to approve the adjournment of the Extraordinary General Meeting in the event Venus does not receive the requisite shareholder vote to approve the Business Combination.

 

Approval of the Business Combination Proposal, Share Increase Proposal, Director Election Proposal, Nasdaq Stock Issuance Proposal and the Adjournment Proposal require the affirmative vote of the holders of a majority of the issued and outstanding Venus ordinary shares present and entitled to vote at the Extraordinary General Meeting to be passed as ordinary resolutions. The Name Change Proposal and Articles Amendment Proposal require the affirmative vote of at least a two-thirds majority of the issued and outstanding Venus ordinary shares present and entitled to vote at the Extraordinary General Meeting to be passed as special resolutions.

 

Assuming that a quorum is present, attending the Extraordinary General Meeting either in person or by proxy and abstaining from voting will have the same effect as voting against the Business Combination Proposal and no effect on the other Proposals and failing to instruct your bank, brokerage firm or nominee to attend and vote your shares will have no effect on any of the Proposals.

 

As of the record date, 1,375,000 shares held by our Sponsor, or approximately 22.73% of the outstanding Venus ordinary shares, would be voted in favor of each of the Proposals.

 

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

 

A: Yes. Venus will not undertake the Change of Name Proposal, the Nasdaq Share Issuance Proposal, the Share Increase Proposal, the Articles Amendment Proposal or the Director Election Proposal unless and until the Business Combination Proposal is approved by its shareholders.

 

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Q: How were the transaction structured and consideration for the Business Combination determined?

 

A: The Business Combination was the result of an extensive search for a potential transaction utilizing the global network and investing and operating experience of Venus’ Sponsor, management team and board of directors. The terms of the Business Combination were the result of extensive negotiations between Venus, Venus Merger Sub, VIYI and WiMi. Please see the section entitled “The Business Combination Proposal — Background of the Business Combination” for more information.

 

Q: Did the board of directors of Venus obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A: Yes. Venus retained King Kee Appraisal and Advisory Limited (Hong Kong), which we refer to as KKG or King Kee, to provide a valuation analysis and evaluate the fairness of the potential Business Combination of Venus and VIYI. On May 16, 2021, King Kee rendered its draft opinion to the Venus Board of Directors (which was subsequently confirmed by delivery of King Kee’s official opinion addressed to the Venus Board of Directors dated June 10, 2021), as to the fairness, from a financial point of view, to Venus of the Aggregate Merger Consideration (the “Aggregate Closing Merger Consideration”) to be issued and paid by Venus to the VIYI shareholders pursuant to the Merger Agreement.

 

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

 

A: Venus’ directors and officers may have interests in the Business Combination that are different from your interests as a shareholder. In August 2019, in connection with its formation, Venus issued an aggregate of 1,150,000 ordinary shares to Venus’ initial shareholders, including the Sponsor, which is referred to herein as “insider shares,” for an aggregate purchase price of $25,000. Simultaneously with the closing of the IPO on February 11, 2021, Venus consummated a private placement of 225,000 units (the “Private Units”) with its Sponsor at a price of $10.00 per Private Unit.

 

As a result, in the event that the Business Combination with VIYI is not completed, and Venus is not able to consummate a business combination with any other proposed target business before November 11, 2022, to such date which Venus has determined to extend to as needed in order to close a business combination transaction subject to deposit of further monthly extension fee, the securities held by the Sponsor and other insiders of Venus will become worthless.

 

In August 2019, our Sponsor Yolanda Management Corporation a British Virgin Islands exempted company, purchased an aggregate of 1,150,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.02 per share. Additionally, in connection with the completion of our IPO, our Sponsor, purchased an aggregate of 225,000 units at a price of $10.00 per unit for an aggregate purchase price of $2,250,000. Each private placement unit purchased by the Sponsor consists of one ordinary share, one right to receive one-tenth (1/10) of an ordinary share upon the consummation of a business combination and one warrant. Each private placement warrant is exercisable to purchase one-half of one ordinary share at a price of $11.50 per whole share.

 

As a result of these purchases, our Sponsor owns an aggregate of 1,375,000 ordinary shares which were acquired at an average price of $1.65 per share. Giving effect to the conversion of the rights into ordinary shares, our Sponsor would own an aggregate of 1,397,500 shares acquired for an average acquisition price of $1.62 per share. Investors in our IPO paid an average per share price of approximately $10.00 per share, without assigning a value to the warrants and rights included in the units. Therefore, our Sponsor may earn a positive return on the ordinary shares owned by it even if the ordinary shares trade following the completion of the business combination trade below $10.00 per share and the IPO investors experience a loss on their return. The likely benefit to our Sponsor and our directors and officers may influence their motivation for promoting the Business Combination and/or soliciting proxies for the approval of the Business Combination Proposal.

 

None of the officers or directors, or the Sponsor of Venus, have any affiliation with VIYI.

 

Q: Why is Venus proposing the Nasdaq Stock Issuance Proposal?

 

A: Venus is proposing the Nasdaq Stock Issuance Proposal in order to comply with Nasdaq listing rules, which require, among other things, shareholder approval of certain transactions that result in the issuance of 20% or more of a company’s outstanding voting power or shares of common stock (or ordinary shares in the case of

 

2

 

a Cayman Islands exempted company such as Venus) outstanding before the issuance of stock or securities or the issuance of stock or securities to any director, officer or “Substantial Shareholder.” In connection with the Business Combination, Venus is seeking shareholder approval for the issuance of up to 39,603,961 Venus ordinary shares to the VIYI shareholders. Because the number of securities that New Venus will issue in connection with the Business Combination is equal to 20% or more of Venus’ outstanding voting power and outstanding Venus ordinary shares in connection with the Business Combination, it is required to obtain shareholder approval of such issuances pursuant to Nasdaq listing rules. Shareholder approval of the Nasdaq Stock Issuance Proposal is also a condition to closing the Merger Agreement. See the section entitled “The Nasdaq Stock Issuance Proposal” for additional information.

 

We are not proposing any new equity incentive plan for stockholder action.

 

Q: Why is Venus proposing the Name Change Proposal?

 

A: Venus was created as a blank check company with no business operations and whose sole business purpose was to consummate a business combination with a target business. As such, the name “Venus Acquisition Corporation” has no business significance. Venus’ Board of Directors, in consultation with VIYI, has determined that the new proposed name “MicroAlgo Inc.” more properly conveys and reflects the business operations of VIYI as may be expanded following completion of the Business Combination.

 

Q: Why is Venus proposing the Share Increase Proposal?

 

A: Venus was created with only 50,000,000 ordinary shares authorized as its share capital for issuance. As a result of the terms of the Merger, Venus must issue to the former VIYI shareholders an aggregate of 39,603,961 Venus ordinary shares as well as ordinary shares issuable upon the conversion of the outstanding 4,825,000 Venus Rights into 482,500 Venus ordinary shares. Further, Venus must retain a reserve for the exercise of the 4,600,000 public warrants issued in its IPO into 2,300,000 ordinary shares and another 225,000 warrants held by its Sponsor exercisable into an additional 112,500 Venus ordinary shares. Therefore, in order to complete the Business Combination and to provide for additional Venus ordinary shares for potential future capital events such as an issuance of equity or an acquisition of additional business through the issuance of its equity securities, Venus will need to increase its authorized share capital.

 

Q: Why Venus is proposing Articles Amendment Proposal?

 

A: Venus is proposing the Articles Amendment Proposal to make our corporate existence perpetual as opposed to our current corporate existence terminating 12 months (or up to 21 months, if Venus extends the period of time to consummate a business combination) following the consummation of the IPO and removing various provisions applicable only to special purpose acquisition companies.

 

Q: When and where is the Extraordinary General Meeting?

 

A: The Extraordinary General Meeting will be held on October 21, 2022 at 10:00 AM Eastern Time. The Extraordinary General Meeting will be a completely virtual Meeting of shareholders, which will be conducted via live webcast. You will be able to attend the Extraordinary General Meeting online, vote and submit your questions during the Extraordinary General Meeting by visiting https://www.cleartrustonline.com/venus.

 

Q: Who may vote at the Extraordinary General Meeting?

 

A: Only holders of record of Venus ordinary shares as of the close of business on September 28, 2022 (the record date) may vote at the Extraordinary General Meeting. As of September 28, 2022, there were 6,050,000 Venus ordinary shares issued and outstanding and entitled to vote. Please see the section titled “The Extraordinary General Meeting — Record Date; Who is Entitled to Vote” for further information.

 

Q: What is the quorum requirement for the Extraordinary General Meeting?

 

A: Shareholders representing a majority of the shares of the shares issued and outstanding as of the record date and entitled to vote at the Extraordinary General Meeting must be present in person or represented by proxy in order to hold the Extraordinary General Meeting and conduct business. This is called a quorum. Venus ordinary shares will be counted for purposes of determining if there is a quorum if the shareholder (i) is present

 

3

 

and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian. In the absence of a quorum, the Extraordinary General Meeting will be adjourned to the same time and place seven days hence, or to such other time or place as is determined by the directors.

 

Q: How will the initial shareholders vote?

 

A: Venus’ initial shareholders, including the Sponsor, who as of the record date, owned 1,375,000 shares of Venus ordinary shares, or approximately 22.73% of the issued and outstanding Venus ordinary shares, have agreed to vote their respective shares acquired by them prior to the IPO in favor of the Business Combination Proposal and the other Proposals. The initial shareholders have also agreed that they will vote any shares they purchase in the open market in or after the IPO in favor of each of the Proposals. As of September 28, 2022 no such purchases have been made.

 

Our Sponsor, officers and directors have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us at the time of consummation of our IPO, to vote any founder shares and private placement shares held by them and any public shares purchased during or after this offering in favor of our business combination. As a result, in addition to our shareholder’s founder shares, we would need only 1,575,001, or approximately 34.24%, of the 4,600,000 public shares sold in this offering to be voted in favor of a transaction (assuming all outstanding shares are voted in order to have our business combination approved (assuming the over-allotment option is exercised). Further, in connection with our IPO, we issued 75,000 ordinary shares to Ladenburg Thalmann & Co., Inc, our lead underwriter.

 

In light of the fact that the Sponsor and Ladenburg Thalmann & Co Inc., which own in the aggregate approximately 23.97% of Venus ordinary shares as of the record date have agreed to vote their shares in favor of the Business Combination Proposal, the percentage of remaining shares needed to vote for the business combination proposal if only a quorum of Venus’ shares are present is any number greater that 26.03%.

 

Q: What do I need to do now?

 

A: You are urged to read carefully and consider the information contained in this proxy statement, including the annexes, and consider how the Business Combination will affect you as a Venus shareholder. You should vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card.

 

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

 

A: No. You are invited to attend the Extraordinary General Meeting to vote on the Proposals described in this proxy statement. However, you do not need to attend the Extraordinary General Meeting to vote your Venus ordinary shares. Instead, you may submit your proxy by signing, dating and returning the applicable enclosed proxy card in the pre-addressed postage paid envelope. Your vote is important. Venus encourages you to vote as soon as possible after carefully reading this proxy statement.

 

Q: Am I required to vote against the Business Combination Proposal in order to have my Venus ordinary shares redeemed?

 

A: No. You are not required to vote against the Business Combination Proposal in order to have the right to demand that Venus redeems your Venus 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 Venus ordinary shares are sometimes referred to herein as “redemption rights.” If the Business Combination is not completed, holders of Venus ordinary shares electing to exercise their redemption rights will not be entitled to receive such payments and their Venus ordinary shares will be returned to them.

 

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 October 19, 2022 (two (2) business days before the Extraordinary General Meeting), that Venus redeems your shares for cash, and (ii) submit your request in writing to Venus’ transfer agent, at the address

 

4

 

listed at the end of this section and deliver your shares to Venus’ transfer agent (physically, or electronically using the DWAC (Deposit/Withdrawal At Custodian) system) at least two (2) business days prior to the vote at the Extraordinary General Meeting. You are not required to vote for or against the Business Combination or any other Proposal in order to redeem your Venus ordinary shares.

