UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File

No. 001-39771

MUDRICK CAPITAL ACQUISITION CORPORATION II

(Exact name of registrant as specified in its charter)

Delaware		85-2320197
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)

527 Madison Avenue, 6th Floor

New York, NY 10022

(Address of Principal Executive Offices, including zip code)

(646)

~~(646)~~747-9500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	~~Trading Symbol~~TradingSymbol(s)	Name of each ~~exchange~~exchangeon on which registered
Units, each consisting of one share of Class A Common Stock and one-half of one Redeemable Warrant	MUDSU	The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share	MUDS	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50	MUDSW	The Nasdaq Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-~~2of~~2

of the Exchange Act.

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

~~Rule12b~~12b-~~2of~~2

of the Exchange Act): Yes ☒ No ☐

As of August 11

, 2022, there were 31,625,000 shares of Class A common stock, par value $0.0001 per share (“Class A common stock”) and 7,906,250 shares of Class B common stock, par value $0.0001 per share (“Class B common stock”), of the registrant issued and outstanding.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

FORM

10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

		Page
PART 1 – FINANCIAL INFORMATION
Item 1.	Interim Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021		1
	Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021		1
	Condensed Consolidated Statements of Operations for the Three months Ended March 31, 2022 and 2021 (unaudited)		2
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021		2
	Condensed Consolidated Statements of Changes in Stockholder’s Deficit for the Three months Ended March 31, 2022 and 2021 (unaudited)		3
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Six Months Ended June 30, 2022 and 2021		3
	Condensed Consolidated Statements of Cash Flows for the Three months Ended March 31, 2022 and 2021 (unaudited)		4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021		4
	Notes to Condensed Consolidated Financial Statements (unaudited)		5
	Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1718
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		2021
Item 4.	~~Control~~Controls and Procedures		2021
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		2122
Item 1A.	Risk Factors		2122
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2122
Item 3.	Defaults Upon Senior Securities		2122
Item 4.	Mine Safety Disclosures		2122
Item 5.	Other Information		2122
Item 6.	Exhibits		2223
SIGNATURES			2324

Table of Contents

PART 1 – FINANCIAL INFORMATION

Item 1. Interim Financial Statements

MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2022			December 31, 2021
	June 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
Current assets
Cash	$	43118,~~768~~964		$	138,686
Prepaid expenses		~~112~~81,~~958~~208			82,708
Total Current Assets		~~156~~200,~~726~~172			221,394
Investments held in Trust Account		321,~~044~~283,~~409~~642			321,039,924
TOTAL ASSETS	$	321,~~201~~483,~~135~~814		$	321,261,318
LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	6,~~376~~720,~~338~~836		$	5,044,473
Total Current Liabilities		6,376,338			5,044,473
Income taxes payable		6,036			—
Convertible note – related party		1,250,000			1,000,000
Total Current Liabilities		6,726,872			5,044,473
Warrant liabilities		12,025,125			22,097,338
Convertible note – related party		1,500,000			1,000,000
Warrant liabilities		8,557,750			22,097,338
Deferred underwriting fee payable		11,068,750			11,068,750
TOTAL LIABILITIES		3027,~~720~~853,~~213~~372			39,210,561
Commitments and Contingencies
Class A common stock subject to possible redemption 31,625,000 shares at approximately $10.15 per share as of March 31, 2022 and December 31, 2021		320,993,750			320,993,750
Class A common stock subject to possible redemption 31,625,000 shares at approximately $10.15 per share as of June 30, 2022 and December 31, 2021		321,012,714			320,993,750
Stockholders’ Deficit
STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding		—			—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized		—			—
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 7,906,250 shares issued and outstanding, as of March 31, 2022 and December 31, 2021		791			791
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 7,906,250 shares issued and outstanding, as of June 30, 2022 and December 31, 2021		791			791
Additional paid-in capital		—			—
Accumulated deficit		(3027,~~513~~383,~~619~~063	)		(38,943,784	)
Total Stockholders’ Deficit		(30,512,828	)		(38,942,993	)
TOTAL STOCKHOLDERS’ DEFICIT		(27,382,272	)		(38,942,993	)
TOTAL LIABILITIES, CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT	$	321,~~201~~483,~~135~~814		$	321,261,318

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months EndedMarch 31,
	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
General and administrative expenses	$	1551,~~646,533~~052		$	~~721~~3,~~627~~074,794		$	2,197,585		$	3,796,421
Loss from operations		(1551,~~646,533~~052	)		(~~721~~3,~~627~~074,794	)		(2,197,585	)		(3,796,421	)
Other income:
Other income (expense):
Interest earned on investments held in Trust Account		4239,~~485~~233			304,~~258~~321			243,718			34,579
Change in fair value of warrant liabilities		103,~~072~~467,~~213~~375			4(112,~~963~~825,~~883~~786	)		13,539,588			(107,861,903	)
Total other income		10,076,698			4,994,141
Total other income (expense), net		3,706,608			(112,821,465	)		13,783,306			(107,827,324	)
Net income	$	8,430,165		$	4,272,514
Income before provision for income taxes		3,155,556			(115,896,259	)		11,585,721			(111,623,745	)
Weighted average shares outstanding, Class A common stock		31,625,000			31,625,000
Provision for income taxes		(6,036	)		—			(6,036	)		—
Basic and diluted net income per share, Class A common stock	$	0.21		$	0.11
Net income (loss)	$	3,149,520		$	(115,896,259	)	$	11,579,685		$	(111,623,745	)
Weighted average shares outstanding, Class B common stock		7,906,250			7,906,250
Weighted average shares outstanding, Class A common stock		31,625,000			31,625,000			31,625,000			31,625,000
Basic and diluted net income per share, Class B common stock	$	0.21			0.11
Basic and diluted net income (loss) per share, Class A common stock	$	0.08		$	(2.93	)	$	0.29		$	(2.82	)
Weighted average shares outstanding, Class B common stock		7,906,250			7,906,250			7,906,250			7,906,250
Basic and diluted net income (loss) per share, Class B common stock	$	0.08		$	(2.93	)	$	0.29		$	(2.82	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN ~~STOCKHOLDER’S~~CHANGES ~~DEFICIT~~IN CLASS A

