FORM 10-Q
(Mark One)
| FORM 10-Q | ||||||||
| (Mark One) | ||||||||
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| HYCROFT MINING HOLDING CORPORATION | ||||||||
| (Exact name of registrant as specified in its charter) | ||||||||
| Delaware | 82-2657796 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer
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P.O. Box 3030 Winnemucca, Nevada 89446 | |||||||||
| (Address of | |||||||||
| (775) 304-0260 | ||||||||
| (Registrant’s telephone number, including area code) | ||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Trading Symbol(s) | Name of each exchange on which registered | |||||||
| Class A common stock, par value $0.0001 per share | HYMC | The Nasdaq Stock Market LLC | ||||||
| Warrants to purchase common stock | HYMCW | The Nasdaq Stock Market LLC | ||||||
| Warrants to purchase common stock | HYMCL | The Nasdaq Stock Market LLC | ||||||
| Securities registered pursuant to Section 12(g) of the Act: None | ||||||||
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ | ||||||||
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ Nox
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No¨
| ☐ | Large accelerated filer | ☐ | Accelerated filer | |||||||||||||
| ☒ | Non-accelerated filer | ☒ | Smaller reporting company | |||||||||||||
| ☐ | Emerging growth company | |||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yesx No ¨
As of May 9, 2018, there were 20,800,000 shares of the Company’s Class A common stock and 5,200,000 of the Company’s Class B common stock issued and outstanding.
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒ | ||||||||
| As of May 6, 2024, there were 23,063,716 shares of the Company’s common stock and no shares of the Company’s preferred stock issued and outstanding. | ||||||||
MUDRICK CAPITAL ACQUISITION
| Page | |||||||||||
| PART | ITEM | ||||||||||
| Legal Proceedings | |||||||||||
Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||
| Page | ||||||
| Condensed Consolidated Financial Statements | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| Unaudited Condensed Consolidated Statements of Stockholders’ Equity | ||||||
| Notes to Unaudited Condensed Consolidated Financial Statements | ||||||
MUDRICK CAPITAL ACQUISITION
| March 31, 2018 | December 31, 2017 | |||||||
| ASSETS | (unaudited) | (audited) | ||||||
| Current Assets | ||||||||
| Cash | $ | 835,631 | $ | 24,945 | ||||
| Prepaid expenses | 97,534 | — | ||||||
| Total Current Assets | 933,165 | 24,945 | ||||||
| Deferred offering costs | — | 166,500 | ||||||
| Cash and marketable securities held in Trust Account | 210,191,736 | — | ||||||
| Total Assets | $ | 211,124,901 | $ | 191,445 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 50,445 | $ | 533 | ||||
| Income taxes payable | 13,060 | — | ||||||
| Accrued offering costs | — | 25,000 | ||||||
| Promissory note – related party | — | 143,696 | ||||||
| Total Current Liabilities | 63,505 | 169,229 | ||||||
| Deferred underwriting fees | 7,280,000 | — | ||||||
| Total Liabilities | 7,343,505 | 169,229 | ||||||
| Commitments and Contingencies | ||||||||
| Common stock subject to possible redemption, $0.0001 par value; 19,681,326 and -0- shares as of March 31, 2018 and December 31, 2017, respectively (at redemption value of $10.10 per share) | 198,781,393 | — | ||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding as of March 31, 2018 and December 31, 2017 | — | — | ||||||
| Class A Common stock, $0.0001 par value; 100,000,000 shares authorized; 1,118,674 and -0- shares issued and outstanding (excluding 19,681,326 and -0- shares subject to possible redemption) as of March 31, 2018 and December 31, 2017, respectively | 112 | — | ||||||
| Class B Common stock, $0.0001 par value; 10,000,000 shares authorized; 5,200,000 and 5,750,000 shares issued and outstanding as of March 31, 2018 and December 31,2017, respectively | 520 | 575 | ||||||
| Additional paid-in capital | 5,008,887 | 24,425 | ||||||
| Accumulated deficit | (9,516 | ) | (2,784 | ) | ||||
| Total Stockholders’ Equity | 5,000,003 | 22,216 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 211,124,901 | $ | 191,445 | ||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| (unaudited) | |||||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 57,566 | $ | 106,210 | |||||||
| Prepaids and deposits – Note 3 | 3,993 | 3,326 | |||||||||
| Supplies inventories, net – Note 4 | 1,709 | 1,834 | |||||||||
| Income tax receivable | 1,530 | 1,530 | |||||||||
| Interest receivable | 466 | 667 | |||||||||
| Other receivable | 200 | — | |||||||||
| Current assets | 65,464 | 113,567 | |||||||||
| Property, plant, and equipment, net – Note 5 | 52,093 | 53,091 | |||||||||
| Restricted cash – Note 6 | 26,633 | 26,340 | |||||||||
| Assets held for sale – Note 7 | 7,148 | 7,148 | |||||||||
| Prepaids – Note 3 | 1,231 | 1,547 | |||||||||
| Total assets | $ | 152,569 | $ | 201,693 | |||||||
| Liabilities: | |||||||||||
| Asset retirement obligation | $ | 3,517 | $ | 3,172 | |||||||
| Accounts payable and accrued expenses – Note 8 | 1,690 | 1,631 | |||||||||
| Debt, net – Notes 9 and 21 | 130 | 2,330 | |||||||||
| Contract liabilities – Note 10 | 109 | 1,550 | |||||||||
| Other liabilities – Note 11 | 568 | 3,063 | |||||||||
| Current liabilities | 6,014 | 11,746 | |||||||||
| Debt, net – Notes 9 and 21 | 116,410 | 142,617 | |||||||||
| Deferred gain on sale of royalty | 29,839 | 29,839 | |||||||||
| Asset retirement obligation – Note 12 | 6,540 | 4,801 | |||||||||
| Warrant liabilities – Notes 13 and 20 | 21 | 26 | |||||||||
| Other liabilities – Note 11 | — | 8 | |||||||||
| Total liabilities | 158,824 | 189,037 | |||||||||
| Commitments and contingencies – Note 23 | |||||||||||
| Stockholders’ equity – Note 14 | |||||||||||
| Common stock, $0.0001 par value; 1,400,000,000 shares authorized; 21,256,895 issued and outstanding at March 31, 2024, and 20,736,612 issued and outstanding at December 31, 2023, respectively | 21 | 21 | |||||||||
| Additional paid-in capital | 739,648 | 737,810 | |||||||||
| Accumulated deficit | (745,924) | (725,175) | |||||||||
| Total stockholders’ (deficit) equity | (6,255) | 12,656 | |||||||||
| Total liabilities and stockholders’ equity | $ | 152,569 | $ | 201,693 | |||||||
MUDRICK CAPITAL ACQUISITION
(Unaudited)
Three Months Ended March 31, 2018 | ||||
| General and administrative expenses | $ | 105,860 | ||
| Loss from operations | (105,860 | ) | ||
| Other income: | ||||
| Interest income | 452 | |||
| Interest earned on marketable securities held in Trust Account | 111,736 | |||
| Other income | 112,188 | |||
| Income before provision for income taxes | 6,328 | |||
| Provision for income taxes | (13,060 | ) | ||
