Table of Contents
 

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

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020

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

2021

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to

Commission File
No. 001-39771

MUDRICK CAPITAL ACQUISITION CORPORATION II
(Exact name of registrant as specified in its charter)
MUDRICK CAPITAL ACQUISITION CORPORATION II
(Exact name of registrant as specified in its charter)

Delaware
 85-2347188
85-2320197

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

527 Madison Avenue, 6th Floor

New York, NY 10022

(Address of Principal Executive Offices, including zip code)

(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)

527 Madison Avenue, 6th Floor
New York, NY 10022
(Address of Principal Executive Offices, including zip code)
(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(s)
 
Name of each exchange
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  x

☐

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  x☒    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-2
of the Exchange Act.

¨
Large accelerated filer¨ Accelerated filer
 x Non-accelerated☐Accelerated filerx Smaller reporting company☐
  x
Non-accelerated filer☒Smaller reporting company☒
Emerging growth company☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act):    Yes  x☒    No  ¨

As☐

A
s of January 21, 2021November 10, 202
1, there were
 31,625,000 shares of Class A common stock, par value $0.0001 per share (“Class A
c
ommon stock”) and 7,906,250 shares of Class B common stock, $0.0001 par value $0.0001 per share (“Class B
c
ommon stock”), of the registrant issued and outstanding.

 

Table of Contents
MUDRICK CAPITAL ACQUISITION CORPORATION II

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2020

2021

TABLE OF CONTENTS

  
Page
PART 1 – FINANCIAL INFORMATION
 
   
Item 1.Financial Statements 
   
 Condensed Consolidated Balance SheetSheets as of September 30, 2021 (unaudited) and December 31, 20201
   
 Unaudited Condensed StatementConsolidated Statements of Operations (unaudited)for the Three and Nine months Ended September 30, 2021 and for the period from July 30, 2020 (inception) through September 30, 20202
   
 Unaudited Condensed StatementConsolidated Statements of Changes in Stockholder’s Equity (unaudited)Deficit for the Three and Nine months Ended September 30, 2021 and for the period from July 30, 2020 (inception) through September 30, 20203
   
 Unaudited Condensed StatementConsolidated Statements of Cash Flows (unaudited)for the Nine months Ended September 30, 2021 and for the period from July 30, 2020 (inception) through September 30, 20204
   
 Notes to Condensed Consolidated Financial Statements (unaudited)5
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1317
   
Item 3.Quantitative and Qualitative Disclosures about Market Risk15
   
Item 4.Control and Procedures15
PART II – OTHER INFORMATION19 
   
Item 1.4.Control and ProceduresLegal Proceedings19
15PART II – OTHER INFORMATION
   
Item 1A.1.Legal ProceedingsRisk Factors1521
   
Item 1A.Risk Factors21
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds1521
   
Item 3.Defaults Upon Senior Securities1621
   
Item 4.Mine Safety Disclosures1621
   
Item 5.Other Information1621
   
Item 6.Exhibits1622
  
SIGNATURES
23 
SIGNATURES17

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Table of Contents
PART 1 – FINANCIAL INFORMATION
MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2020

(Unaudited)

ASSETS   
Deferred offering costs $118,290 
TOTAL ASSETS $118,290 
     
LIABILITIES AND STOCKHOLDER’S EQUITY    
Current liabilities    
Accrued offering costs $2,000 
Promissory notes — related party  92,541 
Total Current Liabilities  94,541 
     
     
Stockholder’s Equity    
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding  — 
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; none issued and outstanding  — 
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 7,906,250 shares issued and outstanding (1)  791 
Additional paid-in capital  24,209 
Accumulated deficit  (1,251)
Total Stockholder’s Equity  23,749 
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY $118,290 

(1)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. All share and per-share amounts have been retroactively restated to reflect the share transactions (see Note 5).

