Business context and reporting period
This unaudited Form 10-Q covers the quarter and six months ended June 30, 2023. The filing registrant is Welsbach Technology Metals Acquisition Corp., a blank-check SPAC, not Evolution Metals & Technologies Corp. The filing reports no operating business or revenue; its activity was pursuing a business combination.
Financial results and position
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 | Comparable 2022 period |
|---|---|---|---|
| Operating revenue | $0 | $0 | $0 |
| Operating expenses | $380,636 | $1,288,958 | $313,000 and $890,059, respectively |
| Trust investment income | $502,106 | $1,347,196 | $104,347 and $112,124, respectively |
| Net income (loss) | $26,528 | $(203,673) | $(208,653) and $(777,935), respectively |
| Basic and diluted loss per share | $0.00 | $(0.03) | $(0.02) and $(0.08), respectively |
- At June 30, 2023, total assets were $39.09 million, including $38.86 million in the Trust Account; total liabilities were $8.36 million. Redeemable common stock was $38.35 million, and stockholders’ deficit was $7.62 million.
- Cash outside the Trust Account was $208, with $70,331 reported as restricted cash. Management reported a working-capital deficit of $4.98 million.
- Related-party convertible promissory notes totaled $2.05 million, up from $1.55 million at year-end. The $2.70 million deferred underwriting fee is payable only if a business combination closes. No long-term debt or lease obligations were reported.
- For the six months, operating cash used was $353,358. Investing activities provided $42.04 million, mainly reflecting the Trust Account withdrawal for redemptions; financing activities used $42.14 million, mainly reflecting redemption payments, partly offset by Sponsor borrowing. Cash and restricted cash ended at $70,539.
Material changes versus the prior comparable period
- Second-quarter net income improved from a $208,653 loss in 2022 to $26,528 income in 2023, principally because Trust Account income rose to $502,106 from $104,347.
- The six-month net loss narrowed to $203,673 from $777,935, as Trust Account income increased substantially, partly offset by higher general and administrative expense and income-tax provision.
- In March 2023, holders redeemed 4,097,964 shares for $42.64 million. The Trust Account fell to $38.86 million at June 30 from $79.65 million at December 31, 2022.
Outlook, risks, contingencies and unusual items
- The proposed merger with WaveTech Group, Inc. was mutually terminated on June 15, 2023. The filing does not identify a replacement target. The SPAC intended to complete a business combination before its August 30, 2023 deadline; the charter permitted extensions up to September 30, subject to required payments. No completion was assured.
- Management stated that the small amount of operating cash, working-capital deficit, ongoing costs, and imminent liquidation deadline raise substantial doubt about the Company’s ability to continue as a going concern. Additional Sponsor or other financing was possible but not committed. Failure to complete a transaction would require liquidation.
- After quarter-end, the Sponsor funded an $84,000 working-capital note and a $125,000 extension note; the filing says the latter extended the combination period to August 30, 2023. Sponsor loans are non-interest-bearing and may be repaid from transaction proceeds or, at the Sponsor’s option, converted into units. Repayment may be unavailable if no transaction closes and outside-trust funds are insufficient.
- The filing describes a restricted-cash shortfall associated with vendor payments and funds advanced to the Sponsor. It reports the aggregate deficiency as approximately $142,851 in one section, while another gives a vendor-related deficiency of $43,684.59 and separately describes the $99,166 Sponsor receivable. The Sponsor later repaid that receivable, and subsequent Sponsor funding was said to replenish restricted cash to $213,182. A backstop affiliate also agreed to cover any deficiency as of September 30, 2023.
- A potential federal 1% excise tax on stock repurchases could reduce cash available for a transaction. Management considered the liability not probable based on anticipated liquidation, but said the assessment could change if the Company extended its life into 2024 or entered a transaction.
- Other cited uncertainties include market and economic volatility, inflation, interest rates, COVID-19, and the war in Ukraine. The filing gives no transaction guidance or operating forecast. Disclosure controls were assessed as effective at period-end.
Investor verification points
- Confirm the issuer: the supplied filing is for Welsbach Technology Metals Acquisition Corp., despite the request metadata naming Evolution Metals & Technologies Corp.
- Check subsequent filings for the actual business-combination deadline, any replacement transaction, and whether the SPAC completed a transaction or liquidated.
- Reconcile the restricted-cash deficiency amounts and verify the Sponsor’s repayment, replenishment funding, and backstop obligations.
- Review the terms and outstanding balance of Sponsor notes, including repayment or conversion rights, and the contingent deferred underwriting fee.
- Assess the consequences of liquidation for public shares, rights, and Sponsor-related securities, including any applicable excise-tax treatment.