| Net loss | $ | (6,732 | ) | |
| Weighted average shares outstanding of Class A common stock | 20,800,000 | |||
| Basic and diluted loss per common share, Class A | $ | 0.00 | ||
| Weighted average shares outstanding of Class B common stock | 5,200,000 | |||
| Basic and diluted loss per common share, Class B | $ | (0.01 | ) | |
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Projects, exploration, and development | 4,903 | 3,481 | |||||||||||||||||||||
| General and administrative | 2,913 | 3,339 | |||||||||||||||||||||
| Mine site period costs – Note 2 | 2,584 | 3,809 | |||||||||||||||||||||
| Asset Retirement Obligation Adjustment | 1,991 | — | |||||||||||||||||||||
| Depreciation and amortization – Note 2 | 616 | 718 | |||||||||||||||||||||
| Accretion – Note 12 | 232 | 186 | |||||||||||||||||||||
| Loss from operations | (13,239) | (11,533) | |||||||||||||||||||||
| Other (expense) income: | |||||||||||||||||||||||
Interest expense, including accelerated amortization of discount and issuance costs of $(6,871) – Note 9 | (10,119) | (4,436) | |||||||||||||||||||||
| Other income, net - Note 19 | 1,309 | — | |||||||||||||||||||||
| Interest income | 1,295 | 1,938 | |||||||||||||||||||||
| Fair value adjustment to warrants – Notes 13 and 20 | 5 | 122 | |||||||||||||||||||||
| Net loss | $ | (20,749) | $ | (13,909) | |||||||||||||||||||
| Loss per share: | |||||||||||||||||||||||
| Basic – Note 17 | $ | (1.00) | $ | (0.69) | |||||||||||||||||||
| Diluted – Note 17 | $ | (1.00) | $ | (0.69) | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic – Note 17 | 20,811,602 | 20,027,065 | |||||||||||||||||||||
| Diluted – Note 17 | 20,811,602 | 20,027,065 | |||||||||||||||||||||
MUDRICK CAPITAL ACQUISITION
(Unaudited)
Three Months Ended March 31, 2018 | ||||
| Cash Flows from Operating Activities: | ||||
| Net loss | $ | (6,732 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Interest earned on marketable securities held in Trust Account | (111,736 | ) | ||
| Changes in operating assets and liabilities: | ||||
| Prepaid expenses | (97,534 | ) | ||
| Accounts payable and accrued expenses | 49,912 | |||
| Income taxes payable | 13,060 | |||
| Net cash used in operating activities | (153,030 | ) | ||
| Cash Flows from Investing Activities: | ||||
| Investment of cash in Trust Account | (210,080,000 | ) | ||
| Net cash used in investing activities | (210,080,000 | ) | ||
| Cash Flows from Financing Activities: | ||||
| Proceeds from sale of Units, net of underwriting fees paid | 203,840,000 | |||
| Proceeds from sale of Private Placement Warrants | 7,740,000 | |||
| Repayment of promissory note – related party | (242,331 | ) | ||
| Payment of offering costs | (293,953 | ) | ||
| Net cash provided by financing activities | 211,043,716 | |||
| Net Change in Cash | 810,686 | |||
| Cash – Beginning | 24,945 | |||
| Cash – Ending | $ | 835,631 | ||
| Non-Cash investing and financing activities: | ||||
| Deferred underwriting fees charged to additional paid in capital | $ | 7,280,000 | ||
| Payment of deferred offering costs and expenses by Sponsor | $ | 240,135 | ||
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows used in operating activities: | |||||||||||
| Net loss | $ | (20,749) | $ | (13,909) | |||||||
| Adjustments to reconcile net loss for the period to net cash used in operating activities: | |||||||||||
| Accelerated amortization of original issue discount and issuance costs – Note 9 | 6,871 | — | |||||||||
| Non-cash portion of interest expense – Note 9 | 2,744 | 2,963 | |||||||||
| Asset retirement obligation adjustments – Note 12 | 1,991 | — | |||||||||
| Stock-based compensation – Note 15 | 679 | 608 | |||||||||
| Depreciation and amortization – Notes 2 and 5 | 616 | 718 | |||||||||
| Accretion – Note 12 | 232 | 186 | |||||||||
| Loss on sale of equipment, net of commissions | 132 | — | |||||||||
| Write-down of supplies inventories | 12 | — | |||||||||
| Non-cash lease expense | (2) | — | |||||||||
| (Gain) on fair value adjustment for warrant liabilities – Notes 13 and 20 | (5) | (122) | |||||||||
| Gain on non-refundable deposit - Note 19 | (1,441) | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Interest receivable | 201 | (53) | |||||||||
| Supplies inventories, net – Note 4 | 113 | 62 | |||||||||
| Accounts payable and accrued expenses – Note 8 | 59 | (1,082) | |||||||||
| Other receivable | (200) | 2,771 | |||||||||
| Prepaids – Note 3 | (351) | 792 | |||||||||
| Other liabilities – Note 11 | (2,635) | (1,752) | |||||||||
| Net cash used in operating activities | (11,733) | (8,818) | |||||||||
| Cash flows provided by (used in) investing activities: | |||||||||||
| Proceeds from sale of equipment | 270 | — | |||||||||
| Additions to property, plant, and equipment | (25) | (271) | |||||||||
| Net cash provided by (used in) by investing activities | 245 | (271) | |||||||||
| Cash flows provided by (used in) financing activities: | |||||||||||
| Proceeds from issuance of common stock, net of issuance costs – Note 14 | 1,160 | — | |||||||||
| Principal payments on notes payable | (32) | (32) | |||||||||
| Principal payments on debt - Note 9 | (37,991) | (550) | |||||||||
| Net cash used in financing activities | (36,863) | (582) | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | (48,351) | (9,671) | |||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 132,550 | 175,966 | |||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 84,199 | $ | 166,295 | |||||||
| Reconciliation of cash, cash equivalents, and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | 57,566 | $ | 131,987 | |||||||
| Restricted cash | 26,633 | 34,308 | |||||||||
| Total cash, cash equivalents, and restricted cash | $ | 84,199 | $ | 166,295 | |||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
| Balance at January 1, 2023 | 20,027,065 | $ | 20 | $ | 733,437 | $ | (670,151) | $ | 63,306 | ||||||||||||||||||||
| Stock-based compensation costs | — | — | 608 | — | 608 | ||||||||||||||||||||||||
| 5-Year Private Warrants transferred to 5-Year Public Warrants | — | — | 531 | — | 531 | ||||||||||||||||||||||||
| Net loss | — | — | — | (13,909) | (13,909) | ||||||||||||||||||||||||
| Balance at March 31, 2023 | 20,027,065 | $ | 20 | $ | 734,576 | $ | (684,060) | $ | 50,536 | ||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ (Deficit) | ||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||
| Balance at January 1, 2024 | 20,736,612 | $ | 21 | $ | 737,810 | $ | (725,175) | $ | 12,656 | ||||||||||||||||||||
| Issuance of common stock and warrants – Note 14 | 517,688 | — | 1,160 | — | 1,160 | ||||||||||||||||||||||||
| Stock-based compensation costs | — | — | 678 | — | 678 | ||||||||||||||||||||||||