SHEETS

   
September 30,

2021
  
December 31,

2020
 
   
(Unaudited)
  
(Revised)
 
ASSETS
         
Current assets         
Cash  $184,877  $1,117,679 
Prepaid expenses   125,401   167,708 
          
Total Current Assets   310,278   1,285,387 
Investments held in Trust Account   321,019,295   321,002,166 
          
TOTAL ASSETS
  
$
321,329,573
 
 
$
322,287,553
 
          
LIABILITIES AND STOCKHOLDERS’ DEFICIT
         
Current liabilities         
Accounts payable and accrued expenses  $4,996,335  $102,348 
Advance from related party   480   —   
          
Total Current Liabilities   4,996,815   102,348 
Warrant liabilities   18,050,193   24,560,101 
Deferred underwriting fee payable   11,068,750   11,068,750 
          
TOTAL LIABILITIES
  
 
34,115,758
 
 
 
35,731,199
 
          
Commitments and Contingencies
   0    0  
Class A common stock subject to possible redemption 31,625,000 shares at approximately $10.15 per share as of September 30, 2021 and December 31, 2020   320,993,750   320,993,750 
Stockholders’ Deficit
         
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0shares issued and outstanding   0—     0—   
Class A common stock, $0.0001 par value; 100,000,000 shares authorized   0     0   
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 7,906,250 shares issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively   791   791 
Additional
paid-in
capital
   0     0   
Accumulated deficit   (33,780,726)   (34,438,187) 
          
Total Stockholders’ Deficit
  
 
(33,779,935
) 
 
 
(34,437,396
) 
          
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
  
$
321,329,573
 
 
$
322,287,553
 
          
The accompanying notes are an integral part of the unaudited condensed financial statements.


1
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MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED STATEMENTCONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIOD FROM JULY 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

Formation and operating costs$1,251
Net Loss$(1,251)
Weighted average shares outstanding, basic and diluted (1)7,906,250
Basic and diluted net loss per common share$(0.00)

(1)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. All share and per-share amounts have been retroactively restated to reflect the share transactions (see Note 5).

   
Three Months
Ended
September 30,
2021
  
Nine Months
Ended
September 30,
2021
  
For the Period
from July 30,
2020 (inception)
through
September 30,
2020
 
General and administrative expenses  $2,108,263  $5,904,684  $1,251 
              
Loss from operations
  
 
(2,108,263
) 
 
 
(5,904,684
) 
 
 
(1,251
) 
              
Other income:             
Interest earned on investments held in Trust Account   17,658   52,237   0   
Change in fair value of warrant liabilities   114,371,811   6,509,908   0   
              
Total other income   114,389,469   6,562,145   0   
              
Net income (loss)
  
$
112,281,206
 
 
$
657,461
 
 
$
(1,251
) 
              
              
Weighted average shares outstanding, Class A common stock   31,625,000  31,625,000   0   
              
Basic and diluted net income per share, Class A common stock
  
$
2.84
 
 
$
0.02
 
 
$
0  
 
              
Weighted average shares outstanding, Class B common stock   7,906,250   7,906,250   6,875,000 
              
Basic and diluted net income (loss) per share, Class B common stock
  
$
2.84
 
 
 
0.02
 
 
$
(0.00
) 
              
The accompanying notes are an integral part of the unaudited condensed financial statements.

2

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MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED STATEMENTCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S (DEFICIT) EQUITY

(Unaudited)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(Revised)
   
Class A

Common Stock
   
Class B

Common Stock
   
Additional
Paid-in
   
Accumulated
  
Total
Stockholders’
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
  
Deficit
 
Balance – January 1, 2021
  
 
0  
 
  
$
0  
 
  
 
7,906,250
 
  
$
791
 
  
$
0  
 
  
$
(34,438,187
) 
 
$
(34,437,396
) 
Net income   —      —      —      —      —      4,272,514   4,272,514 
                                   
Balance – March 31, 2021
  
 
0  
 
  
$
0  
 
  
 
7,906,250
 
  
$
791
 
  
$
0  
 
  
$
(30,165,673
) 
 
