Metals

WELSBACH TECHNOLOGY METALS ACQUISITION CORP. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

References in this report to the “Company,” “Welsbach,” “our,” “us” or “we”
refer to Welsbach Technology Metals Acquisition Corporation. References to our
“management” or our “management team” refer to our officers and directors, and
references to the “Sponsor” refer to Welsbach Acquisition Holdings LLC. The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related thereto contained elsewhere in this Annual Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.

All statements other than statements of historical fact included in this Annual
Report including, without limitation, statements under “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. When used in
this Annual Report, words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend” and similar expressions, as they relate to us or the Company’s
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company’s management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of many factors, including those set forth under
“Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors”
and elsewhere in this Annual Report.



Overview


We are a blank check company formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization, or
similar business combination with one or more target businesses. We intend to
effectuate our business combination using cash from the proceeds of our initial
public offering and the sale of the placement units that occurred simultaneously
with the completion of our IPO, our capital stock, debt or a combination of
cash, stock and debt.

We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.



Recent Developments


On October 19, 2022, the Company formed WTMA Merger Subsidiary Corp., as a
direct and wholly owned subsidiary of the Company incorporated in Delaware to be
the Merger Sub under the Merger Agreement entered into by the Company on October
31, 2022
.




Merger Agreement



On October 31, 2022, the Company entered into an Agreement and Plan of Merger
(the “Merger Agreement”) by and among the Company, WTMA Merger Subsidiary Corp.,
a Delaware corporation and a direct wholly owned subsidiary of the Company
(“Merger Sub”), and WaveTech Group, Inc., a Delaware corporation ( “WaveTech” or
the “Target”).




The Merger & Consideration



The Merger Agreement provides that, among other things and upon the terms and
subject to the conditions thereof, the following transactions will occur
(together with the other agreements and transactions contemplated by the Merger
Agreement, the “Business Combination”):

(i) prior to the effective time of the Merger, each share of the Series A
preferred stock of WaveTech, par value $0.01 per share (the “WaveTech Preferred
Stock”) will be converted into one share of common stock of WaveTech, par value
$0.01 per share (the “WaveTech Common Stock”) (such conversion, the “WaveTech
Preferred Conversion”);



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(ii) at the closing of the transactions contemplated by the Merger Agreement
(the “Closing”), upon the terms and subject to the conditions of the Merger
Agreement and in accordance with the Delaware General Corporation Law, as
amended (the “DGCL”), Merger Sub will merge with and into WaveTech, the separate
corporate existence of Merger Sub will cease and WaveTech shall continue as the
surviving corporation and a wholly owned subsidiary of WTMA (the “Merger”);

(iii) as a result of the Merger, among other things, all outstanding shares of
capital stock of WaveTech (after giving effect to the WaveTech Preferred
Conversion) (other than (A) treasury shares, (B) dissenting shares and
(C) shares of capital stock of WaveTech subject to stock awards) will be
canceled and converted into the right to receive newly issued shares of common
stock, par value $0.0001 per share, of the Company (the “WTMA Common Stock”)
determined based on a pre-money enterprise valuation of WaveTech of
$150.0 million and a $10.00 price per share of the Company Common Stock; and

(iv) the Company will immediately be renamed WaveTech Group Inc.

Registration Rights Agreement

At the closing of the Business Combination, the Sponsor and certain other
investors party thereto (collectively, the “Holders”) will enter into a
registration rights agreement (the “Registration Rights Agreement”) with the
Company, pursuant to which, among other things, (i) the Company’s existing
registrant rights agreement will be terminated, (ii) the Company will file with
the SEC a registration statement on Form S-1 registering the resale, pursuant to
Rule 415 under the Securities Act, of certain shares of the Company Common Stock
and certain other equity securities of the Company held by the Holders as soon
as practicable, but in any event within thirty (30) days after the Closing;
(iii) the Holders will be entitled to certain demand registration rights in
connection with an underwritten shelf takedown offering, in each case subject to
certain limitations set forth in the Registration Rights Agreement; and (iv) the
Holders have certain piggy-back registration rights, in each case subject to
certain limitations set forth in the Registration Rights Agreement.