STOCK REDEMPTION AND STOCKHOLDERS’ DEFICIT

(UNAUDITED)

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – December 31, 2021		—	$	—		7,906,250	$	791	$	—	$	(38,943,784	)	$	(38,942,993	)
Balance – January 1, 2022		—	$	—		7,906,250	$	791	$	—	$	(38,943,784	)	$	(38,942,993	)
Net income		—		—		—		—		—		8,430,165			8,430,165
Balance – March 31, 2022		—	$	—		7,906,250	$	791	$	—	$	(30,513,619	)	$	(30,512,828	)
Accretion for Class A Common Stock to redemption amount		—		—		—		—		—		(18,964	)		(18,964	)
Net income		—		—		—		—		—		3,149,520			3,149,520
Balance – June 30, 2022		—	$	—		7,906,250	$	791	$	—	$	(27,383,063	)	$	(27,382,272	)

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2021

	Class A Common Stock				Class B Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance – December 31, 2020		—	$	—		7,906,250	$	791	$	—	$	(34,438,187	)	$	(34,437,396	)
Balance – January 1, 2021		—	$	—		7,906,250	$	791	$	—	$	(34,438,187	)	$	(34,437,396	)
Net income		—		—		—		—		—		4,272,514			4,272,514
Balance – March 31, 2021		—	$	—		7,906,250	$	791	$	—	$	(30,165,673	)	$	(30,164,882	)
Net loss		—		—		—		—		—		(115,896,259	)		(115,896,259	)
Balance – June 30, 2021		—	$	—		7,906,250	$	791	$	—	$	(146,061,932	)	$	(146,061,141	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	Six Months Ended June 30,
	2022			2021
Cash Flows from Operating Activities:
Net income	$	8,430,165		$	4,272,514
Net income (loss)	$	11,579,685		$	(111,623,745	)
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in fair value of warrant liabilities		(1013,~~072~~539,~~213~~588	)		(4107,~~963~~861,~~883~~903	)
Interest earned on investments held in Trust Account		(4243,~~485~~718	)		(3034,~~258~~579	)
Changes in operating assets and liabilities:
Prepaid expenses		~~(30~~1,~~250~~500	)		(~~33,080~~386	)
Accounts payable and accrued expenses		1,331,865			480,913
Income tax payable		6,036			—
Net cash used in operating activities		(344,918	)		(273,794	)
Accounts payable and accrued expenses		1,676,363			2,917,040
Net cash used in operating activities		(519,722	)		(879,767	)
Cash Flows from Investing Activities:
Cash withdrawn from Trust Account to pay franchise and income taxes		—			35,108
Net cash provided by investing activities		—			35,108
Cash Flows from Financing Activities:
Advances from related party		—			69,~~560~~883
Proceeds from convertible promissory note - related party		250,000			—
Repayment of advances from related party		—			(7,509	)
Net cash provided by financing activities		250,000			6,560
Proceeds from convertible promissory note—related party		500,000			—
Net Change in Cash		(94,918	)		(232,126	)
Net cash provided by financing activities		500,000			2,374
Net Change in Cash		(19,722	)		(842,285	)
Cash – Beginning of period		138,686			1,117,679
Cash – End of period	$	43118,~~768~~964		$	~~885~~275,~~553~~394
Non-cash investing and financing activities:

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Mudrick Capital Acquisition Corporation II (the “Company”) is a blank check company incorporated in Delaware on July 30, 2020. The Company was 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 (the “Business Combination”).

The Company has two wholly owned subsidiaries which were formed on April 1, 2021, Titan Merger Sub I, Inc., a Delaware corporation and Titan Merger Sub II, LLC, a Delaware limited liability company.

The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of June 30, 2022, the Company had not commenced any operations. All activity through June 30, 2022 relates to the Company’s formation, initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination and activities in connection with the announced and subsequently terminated acquisition of Topps Intermediate Holdco, Inc. (“Topps”), a Delaware corporation (as described below) and the announced and subsequently terminated acquisition of BC Cyan Investment Holdings Inc., a Delaware corporation (“Blue Nile”). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates

non-operating

income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.

On April 6, 2021, the Company entered into an Agreement and Plan of Merger (the “Topps Merger Agreement”) and related agreements with Topps. Pursuant to the Topps Merger Agreement, the Company agreed to acquire all the outstanding capital stock of Topps ~~(the “Topps Merger”)~~. On August 20, 2021, the parties terminated the Topps Merger Agreement, effective August 20, 2021.

As previously disclosed on June 13, 2022, the Company entered into an Agreement and Plan of Merger, dated June 10, 2022 (the “BN Merger Agreement”) with Titan Merger Sub I, Inc., a Delaware corporation and direct, wholly-owned subsidiary of the Company, Titan Merger Sub II, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of the Company, and Blue Nile. In connection with the signing of the BN Merger Agreement and as previously disclosed, the Company also entered into (i) a Subscription and Backstop Agreement, dated June 10, 2022 (the “Subscription and Backstop Agreement”) with Blue Nile, Blue Nile, Inc., a Delaware corporation, and Mudrick Capital Management, L.P., a Delaware limited partnership (“Mudrick Capital”), (ii) a Sponsor Support Agreement, dated June 10, 2022 (the “Sponsor Support Agreement”) with Mudrick Capital Acquisition Holdings II LLC, a Delaware limited liability company, and (iii) a Subscription Agreement, dated June 10, 2022 (the “Holdings Subscription Agreement”) with BC Cyan Holdings LP, a Delaware limited partnership.