| Vesting of restricted stock units | 2,595 | — | — | — | — | ||||||||||||||||||||||||
| Net loss | — | — | — | (20,749) | (20,749) | ||||||||||||||||||||||||
| Balance at March 31, 2024 | 21,256,895 | $ | 21 | $ | 739,648 | $ | (745,924) | $ | (6,255) | ||||||||||||||||||||
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Mudrick Capital Acquisition Corporation (the “Company”) was incorporated in Delaware on August 28, 2017. The Company was formedrestarted pre-commercial scale open pit mining operations at the Hycroft Mine during the second quarter of 2019 and began producing and selling gold and silver during the third quarter of 2019. The Company operated the Hycroft Mine until November 2021, when it discontinued active mining operations as a result of the then-current and expected ongoing cost pressures for many of the reagents and consumables used at the Hycroft Mine and to further determine the most effective processing method for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
Althoughsulfide ore. In March 2023, the Company, along with its third-party consultants, completed and filed the Hycroft Property Initial Assessment Technical Report Summary Humboldt and Pershing Counties, Nevada (“2023 Hycroft TRS”) that included a mineral resource estimate utilizing a pressure oxidation (“POX”) process for sulfide mineralization and heap leaching process for oxide and transition mineralization.The Company is not limited to a particular industry or sectorfocusing on exploration drilling and data analyses, completing technical studies, conducting trade-off studies and alternative analyses for purposesdetermining the optimal process flow sheet for processing sulfide ores and recovering gold and silver, and maintaining the Hycroft Mine.
offering expenses, of $1.2 million. As of March 31, 2018,2024 and December 31, 2023, there were $14.8 million and $360.3 million, respectively, gross sales price of common stock available for issuance under the ATM Program. The net proceeds from the ATM Program have been, and are expected to be, used for general corporate purposes, which may include the repayment, refinancing, redemption, or repurchase of existing indebtedness, exploration, working capital, or capital expenditures and other investments.
The registration statement for the Company’s initial public offeringaccordance with U.S. generally accepted accounting principles (“Initial Public Offering”) was declared effective on February 7, 2018. On February 12, 2018, the Company consummated the Initial Public Offering of 20,000,000 units (“Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $200,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,500,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Company’s sponsor, Mudrick Capital Acquisition Holdings LLC ($6,500,000) (the “Sponsor”GAAP”) and Cantor Fitzgerald & Co. ($1,000,000) (“Cantor”), generating gross proceeds of $7,500,000, which is described in Note 4.
Following the closing of the Initial Public Offering on February 12, 2018, an amount of $202,000,000 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants was placed in a trust account (“Trust Account”) and may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.
On February 28, 2018, in connection with the underwriters’ election to partially exercise their over-allotment option, the Company consummated the sale of an additional 800,000 Units at $10.00 per Unit and the sale of an additional 240,000 Private Placement Warrants at $1.00 per warrant, generating total gross proceeds of $8,240,000. Following the closing, an additional $8,080,000 of net proceeds ($10.10 per Unit) was placed in the Trust Account, resulting in $210,080,000 ($10.10 per Unit) held in the Trust Account.
Transaction costs amounted to $11,974,088, consisting of $4,160,000 of underwriting fees, $7,280,000 of deferred underwriting fees payable (which are held in the Trust Account) and $534,088 of other costs. In addition, as of March 31, 2018, $835,631 of cash was held outside of the Trust Account and is available for working capital purposes. As described in Note 5, the $7,280,000 deferred underwriting fees payable is contingent upon the consummation of a Business Combination by February 12, 2020.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide its holders of the outstanding shares of its Class A common stock, par value $0.0001, par value $0.0001 (“Class A common stock”), sold in the Initial Public Offering (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares (as defined below in Note 3) upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.10 per Public Share). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote its Founder Shares (as defined in Note 4) and any Public Shares held by them in favor of approving a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding the foregoing, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the Initial Public Offering, without the prior consent of the Company.
The Company’s Sponsor, officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the public stockholders with the opportunity to redeem their shares of Class A common stock in conjunction with any such amendment.
If the Company is unable to complete a Business Combination by February 12, 2020 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.10 per share held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financialCertain information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting.
Accordingly, theythese Financial Statements do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. These Financial Statements should be read in conjunction with the Company’s Audited Consolidated Financial Statements and the notes thereto (the “Notes”) as of and for the year ended December 31, 2023 (the “2023 Audited Financial Statements”), filed as a part of the Company’s annual report on Form 10-K filed with the SEC on March 14, 2024. The Company continues to follow the accounting policies set forth in the 2023 Audited Financial Statements, with updates discussed below. In the opinion of management, the accompanying unaudited condensed financial statementsFinancial Statements include all adjustments consisting of a normal recurring nature, whichthat are necessary for a fair presentation of the Company’s interim financial position, operating results, and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company's final prospectus as filed with the SEC on February 8, 2018, as well as the Company’s Form 8-K, as filed with the SEC on February 16, 2018. The interim results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ended December 31, 2018 or for any future interim periods.