The foregoing summary of the Registration Rights Agreement does not purport to
be complete and is subject to, and qualified in its entirety by, the form of the
Registration Rights Agreement, a copy was filed as Exhibit 10.1 to the Current
Report on Form 8-K filed with the SEC November 1, 2022 and incorporated by
reference herein.

Sponsor Support and Lock-up Agreement

On October 31, 2022, the Company and WaveTech entered into a Sponsor Support and
Lock-up Agreement (the “Sponsor Support and Lock-up Agreement”), with the
Sponsor and the persons set forth on this Agreement (together with the Sponsor,
the “Sponsors”), pursuant to which the Sponsors agreed to, among other things,
(i) vote in favor of the Merger Agreement and the transactions contemplated
thereby, in each case, subject to the terms and conditions contemplated by the
Sponsor Support and Lock-up Agreement and (ii) vote against and withhold consent
with respect to any merger, purchase of all or substantially all of the
Company’s assets or other business combination transaction (other than the
Merger Agreement and the Business Combination).

Under the Sponsor Support and Lock-up Agreement, the Sponsors also agreed not
to, without the prior written consent of WaveTech and the board of directors of
the Company (i) sell, offer to sell, contract or agree to sell, hypothecate,
pledge, grant any option to purchase or otherwise dispose of or agree to dispose
of, directly or indirectly, file (or participate in the filing of) a
registration statement with the SEC (other than the Form S-4) or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, with respect to
any shares of the Company Common Stock owned by such Sponsor immediately after
the Closing (the “Subject Sponsor Shares”), (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any Subject Sponsor Shares owned by such Sponsor or
(iii) publicly announce any intention to effect any transaction specified in
clause (i) or (ii), in each case, until the earlier of (a) 180 days after the
Closing and (b) the date on which the closing price per share of the Company
Common Stock equals or exceeds $12.50 (subject to adjustment) for any twenty
(20) Trading Days (as defined in the Sponsor Support and Lock-up Agreement)
within any thirty (30) consecutive Trading Day period.

The foregoing summary of the Sponsor Support and Lock-up Agreement does not
purport to be complete and is subject to, and qualified in its entirety by, the
Sponsor Support and Lock-up Agreement, a copy was filed as Exhibit 10.2 to the
Current Report on Form 8-K filed with the SEC November 1, 2022 and incorporated
by reference herein.



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Shareholder Support and Lock-up Agreement

On October 31, 2022, the Company and the Sponsor entered into a Shareholder
Support and Lock-up Agreement (the “Shareholder Support and Lock-up Agreement”),
with WaveTech and certain stockholders of WaveTech (the “Company Stockholders”).
Pursuant to the Shareholder Support and Lock-up Agreement, the Company
Stockholders agreed to, among other things, provide written consent or vote at
any called meeting with respect to the outstanding shares of WaveTech capital
stock held by the Company Stockholders adopting the Merger Agreement and related
transactions and approving the Business Combination.

Under the Shareholder Support and Lock-up Agreement, the Company
Stockholders also agreed not to, without the prior written consent of WaveTech
and the board of directors of the Company (i) sell, offer to sell, contract or
agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, file (or participate
in the filing of) a registration statement with the SEC (other than the Form
S-4) or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Exchange Act,
with respect to any shares of the Company Common Stock owned by such Company
Stockholder immediately after the Closing (the “Subject Stockholder Shares”),
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any Subject
Stockholder Shares owned by such Company Stockholder or (iii) publicly announce
any intention to effect any transaction specified in clause (i) or (ii), in each
case, until the earlier of (a) 180 days after the Closing and (b) the date on
which the closing price per share of the Company Common Stock equals or exceeds
$12.50 (subject to adjustment) for any twenty (20) Trading Days within any
thirty (30) consecutive Trading Day period.

The foregoing summary of the Shareholder Support and Lock-up Agreement does not
purport to be complete and is subject to, and qualified in its entirety by, the
Shareholder Support and Lock-up Agreement, a copy was filed as Exhibit 10.3 to
the Current Report on Form 8-K filed with the SEC November 1, 2022 and
incorporated by reference herein.



Results of Operations


We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities for the nine months ended September 30, 2022 were
in connection with the search for a prospective initial Business Combination. We
do not expect to generate any operating revenues until after the completion of
our initial Business Combination, at the earliest. We expect to generate
non-operating income in the form of interest income from the proceeds of the IPO
placed in the Trust Account. We expect that we will 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 in connection
with searching for, and completing, a Business Combination.