On August 5, 2022, the Company terminated the BN Merger Agreement in accordance with the terms thereof. As a result of the termination of the BN Merger Agreement, the BN Merger Agreement will be of no further force and effect, subject to certain exceptions set forth therein, and each of the Sponsor Support Agreement, the Subscription and Backstop Agreement and the Holdings Subscription Agreement shall each automatically terminate in accordance with its terms. Blue Nile shall pay the Termination Fee (as defined in the BN Merger Agreement) to the Company, and shall pay the Subscriber Termination Adjustment (as defined in the Subscription and Backstop Agreement) to Mudrick Capital, in accordance with the terms of the BN Merger Agreement and Subscription and Backstop Agreement, respectively.

The registration statement for the Company’s Initial Public Offering was declared effective on December 7, 2020. On December 10, 2020, the Company consummated the Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $275,000,000 which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 10,000,000 warrants (the “Sponsor Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Mudrick Capital Acquisition Holdings II LLC (the “Sponsor”) and the sale of 1,375,000 warrants (the “Jefferies Private Placement Warrants” and together with the Sponsor Private Placement Warrants, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Jefferies LLC (“Jefferies”), generating gross proceeds of $11,375,000 which is described in Note 4.

On December 14, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 4,125,000 Units issued for an aggregate amount of $41,250,000. In connection with the underwriters’ full exercise of their over-allotment option, the Company also consummated the sale of an additional 1,443,750 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total proceeds of $1,443,750.

Transaction costs amounted to $17,874,801, consisting of $6,325,000 in cash underwriting fees, $11,068,750 of deferred underwriting fees and $481,051 of other offering costs.

Following the closing of the Initial Public Offering on December 10, 2020, and the underwriters’ full exercise of their over-allotment option on December 14, 2020, an amount of $320,993,750 ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), located in the United States and invested only 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 185 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

Rule 2a-~~7ofthe~~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 funds held in the Trust Account, as described below.

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 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’s initial Business Combination must be with one or more target businesses that together have a fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into a Business Combination. 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 business sufficient for it not to be required to register as an investment company under the Investment Company Act.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to convert all or a portion of their Public Shares 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. The Public Stockholders will be entitled to convert their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon 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. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules 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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to convert their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.

Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the 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 20% of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to provide for the redemption of its Public Shares in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other material provisions relating to stockholders’ rights or

pre-business

combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

The Company has until September 10, 2022 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within 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 pay 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), 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. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account 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 6) held in the Trust Account in the event the Company does not complete a Business Combination within 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 assets remaining available for distribution will be less than the amount of funds deposited into the Trust Account ($10.15 per share).

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

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 third party 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 to below the lesser of (i) $10.15 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.15 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account nor will it apply 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 (except for the Company’s independent registered accounting firm), prospective target businesses and 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.

The Company has also recently filed a preliminary proxy statement in connection with a special meeting to be held for the purpose of voting on: (i) a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company is required to consummate a business combination from September 10, 2022 to December 10, 2022 (the “Charter Amendment Proposal”) and (ii) a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Charter Amendment Proposal.

Liquidity and Going Concern

As of ~~March~~June 3130, 2022, the Company had $43118,~~768~~964 in its operating bank accounts and working capital deficit of $6,~~169~~255,~~612~~772.

Prior to the completion of the Initial Public Offering, the Company’s liquidity needs had been satisfied through a contribution of $25,000 from Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, the loan of up to $300,000 from the Sponsor pursuant to the Note (see Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Note was repaid on December 10, 2020. 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, provide the Company Working Capital Loans (see Note 5). There were $1,~~250~~500,000 and $1,000,000 amounts outstanding under any Working Capital Loan as of ~~March~~June 3130, 2022 and December 31, 2021, respectively.

The Company may raise additional capital through loans or additional investments from the Sponsor or its stockholders, officers, directors, or third parties. The Company’s officers and directors and the Sponsor may but are not obligated to loan the Company funds, from time to time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a Business Combination. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.

In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”)

2014-15,“Disclosures

of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about the Company’s ability to continue as a going concern through September 10, 2022, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. Management of the Company plans to complete a business combination prior to the date for mandatory liquidation. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

NOTE

~~NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~ 2

. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to

10Form10-Q

and Article 8 of Regulation

S-X

of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form

10-K,

as filed with the SEC on March 29, 2022 (as amended on Form

10-K/A

and filed with the SEC on March 31, 2022). The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiaries where the Company has the ability to exercise control. All significant intercompany balances and transactions have been eliminated in consolidation. Activities in relation to the noncontrolling interest are not considered to be significant and are, therefore, not presented in the accompanying unaudited consolidated financial statements.

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.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances 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 more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such

~~Making~~ estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances 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 more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes available and, accordingly, the actual results could differ significantly from those estimates.

may be subject to change as more current information becomes available and, 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 ~~did~~had ~~not~~$118,964 ~~have~~and ~~any~~$138,686 of cash ~~equivalents~~ as of ~~March~~June 3130, 2022 and December 31, 2021, respectively, and no cash equivalents.

Class A Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”). Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that is either within 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, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.

Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.

At ~~March~~June 3130, 2022 and December 31, 2021, the Class A common stock reflected in the condensed consolidated balance sheets are reconciled in the following table:

Gross proceeds	$	316,250,000
Less:
Proceeds allocated to Public Warrants	$	(12,036,716	)
Class A common stock issuance costs		(17,177,930	)
Plus:
Accretion of carrying value to redemption value	$	33,958,396
Class A common stock subject to possible redemption	$	320,993,750
Class A common stock subject to possible redemption, December 31, 2021		320,993,750
Plus:
Accretion of carrying value to redemption value		18,964
Class A common stock subject to possible redemption, June 30, 2022	$	321,012,714

Offering Costs Associated with the Initial Public Offering

Offering costs consisted of legal, accounting and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs allocated to warrant liabilities were expensed as incurred in the statements of operations. Offering costs associated with the common stock subject to possible redemption issued were initially charged to temporary equity and then accreted up to redemption value against stockholders’ equity upon the completion of the Initial Public Offering. Offering costs amounting to $17,177,930 were charged to temporary equity upon the completion of the Initial Public Offering, and $696,870

of the offering costs were related to the warrant liabilities and charged to the statements of operations. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

Warrant Liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815~~, Derivatives and Hedging (“ASC 815”)~~. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional

paid-in

capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The warrants meet the criteria for liability classification. Changes in the estimated fair value of the warrants are recognized as a

non-cash

gain or loss on the statements of operations.

