SEC Form 10-Q Summary
Registrant: Mudrick Capital Acquisition Corporation. The request metadata identifies Hycroft Mining Holding Corp., but the provided filing is for Mudrick Capital Acquisition Corporation.
Business Context and Reporting Period
Unaudited quarterly report for the three and six months ended June 30, 2018, filed August 10, 2018. The registrant was a Delaware blank-check company formed to identify and complete a business combination, with a stated focus on companies recently emerging from bankruptcy protection. It had not commenced operating activities or generated operating revenue.
Financial Metrics
| Metric | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 |
|---|---|---|
| General and administrative expense | $165,331 | $271,191 |
| Interest income from Trust Account | $779,266 | $891,002 |
| Income before taxes | $616,431 | $622,759 |
| Income tax provision | $153,670 | $166,730 |
| Net income | $462,761 | $456,029 |
| Basic and diluted Class A income per share | $0.02 | $0.03 |
| Basic and diluted Class B loss per share | $(0.01) | $(0.03) |
- Cash and marketable securities held in the Trust Account were $210.97 million at June 30, 2018.
- Cash outside the Trust Account was $722,428, available for working capital.
- Total assets were $211.81 million; total liabilities were $7.56 million.
- Common stock subject to possible redemption was recorded at $199.24 million, representing 19,727,144 shares at a redemption value of $10.10 per share.
- Deferred underwriting fees were $7.28 million and payable only if a business combination is completed by February 12, 2020.
- Net cash used in operating activities was $266,233; net cash used in investing activities was $210.08 million; net cash provided by financing activities was $211.04 million.
- The company had no long-term debt, capital lease obligations, operating lease obligations, or off-balance-sheet financing arrangements.
Material Changes Versus the Prior Comparable Period
- The company completed its initial public offering in February 2018, selling 20.8 million units at $10.00 per unit and raising gross proceeds of $208.0 million.
- It also sold 7.74 million private placement warrants for gross proceeds of $7.74 million.
- Trust Account investments increased from zero at December 31, 2017 to $210.97 million at June 30, 2018.
- Cash increased from $24,945 to $722,428, while total assets increased from $191,445 to $211.81 million.
- The related-party promissory note was repaid after the IPO; no balance remained at June 30, 2018.
- Class B founder shares declined from 5.75 million to 5.2 million following forfeiture of 550,000 shares after the underwriters did not fully exercise the over-allotment option.
- Prior-period operating comparisons are limited because the company was newly formed and had not commenced operations.
Outlook, Risks, Contingencies, and Unusual Items
- Management expected no operating revenue until after completion of an initial business combination and expected continued legal, accounting, public-company compliance, diligence, and acquisition-related expenses.
- The company was required to complete a qualifying business combination by February 12, 2020 or liquidate and redeem the public shares using the Trust Account, subject to applicable obligations and permitted deductions.
- A business combination generally must involve target businesses with an aggregate fair market value of at least 80% of the Trust Account assets, excluding deferred underwriting commissions and income taxes payable.
- Public stockholders could redeem shares for approximately their pro rata Trust Account value, subject to stated conditions and a 15% redemption limitation for holders acting as a group without company consent.
- The sponsor committed to purchase $25 million of forward-purchase securities concurrently with a business combination.
- The sponsor may provide working-capital loans, but no written agreements for such loans existed at the filing date; up to $1.5 million could be convertible into warrants.
- Key risks included failure to identify or complete a business combination, insufficient funds, substantial shareholder redemptions, dilution from additional equity or securities, acquisition financing constraints, and possible liquidation.
- The company paid the sponsor $10,000 per month for office space, utilities, and administrative support, incurring $30,000 in the quarter and $50,000 year to date.
- Management reported effective disclosure controls and no material changes in internal control over financial reporting. No legal proceedings or material changes to previously disclosed risk factors were reported.
Investor Verification Checklist
- Verify that this filing belongs to Mudrick Capital Acquisition Corporation rather than Hycroft Mining Holding Corp.
- Confirm the status and ultimate outcome of the company’s initial business combination deadline of February 12, 2020.
- Reconcile the $210.97 million Trust Account balance, redemption classification, deferred underwriting fee, and applicable interest and tax deductions.
- Assess the potential dilution from public warrants, private placement warrants, founder shares, forward-purchase securities, and any working-capital loans.
- Review the IPO prospectus and subsequent filings for the target-search process, redemption activity, financing, and liquidation or business-combination developments.