 

Any corrected or changed written demand of redemption rights must be received by Venus’ transfer agent two business days prior to the Extraordinary General 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 Extraordinary General 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 Venus ordinary shares as of the record date. Any public shareholder who holds Venus ordinary shares on or before October 19, 2022 (two (2) business days before the Extraordinary General 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. If you have questions regarding the certification of your position or delivery of your shares, please contact:

 

VStock Transfer LLC

18 Lafayette Place

Woodmere, New York 11598

E-mail: shay@vstocktransfer.com

Tel: (212) 828-8436

Facsimile: (646) 536-3179

 

Q: How can I vote?

 

A: If you were a holder of record of Venus ordinary shares on September 28, 2022, the record date for the Extraordinary General Meeting, you may vote with respect to the Proposals in person at the Extraordinary General Meeting, or by submitting a proxy by mail so that it is received prior to October 21, 2022, in accordance with the instructions provided to you under the section titled “The Extraordinary General 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 you with 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 Extraordinary General 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 Venus ordinary shares with respect to non-discretionary matters unless you provide them with instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Venus believes the Proposals are non-discretionary and, therefore, your broker, bank or nominee cannot vote your Venus 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 do not provide instructions with your proxy, your bank, broker or other nominee may submit a proxy card expressly indicating that it is NOT voting your Venus ordinary shares; this indication that a bank, broker or nominee is not voting your Venus ordinary shares is referred to as a “broker non-vote.” Your bank, broker or other nominee can vote your Venus ordinary shares only if you provide instructions on how to vote. You should instruct your broker to vote your Venus ordinary shares in accordance with directions you provide.

 

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

 

A: Venus 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 Extraordinary General Meeting of Venus shareholders. Assuming that a quorum is present, attending the Extraordinary General Meeting either

 

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in person or by proxy and abstaining from voting will have the same effect as voting against the Business Combination Proposal and no effect on the other Proposals and failing to instruct your bank, brokerage firm or nominee to attend and vote your shares will have no effect on any of the Proposals.

 

Q: What happens if I sell my Venus ordinary shares before the Extraordinary General Meeting?

 

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

 

If you are the purchaser of Venus ordinary shares after the record date, you must either (i) have a written agreement from the seller or transferor of the Venus ordinary shares whereby the seller/transferor agrees to vote the Venus ordinary shares in accordance with your instructions, or (ii) obtain a proxy from the seller/transferor which authorizes you to vote the Venus ordinary shares held in record name of the seller/transferor.

 

Q. What happens to my Venus Rights and Venus Warrants if I vote to redeem my Ordinary Shares?

 

A. The Venus Units, Venus ordinary shares, Venus Rights and Venus Warrants are currently listed on the Nasdaq Capital Market under the symbols “VENA,” “VENAW”, “VENAR” and “VENAU,” respectively. The Units commenced trading on the Nasdaq Stock Market on February 8, 2021, and Venus announced that the holders of Units may elect to separately trade ordinary shares, Public Warrants and Public Right on February 11, 2021. The closing price of Venus’s Units, ordinary shares, Public Warrants and Public Rights on September 23, 2022, was $10.60, $10.35, $0.05 and $0.29, respectively.

 

Even if you elect to redeem your Ordinary Shares and the Business Combination is completed, you will still own the Venus Rights and Venus Warrants. Based on the closing price of Venus Warrants of $0.094 on Nasdaq as of April 14, 2022, the Venus Warrants of public shareholders, Sponsor, officers and directors had an aggregate market value of approximately $453,550 assuming no redemptions by Venus shareholders and $21,150, assuming redemptions of 4,600,000 ordinary shares for cash ($46.5 million in the aggregate). The $46.5 million, or 4,600,000 ordinary shares, represents the maximum redemption amount. If the Business Combination with VIYI is not completed, and we cannot source and complete a substitute business combination within the time frame set forth in our constitutive documents, the Public Warrants and Rights will expire and will be worthless.

 

Q: What happens to my Venus Rights if the Business Combination with VIYI is consummated?

 

A: Each holder of a Venus Right will receive one-tenth (1/10) of a New Venus ordinary share upon consummation of our Business Combination with VIYI. As soon as practicable upon the consummation of our Business Combination, we will direct registered holders of the rights to return their rights to our rights agent, VStock Transfer LLC. Upon receipt of the rights, the rights agent will issue to the registered holder of such right(s) the number of full ordinary shares to which he, she or it is entitled. We will notify registered holders of the rights to deliver their rights to the rights agent promptly upon consummation of such Business Combination and have been informed by the rights agent that the process of exchanging their rights for ordinary shares should take no more than a matter of days. No fractional New Venus ordinary shares will be issued in connection with the conversion of the rights, and any fractional entitlement will be rounded down to the nearest whole ordinary share.

 

Q: If I am a Venus warrant holder, can I exercise redemption rights with respect to my warrants?

 

A: No. The holders of our warrants have no redemption rights with respect to our warrants.

 

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Q: Do I have appraisal rights if I object to the Business Combination?

 

A: No. There are no appraisal rights available to holders of Venus ordinary shares in connection with the Business Combination under Cayman Islands law.

 

Q: Do I have appraisal rights in connection with the Merger with VIYI?

 

A: No. There are no appraisal rights available to holders of Venus ordinary shares in connection with the Business Combination with VIYI or any other proposal under Cayman Islands law.

 

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

 

A: Prior to the Business Combination, Venus’ public shareholders, who hold shares issued in the IPO, own approximately 76.03% of Venus’ issued and outstanding ordinary shares. After giving effect to the Business Combination and (i) to the issuance of the 39,603,961 New Venus ordinary shares issued to the current VIYI shareholders; (ii) to the conversion of the Venus rights into 482,500 New Venus ordinary shares, (iii) assuming no exercise of the New Venus Warrants and (iv) assuming no redemptions and maximum redemptions of Venus’ shares, Venus’ current public shareholders will own approximately 10.97% and 2.61% of the issued share capital of New Venus respectively.

 

After the Business Combination, assuming there are no redemptions of Venus’ shares and giving effect to (i) the issuance of the 39,603,961 Ordinary Shares in the Acquisition Merger, issued to the current VIYI shareholders; (ii) an aggregate of 482,500 shares are issued upon conversion of the Venus Rights, including private rights; (iii) an aggregate of 2,412,500 shares are issued upon conversion of the Venus Warrants, including private warrants; and (iv) an aggregate of 75,000 Ordinary shares are issued to Ladenburg as underwriter in our IPO, Venus’ current public shareholders will own approximately 15.16% of the issued share capital of Venus, Venus’ current directors, officers and affiliates will own approximately 3.11% of the issued share capital of Venus, and VIYI shareholders will own approximately 81.58% of the issued share capital of New Venus.

 

Assuming the maximum number of Venus’ shareholders elect to redeem their ordinary shares (an aggregate of 4,600,000 ordinary shares) the Venus’ public shareholders who hold shares issued in the IPO will own approximately 6.28% of Venus’ issued and outstanding shares of ordinary shares after giving effect to (i) the issuance of the 39,603,961 Ordinary Shares in the Acquisition Merger, issued to the current VIYI shareholders and (ii) an aggregate of 482,500 shares are issued upon conversion of the Venus Rights, including private rights; (iii) an aggregate of 2,412,500 shares are issued upon conversion of the Venus Warrants, including private warrants; and (iv) an aggregate of 75,000 Ordinary Shares issued to Ladenburg Thalmann as underwriter in our IPO. VIYI shareholders will own approximately 90.11% of the issued share capital of New Venus.

 

Q: Are VIYI’s shareholders required to approve the Business Combination?

 

A: Yes. VIYI’s shareholders’ approval of the Merger Agreement and the Plan of Merger is required to consummate the Business Combination. While VIYI’s shareholders have previously approved the Merger Agreement and Plan of Merger, as a result of Amendment No. 2 and Amendment No. 3 to the Merger Agreement, ViYi shareholders will be required again to approve the Merger Agreement and Plan of Merger, as amended. ViYi shareholders have also executed a Transaction Support Agreement which the VIYI Shareholders agreed, among other things, (i) not to redeem any of Venus ordinary shares which may be owned by them which may be acquired prior to the closing of the Business Combination; (ii) to vote at any meeting of the shareholders of Venus and VIYI all such Venus ordinary shares or VIYI ordinary shares, as the case may be, in favor of the Merger and the transactions contemplated by the Merger Agreement and in favor of the other proposals contained in the Venus Proxy Statement; (iii) to be bound by certain other covenants and agreements related to the Business Combination, and (iv) to be bound by certain transfer restrictions with respect to such VIYI ordinary shares prior to the closing of the Business Combination, in each case, on the terms and subject to the conditions set forth in the Transaction Support Agreement.

 

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

 

A: Yes. The obligations of each of Venus, VIYI, Venus Merger Sub, and WiMi to consummate the Business Combination are subject to conditions, as more fully described in the section titled “Summary of the Proxy Statement — The Business Combination and the Merger Agreement” in this proxy statement.

 

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

 

A: Yes. You may change your vote at any time before your proxy is voted at the Extraordinary General Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by attending the Extraordinary General Meeting in person and casting your vote by hand or by ballot (as applicable) or by submitting a written revocation stating that you would like to revoke your proxy that Venus’ proxy solicitor receives prior to the Extraordinary General Meeting. If you hold your Venus 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. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to our transfer agent VStock, at 18 Lafayette Place Woodmere, New York 11598, or our proxy solicitor Advantage Proxy, Inc, at PO Box 13581 Des Moines, WA 98198 or by email at ksmith@advantageproxy.com.

 

Q: Should I send in my share certificates now?

 

A: Yes. Venus’ shareholders who intend to have their shares redeemed should send their certificates or tender their shares electronically no later than two business days before the Extraordinary General Meeting. Please see the section titled “The Extraordinary General 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, Venus expects that the Business Combination will occur as soon as practicable following the Extraordinary General Meeting, but only after the registration of the Plan of Merger by the Registrar of Companies of the Cayman Islands with respect to Business Combination. Under the terms of the Merger Agreement, the Business Combination may be terminated by either party if closing has not been completed by September 30, 2021. On January 24, 2022, Venus, VIYI and WiMi entered into Amendment No. 1 to the Merger agreement to extend the outside termination date from September 30, 2021 to June 30, 2022. On August 2, 2022, Venus, VIYI and WiMi entered into Amendment No. 2 to the Merger agreement to extend the outside termination date from June 30, 2022 to November 11, 2022. The board of Venus has resolved to extend the period of time as needed to complete the business combination with VIYI up to November 11, 2022, which is the deadline that Venus has the option to extend to for consummating the business combination. Venus has deposited the monthly extension fee to the trust account to extend the time to complete the transaction to September 11, 2022 and will make further monthly extension fee payment of $153,555 per month to extend the period of time to consummate a business combination with VIYI up to November 11, 2022 as needed. Pursuant to the terms of Venus’ memorandum and articles of association and the trust agreement entered into between Venus and the transfer agent, in order to extend the time available for Venus to consummate its initial business combination, Venus’ insiders or its affiliates or designees, upon five (5) days’ advance notice prior to the applicable deadline, must deposit into the trust account $153,333 on or prior to the date of the applicable deadline.

 

Q: Who will manage New Venus?

 

A: Mr. Jie Zhao, who currently serves as Chairman of the board of directors of VIYI, Mr. Chengwei Yi, who currently serves as Chief Executive Officer of VIYI, and Mr. Li He, who currently serves as the Chief Financial Officer of VIYI, will serve in those respective roles as Chairman of the board of directors, Chief Technical Office and Chief Financial Officer respectively at Venus following the consummation of the Business Combination. For more information on Venus’ current and anticipated management, see the section titled “Venus’ Directors and Executive Officers after the Business Combination” in this proxy statement.

