References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Venus Acquisition Corporation. References to our "management"
or our "management team" refer to our officers and directors, references to the
"Sponsor" refer to Yolanda Management Corporation. The following discussion and
analysis of the Company's financial condition and results of operations should
be read in conjunction with the financial statements and the notes thereto
contained elsewhere in this Quarterly Report. Certain information contained in
the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts, and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's registration statement on Form S-1 filed with
the U.S. Securities and Exchange Commission (the "SEC"). The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We were formed on May 14, 2018 under the laws of the Cayman Islands, as a blank
check company for the purpose of engaging in a merger, share exchange, asset
acquisition, share purchase, recapitalization, reorganization or other similar
business combination, with one or more target businesses or entities. Our
efforts to identify a prospective target business will not be limited to a
particular industry or geographic region, although we intend to focus on
businesses that have a connection to the Asian market. We believe that we will
add value to these businesses primarily by providing them with access to the
U.S. capital markets.
We presently have no revenue, have had losses since inception from incurring
formation costs and have had no operations other than the active solicitation of
a target business with which to complete a business combination. We have relied
upon the sale of our securities and loans from our officers and directors to
fund our operations.
On February 11, 2021, the Company consummated its initial public offering of
4,600,000 Units, which includes the full exercise of the over-allotment option.
Each Unit consists of one ordinary share, one redeemable warrant, and one right
to receive one-tenth (1/10) of an ordinary share upon the consummation of an
initial business combination. The Units were sold at an offering price of $10.00
per Unit, generating gross proceeds of $46,000,000. Simultaneously with the
closing of the initial business combination, the Company consummated a private
placement ("Private Placement") of 225,000 units (the "Private Units") at a
price of $10.00 per Private Unit, generating total proceeds of $2,250,000. In
addition, the Company sold to Ladenburg Thalmann & Co., Inc., for $75, a total
of 75,000 Shares.
A total of $46,460,000 of the net proceeds from the IPO and the Private
Placement were deposited in a trust account established for the benefit of the
Company's public shareholders.
Transaction costs amounted to $2,462,767, consisting of $805,000 of underwriting
fees, $1,150,000 of deferred underwriting fees and $507,767 of other offering
costs.
1
As a result of the IPO, the Private Placement and sale of units to our
underwriter, assuming the units were split into its component parts, we had: (i)
4,825,000 units, (ii) 6,050,000 ordinary shares, (iii) 4,825,000 rights to
acquire an aggregate of 482,500 ordinary shares: and (iv) 4,825,000 warrants to
acquire 2,412,500 ordinary shares issued and outstanding as of February 11,
2021. We have not issued any securities since such date.
Our management has broad discretion with respect to the specific application of
the net proceeds of the initial business combination and the Private Placement,
although substantially all of the net proceeds are intended to be applied
generally towards consummating a business combination.
Results of Operations
Our entire activity from inception up to February 11, 2021 was in preparation
for the initial public offering. Since the initial public offering, our activity
has been limited to the evaluation of business combination candidates, and we
will not be generating any operating revenues until the closing and completion
of our initial business combination. We expect to incur increased expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses. We expect our
expenses to increase substantially after this period.
For the three and nine months ended September 30, 2022, we had a net income of
$433,314 and $235,888, respectively, which was comprised of general and
administrative expenses, interest income and change in fair value of warrant
liabilities. For the three and nine months ended September 30, 2022, we had
change in unrealized gain on available for sale securities of $91,646. For the
three and nine months ended September 30, 2021, we had a net loss of $333,627,
and $640,090, respectively, which was comprised of formation, general and
administrative expenses, interest income and change in fair value of warrant
liabilities. For the three and nine months ended September 30, 2021, we did not
have any change in unrealized gain on available for sale securities.
Liquidity and Going Concern
As of September 30, 2022, we had a working capital deficit of $2,156,363 and
cash of $18,238. Until the consummation of the initial public offering, the
Company's only source of liquidity was an initial purchase of ordinary shares by
the Sponsor, monies loaned by the Sponsor under a certain unsecured promissory
note and advances from the Sponsor.
On February 11, 2021, we consummated the initial public offering of 4,600,000
Units (which includes the full exercise of the underwriter's over-allotment
option), at a price of $10.00 per Unit, generating gross proceeds of
$46,000,000. Simultaneously with the closing of the initial public offering, we
consummated the sale of 225,000 Private Units, at a price of $10.00 per Unit,
generating gross proceeds of $2,250,000.