For the three and nine months ended September 30, 2022, we had a net loss of
$816,133 and $1,594,068, respectively, which primarily consists of operating
expenses of $1,062,557 and $1,852,616, accrual of Delaware franchise taxes of
$50,000 and $150,000, and provision for income taxes of $52,582, offset by
interest and dividend earned on marketable securities held in the Trust Account
in total of $349,006 and $461,130.

For the three months ended September 30, 2021 and for the period from May 27,
2021
(inception) through September 30, 2021, we had a net loss of $30 and
$1,030, respectively, which primarily consists of operating expenses.

Liquidity and Capital Resources

On December 30, 2021, the Company consummated the IPO of 7,500,000 units
(“Units”), each Unit containing one share of common stock (the “Public Shares”)
and one right to receive 1/10 of one share of common stock upon the consummation
of the Business Combination (the “Public Rights”), generating gross proceeds of
$75,000,000, which is discussed in Note 3 to the financial statements.



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Simultaneously with the closing of the IPO, the Company consummated the sale of
347,500 private placement units (“Private Placement Units”) at a price of $10.00
per Private Placement Unit in a private placement to the Company’s sponsor,
Welsbach Acquisition Holdings LLC (the “Sponsor”) generating gross proceeds of
$3,475,000 which is described in Note 4 to the financial statements.

The Company granted the underwriters a 45-day option to purchase up to 1,125,000
Units to cover Over-allotment, if any. On January 14, 2022, the underwriters
partially exercised the option and purchased 227,686 additional Units (the
“Over-allotment Units”), generating gross proceeds of $2,276,860.

Upon the closing of the Over-allotment on January 14, 2022, the Company
consummated a private sale of an additional 4,554 Private Placement Units at a
price of $10.00 per Private Placement Unit, generating gross proceeds of
$45,540. As of January 14, 2022, a total of $77,276,860 of the net proceeds from
the IPO (including the Over-allotment Units) and the sale of Private Placement
Units has been placed in the Trust Account. As the over-allotment option was
only partially exercised, 224,328 shares of Common stock purchased by the
Initial Stockholders have been forfeited for no consideration.

Offering costs for the IPO amounted to $4,663,218, consisting of $1,500,000 of
underwriting fees, $2,625,000 of deferred underwriting fees payable (which are
held in the Trust Account (defined below)) and $538,218 of other costs.

$2,704,690 of deferred underwriting fee payable is contingent upon the
consummation of a Business Combination by September 30, 2022, subject to the
terms of the underwriting agreement.

For the period ended September 30, 2022, cash used in operating activities was
$764,603. Net cash used in investing activities was $3,049,628 and net cash
provided by financing activities was $3,049,631 mainly reflecting the proceeds
of our IPO and subsequent deposit into the trust account.

At September 30, 2022, we had cash and marketable securities held in the trust
account of $78,510,772. We intend to use substantially all of the funds held in
the trust account, including any amounts representing interest earned on the
trust account (less income taxes payable), to complete our business combination.
To the extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our Business Combination, the remaining proceeds held
in the Trust Account will be used as working capital to finance the operations
of the target business or businesses, make other acquisitions and pursue our
growth strategies.

At September 30, 2022, we had cash of $436,356 outside of the trust account. We
have used and intend to continue 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.

We monitor the adequacy of our working capital in order to meet the expenditures
required for operating our business prior to our initial business combination.
However, if our estimates of the costs of identifying a target business,
undertaking in-depth due diligence and negotiating an initial business
combination are less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our business
combination. Moreover, we may need to obtain additional financing either to
complete our Business Combination or because we become obligated to redeem a
significant number of our public shares upon completion of our business
combination, in which case we may issue additional securities or incur debt in
connection with such business combination. If we are unable to complete our
initial Business Combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account.

We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.



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Related Party Transactions


Promissory Note – Related Party

On June 25, 2021, the Sponsor agreed to loan the Company an aggregate of up to
$300,000 to cover expenses related to the IPO pursuant to a promissory note (the
“Note”). This loan was non-interest bearing and was payable at the consummation
of the IPO. As of September 30, 2022, and December 31, 2021, there was no amount
payable against the Note and no amounts have been drawn against the Note.