 

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

 

A: If the Business Combination is not consummated, Venus may seek another suitable business combination. If Venus does not consummate a business combination by the date that is 12 months from the closing of the IPO (or extended up to 21 months, as previously described), then pursuant to its Memorandum and Articles of Association, Venus will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $50,000 of interest to pay dissolution expenses) divided by the number of then issued and outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of Venus’ remaining shareholders and Board of Directors, liquidate and dissolve, subject in each case to Venus’ obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

 

The board of Venus has resolved to extend the period of time up to nine times to complete the business combination with VIYI. Venus has made seven monthly extensions and paid the monthly extension fee to extend the time to complete the transaction to September 11, 2022. Venus plans to deposit further monthly extension fee of $153,333 per month to the trust account up to nine times up to November 11, 2022 to further extend the period of time to consummate a business combination with VIYI.

 

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 Venus 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 Venus and utilized to fund working capital needs of Venus. As of April 14, 2022, there was approximately $46,932,997 in Venus’ trust account. Venus estimates that approximately $10.10 per issued and outstanding share issued in Venus’ 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 Venus.

 

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 Venus 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 Venus ordinary shares under Section 302 of the Internal Revenue Code (the “Code”). If the redemption qualifies as a sale or exchange of the Venus 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 Venus 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 Venus 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.”

 

Q: Will holders of Venus’ ordinary shares, Rights or Warrants be subject to U.S. federal income tax on the Venus ordinary shares 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,” there will be no taxable event to the pre-Business Combination holders of Venus securities.

 

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 or the enclosed proxy card you should contact Venus’ proxy solicitor, Advantage Proxy, Inc, toll-free at +1 (877) 870-8565 or by email at ksmith@advantageproxy.com.

 

You may also obtain additional information about Venus 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 VENUS’ SHAREHOLDERS

 

Pursuant to the rules of the SEC, Venus 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, unless Venus has received contrary instructions from one or more of such shareholders. Upon written or oral request, Venus will deliver a separate copy of this proxy statement to any shareholder at a shared address to which a single copy of this proxy statement was delivered and who wishes to receive separate copies in the future. Shareholders receiving multiple copies of the proxy statement may likewise request that Venus delivers single copies of this proxy statement in the future. Shareholders may notify Venus of their requests by contacting:

 

Venus’ proxy solicitor:

 

Advantage Proxy, Inc.

P.O. Box 13581

Des Moines, WA 98198

Toll Free Telephone: (877) 870-8565

Main Telephone: (206) 870-8565

E-mail: ksmith@advantageproxy.com

 

or

 

Venus Acquisition Corporation

477 Madison Avenue, 6th Floor

New York,

New York 10022

(917) 267-4568

 

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SUMMARY OF THE PROXY STATEMENT

 

This summary highlights selected information from this proxy statement but may not contain all of the information that may be important to you. Accordingly, you are encouraged to read carefully this entire proxy statement, including the Merger Agreement attached as Annex A and the Venus’ Memorandum and Articles of Association attached as Annex B. 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 by Venus’ shareholders.

 

The Parties to the Business Combination

 

Venus Acquisition Corporation

 

Venus is a blank check company incorporated in the Cayman Islands which was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities. Although Venus’ efforts in identifying prospective target businesses will not be limited to a particular geographic region, it intends to focus on businesses that have a connection to the Asian market. Venus believes that it will add value to these businesses primarily by providing them with access to the U.S. capital markets.

 

Venus has 12 months from the date of Venus’ IPO (February 11, 2021) to consummate a prospective business combination. However, if Venus anticipates that it may not be able to consummate a business combination within 12 months, it may, by resolution of its board of directors extend the period of time to consummate a business combination up to nine times, each by an additional one month (for a total of up to 21 months to complete a business combination). In the event Venus does not consummate a business combination within 12 months from the closing of its IPO (or up to 21 months as previously described), it will cease operations and liquidate the trust account and distribute the funds included therein to the holders of its securities sold in its IPO and dissolve. On February 11, 2022, the Company elected to extend the date by which it is required to complete a business combination to March 11, 2022 and deposited $153,333 into its Trust Account. In the following months after March 11, 2022, the Company elected to further extend the date by which it is required to complete a business combination to September 11, 2022 and the extension fee has been deposited. The Sponsor intends to extend the life of Venus till the consummation of the business combination with VIYI or November 11, 2022 which is earlier.

 

On February 11, 2021, Venus consummated the IPO of 4,000,000 units, at $10.00 per unit. In addition, Venus’ underwriters exercised in full the over-allotment option for an additional 600,000 units on the same date, resulting in the issuance and sale of an aggregate of 4,600,000 units, generating gross proceeds of $46,000,000. In addition, Venus sold to Ladenburg Thalmann & Co., Inc. a total of 75,000 Venus ordinary shares for $75.

 

Simultaneously with the closing of the IPO, Venus consummated a private placement with its Sponsor, Yolanda Management Corporation, for the purchase of 225,000 Units (the “Private Units”) at a price of $10.00 per Private Unit, generating total proceeds of $2,250,000. The Sponsor has also previously loaned Venus the sum of $289,000, which loan was payable upon the earlier of completion of the IPO or December 31, 2021. In connection with the completion of the IPO, the Sponsor instructed Venus to offset payment of the note with a corresponding portion of the subscription price for the Private Unit purchase.

 

After deducting the underwriting discounts, the pre-IPO Sponsor loan, offering expenses, and commissions from the IPO and the sale of the Private Units, a total of $46,460,000 was deposited into a trust account established for the benefit of Venus’ public shareholders with Wilmington Trust, National Association acting as trustee, at an account at Morgan Stanley, 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 June 30, 2022, Venus has approximately $10,899 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 in the trust account earning interest. As of June 30, 2022, there was $47,306,580 held in the trust account.

 

Venus’ units, ordinary shares, warrants and rights are each quoted on the Nasdaq Capital Market, under the symbols “VENAU,” “VENA,” “VENAW” and “VENAR,” respectively. Each Venus Unit consists of one share

 

 

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of ordinary share, one warrant entitling its holder to purchase one-half of one share of ordinary share at a price of $11.50 per whole share, and one right to receive one-tenth (1/10) of one share of ordinary share upon the consummation of the Business Combination. Venus’ units commenced trading on the Nasdaq Capital Market on February 11, 2021. Venus’ ordinary share, public rights and public warrants commenced trading on the Nasdaq Capital Market on April 9, 2021.

 

Since completing its initial public offering, Venus has been dedicating its management’s time and efforts to sourcing a target business. Venus has until February 11, 2022 to consummate a business combination. In addition, Venus has the option and has decided to extend the period of time to consummate a business combination up to nine times as needed, each by an additional month (for a total of 21 months) to complete a business combination (the “combination period”). In order to extend the time available for Venus to consummate a business combination, the Sponsor or its affiliate or designees must deposit into the Trust Account $153,333 (approximately $0.033 per public Ordinary Share), up to an aggregate of $1,380,000, or $0.30 per public ordinary share, on or prior to the date of the applicable deadline, for each one-month extension. The Board of Venus has resolved to extend the time to complete the transaction up to nine times to November 11, 2022. Venus has made seven monthly extensions and deposited the required extension fee to extend the time to complete the business combination to September 11, 2022. Venus plans to deposit further monthly extension fee up to nine times to extend the time to complete its business combination transaction with VIYI. The funds which have been provided to extend the time frame is in the form of loan to us from our Sponsor. The terms of any such loan are interest free and will be repayable only if Venus completes a business combination. If Venus is unable to complete a business combination within the combination period, Venus will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem 100% of the outstanding public Venus ordinary shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $50,000), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and Venus’ board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of Venus, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the trust account in the event Venus does not complete a business combination within the combination period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the public Venus ordinary shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the initial public offering price per unit ($10.00).

 

VIYI Algorithm Inc.

 

VIYI is not an operating company in the PRC but a Cayman Islands holding company with its operations conducted through its subsidiaries.

 

Historically, VIYI had a series of contractual arrangements with Shenzhen Yitian, a PRC company that functioned as a variable interest entity and is referred to as “the VIE” or “Yitian” in this proxy statement. VIYI does not own any equity interest in Shenzhen Yitian, instead, VIYI controls and receives the economic benefits of Shenzhen Yitian’s business operations through certain contractual arrangements. Accordingly, under U.S. GAAP, the financial results of the VIE are consolidated in VIYI’s financial statements.

 

Due to the business strategy adjustment, Shenzhen Yitian and its subsidiaries have no longer operated the business involving foreign investment restrictions since March 1, 2022, therefore VIYI can own direct equity interest in Shenzhen Yitian and its subsidiaries. On April 1, 2022, VIYI and Shenzhen Yitian have terminated the VIE arrangements and, as a result, VIYI’s WFOE holds 100% of the issued and outstanding shares of Shenzhen Yitian. VIYI now controls and receives the economic benefits of Shenzhen Yitian and its subsidiaries through equity ownership.

 

As a holding company with no material operations of its own, VIYI conducts substantially all of its operations through its subsidiaries.

 

VIYI is dedicated to the development and application of bespoke central processing algorithms. VIYI provides comprehensive solutions to customers by integrating central processing algorithms with software or hardware, or both, thereby helping them to increase the number of customers, improve end-user satisfaction, achieve direct cost savings, reduce power consumption, and achieve technical goals. The range of VIYI’s services includes algorithm optimization, accelerating computing power without the need for hardware upgrades, lightweight data processing, and data intelligence services. VIYI’s ability to efficiently deliver software and hardware optimization to customers through bespoke central processing algorithms serves as a driving force for VIYI’s long-term development.

 

 

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Currently, VIYI is focused on developing and delivering central processing algorithm solutions to customers engaged in internet advertisement and gaming, and intelligent chips. Moreover, VIYI’s customer base is rapidly growing due to a general demand for more efficient data processing in various industries driven by the growing internet population and prevalence of AI. According to the CIC Report, revenue of central processing algorithm services derived from internet advertisement and online gaming alone grew from RMB 2.2 billion in 2016 to RMB 6.9 billion in 2020, representing a CAGR of 32.7%. This market is expected to maintain a rapid growth trend, expanding at a CAGR of 15% during the period from 2020 to 2025.

 

In the mid-to-long term, VIYI will continue to adhere to its strategic mindset. By improving upon each iteration of VIYI’s one-stop intelligent data management solutions made possible by its proprietary central processing algorithm services, VIYI can help customers to enhance their service efficiency and make model innovations in business, and actively enhance the industry value of the central processing algorithm services in the general field of data intelligent processing industry.

 

On September 24, 2020, VIYI was incorporated under the laws of the Cayman Islands under the name of VIYI Technology Inc. On March 19, 2021, VIYI technology was renamed as VIYI Algorithm Inc. VIYI’s principal executive offices are located at Unit 507, Building C, Taoyuan Street, Long Jing High and New Technology Jingu Pioneer Park, Nanshan District, Shenzhen, 518052, People’s Republic of China. VIYI’s telephone number at this address is +86 (0755) 8654 9023. VIYI’s registered office in the Cayman Islands is located at Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. After the consummation of the Business Combination, VIYI will become a wholly owned subsidiary of Venus.

 

WiMi held 73% of VIYI’s issued and outstanding shares prior to the consummation of the Business Combination. WiMi was incorporated as an exempted company in the Cayman Islands on August 16, 2018. The ADSs of WiMi are listed on the Nasdaq Global Market under the symbol “WIMI”.

 

The following diagram illustrates VIYI’s corporate structure as of June 30, 2022, without giving effect to the Business Combination.

 

Diagram

Description automatically generated

 

Historically, VIYI had a series of contractual arrangements with Shenzhen Yitian. Due to the business strategy adjustment, Shenzhen Yitian and its subsidiaries have no longer operated the business involving foreign investment restrictions since March 1, 2022, therefore VIYI can own direct equity interest in Shenzhen Yitian and its subsidiaries. On April 1, 2022, VIYI and Shenzhen Yitian have terminated the VIE arrangements and, as a result, VIYI’s WFOE holds 100% of the issued and outstanding shares of Shenzhen Yitian. VIYI now controls and receives the economic benefits of Shenzhen Yitian and its subsidiaries through equity ownership.