The fair value of the warrants issued in the Initial Public Offering has been estimated using a Monte Carlo simulation methodology as of the date of the Initial Public Offering and such warrants quoted market price as of December 31, 2021 (see Note 9).

Income Taxes

The Company ~~follows~~accounts ~~the asset and liability method of accounting~~ for income taxes under ASC 740, “Income Taxes.” ~~Deferred~~(“ASC ~~tax~~740”). ~~assets~~ASC ~~and~~740 ~~liabilities~~requires ~~are recognized for~~ the ~~estimated~~recognition ~~future~~of deferred tax ~~consequences~~assets ~~attributable~~and toliabilities ~~differences~~for ~~between~~both the ~~financial~~expected ~~statements~~impact ~~carrying amounts~~ of ~~existing~~differences ~~assets~~between ~~and~~the ~~liabilities~~unaudited ~~and~~condensed ~~their~~financial ~~respective~~statements and tax ~~bases.~~basis ~~Deferred~~of ~~tax~~ assets and liabilities ~~are~~and ~~measured~~for ~~using~~the ~~enacted tax rates~~ expected tofuture ~~apply~~tax tobenefit ~~taxable income in the years in which those temporary differences are expected~~ to be ~~recovered~~derived orfrom ~~settled. The effect on deferred~~ tax ~~assets~~loss and ~~liabilities of a change in~~ tax ~~rates~~credit iscarry ~~recognized~~forwards. inASC ~~income~~740 inadditionally ~~the~~requires ~~period~~a ~~that~~valuation ~~included~~allowance ~~the~~to ~~enactment~~be ~~date. Valuation allowances are~~ established, when ~~necessary,~~it tois ~~reduce~~more ~~deferred~~likely ~~tax~~than ~~assets~~not tothat ~~the~~all ~~amount~~or ~~expected~~a toportion beof ~~realized. Valuation allowances are established, when necessary, to reduce~~ deferred tax assets towill ~~the~~not ~~amount expected to~~ be realized.

ASC

~~start~~740-up270-25-2

requires that an annual effective tax rate be determined and such annual effective rate applied to year to date income in interim periods under ASC

~~start~~740-up270-30-5.

As of June 30, 2022 and December 31, 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was (0.19)% and 0.00% for the three months ended June 30, 2022 and 2021, respectively, and (0.05)% and 0.00% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three and six months ended June 30, 2022 and 2021, due to changes in fair value in warrant liability and the valuation allowance on the deferred tax assets.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be

ASC 740 prescribes a recognition threshold and a measurement attribute 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 of March 31, 2022 and December 31, 2021. 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.

to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

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 of June 30, 2022 and December 31, 2021. 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to income taxation by major taxing authorities since inception. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

Net Income per Common Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Net income per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from income per common share as the redemption value approximates fair value.

The calculation of diluted income per common share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 28,631,250 shares of Class A common stock in the aggregate. As of ~~March~~June 3130, 2022 and 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per common ~~shares~~share is the same as basic net income per common share for the periods presented.

The following table reflects the calculation of basic and diluted net income per common share (in dollars, except per share amounts):

	Three Months Ended March 31,
	Three Months EndedJune 30, 2022				Three Months EndedJune 30, 2021						Six Months EndedJune 30, 2022				Six Months Ended June 30, 2021
	2022				2021
	Class A		Class B		Class A			Class B			Class A		Class B		Class A			Class B
	Class A		Class B		Class A			Class B
Numerator:
Basic and diluted net income per common shares
Allocation of net income (loss)	$	2,519,616	$	629,904	$	(92,717,007	)	$	(23,179,252	)	$	9,263,748	$	2,315,937	$	(89,298,996	)	$	(22,324,749	)
Numerator:
Denominator:
Allocation of net income, as adjusted	$	6,744,132	$	1,686,033	$	3,418,011		$	854,503
Basic and diluted weighted average shares outstanding		31,625,000		7,906,250		31,625,000			7,906,250			31,625,000		7,906,250		31,625,000			7,906,250
Denominator:
Basic and diluted net income (loss) per common share	$	0.08	$	0.08	$	(2.93	)	$	(2.93	)	$	0.29	$	0.29	$	(2.82	)	$	(2.82	)
Basic and diluted weighted average shares outstanding		31,625,000		7,906,250		31,625,000			7,906,250
Basic and diluted net income per common share	$	0.21	$	0.21	$	0.11		$	0.11

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~~Deposit Insurance Corporation coverage limit of $250,000. The Company has 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 820, “Fair Value Measurement,” approximate the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature, except for the warrant liabilities (see Note 9).

Recent Accounting Standards

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

NOTE 3. INITIAL PUBLIC OFFERING

Pursuant to the Initial Public Offering, the Company sold 27,500,000 Units at a price of $10.00 per Unit. On December 14, 2020, the underwriters fully exercised their over-allotment option, resulting in an additional 4,125,000 Units issued for an aggregate amount of $41,250,000. Each Unit consists of one share of Class A common stock and

one-half

of one redeemable warrant (“Public Warrant”). Each whole 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 8).

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the closing of the Initial Public Offering, the Sponsor and Jefferies purchased an aggregate of 11,375,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant from the Company, of which 10,000,000 Private Placement Warrants were purchased by the Sponsor and 1,375,000 Private Placement Warrants were purchased by Jefferies, in a private placement. On December 14, 2020, as a result of the underwriters’ election to fully exercise their over-allotment option, the Sponsor purchased an additional 1,237,500 Private Placement Warrants and Jefferies purchased an additional 206,250 Private Placement Warrants for a total of 1,443,750 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, or $1,443,750 in the aggregate. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 8). The proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.