Following the initial public offering and the exercise of the over-allotment
option, a total of $46,000,000 was placed in the Trust Account. We incurred
$2,462,767, consisting of $805,000 of underwriting fees, $1,150,000 of deferred
underwriting fees and $507,767 of other offering costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $373,852, consisting primarily of a net income of $235,888, interest income
earned in cash and investments held in trust account of $194,110 and change in
fair value of warrant liabilities of $400,000. Changes in our operating assets
and liabilities used cash of $15,630.
For the nine months ended September 30, 2021, cash used in operating activities
was $634,592, consisting primarily of a net loss of $640,090, interest income
earned in cash and investments held in trust account of $1,802 and change in
fair value of warrant liabilities of $10,000. Changes in our operating assets
and liabilities used cash of $2,700.
At September 30, 2022, we had cash of $18,238 held outside the Trust Account. We
intend to use the funds held outside the Trust Account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target
businesses, travel to and from the offices, plants or similar locations of
prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a business combination.
On October 24, 2022, we issued a promissory note, up to $1,500,000 to our
Sponsor for our Sponsor to provide any additional working capital loan to the
Company on an as-needed basis towards the consummation of a Business
Combination. Outstanding working capital loans, if any, under this promissory
note will be paid off by applying the proceeds from the Trust Account after the
redemption upon the closing of the Business Combination. As of September 30,
2022, we have a balance of $733,421 loan from our sponsor.
2
Other than as described above, in order to fund working capital deficiencies or
finance transaction costs in connection with a Business Combination, our sponsor
or an affiliate of our sponsor or certain of our officers and directors may, but
are not obligated to, loan us funds as may be required. If we complete a
Business Combination, we would repay such loaned amounts. In the event that a
Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from
our Trust Account would be used for such repayment. Up to $1,500,000 of such
loans may be convertible into Private Units, at a price of $10.00 per unit at
the option of the lender.
If the Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of a
potential transaction, and reducing overhead expenses. The Company cannot
provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all. These conditions raise substantial doubt about the
Company's ability to continue as a going concern through one year from the date
of these unaudited condensed consolidated financial statements if a Business
Combination is not consummated by November 11, 2022. These unaudited condensed
consolidated financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a going concern.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements as of September 30, 2022. We do not participate
in transactions that create relationships with unconsolidated entities or
financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet
arrangements. We have not entered into any off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities other than an agreement to pay our Sponsor
a monthly fee of $10,000 for general and administrative services, including
office space, utilities and administrative services to the Company. We began
incurring these fees on February 8, 2021 and will continue to incur these fees
monthly until the earlier of the completion of the business combination and the
Company's liquidation.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. The Company has not identified any significant accounting policies.
Warrants
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 480,
Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and
Hedging ("ASC 815"). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a
liability pursuant to ASC 480, and whether the warrants meet all of the
requirements for equity classification under ASC 815, including whether the
warrants are indexed to the Company's own ordinary shares and whether the
warrant holders could potentially require "net cash settlement" in a
circumstance outside of the Company's control, among other conditions for equity
classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
equity at the time of issuance. For issued or modified warrants that do not meet
all the criteria for equity classification, the warrants are required to be
recorded as liabilities at their initial fair value on the date of issuance, and
each balance sheet date thereafter. Changes in the estimated fair value of the
warrants are recognized as a non-cash gain or loss on the statements of
operations.
3
Ordinary shares subject to possible redemption
The Company accounts for its ordinary shares subject to possible redemption in
accordance with the guidance in ASC 480. Ordinary shares subject to mandatory
redemption (if any) is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that feature redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within the Company's control) are classified as temporary equity. At all other
times, ordinary shares are classified as shareholders' equity. As of
September 30, 2022, 4,600,000 ordinary shares subject to possible redemption
which are subject to occurrence of uncertain future events and considered to be
outside of the Company's control are presented as temporary equity, outside of
the shareholders' equity section of the Company's unaudited condensed
consolidated balance sheet. As of October 19, 2022, the end of the redemption
period for the shares of the Company Common Stock issued as part of the units in
the Company's initial public offering consummated on February 11, 2021, an
aggregate of 4,522,704shares of the Company ordinary shares were tendered for
redemption in connection with the Extraordinary General Meeting.
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