 

 

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VIYI’s Hong Kong subsidiaries, including VIYI Technology Limited, Excel Crest Limited and Viwo Technology Limited, are holding companies, all of which have no substantial operations in Hong Kong. VIYI also has no plan for future business operations through any of the three Hong Kong subsidiaries. VIYI Technology Limited has only incurred general and administrative and financial expenses, together with certain research and development expenses for the year ended December 31, 2021. Excel Crest Limited has only incurred general and administrative expenses, which consist primarily of the compensation for its management and administrative personnel and office rental expenses for the office based in Hong Kong. Viwo Technology Limited has no operations at all as of December 31, 2021. These three Hong Kong subsidiaries will remain a part of VIYI’s organizational structure. VIYI does not have any directors or officers located in Hong Kong currently. Given that (1) VIYI’s subsidiaries located in Hong Kong have no substantial operations, and (2) pursuant to the Basic Law of the Hong Kong Special Administrative Region (the “Basic Law”), which is a national law of the PRC and the constitutional document for Hong Kong, national laws of the PRC shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to defense and foreign affairs, as well as other matters outside the autonomy of Hong Kong), VIYI does not believe there will be material effects on its Hong Kong Subsidiaries’ operations and financial results resulting from the legal and operational risks relating to the PRC regulations. As such, the legal and operational risks associated with VIYI’s operations in the PRC apply to its operations in Hong Kong only to the extent applicable. However, there remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. VIYI is also subject to the risks of uncertainty about any future actions the Chinese government or authorities in Hong Kong may take in this regard.

 

Description of the historical VIE Contractual Agreements

 

The historical contractual arrangements consist of a series of four agreements, shareholders power of attorney and irrevocable consent letters (collectively the “Contractual Arrangements”, which were signed on December 24, 2020). The significant terms of the Contractual Agreements are described below.

 

Exclusive Business Cooperation Agreement

 

Under the exclusive business cooperation agreement between Shenzhen Weiyixin and Shenzhen Yitian dated December 24, 2020, Shenzhen Weiyixin has the exclusive right to provide to Shenzhen Yitian technical support, consulting services and other services related to, among other things, use of software, operation maintenance, technical support, and management and marketing consulting. Shenzhen Weiyixin has the exclusive ownership of intellectual property rights created as a result of the performance of this agreement. Shenzhen Yitian agrees to pay Shenzhen Weiyixin service fee at an amount equal to Shenzhen Yitian’s consolidated gross profits after offsetting previous year’s loss (if any). This agreement will remain effective until the date when it is terminated by Shenzhen Weiyixin.

 

Exclusive Option Agreement

 

Pursuant to the exclusive option agreement dated December 24, 2020, by and among Shenzhen Weiyixin, Shenzhen Yitian and each of the shareholders of Shenzhen Yitian, each of the shareholders of Shenzhen Yitian irrevocably granted Shenzhen Weiyixin an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of their equity interests in Shenzhen Yitian, and the purchase price shall be the lowest price permitted by applicable PRC law. Shenzhen Yitian and each of its shareholders undertake that, without the prior written consent of Shenzhen Weiyixin, they may not increase or decrease the registered capital, amend its articles of association or change registered capital structure. This agreement will remain effective unless terminated in the event that the entire equity interests held by registered shareholders in Shenzhen Yitian have been transferred to Shenzhen Weiyixin and/or any other person designated by Shenzhen Weiyixin. Any transfer of equity interests pursuant to this agreement would be subject to PRC regulations and to any changes required thereunder.

 

Equity Interest Pledge Agreement

 

Pursuant to the equity interest pledge agreement dated December 24, 2020, by and among Shenzhen Weiyixin, Shenzhen Yitian and the shareholders of Shenzhen Yitian, the shareholders of Shenzhen Yitian pledged all of their equity interests in Shenzhen Yitian to Shenzhen Weiyixin to guarantee their and Shenzhen Yitian’s obligations under the contractual arrangements including the exclusive business corporation agreement, the exclusive option agreement, the loan agreement, the power of attorney and this equity interest pledge agreement, as well as any loss incurred due to events of default defined therein and all expenses incurred by Shenzhen Weiyixin in enforcing such obligations of Shenzhen Yitian or its shareholders. The shareholders of Shenzhen Yitian agree that, without

 

 

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Shenzhen Weiyixin’s prior written approval, during the term of the equity interest pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests. The pledge under the equity interest pledge agreement shall take effect upon the completion of registration with the relevant administration for industry and commerce, which was completed as of January 29, 2021, and shall remain valid until the earlier of (1) the completion of all contractual obligations and the repayment of all secured debts, or (2) the time when the pledgee and/or the appointed person(s) have decided, subject to the PRC laws, to purchase the entire equity interests hold by the pledgor in Shenzhen Yitian, and such equity interests of Shenzhen Yitian have been transferred to the pledgee and/or the appointed person(s) in accordance with the law such that the pledgee and/or the appointed person(s) may lawfully engage in the business of Shenzhen Yitian.

 

Loan Agreement

 

Pursuant to the loan agreement dated December 24, 2020, Shenzhen Weiyixin agreed to provide loans to the registered shareholders of Shenzhen Yitian, to be used exclusively as investment in Shenzhen Yitian. The loan must not be used for any other purposes without the relevant lender’s prior written consent. The term of the loan agreement commences from the date of the agreement and ends on the date the lender exercises its exclusive option under the relevant exclusive option agreement, or when certain defined termination events occur, such as if the lender sends a written notice demanding repayment to the borrower, or upon the default of the borrower, whichever is earlier. After the lender exercises its exclusive option, the borrower may repay the loan by transferring all of its equity interest in Shenzhen Yitian to the lender, or a person or entity nominated by the lender, and use the proceeds of such transfer as repayment of the loan. If the proceeds of such transfer are equal to or less than the principal of the loan under the loan agreement, the loan is considered interest-free. If the proceeds of such transfer are higher than the principal of the loan under the loan agreement, any surplus is considered interest for the loan.

 

Power of Attorney

 

Pursuant to the power of attorney dated December 24, 2020, by Shenzhen Weiyixin and each shareholder of Shenzhen Yitian, respectively, each shareholder of Shenzhen Yitian irrevocably authorized Shenzhen Weiyixin or any person(s) designated by Shenzhen Weiyixin to act on such shareholders’ behalf with respect to all matters concerning such shareholding, including, without limitation, the power to convene, participate in and vote at shareholder’s meetings, the power to nominate directors and appoint senior management, the power to sell or transfer such shareholder’s equity interest in Shenzhen Yitian, and other shareholders’ rights permitted by PRC law and the Articles of Association of Shenzhen Yitian. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each shareholder remains as a shareholder of Shenzhen Yitian.

 

Spousal Consent Letters

 

Pursuant to these letters, the spouses of the applicable shareholders of Shenzhen Yitian unconditionally and irrevocably agreed that the equity interest in Shenzhen Yitian held by them and registered in their names will be disposed of pursuant to the equity pledge agreement, the exclusive option agreement, and the power of attorney. Each of their spouses agreed not to raise any claim with respect to the equity interest in Shenzhen Yitian held by their respective spouses. In addition, in the event that any spouse obtains any equity interest in Shenzhen Yitian held by his or her spouse for any reason, he or she agreed to be bound by the contractual arrangements.

 

Based on the foregoing historical contractual arrangements, which grant Shenzhen Weiyixin effective control of Shenzhen Yitian and enable Shenzhen Weiyixin to receive all of their expected residual returns, VIYI accounts for Shenzhen Yitian as a VIE and VIYI is the primary beneficiary of the VIE, for accounting purposes, based upon such contractual arrangements. Accordingly, under U.S. GAAP, the financial results of the VIE are consolidated in VIYI’s financial statements on December 24, 2020. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of VIYI.

 

The information contained on, or accessible through, VIYI’s website is not incorporated by reference into this proxy statement, and you should not consider any information contained on, or that can be accessed through, VIYI’s website as part of this proxy statement or in deciding how to vote your shares. For more information on VIYI, please see the sections entitled “Business of VIYI” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of VIYI.”

 

 

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Effect of the Completion of the Business Combination Upon Our Corporate Ownership Structure

 

Assuming the Business Combination with VIYI is consummated, the corporate structure described above, will remain the same. However, VIYI will be owned by Venus, which in turn will be owned by its shareholders, including the shareholders of VIYI receiving the shares in the Merger, the IPO investors and our Sponsor.

 

The following diagrams and table illustrate the ownership structure of Venus immediately following the Business Combination. The ownership percentages set forth below do not take into the exercise of any issued and outstanding Venus Warrants into New Venus ordinary shares. None of the parties in the chart below purchase Venus ordinary shares in the open market; and other than the conversion of outstanding Venus rights into 482,500 New Venus ordinary shares, there are no other issuances of equity by Venus prior to or in connection with the consummation of the Business Combination.

 

The diagrams below depict a simplified version of New Venus’ organizational structure immediately following the completion of the Business Combination under two scenarios.

 

Scenario 1 Combined (Assuming No Redemptions Into Cash):

 

Diagram, table

Description automatically generated

 

Scenario 2 Combined (Assuming Maximum Redemptions Into Cash)

 

Table

Description automatically generated

 

The equity interests shown in the table below were calculated based on the assumptions that (i) no Venus shareholder exercises its redemption, and (ii) Maximum Venus shareholder properly exercises its redemption, or 4,600,000 ordinary shares.

 

    Assuming No
Redemption
    Assuming
Maximum
Redemption
 
Venus’ public shareholders     10.97 %     1.11 %
Venus’ initial shareholders     3.03 %     3.36 %
VIYI shareholders     85.84 %     95.35 %

 

 

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Transfer of cash within VIYI’s organization

 

VIYI operates in two segments, CPA and intelligent chips and software services. For intelligent chips and software services segment, it is mainly operated by VIYI holding and subsidiaries in Singapore, Fe-da Electronics. Both VIYI, and Fe-da Electronics has its own operating cashflow from operation of the segment. The CPA segment is mainly operated by subsidiaries in the PRC, each entity has its own operating cash flow. VIYI and Fe-da had intercompany transfers in cash of approximately RMB 8.0 million (USD 1.2 million) and the VIE had intercompany transfer of approximately RMB 106 million to VIYI’s WFOE for the year ended December 31, 2020. VIYI and VIYI Ltd had intercompany transfers in cash of approximately RMB 16.8 million (USD 2.5 million) and VIYI’s WFOE transferred RMB 12.7 million to the VIE for the year ended December 31, 2021. From January 1, 2022 to April 1, 2022, historical VIE had intercompany transfer of approximately RMB 17.6 million to VIYI’S WFOE.

 

For further details, please refer to page 28 to 31 “Summary Financial Information of VIYI”. There was no dividends or distribution made between VIYI, its subsidiaries and the historical VIE. VIYI has established controls and procedures for cash flows within its organization. Each transfer of cash between Cayman Islands holding company and a subsidiary, the VIE is subject to internal approval. In general cash is maintained in holding company level (VIYI for companies outside PRC and VIYI WFOE for entities inside PRC) for more efficient cash management.

 

VIYI has no present plans to distribute earnings and instead it plans to retain VIYI’s retained earnings to continue to grow VIYI’s business. No dividends or distribution has been declared to paid to VIYI from subsidiaries and no dividends or distribution was made to any U.S. investors.

 

Effects of PRC foreign exchange regulations on VIYI’s ability to transfer assets within VIYI’s organization

 

Current foreign exchange and other regulations in the PRC may restrict VIYI’s PRC subsidiaries in their ability to transfer their net assets to VIYI and its subsidiaries in Singapore and Hong Kong and to New Venus following the Business Combination and completion of the Merger. The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under VIYI’s current corporate structure, VIYI’s Cayman Islands holding company may rely on dividend payments from VIYI’s PRC subsidiaries to fund any cash and financing requirements VIYI may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of VIYI’s PRC subsidiaries in China may be used to pay dividends to VIYI. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, VIYI needs to obtain SAFE approval to use cash generated from the operations of VIYI’s PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

 

The Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification (the “Circular 3”) which took effect on January 26, 2017, stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) under the principle of the genuine transaction, banks shall check the board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting profits.