NOTE 5. RELATED PARTY TRANSACTIONS

Founder Shares

On August 3, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 8,625,000 shares of Class B common stock (the “Founder Shares”). In November 2020, the Sponsor returned to the Company, at no cost, an aggregate of 1,437,500 Founder Shares, which the Company cancelled. In December 2020, the Company effected a stock dividend of 0.1 shares for each Founder Share outstanding, resulting in an aggregate of 7,906,250 Founder Shares issued and outstanding.

~~30-~~The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any30-tradingday period commencing at least 150 days after a 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 Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Administrative Support Agreement

The Company has agreed, commencing on December 7, 2020, to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our initial Business Combination or our liquidation, the Company will cease paying these monthly fees. For the three and six months ended ~~March~~June 3130, 2022 and 2021, the Company incurred and paid $30,000 and $60,000 in fees for these services.

Advances from Related Party

During 2021, the Sponsors advanced the Company an aggregate of $33,816 to fund operating expenses. The advances are

non-interest

bearing and payable upon demand. As of June 30, 2022 and December 31, 2021, the amount advanced was repaid in full.

Related Party Loans

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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. 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.

On November 22, 2021, the Company issued an unsecured convertible promissory note (the “Sponsor Convertible Note”) to the Sponsor, pursuant to which the Company may borrow up to $2,000,000 from the Sponsor for ongoing expenses reasonably related to the business of the Company and the consummation of the Business Combination. All unpaid principal under the Sponsor Convertible Note will be due and payable in full on the earlier of (i) September 10, 2022, and (ii) the consummation of a Business Combination (such earlier date, the “Maturity Date”). The Sponsor will have the option, at any time on or prior to the Maturity Date, to convert up to $1,500,000 outstanding under the Sponsor Convertible Note into warrants to purchase shares of the Company’s Class A common stock, at a conversion price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

As of ~~March~~June 3130, 2022 and December 31, 2021, there was $1,~~250~~500,000 and $1,000,000 borrowings outstanding under the Convertible Notes, respectively.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2022

(UNAUDITED)

NOTE 6. COMMITMENTS

Risks and Uncertainties

Management continues to evaluate the impact of the

COVID-19

pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

Registration and Stockholder Rights

Pursuant to a registration rights agreement entered into on December 7, 2020, the holders of the Founder Shares, Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans will be entitled to registration rights ~~require~~requiring the Company to register a sale of any of the securities held by them pursuant to a registration rights agreement. The holders of the majority of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have certain “piggy-back” registration rights to include their securities in other registration statements filed by the Company, subject to certain limitations. Notwithstanding the foregoing, Jefferies may not exercise its demand and “piggyback” registration rights after five (5) and seven (7) years, respectively, after the Initial Public Offering and may not exercise its demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $11,068,750 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.

Table of Contents

NOTE 7. STOCKHOLDERS’ EQUITY

Preferred Stock

— The Company 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 time by the Company’s board of directors. As of June 30, 2022 and December 31, 2021, there were no shares of preferred stock issued and outstanding.

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. Holders of Class A common stock are entitled to one vote for each share. At June 30, 2022 and December 31, 2021, there were 31,625,000 shares of Class A common stock issued and outstanding, which are subject to possible redemption and presented as temporary equity.

Class

B Common Stock

— The Company is authorized to issue 10,000,000 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 June 30, 2022 and December 31, 2021, there were 7,906,250 shares of Class B common stock issued and outstanding.

Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders except as otherwise required by law. The shares of Class B common stock will automatically convert into Class A common stock at the time of a 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 connection with a Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an

13 as-converted basis, 20%

of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering, plus the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of a Business Combination, including pursuant to a specified future issuance, excluding any shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in a Business Combination and any private placement-equivalent warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder Shares will never occur on a less than one for one basis.

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH 31~~JUNE 30, 2022

(UNAUDITED)

NOTE 8. WARRANT LIABILITIES

As of ~~March~~June 3130, 2022 and December 31, 2021, there were 15,812,500 Public Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a current prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable, and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.

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, it will use its best efforts to file with the SEC a registration statement registering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business Combination or within a specified period following the consummation of a 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.

Redemptions of warrants when the price of Class

A common stock equals or exceeds $18.00

— Once the warrants become exercisable, the Company may redeem the Public Warrants:

•

in whole and not in part;

•

at a price of $0.01 per Public Warrant;

•

upon not less than 30 days’ prior written notice of redemption to each warrant holder; and

• if, and only if, the reported closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days ~~withina30~~within a 30-~~tradingdayperiod~~trading day period ending three business days before the Company sends the notice of redemption to warrant holders.

If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

If and when the warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification. 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 common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. 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 from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

1415

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH 31~~JUNE 30, 2022

(UNAUDITED)

In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

As of June 30, 2022 and December 31, 2021, there were 12,818,750 Private Placement Warrants outstanding. The Private Placement Warrants are identical to the Public Warrants underlying the Units 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 saleable 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,

except as described above, 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.

NOTE 9. FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:


Level 1:		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2:		Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3:		Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company classifies its U.S. Treasury and equivalent securities as

held-to-maturity

in accordance with ASC Topic 320 “Investments—Debt and Equity Securities.”

”Held-to-maturity

Held-to-maturity

securities are those securities which the Company has the ability and intent to hold until maturity.

At March 31, 2022, assets held in the Trust Account were comprised of $321,044,409 in U.S. Treasury securities. For the three months ended March 31, 2022, the Company did not withdraw any interest income from the Trust Account Held-to ~~pay franchise and income taxes.~~ -maturity

treasury securities are recorded at amortized cost on the accompanying balance sheet and adjusted for the amortization or accretion of premiums or discounts.

At June 30, 2022, assets held in the Trust Account were comprised of $321,283,642

money market funds that primarily invest in U.S. Treasury securities at fair market value. For the three and six months ended June 30, 2022, the company did

withdraw any interest income from the Trust Account to pay franchise and income taxes.