$
(30,164,882
) 
Net loss   —      —      —      —      —      (115,896,259)   (115,896,259) 
                                   
Balance – June 30, 2021
  
 
0  
 
  
$
0  
 
  
 
7,906,250
 
  
$
791
 
  
$
0  
 
  
$
(146,061,932
) 
 
$
(146,061,141
) 
Net income   —      —      —      —      —      112,281,206   112,281,206 
                                   
Balance – September 30, 2021
  
 
0  
 
  
$
0  
 
  
 
7,906,250
 
  
$
791
 
  
$
0  
 
  
$
(33,780,726
) 
 
$
(33,779,935
) 
                                   
FOR THE PERIOD FROM JULY 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

  

Class B
Common Stock

  Additional
Paid-in		  Accumulated  Total
Stockholder’s		 
  Shares  Amount  Capital  Deficit  Equity 
Balance — July 30, 2020 (inception) —  $—  $—  $—  $ — 
                
Issuance of Class B common stock to Sponsor(1)  7,906,250   791   24,209   —   25,000 
                     
Net loss  —   —   —   (1,251)  (1,251)
                     
Balance — September 30, 2020  7,906,250  $791  $24,209  $(1,251) $23,749 

(1)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. All share and per-share amounts have been retroactively restated to reflect the share transactions (see Note 5).

   
Class A

Common Stock
   
Class B

Common Stock
   
Additional
Paid-in
   
Accumulated
  
Total
Stockholders’
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
Deficit
  
Equity
 
Balance – July 30, 2020 (inception)
  
 
0  
 
  
$
0  
 
  
 
0  
 
  
$
0  
 
  
$
0  
 
  
$
0  
 
 
$
0  
 
Issuance of Class B common stock to Sponsor   0      0      7,906,250    791    24,209    0     25,000 
Net loss   —      —      —      —      —      (1,251)   (1,251) 
                                   
Balance – September 30, 2020
  
 
0  
 
  
$
0  
 
  
 
7,906,250
 
  
$
791
 
  
$
24,209
 
  
$
(1,251
) 
 
$
23,749
 
                                   
The accompanying notes are an integral part of the unaudited condensed financial statements.

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MUDRICK CAPITAL ACQUISITION CORPORATION II

CONDENSED STATEMENTCONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM JULY 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2020

(Unaudited)

Cash Flows from Operating Activities:   
Net loss $(1,251)
Adjustments to reconcile net loss to net cash used in operating activities:    
Payment of formation costs through promissory note – related party  1,251 
Net cash used in operating activities  — 
     
Net Change in Cash  — 
Cash – Beginning  — 
Cash – Ending $— 
     
Supplemental disclosure of non-cash investing and financing activities:    
Deferred offering costs included in accrued offering costs $2,000 
Deferred offering costs paid through promissory note – related party $91,290 
Deferred offering costs paid directly by Sponsor in exchange for the issuance of Class B common stock $25,000 

   
Nine months

Ended

September 30,
2021
  
For the

Period from

July 30,

2020 (Inception)

Through

September 30,
2020
 
Cash Flows from Operating Activities:
         
Net income (loss)  $657,461  $(1,251) 
Adjustments to reconcile net income (loss) to net cash used in operating activities:         
Payment of formation costs through promissory note – related party       1,251 
Change in fair value of warrant liabilities   (6,509,908)   —   
Interest earned on investments held in Trust Account   (52,237)   —   
Changes in operating assets and liabilities:         
Prepaid expenses   42,307   —   
Accounts payable and accrued expenses   4,893,987   —   
          
Net cash used in operating activities
  
 
(968,390
) 
 
 
—  
 
          
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   9,883   —   
Repayment of advances from related party   (9,403)   —   
          
Net cash provided by financing activities
  
 
480
 
 
 
—  
 
          
Net Change in Cash
  
 
(932,802
) 
 
 
—  
 
Cash – Beginning of period   1,117,679   —   
          
Cash – End of period
  
$
184,877
 
 
$
—  
 
          
Supplemental disclosure of
non-cash
investing and financing activities:
   —     2,000 
          
Deferred offering costs included in accrued offering costs   —     91,290 
          
Deferred offering costs paid through promissory note – related party   —     25,000 
          
The accompanying notes are an integral part of the unaudited condensed financial statements.