Emerging growth company
The Company is an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible thattime the estimate is made. Actual results may differ from amounts estimated in these Financial Statements, and such differences could be material. Accordingly, amounts presented in these Financial Statements may not be indicative of the effect of a condition, situation or set of circumstancesresults that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or moremay be expected for future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and cash equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company didperiods.
Cash and marketable securities held in Trust Account
At March 31, 2018, the assets held in the Trust Account were held in cash and money market funds.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
Common stock subject to possible redemption
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in2024, the Financial Accounting Standards Board ("FASB"(“FASB”) issued Accounting Standards Update 2024-02, Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subjectImprovements—Amendments to mandatory redemption (if any) 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 withinRemove References to the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity.Concepts Statements. The Company’s common stock features certain redemption rights thatamendments are considered to be outsidecodification improvements only and therefore are not expected to significantly affect current accounting practice. The guidance is to clarify guidance, simplify wording or structure of guidance, and other minor improvements. The new guidance is
| March 31, 2024 | December 31, 2023 | ||||||||||
| Current prepaids and deposits: | |||||||||||
| Prepaids: | |||||||||||
| Insurance | $ | 2,541 | $ | 1,631 | |||||||
| Mining claims fees and permit fees | 344 | 495 | |||||||||
| Prepaid taxes | 262 | — | |||||||||
| Surety bond fees | 214 | 643 | |||||||||
| License fees | 201 | 280 | |||||||||
| Other | 218 | 73 | |||||||||
| Deposits | 213 | 204 | |||||||||
| Total | $ | 3,993 | $ | 3,326 | |||||||
| Non-current prepaids: | |||||||||||
| Insurance | $ | 631 | $ | 947 | |||||||
| Royalty – advance payment on Crofoot Royalty | $ | 600 | $ | 600 | |||||||
| Total | $ | 1,231 | $ | 1,547 | |||||||
| Depreciation Life or Method | March 31, 2024 | December 31, 2023 | |||||||||||||||
| Production leach pads | Units-of-production | $ | 11,190 | $ | 11,190 | ||||||||||||
| Test leach pads | 18 months | 6,241 | 6,241 | ||||||||||||||
| Process equipment | 5 - 15 years | 17,615 | 17,556 | ||||||||||||||
| Buildings and leasehold improvements | 10 years | 9,419 | 9,419 | ||||||||||||||
| Mine equipment | 5 - 7 years | 4,750 | 4,732 | ||||||||||||||
| Vehicles | 3 - 5 years | 1,700 | 1,700 | ||||||||||||||
| Furniture and office equipment | 7 years | 713 | 713 | ||||||||||||||
| Mineral properties | Units-of-production | 50 | 50 | ||||||||||||||
| Construction in progress and other | 35,052 | 35,504 | |||||||||||||||
| 86,729 | 87,105 | ||||||||||||||||
| Less, accumulated depreciation and amortization | (34,636) | (34,014) | |||||||||||||||
| Total | $ | 52,093 | $ | 53,091 | |||||||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Reclamation and other surety bond cash collateral | $ | 26,580 | $ | 26,287 | |||||||
| Credit card collateral | 53 | 53 | |||||||||
| Total | $ | 26,633 | $ | 26,340 | |||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Debt, net, current: | |||||||||||
| Sprott Credit Agreement | $ | — | $ | 2,200 | |||||||
| Notes payable | 130 | 130 | |||||||||
| Total | $ | 130 | $ | 2,330 | |||||||
| Debt, net, non-current: | |||||||||||
| Sprott Credit Agreement, net of original issue discount of $2.4 million as of March 31, 2024, and $8.3 million as of December 31, 2023, net of amortization | $ | 12,643 | $ | 42,530 | |||||||
| Subordinated Notes | 104,180 | 101,639 | |||||||||
| Notes payable | 43 | 76 | |||||||||
| Less, debt issuance costs | (456) | (1,628) | |||||||||
| Total | $ | 116,410 | $ | 142,617 | |||||||
| 2024 | 98 | ||||
| 2025 | 54 | ||||
| 2026 | 22 | ||||
| 2027 | 119,180 | ||||
| 2028 | — | ||||
| Sub-total | 119,353 | ||||
| Less, original issue discount, net of accumulated amortization of $17,973 | (2,357) | ||||
| Less, debt issuance costs, net of accumulated amortization of $4,431 | (456) | ||||
| Total debt, net | $ | 116,540 | |||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
Sprott Credit Agreement(1) | $ | 502 | $ | 1,471 | |||||||||||||||||||
Subordinated Notes(2) | 2,541 | 2,299 | |||||||||||||||||||||
Amortization of original issue discount(3) | 158 | 549 | |||||||||||||||||||||
Amortization of debt issuance costs(3) | 46 | 115 | |||||||||||||||||||||
| Other interest expense | 1 | 2 | |||||||||||||||||||||
Accelerated amortization of original issue discount and issuance costs (4) | 6,871 | — | |||||||||||||||||||||
| Total | $ | 10,119 | $ | 4,436 | |||||||||||||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Other liabilities, current: | |||||||||||
| Accrued compensation | $ | 504 | $ | 3,000 | |||||||
| Accrued directors fees | 39 | 38 | |||||||||
| Operating lease liability | 25 | 25 | |||||||||
| Total | $ | 568 | $ | 3,063 | |||||||
| Other liabilities, non-current | |||||||||||
| Operating lease liability | $ | — | $ | 8 | |||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Balance, beginning of period | $ | 7,973 | $ | 10,302 | |||||||
| Accretion | 232 | 1,087 | |||||||||
| Spending | (139) | (529) | |||||||||
| Change in estimates | 1,991 | (2,887) | |||||||||
| Balance, end of period | $ | 10,057 | $ | 7,973 | |||||||
| Current | $ | 3,517 | $ | 3,172 | |||||||
| Non-Current | $ | 6,540 | $ | 4,801 | |||||||
| Balance at | Fair Value | Transfers to | Balance at | |||||||||||||||||||||||||||||
| December 31, 2022 | Adjustments(1) | 5-Year Public Warrants | March 31, 2023 | |||||||||||||||||||||||||||||
| Warrants | Amount | Warrants | Amount | Warrants | Amount | Warrants | Amount | |||||||||||||||||||||||||
| 9,126,515 | $ | 786 | — | $ | (122) | (6,176,794) | $ | (531) | 2,949,721 | $ | 133 | |||||||||||||||||||||
| Balance at | Fair Value | Balance at | ||||||||||||||||||||||||||||||
| December 31, 2023 | Adjustments(1) | March 31, 2024 | ||||||||||||||||||||||||||||||
| Warrants | Amount | Warrants | Amount | Warrants | Amount | |||||||||||||||||||||||||||
| 865,422 | $ | 26 | — | $ | (5) | 865,422 | $ | 21 | ||||||||||||||||||||||||
| Exercise Price | Exercise Period | Expiration Date | Warrants Outstanding | |||||||||||||||||
| $ | 11.50 | 5 years | May 29, 2025 | 865,422 | ||||||||||||||||
Offering Costs
Offering costs consist principallycommon stock, and approximately $361.4 million of legal, accounting, underwritingshares of common stock remain available for future issuance under the Sales Agreement. Net proceeds, after deducting commissions and fees of $5.0 million were $133.5 million.