At December 31, 2021, assets held in the Trust Account were comprised of $321,039,924 money market funds that primarily invest in U.S. Treasury securities at fair market value. For the year ended December 31, 2021, the Company withdrew $35,108 of interest income from the Trust Account to pay franchise and income taxes.

15The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.


Description	Level		June 30, 2022		December 31, 2021
Assets:
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund		1	$	321,283,642	$	321,039,924
Liabilities:
Warrant Liability – Public Warrants		1	$	4,712,125	$	12,175,625
Warrant Liability – Private Placement Warrants		3	$	3,845,625	$	9,921,713

Table of Contents

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH 31~~JUNE 30, 2022

(UNAUDITED)

The Warrants were accounted for as liabilities in accordance with ASC

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

Description	Level		March 31, 2022		December 31, 2021
Assets:
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund		1	$	321,044,409	$	321,039,924
Liabilities:
Warrant Liability – Public Warrants		1	$	6,641,250	$	12,175,625
Warrant Liability – Private Placement Warrants		3	$	5,383,875	$	9,921,713

815-40

and are presented within warrant liabilities the accompanying condensed consolidated balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the condensed consolidated statements of operations.

The Private Placement Warrants were initially and continue to be valued using a Modified Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the common stock. The expected volatility as of the Initial Public Offering date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the Public Warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Placement Warrants. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value as of each relevant date.

The following table provides quantitative information regarding Level 3 fair value measurements:

	March 31, 2022			December 31, 2021
	June 30, 2022			December 31, 2021
Stock price	$	10.0308		$	9.94
Strike price	$	11.50		$	11.50
Term (in years)		52.016			4.30
Volatility		79.060	%		14.110	%
Risk-free rate		2.4393	%		1.16	%
Dividend yield		0.000	%		0.000	%

The following table presents the changes in the fair value of Level 3 warrant liabilities:

	Private Placement
Fair value as of December 31, 2020		11,986,758
Change in fair value		(2,323,922	)
Fair value as of March 31, 2021	$	9,662,836
Fair value as of December 31, 2021		9,921,713
Change in fair value		(4,537,838	)
Fair value as of March 31, 2022	$	5,383,875
Change in fair value		(1,538,250	)
Fair value as of June 30, 2022	$	3,845,625

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels during the three months ended March 31, 2022 and 2021.


	Private Placement
Fair value as of December 31, 2020		11,986,758
Change in fair value		(2,323,922	)

Fair value as of March 31, 2021	$	9,662,836
Change in fair value		56,662,918

Fair value as of June 30, 2021	$	66,325,754

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels during the three and six months ended June 30, 2022 and 2021.

NOTE 10. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review and except as set forth below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

16As previously disclosed on June 13, 2022, the Company entered the BN Merger Agreement. In connection with the signing of the BN Merger Agreement and as previously disclosed, the Company also entered into the Subscription and Backstop Agreement, the Sponsor Support Agreement and the Holdings Subscription Agreement. On August 5, 2022, the Company terminated the BN Merger Agreement in accordance with the terms thereof. As a result of the termination of the BN Merger Agreement, the BN Merger Agreement will be of no further force and effect, subject to certain exceptions set forth therein, and each of the Sponsor Support Agreement, the Subscription and Backstop Agreement and the Holdings Subscription Agreement shall each automatically terminate in accordance with its terms. Blue Nile shall pay the Termination Fee (as defined in the BN Merger Agreement) to the Company, and shall pay the Subscriber Termination Adjustment (as defined in the Subscription and Backstop Agreement) to Mudrick Capital, in accordance with the terms of the BN Merger Agreement and Subscription and Backstop Agreement, respectively.

The Company recently filed a preliminary proxy statement in connection with a special meeting to be held for the purpose of voting on: (i) a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company is required to consummate a business combination from September 10, 2022 to December 10, 2022 (the “Charter Amendment Proposal”) and (ii) a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Charter Amendment Proposal.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Mudrick Capital Acquisition Corporation II. 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 II LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with 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 Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (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 included in this Form10-Qincluding, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. 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, based 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. 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.

Overview

We are a blank check company formed under the laws of the State of Delaware on July 30, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.

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

17Recent Developments

As previously disclosed on June 13, 2022, the Company entered into an Agreement and Plan of Merger, dated June 10, 2022 (the “BN Merger Agreement”) with Titan Merger Sub I, Inc., a Delaware corporation and direct, wholly-owned subsidiary of the Company, Titan Merger Sub II, LLC, a Delaware limited liability company and direct, wholly-owned subsidiary of the Company, and BC Cyan Investment Holdings Inc., a Delaware corporation (“Blue Nile”). In connection with the signing of the BN Merger Agreement and as previously disclosed, the Company also entered into (i) a Subscription and Backstop Agreement, dated June 10, 2022 (the “Subscription and Backstop Agreement”) with Blue Nile, Blue Nile, Inc., a Delaware corporation, and Mudrick Capital Management, L.P., a Delaware limited partnership (“Mudrick Capital”), (ii) a Sponsor Support Agreement, dated June 10, 2022 (the “Sponsor Support Agreement”) with Mudrick Capital Acquisition Holdings II LLC, a Delaware limited liability company, and (iii) a Subscription Agreement, dated June 10, 2022 (the “Holdings Subscription Agreement”) with BC Cyan Holdings LP, a Delaware limited partnership.

The Company also recently filed a preliminary proxy statement in connection with a special meeting to be held for the purpose of voting on: (i) a proposal to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company has to consummate a business combination for an additional three months, from September 10, 2022 to December 10, 2022 (the “Charter Amendment Proposal”) and (ii) a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Charter Amendment Proposal.

