Business context and reporting period
This is Wealthbridge Acquisition Limited’s unaudited Form 10-Q for the quarter ended March 31, 2020—not an operating-company 10-Q filed by Scienjoy Holding Corp. Wealthbridge was a blank-check company pursuing a business combination with Scienjoy; it had not begun operating or generating revenue.
On May 5, 2020, after quarter-end, Wealthbridge shareholders approved the proposed combination. Approval is not the same as closing.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 or comparison |
|---|---|---|
| Revenue | None | None |
| Operating costs | $285,035 | $150,058 |
| Net income (loss) | $(103,166) | $31,047 |
| Basic and diluted loss per share | $(0.11) | $(0.07) |
| Operating cash flow | $(252,001) | $(139,102) |
| Cash outside Trust Account, March 31 | $1,008 | $538,177 at March 31, 2019 |
| Trust Account securities, March 31 | $59,345,007 | $58,588,138 at December 31, 2019 |
| Total liabilities, March 31 | $3,591,025 | $2,700,050 at December 31, 2019 |
The 2020 net loss reflected operating costs offset by $177,418 of trust interest and a $4,451 unrealized gain. The 2019 comparison was net income. Operating costs rose about 90% year over year. The filing provides no meaningful operating margin because the company had no revenue. Cash flows were also affected by financing and trust-account activity; the company received $575,000 under a convertible note from Scienjoy and $252,447 under a related-party note during the quarter.
Public shares subject to possible redemption, classified as temporary equity, totaled $50,797,364 at March 31. The trust assets were principally U.S. Treasury bills. The filing did not report conventional operating-company debt or liquidity metrics; it did disclose $707,040 outstanding on a non-interest-bearing related-party note, a $575,000 non-interest-bearing note payable to Scienjoy upon a business-combination closing, and $2,012,500 of deferred underwriting fees contingent on completing a combination.
Material changes, transaction terms, and risks
- Wealthbridge’s proposed exchange would acquire 100% of Scienjoy for approximately 16.4 million Wealthbridge shares, including 1.64 million held in escrow. Sellers were also entitled to 3 million shares based on Scienjoy’s reported 2019 pretax income; further earnout shares could be due based on 2020–2021 earnings or specified post-closing share-price thresholds.
- The Scienjoy note funded a three-month extension of the business-combination deadline, from February 8 to May 8, 2020. It could be repaid at closing or, at Scienjoy’s option, converted into private units.
- On April 8, after quarter-end, the deferred underwriting fee arrangement was amended: upon closing, the underwriter would receive shares instead of cash. The filing also disclosed a Chardan advisory fee estimated at $3.69 million, payable in 369,000 combined-company shares if the transaction closed, and a separate Fuhua fee of 1% of the purchase price in shares.
- Management warned that COVID-19 could impede transaction completion through travel restrictions or unavailability of personnel, vendors, and service providers. The filing also noted the risk of insufficient funds outside the trust to cover pre-combination expenses and the possibility of liquidation if a combination was not completed within the applicable period.
- There was no operating outlook or revenue guidance. Management expected continued costs while pursuing the acquisition and stated it did not expect operating revenue before a business combination.
Important facts for investors to verify
- Confirm whether and when the Scienjoy combination closed, and review final transaction consideration, redemptions, financing, and post-closing share count.
- Verify Scienjoy’s reported 2019 pretax income and the conditions, measurement, and dilution effects of all earnouts.
- Assess the company’s very limited cash outside the trust, related-party funding, and transaction-related fees and share issuance.
- Review the risks of redemptions, failure to complete the combination, and liquidation; warrants and rights could expire worthless if no combination is completed.