Related Party Loans


In addition, in order to finance transaction costs in connection with a Business
Combination, certain of the Company’s officers and directors may, but are not
obligated to, loan the Company funds as may be required (“Working Capital
Loans”). If the Company completes a Business Combination, the Company would
repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid
only out of funds held outside the Trust Account. In the event that a Business
Combination does not close, the Company may use a portion of proceeds held
outside the Trust Account to repay the Working Capital Loans but no proceeds
held in the Trust Account would be used to repay the Working Capital Loans.
Except for the foregoing, the terms of such Working Capital Loans, if any, have
not been determined and no written agreements exist with respect to such loans.
The Working Capital Loans would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $1.5
million
of such Working Capital Loans may be convertible into units of the post
Business Combination entity at a price of $10.00 per unit. These units would be
identical to the Private Placement Units. As of September 30, 2022, there were
no Working Capital Loans outstanding.

Convertible Promissory Note – Related Party

On September 30, 2022, the Company issued a promissory note in the principal
amount of $772,769 to the Sponsor in connection with the Extension (“Promissory
Note”). The Promissory Note bears no interest and shall be payable upon the
earlier to occur of (i) upon consummation of the Company’s initial business
combination out of the proceeds of the Trust Account released to the Company’s
or (ii) at the Sponsor’s discretion, converted, in full or in part, upon
consummation of the Company’s business combination into additional private units
at a price of $10.00 per unit (the “Conversion”). As of September 30, 2022,
there was a $772,769 balance outstanding under the Promissory Note.

Off-Balance Sheet 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 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 or operating lease
obligations.

The underwriters were paid a cash underwriting discount of $0.20 per Unit on the
offering, or $1,545,537 in the aggregate at the closing of the IPO and the
over-allotment option. In addition, the underwriters are entitled to a deferred
underwriting commissions of $0.35 per unit, or $2,704,690 from the closing of
the IPO.

The Company issued a promissory note in the principal amount of $772,769 to the
Sponsor. The Promissory Note bears no interest and shall be payable upon the
earlier to occur of (i) upon consummation of the Company’s initial business
combination out of the proceeds of the Trust Account released to the Company’s
or (ii) at the Sponsor’s discretion, converted, in full or in part, upon
consummation of the Company’s business combination into additional private units
at a price of $10.00 per unit.

Common Stock Subject to Possible Redemption

We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Common stock subject to mandatory
redemption is classified as a liability instrument and is measured at fair
value. Conditionally redeemable common stock (including common stock that
features redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) is classified as temporary equity. At all other times, common stock
is classified as stockholders’ equity. Our common stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented as temporary equity, outside of the
stockholders’ equity section of our balance sheets. The Company recognizes
changes in redemption value immediately as they occur and adjusts the carrying
value of redeemable common stock to equal the redemption value at the end of
each reporting period. Increases or decreases in the carrying amount of
redeemable common stock are affected by charges against additional paid in
capital and accumulated deficit.

Net Loss per Share of Common Stock

The Company computes earnings (loss) per share in accordance with ASC 260-10-45
“Earnings per Share”, which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. The Company’s
public common shares have a redemption right, which differ from the common
shares that the sponsors hold. Accordingly, the Company has effectively two
classes of shares, which are referred to as public common shares and Founder
Shares. Income and losses are shared pro rata between the two classes of shares.
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period, excluding shares
of common stock subject to forfeiture by the Sponsor. At September 30, 2022, the
Company did not have any dilutive securities and/or other contracts that could,
potentially, be exercised or converted into shares of common stock and then
share in the earnings of the Company. As a result, diluted loss per share is the
same as basic loss per share for the period presented.

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Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material effect on the
accompanying financial statements.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above
events, their duration or magnitude or the extent to which they may negatively
impact our business and our ability to complete an initial business combination.



JOBS Act


On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an “emerging growth company” and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our financial statements may not be
comparable to companies that comply with public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an “emerging growth
company,” we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor’s attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor’s report providing additional information about the
audit and the financial statements (auditor discussion and analysis) and (iv)
disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of executive
compensation to median employee compensation. These exemptions will apply for a
period of five years following the completion of our IPO or until we are no
longer an “emerging growth company,” whichever is earlier.



Critical Accounting Policies


The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
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.

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