 

In light of the flood of capital outflows of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of VIYI’s shareholders regulated by such policies fail to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents VIYI from obtaining sufficient foreign currencies to satisfy VIYI’s foreign currency demands, VIYI may not be able to pay dividends in foreign currencies to its shareholders. For more information on the effect of PRC foreign exchange regulations affecting the transfer of assets between VIYI and the PRC subsidiaries, please see the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of VIYI — Liquidity and Capital Resources.

 

 

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Venus Merger Sub

 

Venus Merger Sub was incorporated on May 25, 2021 under the laws of Cayman Islands for the purpose of effecting the Business Combination and to serve as the vehicle for, and be subsumed into, VIYI pursuant to the Business Combination.

 

The Business Combination and the Merger Agreement

 

The Merger Agreement was entered into by and among Venus, Venus Merger Sub, VIYI and WiMi on June 10, 2021. Pursuant to the terms of the Merger Agreement, the Venus Merger Sub will merge with and into VIYI, with VIYI being the surviving entity and becoming a wholly owned subsidiary of Venus. Venus shall continue to be publicly listed and will change its name to “MicroAlgo Inc.” immediately after the consummation of the Business Combination. New Venus refers to Venus immediately following the consummation of the Business Combination.

 

The aggregate consideration for the Business Combination is $400,000,000, payable in the form of approximately 39,603,961 newly issued Venus ordinary shares to VIYI shareholders. At the closing of the Business Combination, the issued and outstanding shares and all other equity interests in VIYI held by VIYI shareholders will be cancelled and ceased to exist, in exchange for the issuance of an aggregate of approximately 39,603,961 Venus ordinary shares, among which approximately 792,079 Venus ordinary shares to be issued to WiMi will be held in escrow to satisfy any indemnification obligations incurred under the Merger Agreement.

 

On January 24, 2022, Venus, VIYI and WiMi entered into an amendment to the Merger Agreement. The purposes of the amendment were to: (1) extend the outside termination date of the proposed merger to June 30, 2022; (2) provide for the termination of the existing backstop agreement and the new backstop agreement with the majority shareholder of VIYI as described below in this Form 8-K; and (3) acknowledge the existence of new potential governmental approvals under recent changes in China law.

 

On August 2, 2022, Venus, VIYI and WiMi entered into a second amendment to the Merger Agreement. The purposes of the amendment were to: (1) extend the outside termination date of the proposed merger to November 11, 2022; (2) include as a closing condition the requirement that the requisite vote of the shareholders of VIYI has been obtained; (3) include the requirement of the audited financial statement of VIYI for the year ended 2021 and reviewed financial statement of VIYI for the periods ended June 30, 2022 and March 31, 2022; and (4) make conforming changes to reflect that Purchaser will file a proxy statement with the Securities and Exchange Commission following the execution of the Amendment relating to the approval of the Purchaser’s shareholders of the Merger and the transactions contemplated by the Merger Agreement. In order to extend the deadline for Venus to consummate a business combination to November 11, 2022, the Board has resolved to extend the time to complete the business combination up to nine times to November 11, 2022 and plans to deposit the required monthly extension fee to the trust account.

 

On August 3, 2022, Venus, VIYI and WiMi entered into a third amendment to the Merger Agreement. The purposes of the amendment were to remove the approval of issuance by Venus of an aggregate of up to 1,485,149 Venus ordinary shares which may be issued to the Backstop Investor pursuant to the Backstop Agreement.

 

On August 10, 2022, Venus, VIYI and WiMi entered into a fourth amendment to the Merger Agreement (the “Amendment”). The purposes of the amendment were to change the requirement of VIYI’s quarterly reviewed financial statement for the period ended June 30, 2022 as a covenant and other conforming changes regarding the current status.

 

For more information about the Business Combination, please see the sections titled “Business Combination Proposal.” A copy of the Merger Agreement and Amendments to the Merger Agreement are attached to this proxy statement as Annex A.

 

Post-Business Combination Structure and Impact on the Public Float

 

The following table illustrates the ownership structure of Venus immediately following the Business Combination. The equity interests shown in the table below were calculated based on the assumptions that (i) no Venus shareholder exercises its redemption, (ii) none of the parties in the chart below purchase Venus ordinary shares in the open market; and (iii) other than the conversion of outstanding Venus rights into 482,500 New Venus ordinary shares, there are no other issuances of equity by Venus prior to or in connection with the consummation of the Business Combination. Notwithstanding the foregoing, the ownership percentages set forth below do not take into account the exercise of any issued and outstanding Venus Warrants into New Venus ordinary shares.

 

 

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    Scenario 1
Combined
(Assuming No
Redemptions
Into Cash)
    Scenario 2
Combined
(Assuming
Maximum
Redemptions
Into Cash)
 
Weighted average shares calculation, basic and diluted                
Venus public shares     4,600,000        
Venus shares converted from rights     482,500       482,500  
Venus Sponsor shares     1,375,000       1,375,000  
Venus shares issued to underwriter     75,000       75,000  
Venus shares issued in the Business Combination     39,603,961       39,603,961  
Weighted average shares outstanding     46,136,461       41,536,461  
Percent of shares owned by VIYI shareholders(1)     85.8 %     95.3 %
Percent of shares owned by underwriter     0.2 %     0.2 %
Percent of shares owned by Venus initial and public shareholders     14.0 %     4.5 %

 

 
(1) Assuming no redemptions into cash, WiMi will beneficially own 63.32% of New Venus’ ordinary shares after the consummation of the Business Combination and completion of this offering by way of its ownership of VIYI ordinary shares.

 

Of the total 39,603,961 ordinary shares issued in the merger to the VIYI shareholders, 2,500,000 ordinary shares will not be subject to lockup restrictions.

 

Domestic Issuer Status

 

After the consummation of the Business Combination and the completion of this offering, New Venus will remain a domestic filer until June 30, 2023, on which date it will reassess whether New Venus qualifies as a “foreign private issuer”. New Venus may qualify as a “foreign private issuer” on June 30, 2023, after which New Venus will become exempt from certain rules under the Exchange Act that would otherwise apply if New Venus was a domestic issuer. For example, as a “foreign private issuer”, New Venus:

 

will not be required to provide as many Exchange Act reports, or as frequently or as promptly, as domestic issuers with securities registered under the Exchange Act. For example, New Venus will only be required to furnish current reports on Form 6-K any information that New Venus (a) makes or is required to make public under the laws of the Cayman Islands, (b) files or is required to file under the rules of any stock exchange or (c) otherwise distributes or is required to distribute to its shareholders. In addition, New Venus will not be required to file its annual report on Form 10-K, which may be due as soon as 60 days after its fiscal year end. As a “foreign private issuer”, New Venus will be required to file an annual report on Form 20-F within four months after its fiscal year end;

 

will not be required to provide the same level of disclosure on certain issues, such as executive compensation or be required to conduct advisory votes on executive compensation;

 

will be exempt from filing quarterly reports under the Exchange Act with the SEC;

 

will not be subject to the requirement to comply with Regulation Fair Disclosure, or Regulation FD, which imposes certain restrictions on the selected disclosure of material information;

 

will not be required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and

 

will not be required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

 

 

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If the actual facts are different from these assumptions, the percentage ownership retained by Venus’ public shareholders following the Business Combination will be different. The public warrants and private placement warrants will become exercisable upon the completion of the Business Combination and will expire five (5) years after the completion of the Business Combination or earlier upon redemption or liquidation.

 

Management and Board of Directors Following the Business Combination

 

Effective as of the closing of the Business Combination, the board of directors of Venus will consist of five members, four of whom will be nominated by VIYI. In order to continue to satisfy the Nasdaq Capital Market listing standards, at least three of the members of the board of directors will be independent in accordance with Nasdaq listing rules. Additionally, at least one member must be designated and qualify as a “financial expert” under Securities and exchange Commission rules and regulations. See section titled “Venus’ Directors and Executive Officers after the Business Combination” for additional information.

 

Other Documents Relating to the Business Combination

 

Backstop Agreement

 

Venus previously executed backstop agreements with two different parties as of June 10, 2021 and January 24, 2022, respectively, each of which agreements terminated in accordance with their respective terms. No ordinary shares of Venus were purchased by them under such backstop agreements. Venus and VIYI intend to identify, if possible, one or more parties to enter into a backstop agreement similar to the ones previously executed (or similar arrangements to accomplish the transactions contemplated thereby) to assist in: (i) acquiring Venus ordinary shares in open market or in private transactions prior to the closing of the Business Combination at the then prevailing market price of the shares, or (ii) acquiring Venus ordinary shares concurrently with the closing of the Business Combination at a price per share of no greater than the redemption price per share plus $0.05 an agreed upon premium above such redemption price; and in each case waiving the redemption rights associated with any ordinary shares so purchased. As of the date hereof, no replacement backstop investor has been identified.

 

Any such backstop investor will not be affiliated with any of the officers or directors of Venus. The officers and directors of Venus have not committed to purchasing any of our Ordinary Shares or other securities and are not parties to the Backstop Agreement.

 

Registration Rights Agreement

 

In connection with the transactions, Venus and VIYI shareholders have entered into a registration rights agreement as of June 10, 2021, to provide for the resale registration with respect to the shares issued to VIYI shareholders in connection with the Business Combination. Pursuant to this agreement, we have agreed that upon demand New Venus will file up to three registration statements under the Securities Act of 1933, as amended, to provide for the resale of the Merger Shares and to also include these securities in future registration statement filed by New Venus.

 

Transaction Support Agreement

 

In connection with the transactions, Venus and each VIYI shareholder have entered into a Company Transaction Support Agreement as of June 10, 2021, pursuant to which VIYI shareholders agreed, among other things, (i) not to redeem any of Venus ordinary shares which may be owned by them which may be acquired prior to the closing of the Business Combination; (ii) to vote at any meeting of shareholders of Venus and VIYI all such Venus ordinary shares or VIYI ordinary shares, as the case may be, in favor of the Business Combination and the transactions contemplated by the Merger Agreement and in favor of the other proposals contained in Venus’ Proxy statement; (iii) to be bound by certain other covenants and agreements related to the Business Combination, and (iv) to be bound by certain transfer restrictions with respect to such VIYI ordinary shares prior to the closing of the Business Combination, in each case, on the terms and subject to the conditions set forth in the Company Transaction Support Agreement.

 

Escrow Agreement

 

In connection with the transactions, Venus, WiMi and an escrow agent will enter into an Escrow Agreement pursuant to which approximately 792,079 Venus ordinary shares to be issued by Venus to WiMi will be held in

 

 

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escrow to secure the indemnification obligations as contemplated by the Merger Agreement. The form of Escrow Agreement shall be in the customary form used by such escrow agent for similar transactions consistent with the terms of the Merger Agreement.

 

Lock-up Agreements

 

In connection with the transactions, Venus will enter into a Lock-Up Agreement (the form of which is attached as Exhibit B to the Merger Agreement) with each VIYI shareholder and Venus’ Sponsor, Yolanda Management Corporation, with respect to certain lock-up arrangements, which will provide that such VIYI shareholder and Venus’ Sponsor will not, within a certain period of time from the closing of the Business Combination, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, subject to express carve-outs therein, any of the shares issued in connection with the Business Combination, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such shares, whether any of these transactions are to be settled by delivery of any such shares, in cash, or otherwise.

 

The Lock-up Agreement provides that except for an aggregate of 2,500,000 Venus ordinary shares received by certain VIYI shareholders, all shares held by the parties to the lock-up agreements will be subject to restrictions of sale, transfer or assignment as follows: (A) 50% of the shares until the earlier of (i) six (6) months after the date of the consummation of the Merger or (ii) the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after the Merger, and (B) the remaining 50% of the shares may not be transferred, assigned or sold until six months after the date of the consummation of the Merger.

