EX-99.4 19 microalgo_ex99-4.htm EXHIBIT 99.4

 

Exhibit 99.4

 

PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF September 30, 2022

 

   (A)
VIYI		   (B)
Venus		   Pro Forma
Adjustments		   Pro Forma
Balance Sheet		 
ASSETS                    
                     
CURRENT ASSETS                    
Cash and cash equivalents  $20,696,155   $18,238   $48,544,367  (4)  $41,672,093 
              (1,269,763) (5)     
              (26,316,904) (6)     
Accounts receivable, net   3,865,059    -    -    3,865,059 
Inventories   528,916    -    -    528,916 
Prepaid services fees   5,999,763    14,875    -    6,014,638 
Other receivables and prepaid expenses   251,078    -    -    251,078 
Due from Parent   5,509,109    -    -    5,509,109 
Total current assets   36,850,080    33,113    20,957,700    57,840,893 
                    
PROPERTY AND EQUIPMENT, NET   176,271    -    -    176,271 
                     
OTHER ASSETS                    
Prepaid expenses and deposits   188,471    222    -    188,693 
Deferred merger costs   628,652    -    (628,652) (5)   - 
Cost method investment   169,019    -    -    169,019 
Intangible assets, net   3,266,927    -    -    3,266,927 
Operating lease right-of-use assets   226,970    -    -    226,970 
Goodwill   20,245,543    -    -    20,245,543 
Cash and investments held in trust account   -    48,134,908    153,333  (1)   - 
              153,333  (2)     
              102,793  (3)     
              (48,544,367) (4)   - 
Total non-current assets   24,725,582.00    48,135,130    (48,763,560)   24,097,152 
                     
Total assets  $61,751,933   $48,168,243   $(27,805,860)  $82,114,316 
                     
LIABILITIES AND SHAREHOLDERS’ EQUITY                    
                     
CURRENT LIABILITIES                    
Accounts payable  $1,359,894   $-   $-   $1,359,894 
Deferred revenues   3,149,448    -    -    3,149,448 
Other payables and accrued liabilities   760,810    76,058    -    836,868 
Promisory note   -    -    153,333  (2)     
Due to Parent   -    -    126,751  (9)   280,084 
Advance from related party   -    733,421    (733,421) (9)   - 
Banking facility   -    -    -    - 
Operating lease liabilities   165,887    -    -    165,887 
Notes payable – related party   -    1,379,997    153,333  (1)   - 
Taxes payable   86,947    -    -    86,947 
Total current liabilities   5,522,986    2,189,476    (1,833,334)   5,879,128 
                     
OTHER LIABILITIES                    
Operating lease liabilities - noncurrent   72,763    -    -    72,763 
Deferred underwriting compensation   -    1,150,000    (1,150,000) (5)   - 
Warrant liabilities   -    10,000    -    10,000 
Deferred tax liabilities, net   635,260    -    -    635,260 
Total other liabilities   708,023    1,160,000    (1,150,000)   718,023 
                     
Total liabilities   6,231,009    3,349,476    (2,983,334)   6,597,151 
                     
COMMITMENTS AND CONTINGENCIES                    
Ordinary shares subject to redemption   -    48,134,908    306,666  (1)(2)   - 
              102,793  (3)     
              (48,544,367) (6)     
                     
SHAREHOLDERS’ EQUITY                    
Ordinary shares, $0.0001 par value   28,745    1,450    2,106  (6)   43,857 
              39,604  (7)     
              483  (8)     
              (28,745) (7)     
              214  (9)     
Additional paid-in capital   26,252,042    -    22,225,357  (6)   46,261,288 
              (306,666) (1)(2)     
              (3,420,096) (7)     
              (483) (8)     
              (628,652) (5)     
              2,139,786  (9)     
Retained earnings (accumulated deficit)   27,004,295    (3,409,237)   3,409,237  (7)   26,976,178 
              (119,763) (5)     
              91,646  (10)     
Statutory reserves   1,720,417    -    -    1,720,417 
Accumulated other comprehensive loss   190,274    91,646.00    (91,646) (10)   190,274 
Total shareholders’ equity   55,195,773    (3,316,141)   23,312,382    75,192,014 
                     
    325,151    -    -    325,151 
                     
NONCONTROLLING INTERESTS                    
Total equity   55,520,924    (3,316,141)   23,312,382    75,517,165 
                     