| Balance at December 31, 2023 | Warrant Issuances | Transfers from 5-Year Private Warrants | Balance at March 31, 2024 | |||||||||||||||||||||||||||||||||||
| Warrants | Amount | Warrants | Amount | Warrants | Amount | Warrants | Amount | |||||||||||||||||||||||||||||||
| 5-Year Public Warrants | 33,424,476 | $ | 29,539 | — | $ | — | — | $ | — | 33,424,476 | $ | 29,539 | ||||||||||||||||||||||||||
| Public Offering Warrants | 9,583,334 | 12,938 | — | — | — | — | 9,583,334 | 12,938 | ||||||||||||||||||||||||||||||
| Private Placement Offering Warrants | 46,816,480 | 25,604 | — | — | 46,816,480 | 25,604 | ||||||||||||||||||||||||||||||||
| Total | 89,824,290 | $ | 68,081 | — | $ | — | — | $ | — | 89,824,290 | $ | 68,081 | ||||||||||||||||||||||||||
| Balance at December 31, 2022 | Transfers from 5-Year Private Warrants(1) | Balance at March 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Warrants | Amount | Warrants | Amount | Warrants | Amount | |||||||||||||||||||||||||||||||||
| 5-Year Public Warrants | 25,163,383 | $ | 28,954 | 6,176,794 | $ | 531 | 31,340,177 | $ | 29,485 | |||||||||||||||||||||||||||||
| Public Offering Warrants | 9,583,334 | 12,938 | — | — | 9,583,334 | 12,938 | ||||||||||||||||||||||||||||||||
| Private Placement Offering Warrants | 46,816,480 | 25,604 | — | — | 46,816,480 | 25,604 | ||||||||||||||||||||||||||||||||
| Total | 81,563,197 | $ | 67,496 | 6,176,794 | $ | 531 | 87,739,991 | $ | 68,027 | |||||||||||||||||||||||||||||
| Exercise price | Exercise period | Expiration date | Warrants outstanding | ||||||||||||||||||||
| 5-Year Public Warrants | $ | 11.50 | 5 years | May 29, 2025 | 33,424,476 | ||||||||||||||||||
| Public Offering Warrants | $ | 10.50 | 5 years | October 6, 2025 | 9,583,334 | ||||||||||||||||||
| Private Placement Offering Warrants | $ | 1.068 | 5 years | March 15, 2027 | 46,816,480 | ||||||||||||||||||
Income taxes
Company. As of March 31, 2024, there were 482,071 shares available for issuance under the PIPP.
| Three Months Ended March 31, | |||||||||||||||||
| 2024 | 2023 | ||||||||||||||||
| Unvested at beginning of year | 607,099 | 354,715 | |||||||||||||||
| Granted | — | — | |||||||||||||||
| Canceled/forfeited | — | (6,282) | |||||||||||||||
| Vested | (9,443) | (9,165) | |||||||||||||||
Unvested end of period(1) | 597,656 | 339,267 | |||||||||||||||
FASB ASC 740 prescribes a recognition threshold and a measurement attributeexpense or benefit for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as ofthree months ended March 31, 20182024 and December 31, 2017.2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutoryeffective tax rate for the three months ended March 31, 2024 and 2023 was loweredNil and Nil, respectively. The effective tax rate differed from 35%the statutory rate during each period primarily due to 21% effective January 1, 2018, among other changes. FASB ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment; therefore, the Company was requiredvaluation allowance established to revalue itsoffset net deferred tax assetsassets.
Net income (loss)diluted loss per share calculations (in thousands, except share and per share amounts):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net loss | $ | (20,749) | $ | (13,909) | |||||||||||||||||||
Weighted average shares outstanding (1) | |||||||||||||||||||||||
| Basic | 20,811,602 | 20,027,065 | |||||||||||||||||||||
| Diluted | 20,811,602 | 20,027,065 | |||||||||||||||||||||
Basic loss per common share (1) | $ | (1.00) | $ | (0.69) | |||||||||||||||||||
Diluted loss per common share (1) | $ | (1.00) | $ | (0.69) | |||||||||||||||||||
Net income (loss) amounts have been adjusted to reflect the 1-for-10 reverse stock split effected November 14, 2023
The Company’s statement of operations includes a presentation of income (loss) per share for common shares subject to redemption in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted for Class A common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A common stock outstanding for the period. Net loss per common share, basic and diluted for Class B common stock is calculated by dividing the net income (loss), less income attributable to Class A common stock, by the weighted average number of Class B common stock outstanding for the period.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal Depository Insurance Coverage of $250,000. At March 31, 2018 and December 31, 2017, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair value of financial instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
Recently accounting pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 20,800,000 units at a price of $10.00 per Unit, inclusive of 800,000 Units sold on February 28, 2018 upon the underwriters’ election to partially exercise their over-allotment option. Each Unit consists of one share of Class A common stock (such shares of Class A common stock included in the Units being offered, the “Public Shares”), and one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
4. RELATED PARTY TRANSACTIONS
Founder Shares
On September 25, 2017, the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock, par value $0.001 (“Class B common stock”) for an aggregate price of $25,000. The Founder Shares will automatically convert into shares of Class A common stock at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions, as described in Note 6. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment, at any time. The initial stockholders have agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’ election to partially exercise their over-allotment option on February 28, 2018, 200,000 Founder Shares are no longer subject to forfeiture. The underwriters elected not to exercise the remaining portion of the over-allotment option and, therefore, 550,000 Founder Shares were forfeited.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Private Placement Warrants
Concurrently withoutstanding during the closing of the Initial Public Offering, the Sponsor and Cantor purchased an aggregate of 7,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant (6,500,000 Private Placement Warrants by the Sponsor and 1,000,000 Private Placement Warrants by Cantor) for an aggregate purchase price of $7,500,000. On February 28, 2018, the Company consummated the sale of an additional 240,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, of which 200,000 Private Placement Warrants were purchased by the Sponsor and 40,000 Private Placement Warrants were purchased by Cantor, generating gross proceeds of $240,000. Each Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. The proceeds from the Private Placement Warrants were addedperiod.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
The Private Placement Warrants have been deemed compensation by Financial Industry Regulatory Authority, or FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of the FINRA Manual commencing on the effective date of the registration statement for the Initial Public Offering. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement for the Initial Public Offering. Additionally, the Private Placement Warrants purchased by Cantor may not be sold, transferred, assigned, pledged or hypothecated for 180 days following the effective date of the Initial Public Offering except to any selected dealer participating in the Initial Public Offering and the bona fide officers or partners of the underwriter and any such participating selected dealer.