 

Non-competition and Non-solicitation Agreements

 

In connection with the transactions, Venus and VIYI will enter into a Non-competition and Non-solicitation Agreement (the form of which is attached as Exhibit E to the Merger Agreement) with each VIYI shareholder in favor of Venus and VIYI. Pursuant to these agreements, the VIYI shareholders shall agree not to compete with VIYI’s business, nor support any affiliate in competing with VIYI’s business during the two years following the closing of the Merger. Additionally, none of such persons will encourage, induce or solicit any employee, director or officer of VIYI to leave VIYI.

 

Redemption Rights

 

Venus’ public shareholders will be provided with the opportunity to redeem all or a portion of their public shares upon the completion of a business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of a business combination, including interest (which interest shall be net of taxes payable) divided by the number of then issued and outstanding public shares. As of June 10, 2021, this would have amounted to approximately $10.10 per share.

 

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

 

(i) hold public Venus ordinary shares or hold public Venus ordinary shares through Venus Units and you elect to separate your Venus Units into the underlying public Venus ordinary shares, public Venus Rights and public Venus Warrants prior to exercising your redemption rights with respect to the public Venus ordinary shares; and

 

(ii) prior to October 19, 2022, (a) submit a written request to the transfer agent that Venus redeems your public shares for cash and (b) deliver your public shares to the transfer agent, physically or electronically through DTC.

 

Holders of outstanding Venus Units must separate the underlying Venus ordinary shares, Venus Warrants and Venus Rights prior to exercising redemption rights with respect to the Venus ordinary shares. If Venus Units are registered in a holder’s own name, the holder must deliver the certificate for its Venus Units to the transfer agent with written instructions to separate the Venus 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 Venus ordinary shares from the Venus Units.

 

If a broker, dealer, commercial bank, trust company or other nominee holds Venus 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 Venus Units into their individual component parts. The beneficial owner’s nominee must

 

 

21

 

 

send written instructions by facsimile to the transfer agent. Such written instructions must include the number of Venus Units to be separated and the nominee holding such Venus Units. The beneficial owner’s nominee must also initiate electronically, using DTC’s DWAC system, a withdrawal of the relevant Venus Units and a deposit of an equal number of Venus ordinary shares, Venus Warrants and Venus 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 Venus ordinary shares from the Venus 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 Venus ordinary shares to be separated in a timely manner, they will likely not be able to exercise their redemption rights.

 

In seeking shareholder approval of the Business Combination, Venus’ Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the ordinary shares sold in Venus’ IPO, which Venus refers to as the “Excess Shares.” However, Venus would not be restricting shareholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination.

 

The Proposals

 

At the Extraordinary General Meeting, the Venus’ shareholders will be asked to vote on the following:

 

the Business Combination Proposal to approve the Business Combination;

 

the Director Election Proposal;

 

the Nasdaq Stock Issuance Proposal;

 

the Share Increase Proposal;

 

the Name Change Proposal;

 

the Articles Amendment Proposal; and

 

The Adjournment Proposal to approve the adjournment of the Extraordinary General Meeting in the event Venus does not receive the requisite shareholder vote to approve the Business Combination.

 

Please see the sections titled “The Extraordinary General Meeting” on page 1 for more information on the foregoing Proposals.

 

Voting Securities, Record Date

 

As of September 28, 2022, there were 6,050,000 shares of Venus ordinary shares issued and outstanding. Only Venus’ shareholders who hold shares of Venus ordinary shares of record as of the close of business on September 28, 2022 (“Record Date”) are entitled to vote at the Extraordinary General Meeting or any adjournment of the Extraordinary General Meeting. Approval of the Business Combination Proposal will require the affirmative vote of a majority of the votes cast by the holders of the issued Venus ordinary shares entitled to vote thereon which were present at the meeting to approve the Business Combination. Approval of the Share Increase Proposal, Directors Election Proposal, the Nasdaq Stock Issuance Proposal and Adjournment Proposal will require the affirmative vote of at least a majority of the votes cast by the holders of the issued Venus ordinary shares present in person or represented by proxy at the Extraordinary General Meeting and entitled to vote on such matter. Approval of the Name Change Proposal, and the Articles Amendment Proposal will require the affirmative vote of at least a two-thirds majority of the votes cast by the holders of the issued Venus ordinary shares of the Company present in person or represented by proxy at the Extraordinary General Meeting and entitled to vote on such matter (to be passed as special resolutions).

 

As of September 28, 2022, the initial shareholders (our Sponsor) owned and were entitled to vote 1,375,000 shares of Venus ordinary shares, or approximately 22.73% of Venus’ issued and outstanding shares. With respect to the Business Combination, the initial shareholders which own approximately 22.73% of Venus’ outstanding shares as of the Record Date, have agreed to vote its Venus ordinary shares in favor of Business Combination Proposal although there is no agreement in place with respect to voting on the other Proposals.

 

 

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Anticipated Accounting Treatment

 

The Business Combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, Venus will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the holders of VIYI expecting to have a majority of the voting power of the post-combination company, VIYI’s senior management comprising all of the senior management of New Venus, the relative size of VIYI compared to Venus, and VIYI’s operations comprising the ongoing operations of New Venus. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of VIYI’s issuing shares for the net assets of Venus, accompanied by a recapitalization. The net assets of Venus will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of VIYI.

 

Regulatory Approvals

 

The Business Combination and the other transactions contemplated by the Merger 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 Cayman Islands, except for the registration by the Registrar of Companies in the Cayman Islands of the Plan of Merger. We are not presently required to obtain any license or regulatory approval from any PRC based authorities to complete the Business Combination.

 

In the opinion of VIYI’s PRC counsel, Guangdong Jiayin law firm, a copy of which is field as an exhibit to this Proxy Statement, VIYI’s PRC subsidiaries are in possession of the requisite licenses and permits from the PRC government authorities that are material to the business operations of VIYI in the PRC. However, VIYI, its PRC subsidiaries, are subject to the risks of uncertainty about any future actions of the PRC government which may result in a material change in VIYI’s operations. For a description of the licenses and approvals that VIYI’s PRC subsidiaries are required to obtain for the operations in China as of the date of this proxy statement, see “Regulations Applicable to VIYI.”

 

PRC counsel has further advised that permits, licenses, or operations of some of VIYI’s subsidiaries may be subject to challenges from the PRC authorities. VIYI may not be able to timely obtain or maintain all the required licenses or approvals, permits, or to complete filing, registrations or other formalities necessary for VIYI’s present or future operations, and VIYI may not be able to renew certain permits or licenses or renew certain filing, registration or other formalities. For risks relating to licenses and approvals required for the operations of VIYI in China, see “Risk Factors — Risk Factors Relating to VIYI’s Business and Industry — VIYI may be materially and adversely affected by the complexity, uncertainties and changes in PRC regulation of the Internet industry and companies.”

 

According to the opinion provided by Guangdong Jiayin law firm, VIYI is currently not required to obtain permissions from any of the PRC authorities to operate and issue VIYI’s ordinary shares to foreign investors. In addition, VIYI and VIYI’s subsidiaries are not required to obtain permission or approval from the PRC authorities including the CSRC and Cyberspace Administration of China (“CAC”), nor has VIYI, VIYI’s subsidiaries, applied for or received any denial for the operation. However, there are substantial uncertainties regarding the interpretation and application of the current and future PRC laws and regulations, and VIYI cannot assure you that the regulators in the PRC will not adopt new laws, regulations and rules or detailed implementations and interpretations or will not subsequently require VIYI to undergo the approval procedures and subject it to sanctions.

 

From a listing eligibility perspective, in the opinion of VIYI’s PRC counsel Guangdong Jiayin law firm, VIYI is currently not required to obtain approval from the CSRC under the M&A Rules to list on the U.S. stock exchanges and thus has not received any explicit permission or denial from the CSRC, CAC or other Chinese authorities. However, there are risks and uncertainties with respect to when and whether VIYI will be required to obtain permission from the PRC government to list on the U.S. stock exchanges in the future, and even when such permissions are obtained, whether they will be denied or rescinded.

 

To further illustrate the uncertainties described above, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council recently jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection

 

 

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requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject VIYI to compliance requirements in the future. Given the current regulatory environment in the PRC, VIYI is still subject to the uncertainty of interpretation and enforcement of the rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities.

 

VIYI have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC, CAC, or other PRC regulatory authorities required for overseas listings. VIYI cannot assure you that the PRC regulatory authorities, including the CAC, would take the same view as VIYI does, and there is no assurance that VIYI can fully or timely comply with such laws. In the event that VIYI becomes subject to any mandatory cybersecurity review and other specific actions required by the CAC, VIYI faces uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, VIYI may be further required to suspend its relevant business, shut down its website, or face other penalties, which could materially and adversely affect its business, financial condition, and results of operations. For risks relating to regulatory approvals on overseas listings and the oversight of the CAC, please refer to “Risk Factors — Risk Factors Relating to VIYI’s Business and Industry — VIYI may be liable for improper use or appropriation of personal information provided directly or indirectly by its customers or end users.

 

VIYI may also be subject to penalties and sanctions imposed by PRC regulatory agencies, including the CSRC if it fails to comply with their rules and regulations, which could affect the ability of VIYI to list on Nasdaq or foreign exchanges in other jurisdictions. All of these factors may affect the value of investors’ securities in New Venus after the consummation of the Business Combination. For the detailed discussion of risks associated with the VIE structure, please refer to “Risk Factors — Risk Factors Relating to Doing Business in China — The PRC government exerts substantial influence over the manner in which VIYI, its subsidiaries, and the VIE must conduct its business activities. VIYI is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if VIYI was required to obtain approval in the future and was denied permission from Chinese authorities to list on U.S. exchanges, VIYI will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.

 

PRC counsel has further advised that the CSRC has not issued any definitive rules or interpretations concerning whether offerings such as this offering are subject to the CSRC approval procedures under the M&A Rules. Although VIYI is of the position that it is not required to obtain approval from the CSRC under the M&A Rules for listing and trading its securities after the consummation of the Business Combination, uncertainties still exist as to how the M&A Rules will be interpreted and implemented and the Opinion stated above is subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. For risks relating to regulatory approvals on overseas listings and the approval of the CSRC, please refer to “Risk Factors — Risks Factors Relating to Doing Business in China — The M&A Rules and certain other PRC regulations may make it more difficult for VIYI to pursue growth through acquisitions.”

 

Interests of Certain Persons in the Business Combination

 

When you consider the recommendation of Venus’ board of directors in favor of approval of the Business Combination Proposal and the other related Proposals, you should keep in mind that Venus’ 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 November 11, 2022, the date that is 21 months from the closing of the IPO, if the time period is extended as previously described herein, Venus will cease all operations and liquidate as previously described herein, in such event:

 

  the 1,150,000 shares of Venus ordinary shares held by the initial shareholders, which were acquired prior to the IPO for an aggregate purchase price of $25,000, will be worthless. Such shares had an aggregate market value of approximately $11,902,500 based on the closing price of Venus ordinary shares of $10.35 on the Nasdaq Capital Market as of September 23, 2022;

 

  the 225,000 private units purchased by the Sponsor for a total purchase price of $2,250,000, will be worthless. Such private units had an aggregate market value of approximately $2,385,000 closing price of Venus Units of $10.60 on the Nasdaq Capital Market as of September 23, 2022;

 

 

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Recommendations of Venus’ Board of Directors to Venus’ Shareholders

 

After careful consideration of the terms and conditions of the Merger Agreement, the Venus’ board of directors has determined that the Business Combination and the transactions contemplated thereby are fair to and in the best interests of Venus and its shareholders. In reaching its decision with respect to the Business Combination, the Venus’ board of directors reviewed various industry and financial data and the due diligence and evaluation materials provided by VIYI. The Venus’ board of directors also obtained a fairness opinion from King Kee, a third party valuation firm, on which to base its assessment. Venus’ board of directors recommends that Venus’ shareholders vote:

 

the Business Combination Proposal to approve the Business Combination;

 

the Director Election Proposal;

 

the Nasdaq Stock Issuance Proposal;

 

the Share Increase Proposal;

 

the Name Change Proposal;

 

the Articles Amendment Proposal; and

 

The Adjournment Proposal to approve the adjournment of the Extraordinary General Meeting in the event Venus does not receive the requisite shareholder vote to approve the Business Combination.