Total liabilities and shareholders’ equity  $61,751,933   $48,168,243   $(27,805,860)  $82,114,316 

 

 

 

 

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

Nine months ended September 30, 2022

(UNAUDITED)

 

               Pro Forma 
   (A)   (B)   Pro Forma   Income 
   VIYI   Venus   Adjustments   Statement 
OPERATING REVENUES  $64,992,619   $-   $-   $64,992,619 
                     
COST OF REVENUES   (50,336,476)        -    (50,336,476)
                     
GROSS PROFIT   14,656,143    -    -    14,656,143 
                     
OPERATING EXPENSES                    
Formation, and operating costs   -    (358,222)        (358,222)
Selling expenses   (484,568)   -    -    (484,568)
General and administrative expenses   (2,655,833)   -    -    (2,655,833)
Research and development expenses   (9,571,894)   -    -    (9,571,894)
Total operating expenses   (12,712,295)   (358,222)   -    (13,070,517)
                     
INCOME (LOSS) FROM OPERATIONS   1,943,848    (358,222)   -    1,585,626 
                     
OTHER INCOME (EXPENSES)                    
Investment loss   (149,892)   -    -    (149,892)
Interest income   151,863    194,110    (194,110) (1)   151,863 
Finance expenses, net   (53,373)   -    -    (53,373)
Change fair value of warrant liablities        400,000    -    400,000 
Other income, net   266,491    -    -    266,491 
Total other expenses, net   215,089    594,110    (194,110)   615,089 
                     
INCOME BEFORE INCOME TAXES   2,158,937    235,888    (194,110)   2,200,715 
                     
BENEFIT OF (PROVISION FOR) INCOME TAX                    
Current   (31,103)   -    -    (31,103)
Deferred   168,677    -    -    168,677 
Total provision for income tax   137,574    -    -    137,574 
                     
NET INCOME (LOSS)   2,296,511    235,888    (194,110)   2,338,289 
                     
Less: Net income attributable to non-controlling interests   99,227    -    -    99,227 
                     
NET INCOME (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS  $2,197,284   $235,888   $(194,110)  $2,239,062 
                     
NET INCOME  $2,296,511   $235,888   $(194,110)  $2,338,289 
                     
OTHER COMPREHENSIVE INCOME                    
Foreign currency translation adjustment   554,465    -    -    554,465 
Change in unrealized gain on available for sale securities   -    91,646    (91,646) (1)   - 
                     
COMPREHENSIVE INCOME   2,850,976    327,534    (285,756)   2,892,754 
                     
Less: Comprehensive income attributable to noncontrolling interests   99,227    -    -    99,227 
                     
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE SHAREHOLDERS BEFORE   2,751,749    327,534   $(285,756)  $2,793,527 
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES, SUBJECT TO REDEMPTION      
Basic and diluted   300,000,000    4,600,000    (4,600,000) (2)   - 
                     
EARNINGS PER SHARE                    
Basic and diluted  $0.01   $0.13   $    $-
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES TO VENUS SHAREHOLDERS      
Basic and diluted   300,000,000    1,450,000    42,406,706  (2)   43,856,706 
                     
EARNINGS (LOSS) PER SHARE                    
Basic and diluted  $0.01   $(0.24)  $    $0.05

 

2

 

 

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

Year ended December 31, 2021

(AUDITED)

 

               Pro Forma 
   (A)   (B)   Pro Forma   Income 
   VIYI   Venus   Adjustments   Statement 
OPERATING REVENUES  $83,010,597   $   $-   $83,010,597 
                     
COST OF REVENUES   (49,499,997)        -    (49,499,997)
                     
GROSS PROFIT   33,510,600    -    -    33,510,600 
                     
OPERATING EXPENSES                    
Formation, and operating costs   -    (785,096)   (119,763) (2)   (904,859)
Selling expenses   (850,097)   -    -    (850,097)
General and administrative expenses   (5,340,536)   -    -    (5,340,536)
Research and development expenses   (16,788,003)   -    -    (16,788,003)
Goodwill impairement loss   (2,895,014)        -    (2,895,014)
Change in fair value of business acquisition payable   508,163         -    508,163 
Total operating expenses   (25,365,487)   (785,096)   (119,763)   (26,270,346)
                     