The Sponsor, Cantor and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On September 25, 2017, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Proposed Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and payable on the earlier of March 31, 2018 or the completion of the Initial Public Offering. The Note was repaid upon the consummation of the Initial Public Offering.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or 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 $1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.
Administrative Support Agreement
The Company entered into an agreement whereby, commencing on February 8, 2018 through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Fornet loss during the three months ended March 31, 2018, the Company incurred $20,000 of administrative service fees.
5. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on February 7, 2018, the holders of Founder Shares, Private Placement Warrants, securities issuable pursuant to the Forward Purchase Contract (see below),2024 and warrants that may be issued upon conversion of Working Capital Loans are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock). These holders have certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were paid a cash underwriting discount of $0.20 per Unit, or $4,160,000 in the aggregate. In addition, the underwriters are entitled to a deferred fee of $0.35 per Unit, or $7,280,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
Forward Purchase Contract
On January 24, 2018, the Company entered into a forward purchase contract (the “Forward Purchase Contract”) with the Sponsor, pursuant to which the Sponsor committed to purchase, in a private placement for gross proceeds of $25,000,000 to occur concurrently with the consummation of a Business Combination, 2,500,000 Units (the “Forward Units”) on substantially the same terms as the sale of Units in Initial Public Offering at $10.00 per Unit, and 625,000 shares of Class A common stock. The funds from the sale of Forward Units will be used as part of the consideration to the sellers in a Business Combination; any excess funds from this private placement will be used for working capital purposes in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their Public Shares and provides the Company with a minimum funding level for a Business Combination.
6. STOCKHOLDERS’ EQUITY
Common Stock
Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of March 31, 2018 and December 31, 2017,2023, respectively, there were 1,118,674 and -0- shares of Class A common stock issued and outstanding (excluding 19,681,326 and -0- shareswas no dilutive effect of common stock subject to possible redemption), respectively.
Class B Common Stock —equivalents because the effects of such would have been anti-dilutive. The Company is authorized to issue 10,000,000following table summarizes the shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of March 31, 2018 and December 31, 2017, there were 5,200,000 and 5,575,000 shares, respectively, of Class B common stock outstanding.
Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert into shares of Class A common stock atexcluded from the time of the initial Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that theweighted average number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding, uponas the completionimpact would be anti-dilutive (in thousands):
| March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
Shares upon exercise of warrants (1 for 2023 only) | 9,069 | 9,069 | |||||||||
| Restricted stock units | 598 | 339 | |||||||||
| Total | 9,667 | 9,408 | |||||||||
Preferred Stock — The CompanyCompany’s management reporting structure. Each segment is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to timereviewed by the executive decision-making group to make decisions about allocating the Company’s board of directors. As of March 31, 2018 and December 31, 2017, there were no shares of preferred stock issued or outstanding.
Warrants — Public Warrants may only be exercised for a whole number of shares. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effectiveresources and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the Public Warrants is not effective within a specified period following the consummation of Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.assess its performance. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
The Private Placement Warrants are identical to the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company may redeem the Public Warrants (except with respect to the Private Placement Warrants):
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Class A common stock at a pricetables below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution fromsummarize the Company’s assets held outsidesegment information (in thousands):
| Three months ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
| Hycroft Mine | Corporate and Other | Total | |||||||||||||||||||||||||||||||||
| Operating costs | $ | 10,326 | $ | 2,913 | $ | 13,239 | |||||||||||||||||||||||||||||
| Loss from operations | (10,326) | (2,913) | (13,239) | ||||||||||||||||||||||||||||||||
| Other income | 1,309 | — | 1,309 | ||||||||||||||||||||||||||||||||
| Interest expense – Note 9 | (1) | (10,118) | (10,119) | ||||||||||||||||||||||||||||||||
| Interest income | 455 | 840 | 1,295 | ||||||||||||||||||||||||||||||||
| Fair value adjustment to warrants – Notes 13 and 20 | — | 5 | 5 | ||||||||||||||||||||||||||||||||
| Loss before income taxes | $ | (8,563) | $ | (12,186) | $ | (20,749) | |||||||||||||||||||||||||||||
| Income tax benefit | — | — | — | ||||||||||||||||||||||||||||||||
| Net loss | $ | (8,563) | $ | (12,186) | $ | (20,749) | |||||||||||||||||||||||||||||
| Three months ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| Hycroft Mine | Corporate and Other | Total | |||||||||||||||||||||||||||||||||
| Operating costs | 8,194 | 3,339 | 11,533 | ||||||||||||||||||||||||||||||||
| Loss from operations | (8,194) | (3,339) | (11,533) | ||||||||||||||||||||||||||||||||
| Interest expense – Note 9 | — | (4,436) | (4,436) | ||||||||||||||||||||||||||||||||
| Fair value adjustments to warrants – Notes 13 and 20 | — | 122 | 122 | ||||||||||||||||||||||||||||||||
| Interest income | 464 | 1,474 | 1,938 | ||||||||||||||||||||||||||||||||
| Loss before income taxes | $ | (7,730) | $ | (6,179) | $ | (13,909) | |||||||||||||||||||||||||||||
| Income tax benefit | — | — | — | ||||||||||||||||||||||||||||||||
| Net loss | $ | (7,730) | $ | (6,179) | $ | (13,909) | |||||||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Hycroft Mine | Corporate and Other | Total | Hycroft Mine | Corporate and Other | Total | ||||||||||||||||||||||||||||||
| Total Assets | $ | 56,947 | $ | 95,622 | $ | 152,569 | $ | 66,129 | $ | 135,564 | $ | 201,693 | |||||||||||||||||||||||
7. FAIR VALUE MEASUREMENTS
The Company follows the guidancecomponents reported in ASC 820 for its financial assets and liabilities that are re-measured and reported at
| Three months ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Other Income (Expense) | |||||||||||
| Income from non-refundable deposit | $ | 1,441 | $ | — | |||||||
| Loss on sale of equipment | (132) | — | |||||||||
| Total | $ | 1,309 | $ | — | |||||||
measurements
The following table presents information about the Company’s assets that areliabilities measured at fair value on a recurring basis (in thousands).