 

Summary Risk Factors

 

In evaluating the Business Combination and the Proposals to be considered and voted on at the Extraordinary General Meeting, you should carefully review and consider the risk factors set forth under the section titled “Risk Factors” beginning on page 39 of this proxy statement. Below is a summary of material factors that make an investment in our ordinary shares speculative or risky. Importantly, this summary does not address all of the risks that we and VIYI face. 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) Venus’ ability to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of New Venus following consummation of the Business Combination. These risks include, but are not limited to the following:

 

VIYI may be materially and adversely affected by the complexity, uncertainties and changes in PRC regulation of the Internet industry and companies. Please refer to “Risk Factors — Risk Factors Relating to VIYI’s Business and Industry — VIYI may be materially and adversely affected by the complexity, uncertainties and changes in PRC regulation of the Internet industry and companies.” on page 49 of this proxy statement.

 

VIYI’s business generates and processes a large amount of data, and VIYI is required to comply with PRC laws and regulations relating to cyber security. These laws and regulations could create unexpected costs, subject VIYI to enforcement actions for compliance failures, or restrict portions of VIYI’s business or cause VIYI to change its data practices or business model. Please refer to “Risk Factors — Risk Factors Relating to VIYI’s Business and Industry — VIYI may be liable for improper use or appropriation of personal information provided directly or indirectly by its customers or end users.” on page 50 of this proxy statement.

 

Sudden or unexpected changes with little advance notice in China’s economic, political, or social conditions or government policies could have a material adverse effect on VIYI’s business and operations. Please refer to “Risk Factors — Risks Factors Relating to Doing Business in China —Uncertainties in the promulgation, interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and VIYI.” on page 58 of this proxy statement.

 

The PRC government may intervene or influence VIYI’s operations at any time or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in VIYI’s operation and/or the value of VIYI’s ordinary shares. Please refer to “Risk Factors — Risks Factors Relating to Doing Business in China — VIYI is subject to extensive and evolving legal system in the PRC, non-compliance with which, or changes in which, may materially and adversely affect VIYI’s business and prospects, and may result in a material change in VIYI’s operations

 

 

25

 

 

and/or the value of VIYI’s ordinary shares or could significantly limit or completely hinder VIYI’s ability to offer or continue to offer securities to investors and cause the value of VIYI’s securities to significantly decline or be worthless.” on page 59 of this proxy statement.

 

Any actions by the PRC government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder VIYI’s ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. VIYI is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if VIYI were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, VIYI will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. Please refer to “Risk Factors — Risks Factors Relating to Doing Business in China — The PRC government exerts substantial influence over the manner in which VIYI, its subsidiaries must conduct its business activities. VIYI is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges, however, if VIYI was required to obtain approval in the future and was denied permission from Chinese authorities to list on U.S. exchanges, VIYI will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.” on page 54 of this proxy statement.

 

You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against VIYI or VIYI’s management named in the proxy statement based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. Please refer to “Risk Factors — Risks Factors Relating to Doing Business in China — Certain judgments obtained against VIYI by its shareholders may not be enforceable.” on page 62 of this proxy statement.

 

Recent joint statement by the SEC and the PCAOB, proposed rule changes submitted by Nasdaq, and an act passed by the U.S. Senate all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to VIYI’s offering that trading in VIYI’s securities may be prohibited under the HFCA Act. Currently VIYI’s auditor is headquartered in New York and has been inspected by the PCAOB on a regular basis. Therefore, it is not subject to the determinations announced by the PCAOB on December 16, 2021.

 

However, in the event the PRC authorities would further strengthen regulations over auditing work of Chinese companies listed on the U.S. stock exchanges, the PCAOB may not be able to inspect or fully investigate VIYI’s auditor and as a result, Nasdaq may determine to delist VIYI’s securities. Please refer to “Risk Factors — Risks Factors Relating to Doing Business in China — The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies, including companies based in China, upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.” on page 57 of this proxy statement.

 

Other Venus Considerations

 

The Board of Directors focused its analysis on whether the Business Combination is likely to generate a return for Venus’s stockholders that is greater than if the trust were to be liquidated. Our Board of Directors unanimously concluded that the Merger Agreement with VIYI is fair to and in the best interests of the Venus stockholders. See “The Business Combination Proposal — Basis for Venus Board of Directors’ Recommendation — Fairness Opinion”.

 

Recommendation of Venus’s Board of Directors

 

After careful consideration, Venus’s Board of Directors determined that the Business Combination with VIYI is fair to, and in the best interests of, Venus and its stockholders. On the basis of the foregoing, Venus’s Board of Directors has approved and declared advisable the Business Combination and recommends that you vote or give instructions to vote “FOR” each of the Business Combination Proposal and the other Proposals.

 

Venus’s Board of Directors have interests that may be different from, or in addition to your interests as a stockholder. See “The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for further information.

 

 

26

 

 

SUMMARY FINANCIAL INFORMATION OF VIYI

 

The following selected consolidated statements of income and comprehensive income for the years ended December 31, 2020 and 2021 and for the six months ended June 30, 2021 and 2022, selected consolidated balance sheets data as of December 31, 2020 and 2021 and June 30, 2022 selected consolidated cash flow data for the years ended December 31, 2020 and 2021 and for the six months ended June 30, 2021 and 2022 have been derived from VIYI’s consolidated financial statements included elsewhere in this proxy statement and have been prepared on the same basis as VIYI’s consolidated financial statements and have included all adjustments, consisting only of normal and recurring adjustments, that VIYI considers necessary for a fair statement of VIYI’s financial position and operating results for the periods presented. The historical results included below and elsewhere in this proxy statement are not indicative of VIYI’s future performance. You should read the section headed “Selected Historical Consolidated Financial and Operating Data of VIYI” together with VIYI’s consolidated financial statements and the section headed “Management’s Discussion and Analysis of Financial Condition and Results of Operations of VIYI” contained elsewhere herein.

 

The following table represents VIYI’s selected consolidated statements of income and comprehensive income for the years ended December 31, 2020 and 2021 and for the six months ended June 30, 2021 and 2022:

 

Selected Consolidated Statements of Income and Comprehensive Income:

 

    For the Years Ended
December 31,
    For the Six Months Ended
June 30,
 
    2020     2021     2021     2021     2022     2022  
    RMB     RMB     USD     RMB     RMB     USD  
                      (Unaudited)     (Unaudited)     (Unaudited)  
Operating revenues     307,788,730       529,250,664       83,010,597       228,946,224       345,774,201       51,520,428  
Cost of revenues     (182,618,305 )     (315,597,133 )     (49,499,997 )     (108,062,907 )     (276,424,458 )     (41,187,302 )
Gross profit     125,170,425       213,653,531       33,510,600       120,883,317       69,349,743       10,333,126  
Operating expenses     (31,084,452 )     (161,722,739 )     (25,365,487 )     (59,990,080 )     (55,000,612 )     (8,195,102 )
Income from operations     94,085,973       51,930,792       8,145,113       60,893,237       14,349,131       2,138,024  
Other (expenses) income, net     (167,503 )     3,354,208       526,093       2,628,208       380,015       56,623  
Provision for income taxes     (2,446,634 )     (547,209 )     (85,827 )     210,169       500,177       74,526  
Net income     91,471,836       54,737,791       8,585,379       63,731,614       15,229,323       2,269,173  
Less: Net loss attributable to non-controlling interests     (11,591 )     (538,060 )     (84,392 )     (130,216 )     228,367       34,027  
Net income attributable to VIYI Algorithm Inc.     91,483,427       55,275,851       8,669,771       63,861,830       15,000,956       2,235,146  
Other comprehensive income (loss)     (2,130,654 )     (455,030 )     (71,369 )     (446,443 )     1,377,873       205,303  
Comprehensive income attributable to Algorithm Inc.     89,352,773       54,820,821       8,598,402       63,415,387       16,378,829       2,440,449  

 

The following table represents VIYI’s selected consolidated balance sheet data as of December 31, 2020 and 2021 and June 30, 2022:

 

Selected Consolidated Balance Sheet Data:

 

    As of December 31,     As of June 30,  
    2020     2021     2021     2022     2022  
    RMB     RMB     USD     RMB     USD  
                      (Unaudited)     (Unaudited)  
Current assets     304,473,636       344,264,627       53,996,364       372,987,806       55,575,260  
Other assets     178,148,116       176,068,052       27,615,484       176,211,427       26,255,539  
Total assets     482,621,752       520,332,679       81,611,848       549,199,233       81,830,799  
Total liabilities     163,012,407       146,440,243       22,968,493       158,699,601       23,646,272  
Total VIYI Algorithm Inc. shareholders’ equity     317,521,266       372,342,087       58,400,190       388,720,916       57,919,498  
Non-controlling interests     2,088,079       1,550,349       243,165       1,778,716       265,029  
Total shareholders’ equity     319,609,345       373,892,436       58,643,355       390,499,632       58,184,527  

 

 

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The following table represents VIYI’s selected consolidated cash flow data for the years ended December 31, 2020 and 2021 and for the six months ended June 30, 2021 and 2022:

 

Selected Consolidated Cash Flow Data:

 

    For the Years Ended
December 31,
    For the Six Months Ended
June 30,
 
    2020     2021     2021     2021     2022     2022  
    RMB     RMB     USD     RMB     RMB     USD  
                      (Unaudited)     (Unaudited)     (Unaudited)  
Net cash provided by operating activities     96,200,132       98,530,184       15,454,018       44,942,528       2,216,206       330,216  
Net cash provided by (used in) investing activities     33,514,895       (41,830,676 )     (6,560,953 )     (208,475 )     18,269,079       2,722,096  
Net cash provided by (used in) financing activities     112,966,844       (25,079,283 )     (3,933,573 )     (11,544,836 )     4,164,177       620,463  
Effect of exchange rate on cash and cash equivalents     (2,722,041 )     (1,394,150 )     (218,668 )     (542,682 )     5,513,861       821,566  
Change in cash and cash equivalents     239,959,830       30,226,075       4,740,824       32,646,535       30,163,323       4,494,341  
Cash and cash equivalents, beginning of period     2,182,694       242,142,524       37,978,971       242,142,524       272,368,599       40,582,978  
Cash and cash equivalents, end of period     242,142,524       272,368,599       42,719,795       274,789,059       302,531,922       45,077,319  

 

The following tables show the financial position, cash flows, and results of operations for VIYI, the VIE, and subsidiaries in China as of December 31, 2020 and December 31, 2021, respectively.