INCOME (LOSS) FROM OPERATIONS   8,145,113    (785,096)   (119,763)   7,240,254 
                     
OTHER INCOME (EXPENSES)                    
Investment income   197,313    -    -    197,313 
Interest income   295,670    2,683    (2,683) (1)   295,670 
Finance expenses, net   (280,802)        -    (280,802)
Change fair value of warrant liablities        (30,000)        (30,000)
Other income, net   313,912    -    -    313,912 
Total other expenses, net   526,093    (27,317)   (2,683)   496,093 
                     
INCOME (LOSS) BEFORE INCOME TAXES   8,671,206    (812,413)   (122,446)   7,736,347 
                     
BENEFIT OF (PROVISION FOR) INCOME TAX                    
Current   (368,832)   -    -    (368,832)
Deferred   283,005    -    -    283,005 
Total provision for income tax   (85,827)   -    -    (85,827)
                     
NET INCOME (LOSS)   8,585,379    (812,413)   (122,446)   7,650,520 
                     
Less: Net loss attributable to non-controlling interests   (84,392)             (84,392)
                     
NET INCOME (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS  $8,669,771   $(812,413)  $(122,446)  $7,734,912 
                     
NET INCOME (LOSS)  $8,585,379   $(812,413)  $(122,446)  $7,650,520 
                     
OTHER COMPREHENSIVE LOSS                    
Foreign currency translation adjustment   (71,369)   -    -    (71,369)
                     
COMPREHENSIVE INCOME (LOSS)   8,514,010    (812,413)   (122,446)   7,579,151 
                     
Less: Comprehensive loss attributable to noncontrolling interests   (84,392)   -    -    (84,392)
                     
COMPREHENSIVE INCOME (LOSS)   8,598,402    (812,413)  $(122,446)  $7,663,543 
                     
Less: income attributable to ordinary shares subject to redemption                  - 
                     
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS BEFORE   8,598,402    (812,413)   (122,446)   7,663,543 
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES                    
Basic and diluted        4,070,685    (4,070,685) (3)   - 
                     
EARNINGS (LOSS) PER SHARE                    
Basic and diluted      $0.08       $- 
                     
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES                    
Basic and diluted        1,415,479    42,441,227  (3)   43,856,706 
                     
EARNINGS (LOSS) PER SHARE                    
Basic and diluted      $(0.81)       $0.18 

 

3

 

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

Introduction

 

MicroAlgo Inc. (“MicroAlgo” or the “Company”) (f/k/a Venus Acquisition Corporation (“Venus”)), a Cayman Islands exempted company, entered into the Business Combination and Merger Agreement dated September 10, 2021 (as amended on January 24, 2022, August 2, 2022, August 3, 2022 and August 10, 2022, the “Merger Agreement”), by and among Venus, Venus Merger Sub Corporation (“Venus Merger Sub”), a Cayman Islands exempted company incorporated for the purpose of effectuating the Business Combination (as defined herein), and VIYI Algorithm Inc. (“VIYI”), a Cayman Islands exempted company.

 

On December 9, 2022, in accordance with the Merger Agreement, the closing of the Business Combination (the “Closing”) occurred, pursuant to which Venus issued 39,603,961 ordinary shares to VIYI shareholders. As a result of the consummation of the Business Combination, VIYI is now a wholly-owned subsidiary of the Company, which has changed its name to MicroAlgo Inc.

 

Prior to the Transaction Close, holders of ordinary shares of Venus had the right to redeem all or a portion of their Venus ordinary shares for a per share price calculated in accordance with Venus’s governing documents. The following unaudited pro forma condensed combined financial is based on the historical financial statements of VIYI and Venus after giving effect to the Transaction and reflected the actual redemption of 2,493,755 Venus ordinary shares.

 

The unaudited pro forma combined balance sheet as of September 30, 2022 gives pro forma effect to the Business Combination as if it had been consummated as of that date. The unaudited pro forma combined statements of operations for the nine months ended September 30, 2022 and for the year ended December 31, 2021 give pro forma effect to the Business Combination as if it had occurred as of January 1, 2021. This information should be read together with VIYI’s and Venus’ respective audited financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations of VIYI,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Venus” and other financial information included elsewhere in this Current Report.

 

The unaudited pro forma combined balance sheet as of September 30, 2022 has been prepared using the following:

 

  ● VIYI’s unaudited consolidated balance sheet as of September 30, 2022, as included elsewhere in this Current Report; and

 

  ● Venus’ unaudited consolidated balance sheet as of September 30, 2022, as filed in Form 10-Q on November 23, 2022.