Table of Contents

Results of Operations

We have neither engaged in any operations (other than searching for a Business Combination after our Initial Public Offering) nor generated any revenues to date. Our only activities from inception through June 30, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, identifying a target company for a Business Combination, activities in connection with the announced and subsequently terminated acquisition of Topps, and the announced and subsequently terminated acquisition of Blue Nile. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate

non-operating

income in the form of interest income on marketable securities. We incur 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~~June 3130, 2022, we had net income of $83,~~430~~149,~~165~~520, which consisted of the change in fair value of warrant liabilities of $103,~~072~~467,~~213~~375 and interest earned on investment held in Trust Account of $4239,~~485~~233, offset by general and administrative expenses of $1551,~~646~~052 and provision for income taxes of $6,~~533~~036.

For the ~~three~~six months ended ~~March~~June 3130, ~~2021~~2022, we had net income of $411,~~272~~579,~~514~~685, which consisted of ~~interest~~the ~~earned~~change onin ~~investment~~fair ~~held~~value inof ~~Trust~~warrant ~~Account~~liabilities of $3013,~~258~~539,588 and ~~the~~interest ~~change~~earned inon ~~fair~~investment ~~value~~held ofin ~~warrant~~Trust ~~liabilities~~Account of $4243,~~963~~718,~~883,~~ offset by general and administrative expenses of $~~721~~2,~~627~~197,585 and provision for income taxes of $6,036.

For the three months ended June 30, 2021, we had net loss of $115,896,259, which consisted of the change in fair value of warrant liabilities of $112,825,786 and general and administrative expenses of $3,074,794, offset by interest earned on investment held in Trust Account of $4,321.

For the six months ended June 30, 2021, we had net loss of $111,623,745, which consisted of the change in fair value of warrant liabilities of $107,861,903 and general and administrative expenses of $3,796,421, offset by interest earned on investment held in Trust Account of $34,579.

Liquidity and Going Concern

On December 10, 2020, we consummated the Initial Public Offering of 27,500,000 Units, at a price of $10.00 per Unit, generating gross proceeds of $275,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 11,375,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant in a private placement to our Sponsor and Jefferies, generating gross proceeds of $11,375,000.

On December 14, 2020, the Company sold an additional 4,125,000 Units for total gross proceeds of $41,250,000 in connection with the underwriters’ full exercise of their over-allotment option. Simultaneously with the closing of the over-allotment option, we also consummated the sale of an additional 1,443,750 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total proceeds of $1,443,750.

Following the Initial Public Offering, the full exercise of the over-allotment option and the sale of the Private Placement Warrants, a total of $320,993,750 was placed in the Trust Account. We incurred $17,874,801 in transaction costs, including $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees and $481,051 of other offering costs.

For the ~~three~~six months ended ~~March~~June 3130, 2022, cash used in operating activities was $~~344~~519,~~918~~722. Net income of $811,~~430~~579,~~165~~685 was affected by ~~the~~ change in fair value of warrant liabilities of $1013,~~072~~539,~~213~~588 and interest earned on investment held in Trust Account of $4243,~~485~~718, and changes in operating assets and liabilities, which provided $1,~~301~~683,~~615~~899 of cash from operating activities.

For the ~~three~~six months ended ~~March~~June 3130, 2021, cash used in operating activities was $~~273~~879,~~794~~767. Net ~~income~~loss of $4111,~~272~~623,~~514~~745 was affected by athe change in ~~the~~ fair value of warrant liabilities of $4107,~~963~~861,~~883,~~903 and interest earned on ~~marketable~~investment ~~securities~~ held in Trust Account of $3034,~~258~~579, and changes in operating assets and liabilities, which provided $~~447~~2,~~833~~916,654 of cash from operating activities.

As of ~~March~~June 3130, 2022, we had cash and investments held in the Trust Account of $321,~~044~~283,~~409~~642. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. We may withdraw interest to pay taxes. 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.

As of ~~March~~June 3130, 2022, we had $43118,~~768~~964 of cash held outside of the Trust Account. 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, and structure, negotiate and complete a Business Combination.

1819

Table of Contents

In order to fund working capital deficiencies or finance transaction costs in connection with a 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 a Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a 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 may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.

We may need to raise additional capital through loans or additional investments from the Sponsor or our stockholders, officers, directors, or third parties. Our officers and directors and the Sponsor may but are not obligated to loan us funds, from time to time, in whatever amount they deem reasonable in their sole discretion, to meet our working capital needs. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a Business Combination. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.

In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”)

~~In connection with the Company’s assessment of going concern considerations in accordance with FASB’s Accounting Standards Update (“ASU”)~~ 2014-15,“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if our company is unable to complete a business combination by September 10, 2022, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after September 10, 2022.

“Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that if our company is unable to complete a business combination by September 10, 2022, then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after September 10, 2022.

Off-Balance

Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered

off-balance

sheet arrangements as of June 30, 2022. 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 Obligations

We 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 services. We began incurring these fees on December 7, 2020 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $11,068,750 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 we complete a Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies

The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Warrant Liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject tore-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations.

Class A Common Stock Subject to Possible Redemption

We account for our Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of our balance sheets.

1920

Table of Contents

Net Income per Common Share

Net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. The Company has two classes of common stock, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of common stock. Accretion associated with the redeemable shares of Class A common stock is excluded from income per common share as the redemption value approximates fair value.

Recent Accounting Standards

~~No. 2020-06~~Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed consolidated financial statements.