| Hierarchy Level | March 31, 2024 | December 31, 2023 | |||||||||||||||
| 5-Year Private Warrants | 2 | $ | 21 | $ | 26 | ||||||||||||
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash interest paid | $ | 502 | $ | 1,473 | |||||||
| Increase in debt from in-kind interest | 2,541 | 2,299 | |||||||||
| Description | Level | March 31, 2018 | December 31, 2017 | |||||||||
| Assets: | ||||||||||||
| Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund | 1 | $ | 210,191,736 | $ | — | |||||||
MUDRICK CAPITAL ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
8. SUBSEQUENT EVENTS
our business, some of which are class action lawsuits. The Company evaluated subsequent eventsdoes not believe, based on currently available information, that contingencies related to any pending or threatened legal matter will have a material adverse effect on the Company’s Financial Statements, although a contingency could be material to the Company’s results of operations or cash flows for a particular period depending on its results of operations and transactionscash flows for such period. Regardless of the outcome, litigation can have a material adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
may not be prevented or detected. SECURITIES References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Mudrick Capital Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “sponsor” refer to Mudrick Capital Acquisition Holdings LLC. analysisunderstanding of the Company’sour consolidated operating results and financial condition and results of operationscondition. The following discussion should be read in conjunction with theour unaudited condensed consolidated financial statements for the three months ended March 31, 2024 (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 StatementsThis Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act 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(the “Notes”) included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2024, as well as our other reports filed with the Securities Exchange Commission (“SEC”) from time to time, including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2023. Terms not defined herein have the same meaning defined in the Financial Statements and the Notes.limitation,a lost time incident. The Hycroft Mine’s total recordable injury frequency rate (“TRIFR”) for the trailing 12 months, which includes other reportable incidents, is one of the metrics we use to assess safety performance, and it is well below industry averages and significantly below pre-2021 historical levels experienced at the Hycroft Mine. During the first three months of 2024, we continued our critical focus on safety, including allocating personnel, resources, workforce time, and communications to operate safely. These actions contributed to maintaining our TRIFR of Nil (0.00) at March 31, 2024 and December 31, 2023. We will continue to evolve our safety efforts as needed to keep our workforce, contractors, and visitors safe.March 31, 2024 December 31, 2023 Cash and cash equivalents $ 57,566 $ 106,210 Other receivable 200 — Income tax receivable 1,530 1,530 7,039 5,598 Total projected sources of future liquidity $ 66,335 $ 113,338 Three Months Ended March 31, 2024 2023 Net loss $ (20,749) $ (13,909) Net non-cash adjustments 11,829 4,353 Net change in operating assets and liabilities (2,813) 738 Net cash used in operating activities (11,733) (8,818) Net cash provided by (used in) investing activities 245 (271) Net cash used in financing activities (36,863) (582) Net decrease in cash (48,351) (9,671) Cash, cash equivalents, and restricted cash, beginning of period 132,550 175,966 Cash, cash equivalents, and restricted cash, end of period $ 84,199 $ 166,295 Reconciliation of cash, cash equivalents, and restricted cash: Cash and cash equivalents 57,566 106,210 Restricted cash $ 26,633 $ 26,340 Cash, cash equivalents, and restricted cash, end of period $ 84,199 $ 166,295 Payments Due by Period Total Less than
1 Year1 - 3
Years3 - 5
YearsMore than
5 YearsOperating activities: $ 241,199 $ — $ — $ — $ 241,199 96,966 3,044 2,977 749 90,196 75,327 1,766 3,822 69,739 — 4,344 — — — 4,344 Financing activities: 95,173 130 43 95,000 — Total $ 513,009 $ 4,940 $ 6,842 $ 165,488 $ 335,739 this “Management’sPart II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingOperations in 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, basedAnnual Report 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 final prospectusForm 10-K for the Initial Public Offering filed with 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.OverviewWe are a blank check company incorporated on August 28, 2017 in Delaware and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of our Initial Public Offering and the Private Placement, the proceeds from the sale of our shares in connection with a Business Combination (pursuant to the forward purchase agreement we entered into with our sponsor or backstop agreements we may enter into in connection with our initial Business Combination), our securities, debt or a combination of cash, securities and debt.The issuance of additional shares of common stock or preferred stock:●may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;●may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;●could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;●may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and●may adversely affect prevailing market prices for our Class A common stock and/or warrants.Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:●default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;●acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;●our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;●our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;●our inability to pay dividends on our common stock;●using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;●limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;●increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;●limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and●other purposes and other disadvantages compared to our competitors who have less debt.