 

The unaudited pro forma combined statement of operations for the nine months ended September 30, 2022 has been prepared using the following:

 

  ● VIYI’ unaudited consolidated statement of income and comprehensive income nine months ended September 30, 2022, as included elsewhere in this Current Report; and

 

  ● Venus’ unaudited consolidated statement of operations for nine months ended September 30, 2022, as filed in Form 10-Q on November 23, 2022..

 

The unaudited pro forma combined statement of operations for the year ended December 31, 2021 has been prepared using the following:

 

  ● VIYI’s consolidated statements of operations and comprehensive income for the year ended December 31, 2021, as included definitive proxy statement; and

 

  ● Venus’ statement of operations for the year ended December 31, 2021, as included definitive proxy statement.

 

4

 

 

Description of the Transactions

 

On June 10, 2021, Venus entered into the Merger Agreement with the Venus Merger Sub, VIYI and WiMi. 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. New Venus refers to Venus after the consummation of the Business Combination The aggregate consideration for the Business Combination is $400,000,000, payable in the form of 39,603,961 newly issued Venus ordinary shares valued at $10.10 per share to VIYI and its shareholders. At the closing of the Business Combination, the issued and outstanding shares in VIYI held by the former VIYI shareholders will be cancelled and ceased to exist, in exchange for the issue of an aggregate of 39,603,961 Venus Ordinary, among which 792,079 New Venus ordinary shares are to be issued and held in escrow to satisfy any indemnification obligations incurred under the Merger Agreement. For more information about the Business Combination, please see the section entitled “Proposals No.1 — The Business Combination Proposal.” A copy of the Merger Agreement is attached to the accompanying proxy statement as Annex A.

 

Accounting for the Transactions

 

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 senior management comprising substantially all of the senior management of the post-combination company, the relative size of VIYI compared to Venus, and VIYI operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of VIYI 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.

 

Basis of Pro Forma Presentation

 

The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the post-combination company upon consummation of the Business Combination.

 

The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical financial position and results that would have been achieved had the companies always been combined or the future financial position and results that the post-combination company will experience. VIYI and Venus have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

Included in the shares outstanding and weighted average shares outstanding as presented in the pro forma combined financial statements are 39,603,961 ordinary shares to be issued to VIYI shareholders.

 

As a result of the Business Combination and immediately following the closing of the Business Combination, after reflecting the actual redemption of 2,493,755 shares by Venus shareholders, VIYI will own approximately 90.30% of the outstanding Venus ordinary shares, the former shareholders of Venus will own approximately 9.04% of the outstanding Venus ordinary shares, and Ladenburg Thalmann & Co., Inc, lead underwriter of Venus, will own approximately 0.17 %, (not giving effect to any shares issuable to them upon the exercise of any Venus warrants) and Joyous JD limited will own 0.49% as of September 30, 2022.

 

5

 

 

PRO FORMA COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2022

(UNAUDITED)

 

(A) Derived from the unaudited consolidated balance sheet of VIYI as of September 30, 2022. See VIYI’s consolidated financial statements and the related notes appearing elsewhere in Current report.

 

(B) Derived from the unaudited condensed balance sheet of Venus as of September 30, 2022. See Venus’ consolidated financial statements filed in Form 10-Q on November 23, 2022.

 

(1) Reflects the issuance of an unsecured promissory note of $153,333 to the Sponsor and pursuant to which such amount had been deposited into the Trust Account in order to extend the amount of available time to complete the business combination. The amount deposited into trust account increased the redemption value of ordinary shares by $0.033 which was recorded as accretion of carry value to redemption value in additional paid in capital.

 

(2) On November 10, 2022, the Company issued an unsecured promissory note, in an amount of $500,000 to Joyous JD Limited, pursuant to which an amount of $153,333 had been deposited into the Trust Account in order to extend the amount of available time to complete a business combination. The amount deposited into trust account increased the redemption value of ordinary shares by $0.033 which was recorded as accretion of carry value to redemption value in additional paid in capital.

 

(3)

Reflects interest of $102,793 earned on Trust Account from October 1, 2022 to December 9, 2022.

 

(4) Reflects the release of cash from marketable securities held in the trust account.