470-20)”

815-40):

2020-06

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule

~~byRule12b~~12b-~~2of~~2

of the Exchange Act and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls ~~are~~and procedures ~~that~~ are designed ~~with~~to ~~the~~ensure ~~objective of ensuring~~ that information required to be disclosed by us in our ~~reports filed under the~~ Exchange Act reports is recorded, processed, summarized, and reported within the time ~~period~~periods specified in the SEC’s rules and forms., ~~Disclosure~~and ~~controls are also designed with the objective of ensuring~~ that such information is accumulated and communicated to our management, including ~~the~~our ~~chief~~principal executive officer and ~~chief~~principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2022, as such term is defined in Rules

~~Rules13a~~13a-15(e)

and

15d-15(e)

under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

~~Form10-Q~~We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management has identified a material weakness in internal controls related to the accounting for complex financial instruments. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to continue to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

Changes in Internal Control over Financial Reporting

~~The~~There ~~Company~~was ~~has~~no ~~made~~change, ~~changes~~except as noted above and below, in ~~its~~our internal control over financial reporting tothat ~~enhance~~occurred ~~our~~during ~~processes~~the tofiscal ~~identify~~quarter ~~and~~of ~~appropriately~~2022 ~~apply~~covered ~~applicable~~by ~~accounting~~this ~~requirements~~Quarterly toReport ~~better~~on ~~evaluate~~Form ~~and~~10-Q ~~understand the nuances of the complex accounting standards~~ that ~~apply~~has tomaterially ~~our financial statements~~affected, ~~including~~or ~~providing~~is ~~enhanced~~reasonably ~~access~~likely to ~~accounting~~materially ~~literature~~affect, ~~research materials and documents and increased communication among~~ our ~~personnel~~internal ~~and~~control ~~third-party~~over ~~professionals~~financial ~~with whom we consult regarding complex accounting applications~~reporting. The ~~Company~~material ~~can~~weakness ~~offer~~discussed nobelow ~~assurance~~was ~~that~~remediated ~~these~~during ~~changes~~the ~~will~~quarter ~~ultimately~~ended ~~have~~June ~~the~~30, ~~intended effects~~2022.

20Remediation of a Material Weakness in Internal Control over Financial Reporting

In response to the previously identified material weakness, the Company designed and implemented remediation measures to address the material weakness identified and enhanced its internal control over financial reporting. The Company has enhanced its financial reporting processes to better identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to its financial statements, including providing enhanced access to accounting literature, research materials and documents and increased communication among the Company’s personnel and third-party professionals with whom management consults regarding complex accounting applications.

Table of Contents

PART II— – OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule

12b-2

of the Exchange Act and are not required to provide the information otherwise required under this item. Except as set forth below, as of the date of this Form

10-Q,

there have been no material changes with respect to those risk factors previously disclosed in our definitive proxy statement in connection with the Company’s since cancelled special meeting of stockholders filed with the SEC on July 30, 2021 and our Form

10-K

for the year ended December 31, 2021, filed on March 29, 2022 (as thereafter amended).

There are no assurances that the recent extension request will enable us to complete a business combination.

We recently filed a preliminary proxy statement in connection with a special meeting to be held for the purpose of voting on: (i) a proposal to amend (the “Charter Amendment”) the Company’s amended and restated certificate of incorporation to extend the date by which the Company has to consummate a business combination (the “Extension”) for an additional three months, from September 10, 2022 to December 10, 2022 (the “Extended Termination Date”) (the “Charter Amendment Proposal”) and (ii) a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Charter Amendment Proposal (the “Adjournment Proposal”). The Company’s IPO prospectus and charter provide that the Company has until September 10, 2022 (the “Current Termination Date”) to complete a business combination. As a result, our board of directors has determined it is in the best interests of the Company and our stockholders to extend the termination date from the Current Termination Date to the Extended Termination Date and provide that the date for cessation of operations of the Company if the Company has not completed a business combination would similarly be extended to the Extended Termination Date.

Approving the Extension involves a number of risks and our ability to consummate any business combination is dependent on a variety of factors, many of which are beyond our control. We are required to offer stockholders the opportunity to redeem shares in connection with the Charter Amendment and we will be required to offer stockholders redemption rights again in connection with any stockholder vote to approve a business combination. The fact that we will have separate redemption periods in connection with the Extension and a business combination vote could exacerbate these risks. Other than in connection with a redemption offer or liquidation, our stockholders may be unable to recover their investment except through sales of our shares on the open market. The price of our shares may be volatile, and there can be no assurance that stockholders will be able to dispose of our shares at favorable prices, or at all.

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, investments and results of operations.

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, investments, and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.

On March 30, 2022, the SEC issued proposed rules (the “2022 Proposed Rules”) relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. The 2022 Proposed Rules, if adopted, whether in the form proposed or in revised form, and certain positions and legal conclusions expressed by the SEC in connection with the 2022 Proposed Rules, may materially adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

2122

Table of Contents

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on

Form 10-Q.

No.		Description of Exhibit
2.1¥		Agreement and Plan of Merger, dated as of June 10, 2022, by and among Mudrick Capital Acquisition Corporation II, Titan Merger Sub I, Inc., Titan Merger Sub II, LLC, and BC Cyan Investment Holdings Inc.
10.1¥		Subscription and Backstop Agreement, dated as of June 10, 2022, by and between Mudrick Capital Acquisition Corporation II and Mudrick Capital Acquisition Holdings II LLC.
10.2¥		Holdings Subscription Agreement, dated as of June 10, 2022, by and between Mudrick Capital Acquisition Corporation II and BC Cyan Holdings LP.
10.3¥		Sponsor Support Agreement, dated as of June 10, 2022, by and between Mudrick Capital Acquisition Corporation II and Mudrick Capital Acquisition Holdings II LLC.
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.


¥		Incorporated by reference to the Company’s Form 8-K, filed with the SEC on June 13, 2022.
*		Filed herewith.
**		Furnished.

**23 ~~Furnished.~~

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MUDRICK CAPITAL ACQUISITION CORPORATION II
Date: May 12, 2022	By:	/s/ Jason Mudrick
Date: August 11, 2022	By:	/s/ Jason Mudrick
	Name:	Jason Mudrick
	Title:	Chief Executive Officer and Chairman
		(Principal Executive Officer)
Date: May 12, 2022	By:	/s/ Glenn Springer
Date: August 11, 2022	By:	/s/ Glenn Springer
	Name:	Glenn Springer
	Title:	Chief Financial Officer
		(Principal Accounting and Financial Officer)

2324

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

Filing Compare · Mudrick Capital Acquisition Corp. II