 

 

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VIYI ALGORITHM INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2020

(in RMB)

 

    VIYI
Cayman
      Subsidiaries
outside PRC
      Elimination       Total
(Outside
PRC)
    Historical
VIE
      Subsidiaries in
PRC
      Elimination     Total in side
PRC
      Elimination     Consolidating  
Cash     40,656,241         9,840,443                   50,496,684       27,683,293         163,962,547                 191,645,840               242,142,524  
Other current assets     4,971,188         26,752,646                   31,723,834       30,607,278                           30,607,278                 62,331,112  
Total Current assets     45,627,429         36,593,089                   82,220,518       58,290,571         163,962,547                 222,253,118                 304,473,636  
                                                                                             
Property and equipment, net             342,434                   342,434       35,837                         35,839                 378,273  
Receivables from subsidiaries             7,829,880   (1)     (7,829,880 )             161,960,000   (2)             (161,960,000 )                      
Investment in Subsidiaries     388,024,736                 (106,188,748 )       281,835,988                                       (281,835,988 )      
Due from VIE                                                 281,878,458   (3)     (281,878,458 )                          
Other noncurrent assets             82,039,711                   82,039,711       95,193,706         536,426                 95,730,132                 177,769,843  
Total Assets     433,652,165         126,805,114         (114,018,628 )       446,438,651       315,480,114         446,377,431         (443,838,458 )     318,019,089         (281,835,988 )     482,621,752  
Due from VIE                                                     161,960,000   (2)     (161,960,000 )                          
Other payables – intercompany     7,830,011   (1)               (7,830,011 )                                                    
Due to WiMi     106,352,004                             106,352,004       12,725,539                           12,725,539                 119,077,543  
Other payables and accrued liabilities     84,753         15,719,964                   15,804,717       20,402,445         238,684                 20,641,128                 36,445,849  
Total current liabilities     114,266,768         15,719,964         (7,830,011 )       122,156,721       33,127,984         162,198,684         (161,960,000 )     33,366,667                 155,523,392  
                                                                                             
Business acquisition payable     1,864,131                           1,864,131                                               1,864,131  
Other non-current liabilities             4,896,533                   4,896,533       473,672         254,676                 728,348                 5,624,884  
Total Liabilities     116,130,899         20,616,497         (7,830,011 )       128,917,385       33,601,656         162,453,360         (161,960,000 )     34,095,018                 163,012,407  
                                                                                             
SHAREHOLDERS’ EQUITY                                                                                            
Capital     186,588,331         81,588,798         (81,588,798 )       186,588,331       183,220,254                 (183,220,254 )                   186,588,331  
Retained earnings     128,098,769         26,004,952         (26,004,952 )       128,098,769       93,693,384         276,871,172         (93,693,384 )     276,871,172         (276,871,172 )     128,098,769  
Statutory reserves     4,964,820                           4,964,820       4,964,820         4,964,820         (4,964,820 )     4,964,820         (4,964,820 )     4,964,820  
Accumulated other comprehensive loss     (2,130,654 )       (1,405,133 )     1,405,133         (2,130,654 )                                           (2,130,654 )
Total VIYI Algorithm Inc. shareholders’ equity     317,521,266         106,188,617         (106,188,617 ) (4)     317,521,266       281,878,458   (3)     281,835,992         (281,878,458 )     281,835,992   (4)     (281,835,992 )     317,521,266  
                                                                                             
NONCONTROLLING INTERESTS                                           2,088,079                 2,088,079                 2,088,079  
Total equity     317,521,266         106,188,617         (106,188,617 )       317,521,266       281,878,458         283,924,071         (281,878,458 )     283,924,071         (281,835,992 )     319,609,345  
Total liabilities and shareholders’ equity     433,652,165         126,805,114         (114,018,628 )       446,438,651       315,480,114         446,377,431         (443,838,458 )     318,019,089         (281,835,992 )     482,621,752  

 

Due to the business strategy adjustment, Shenzhen Yitian and its subsidiaries have no longer operated the business involving foreign investment restrictions since March 1, 2022, therefore VIYI can own direct equity interest in Shenzhen Yitian and its subsidiaries. On April 1, 2022, VIYI and Shenzhen Yitian have terminated the VIE arrangements and, as a result, VIYI’s WFOE holds 100% of the issued and outstanding shares of Shenzhen Yitian. VIYI now controls and receives the economic benefits of Shenzhen Yitian and its subsidiaries through equity ownership. All amounts due to and due from the historical VIE were reclassified as intercompany receivable/payable on April 1, 2022.

 

(1) The amount represents cash transfer to VIYI from subsidiary Fe-da Electronics for the year ended December 31, 2020 as a part of the Company’s cash management to keep cash at holding company level for more efficient cash management. The balance is still outstanding as of June 30, 2022.
(2) This amount represents cash transfer to VIYI WFOE from the historical VIE as a part of the Company’s cash management to keep cash at holding company level for more efficient cash management. Approximately RMB 12.7 million of the balance is transferred back to the historical VIE in 2021. Balance of RMB 93.5 million is outstanding as intercompany receivable from VIYI WFOE on April 1, 2022 when the VIE agreements were terminated and VIYI WFOE owned 100% equity interest of Shenzhen Yitian.
(3) Due from VIE represents the total equity of the historical VIE that was pledged to VIYI WFOE when the contractual agreement were signed on December 24, 2020 and current year service income recorded by VIYI WFOE. This amount is reclassified to Investment from subsidiaries on April 1, 2022 when the VIE agreements were terminated and VIYI WFOE owned 100% equity interest of Shenzhen Yitian.
(4) This amount represents VIYI’s investment in subsidiaries which represent the total equity of its subsidiaries and is eliminated upon consolidation.

 

 

29

 

 

VIYI ALGORITHM INC. AND SUBSIDIARIES

UNAUDITED CONDENDSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2020

(in RMB)

 

    VIYI
Cayman
    Subsidiaries
outside PRC
    Historical
VIE
      Subsidiaries
in PRC
    Elimination     Total in
PRC
    Elimination     Consolidating  
Operating revenues     33,780,394       124,413,884       149,575,631         18,821               149,594,452               307,788,730  
Cost of revenues     (1,930,254 )     (112,674,846 )     (68,013,204 )                     (68,013,204 )             (182,618,305 )
Gross profit     31,850,140       11,739,038       81,562,427         18,820               81,581,248               125,170,425  
Operating expenses     (4,213,002 )     (2,967,688 )     (23,743,894 )       (159,868 )             (23,903,762 )             (31,084,452 )
Income from operations     27,637,138       8,771,349       57,818,533         (141,047 )             57,677,486               94,085,973  
Other income (expense)     (923,998 )     (40,859 )     710,362         86,992               797,354               (167,503 )
Provision for income tax           (995,778 )     (1,450,855 )                     (1,450,855 )             (2,446,634 )
Income from VIE(5)                             57,080,040       (57,078,040 )                      
Income from subsidiaries(6)     64,770,287                                               (64,770,287 )      
Non-controlling interest                           11,591               11,591               11,591  
Net income attributable to VIYI     91,483,427       7,734,711       57,078,040   (4)     57,035,576       (57,078,040 )     57,035,576       (64,770,287 )     91,483,427  

 

 
(5) This amount represent service income recorded by VIYI WFOE pursuant to the exclusive business cooperation agreement.
(6) This amount represent income flow through from subsidiaries using the equity method where VIYI recorded equity income from its subsidiaries, of which approximately RMB 57.1 million were flow through from service income of the historical VIE.

 

VIYI ALGORITHM INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2020

(in RMB)

 

    VIYI
Cayman
    Subsidiaries
outside PRC
    Elimination     Total
outside
PRC
    Historical
VIE
    Subsidiaries
in PRC
    Elimination     Consolidating  
Net cash provided by operating activities     35,782,915       16,597,451       (7,830,011 )     44,550,355       47,797,701       3,852,076               96,200,132  
Net cash provided by (used in)investing activities     (97,922,571 )     (6,194,927 )     8,277,252       (95,840,246 )     (32,604,725 )             161,959,866       33,514,895  
Net cash provided by (used in) financing activities     104,508,615                     104,508,615       10,307,625       160,110,470       (161,959,866 )     112,966,844  
Effect of exchange rate     (1,712,718 )     (562,082 )     (447,241 )     (2,722,041 )                           (2,722,041 )
Net increase in cash and cash equivalents     40,656,241       9,840,442             50,496,683       25,500,601       163,962,546               239,959,830  
CASH AND CASH EQUIVELENTS, beginning of year                                 2,182,694                       2,182,694  
CASH AND CASH EQUIVELENTS, end of year     40,656,241       9,840,442               50,496,683       27,683,295       163,962,546               242,142,524  

 

 

30

 

 

VIYI ALGORITHM INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2021

 

    VIYI
Cayman
      Subsidiaries
outside PRC
      Elimination     Total
(Outside
PRC)
    Historical
VIE
      Subsidiaries
in PRC
      Elimination     Total inside
PRC
    Elimination     Consolidating  
Cash     46,916,200         15,485,724                 62,401,924       18,992,248         190,974,427                 209,966,675               272,368,599  
Current assets             16,802,541                 16,802,541       850,286         33,083,201                 33,933,487               50,736,028  
Loan receivable                                           21,160,000                 21,160,000               21,160,000  
Total Current assets     46,916,200         32,288,265                 79,204,465       19,842,534         245,217,628                 265,060,162               344,264,627  
                                                                                         
Property and equipment, net             427,423                 427,423       25,170         16,234                 41,404               468,827  
Intangible asset             19,672,188                 19,672,187               8,208,750                 8,208,750               27,880,937  
Cost method investment                                           600,000                 600,000               600,000  
Long term investment     417,875,271   (5)             (65,534,901 )     352,340,370                                     (352,340,370 )      
Due from VIE                                           105,558,372   (4)     (105,558,372 )                    
Other receivable-intercompany     16,003,007   (2)     7,650,840   (1)     (23,653,847 )           93,480,919   (3)             (93,480,919 )                    
Other receivable-related parties                                           9,000,000                 9,000,000       (9,000,000 )      
Deferred merger costs     3,839,567                         3,839,567                                             3,839,567  
Other noncurrent assets             35,027,861                 35,027,861       6,046,973         102,203,888                 108,250,861               143,278,721  
Total Assets     484,634,045         95,066,577                 490,511,872       119,395,596         470,804,872                 391,161,177               52,0332,679  
                                                                                         
Current Liabilities                                                                                      
Account payable             3,067,780                 3,067,780       200,925         9,817,979                 10,018,904               13,086,682  
Deferred revenues             5,206,524                 5,206,524               6,982,738                 6,982,738               12,189,262  
Other payables and accrued liabilities     928,511         1,397,831                 2,326,340       357,299         1,978,400                 2,335,699               4,662,041  
Operating lease liabilities             237,542                 237,542       42,577         767,033                 809,610               1,047,152  
Taxes payable             210,963                 210,963       510,884         226,545                 737,429               948,392  
Due to WiMi     103,712,608         63,757                 103,776,365       12,725,539         598,434                 13,323,973       (9,000,000 )     108,100,338  
Total current liabilities     104,641,119         10,184,397                 114,825,514       13,837,224         20,371,129                 34,208,353               140,033,867  
                                                                                         
Due to VIE                                           93,480,919   (3)     (93,480,919 )                      
Other payables – intercompany     7,650,840   (1)     16,003,007   (2)     (23,653,847 )                                                  
Operating lease liabilities – noncurrent                                           1,009,917                 1,009,917               1,009,917  
Deferred tax liabilities, net             3,344,272                 3,344,271               2,052,188                 2,052,188               5,396,459  
Total Liability     112,291,959         29,531,676                 118,169,785       13,837,224         116,914,153                 37,270,458               146,440,243  
                                                                                         
SHAREHOLDERS’ EQUITY                                                                                        
Ordinary shares & additional paid in capital     186,588,330         81,588,798         (81,588,797 )     186,588,331       94,983,760         88,236,496         (94,983,760 )     88,236,496       (88,236,496 )     186,588,331  
Retained earnings     178,918,737         (12,675,088 )       2,301,076       178,918,737       7,904,166         254,683,171         (7,904,166 )     254,683,171       (254,683,171 )     178,918,737  
Statutory reserves     9,420,703                         9,420,703       2,670,446         9,420,703         (2,670,446 )     9,420,703       (9,420,703 )     9,420,703  
Accumulated other comprehensive loss     (2,585,684 )       (3,378,809 )       3,500,695       (2,585,684 )                                           (2,585,684 )
Total VIYI Algorithm Inc. shareholders’ equity     372,342,086         65,534,901                 372,342,086       105,558,372   (4)     352,340,370                 352,340,370               372,342,086  
                                                                                         
NONCONTROLLING INTERESTS                                           1,550,349                 1,550,349               1,550,349  
Total equity     372,342,086         65,534,901                 372,342,086       105,558,372         353,890,719