 

(5) Reflects VIYI’s total deferred merger costs related to the Business Combination of approximately $0.6 million as deferred transaction costs and subsequently reclassify to additional paid-in capital upon the close of the Business Combination and reflects Venus’ payment of deferred underwriting compensation of approximately $1.2 million and direct, incremental costs of the Business Combination related to the legal, accounting and other professional fees of approximately $0.1 million is reflected as an adjustment to retained earnings.

 

(6)Reflects 2,493,755 shares redeemed for cash by Venus shareholders, $26.3 million would be paid out in cash at redemption price of $10.55.

 

(7) Reflects the recapitalization of Venus through (a) the contribution of all the share capital in VIYI to Venus, (b) the issuance of 39,603,961 ordinary shares and (c) the elimination of the historical retained earnings of Venus, the accounting acquiree.

 

(8) Reflects upon consummation of the Business Combination, 4,825,000 rights converted into 482,500 ordinary shares.

 

(9)Reflect the issuance of 214,000 shares to Joyous JD to repay $2.14 million owed to Venus related parties. The remaining balance is reclassified to promissory notes Joyous JD.

 

(10)Reflect the reclassification of other comprehensive income from unrealized gain on debt securities to retained earnings.

 

6

 

 

PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(UNAUDITED)

 

(A) Derived from the unaudited consolidated statements of income and comprehensive income of VIYI for the nine months ended September 30, 2022. See VIYI’s financial statements and the related notes appearing elsewhere in this Current Report.

 

(B) Derived from the unaudited statement of operations of Venus for the nine months ended September 30, 2022. See Venus’ financial statements filed in Form 10-Q on November 23, 2022.

 

(1) Represents an adjustment to eliminate investment income on marketable securities held in trust as of the beginning of the period;

 

(2) The calculation of weighted average shares outstanding for basic and diluted net earnings (loss) per share assumes that Venus’ initial public offering occurred as of January 1, 2021. In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net earnings per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period.

 

Weighted average shares calculation, basic and diluted     
Venus public shares   2,106,245 
Venus shares converted from rights   482,500 
Venus Sponsor shares   1,375,000 
Venus shares issued to underwriter   75,000 
Venus shares issued in the Business Combination   39,603,961 
Venus shares issued to Joyous JD Limited   214,000 
Weighted average shares outstanding   43,856,706 
Percent of shares owned by VIYI shareholders   90.30%
Percent of shares owned by underwriter   0.17%
Percent of shares owned by Venus   9.04%
Percent of shares owned by Joyous JD limited   0.49%

 

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PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2021
(UNAUDITED)

 

(A) Derived from the consolidated statements of income and comprehensive income of VIYI for the year ended December 31, 2021. See VIYI’s financial statements and the related notes appearing elsewhere in this proxy statement.

 

(B) Derived from the statement of operations of Venus for the year ended December 31, 2021. See Venus’ financial statements and the related notes appearing elsewhere in this proxy statement.

 

(1)

Represents an adjustment to eliminate investment income on marketable securities held in trust as of the beginning of the period;.

 
(2) Reflects the approximately $0.1 million of Venus transaction costs incurred subsequent to September 30, 2022 as if the Business Combination had been consummated on January 1, 2021, the date the Business Combination occurred for the purposes of the unaudited pro forma condensed combined statement of operations. This is a non-recurring item.
   
(3) The calculation of weighted average shares outstanding for basic and diluted net earnings (loss) per share assumes that Venus’ initial public offering occurred as of January 1, 2021. In addition, as the Business Combination is being reflected as if it had occurred on this date, the calculation of weighted average shares outstanding for basic and diluted net earnings per share assumes that the shares have been outstanding for the entire period presented. This calculation is retroactively adjusted to eliminate the number of shares redeemed in the Business Combination for the entire period.

 

Weighted average shares calculation, basic and diluted     
Venus public shares   2,106,245 
Venus shares converted from rights   482,500 
Venus Sponsor shares   1,375,000 
Venus shares issued to underwriter   75,000 
Venus shares issued in the Business Combination   39,603,961 
Venus shares issued to Joyous JD Limited   214,000 
Weighted average shares outstanding   43,856,706 
Percent of shares owned by VIYI shareholders   90.3%
Percent of shares owned by underwriter   0.17%
Percent of shares owned by Venus   9.04%
Percent of shares owned by Joyous JD limited   0.49%

 

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