year ended December 31, 2023.13We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete a Business Combination will be successful.Results of OperationsWe have neither engaged in any operations nor generated any revenues to date. Our only activities from August 28, 2017 (date of inception) through March 31, 2018 were organizational activities, those necessary to prepare for the Initial Public Offering, which was consummated on February 12, 2018, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account. 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.For the three months ended March 31, 2018, we had net loss of $6,732, which consists of operating costs of $105,860 and a provision for income taxes of $13,060, offset by interest income on cash and securities held in the Trust Account of $111,736 and other interest income of $452.Liquidity and Capital ResourcesThe completion of the Initial Public Offering and simultaneous Private Placement Warrants, inclusive of the underwriters’ partial exercise of their over-allotment option, generated gross proceeds to the Company of $215,740,000. Related transaction costs amounted to $11,974,088, consisting of $4,160,000 of underwriting fees, $7,280,000 of deferred underwriting commissions payable (which are held in the Trust Account) and $534,088 of other costs.As of March 31, 2018, we had cash and securities held in the Trust Account of $210,191,736, substantially all of which is invested in U.S. treasury securities money market fund. Interest income earned on the balance in the Trust Account is available to us to pay taxes.As of March 31, 2018, we had cash of $835,631 held outside the Trust Account, which is available for use by us to cover the costs associated with identifying a target business, negotiating a Business Combination, due diligence procedures and other general corporate uses. In addition, as of March 31, 2018, we had accounts payable and accrued expenses of $50,445.For the three months ended March 31, 2018, cash used in operating activities amounted to $153,030, mainly resulting from a net loss of $6,732 and interest earned on securities held in the Trust Account of $111,736. Changes in our operating assets and liabilities used $34,562 of cash.We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our Business Combination. We may withdraw interest to pay taxes and up to $100,000 for dissolution expenses, if any. 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.Our Sponsor has committed, pursuant to the Forward Purchase Contract with us, to purchase, in a private placement for gross proceeds of $25,000,000 to occur concurrently with the consummation of a Business Combination, 2,500,000 Units on substantially the same terms as the sale of Units in Initial Public Offering at $10.00 per Unit, and 625,000 shares of Class A common stock. The funds from the sale will be used as part of the consideration to the sellers in a Business Combination; any excess funds from this private placement will be used for working capital purposes in the post-transaction company. This commitment is independent of the percentage of stockholders electing to redeem their Public Shares and provides us with a minimum funding level for a Business Combination.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 (as well as pay personnel and advisors to do the forgoing), structure, negotiate and complete a Business Combination. 14In order to fund working capital deficiencies or finance transaction costs in connection with an intended 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 our Business Combination, we would repay such loaned amounts. In the event that our 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 will be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. No written agreements currently exist with respect to such loans.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 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. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. In the current economic environment, it has become especially difficult to obtain acquisition financing. 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. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.Off-balance sheet financing arrangementsWe have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. 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 obligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support provided to the Company. We began incurring these fees on February 8, 2018 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination or the Company’s liquidation.Critical Accounting PoliciesThe 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 critical accounting policies.Recent accounting pronouncementsManagement does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.The net proceedsthe Initial Public OfferingRegulation S-K, quantitative and the sale of the Private Units held in the Trust Accountqualitative disclosures about market risk are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.not required, and such are omitted from this filing.areas required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act as of March 31, 2024.other procedures that are designedwere effective as of March 31, 2024 to ensureprovide such reasonable assurance that information required to be disclosed by us, including our consolidated subsidiaries, in our reports filedwe file or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submittedsubmit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
disclosure and is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission’s rules and forms.15Evaluation of Disclosure Controls and ProceduresAs required by Rules 13a-15 and 15d-15 under the Exchange Act,Our management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluationbelieves that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any system of controls is to provide reasonable assurance of the effectiveness of the design and operation of our disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and procedures assuch assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of March 31, 2018. Based upon this evaluation, our Chief Executive Officerthe inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.During the most recently completed fiscal quarter, there has beenchangesignificant changes in our internal control over financial reporting during the quarter ended March 31, 2024 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.-– OTHER INFORMATIONPROCEEDINGS.None.FACTORS.Factors that could cause our actual resultsFACTORSdiffer materially from thosebe included in thisa Quarterly Report and, therefore, are any of the risks described in our final prospectus filed with the SEC on February 8, 2018. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date ofomitted from this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus filed with the SEC on February 8, 2018.filing.PROCEEDS.The Sponsor and Cantor purchased an aggregate of 7,740,000 Private Placement Warrants (6,700,000 Private Placement Warrants by the Sponsor and 1,040,000 Private Placement Warrants by Cantor) at a price of $1.00 per warrant in private placements that occurred simultaneously with the closing of the Initial Public Offering (including the closing of the partial exercise of the underwriters’ over-allotment option). Each Private Placement Warrant is exercisable for one share of the Company’s Class A common stock at a price of $11.50 per share. The sale of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.Use of ProceedsIn February 2018, the Company consummated its Initial Public Offering in which it sold an aggregate of 20,800,000 Units (including a partial exercise of the underwriter’s overallotment option), with each Unit consisting of one share of Class A common stock and one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The Units in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $208,000,000, including the sale of an aggregate of 800,000 Units to cover over-allotments. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-222562). The SEC declared the registration statement effective on February 7, 2018.In connection with the Initial Public Offering, the Company incurred offering costs of $11,974,088 (including an underwriting fee of $4,160,000 and deferred underwriting commissions of $7,280,000 (including fees and commissions in connection with the partial exercise of the underwriter’s overallotment option)). Other incurred offering costs consisted principally of formation and preparation fees related to the Initial Public Offering. Prior to the closing of the Initial Public Offering, the Sponsor had made $242,331 in loans to the Company. The loans were non-interest bearing and payable on the earlier of March 31, 2018 or the completion of the Initial Public Offering. The loans of $242,331 were fully repaid upon the consummation of the Initial Public Offering on February 12, 2018.After deducting the underwriting fee (excluding the deferred underwriting commission of $7,280,000, which amount will be payable upon consummation of the Business Combination, if consummated) and the Initial Public Offering expenses, the total net proceeds from our Initial Public Offering and the sale of the Private Placement Warrants was approximately $211,045,912 of which $210,080,000 (or $10.10 per Unit sold in the Initial Public Offering) was placed in the Trust Account. As of March 31, 2018, cash held outside the Trust Account was $835,631. The net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants are held in the Trust Account and have been invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.
PROCEEDS16SECURITIES.DISCLOSURES.Not applicable.INFORMATION.None.
INFORMATION17 EXHIBITS.The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.No.Description of Exhibit1.1***Exhibit
NumberDescription 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* Filed herewith.**Furnished.***Incorporated by reference to our Current Report on Form 8-K filed on February 13, 201818ExchangeExchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.MUDRICK CAPITAL ACQUISITION CORPORATIONDate: May 14, 20187, 2024By: /s/ Jason MudrickDiane R. GarrettName:Jason MudrickTitle: (Principal Executive OfficerDate: May 14, 20187, 2024By: /s/ Glenn SpringerStanton RideoutName:Glenn SpringerTitle:19