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MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 2021
(Unaudited)

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Mudrick Capital Acquisition Corporation II (the “Company”) wasis 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 September 30, 2020,2021, the Company had not commenced any operations. All activity for the period from July 30, 2020 (inception) through September 30, 20202021 relates to the Company’s formation, and initial public offering (“Initial Public Offering”), which is described below.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). The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company anticipates it will generate 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 “Merger Agreement”) and related agreements with Topps. Pursuant to the 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, effective August 20, 2021.
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.

4.

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.

5.

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 $279,125,000
$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-7 of 2a-7of
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.

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. A total of $41,868,750 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $320,993,750.

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. In addition, as of December 10, 2020, cash of $1,117,699 was held outside of the Trust Account (as defined below) and is available for the payment of offering costs and for working capital purposes.

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 or1or 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 of 1940, as amended (the “Investment Company Act”). 

Act.

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.


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MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 2021
(Unaudited)

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)6) 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 15%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 will have
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)7) 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).

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 publicPublic 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.

6

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MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 2021
(Unaudited)

Liquidity and Going Concern
As of September 30, 2021, the Company had approximately $184,877 in its operating bank accounts and working capital deficit of $4,686,537.
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 6), 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 6). As of September 30, 2021, there were no amounts outstanding under any Working Capital Loan.
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 that if the Company is unable to complete a Business Combination by December 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 December 10, 2022.
NOTE 2. REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s financial statements as of September 30, 2021, management determined it should revise its previously reported financial statements. The Company determined, at the closing of the Company’s Initial Public Offering, it had improperly valued its Class A common stock subject to possible redemption. The Company previously determined the Class A common stock subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A common stock, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Public Shares issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore, management concluded that the redemption value should include all Class A common stock subject to possible redemption, resulting in the Class A common stock subject to possible redemption being equal to their redemption value. As a result, management has noted a reclassification adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class A common stock.
The Company will present this revision in a prospective manner in all future filings. Under this approach, the previously issued Initial Public Offering balance sheet and Form 10-Qs will not be amended, but historical amounts presented in the current and future filings will be recast to be consistent with the current presentation, and an explanatory footnote will be provided.
In connection with the change in presentation for the Class A common stock subject to redemption, the Company also revised its income (loss) per common share calculation to allocate net income (loss) evenly to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of common stock share pro rata in the income (loss) of the Company.
There has been no change in the Company’s total assets, liabilities or operating results.
The impact of the revision on the Company’s financial statements is reflected in the following table.
Balance Sheet as of December 31, 2020 (audited)
  
As Previously

Reported
   
Adjustment
   
As Revised
 
Class A common stock subject to possible redemption  $281,556,345   $39,437,405   $320,993,750 
Class A common stock  $389   $(389)   $0   
Additional
paid-in
capital
  $6,736,227   $(6,736,227)   $0   
Accumulated deficit  $(1,737,398)   $(32,700,789)   $(34,438,187) 
Total stockholders’ equity (deficit)  $5,000,010   $(39,437,405)   $(34,437,395) 
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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)

NOTE 2.3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-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 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 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 financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering Annual Report on
Form 10-K/A,
as filed with the SEC on December 9, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on December 11, 2020 and December 16, 2020.May 10, 2021. The interim results for the period from July 30, 2020 (inception) throughthree and nine months ended September 30, 20202021 are not necessarily indicative of the results to be expected for the year ending December 31, 20202021 or for any future periods.

Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary 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 condensed 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 financial statements in conformity with 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.

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(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. Accordingly,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.

7

MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020 (Unaudited)

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 not
no
t have any cash equivalents as of September 30, 2021 and December 31, 2020.

Deferred

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’ equity 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 September 30, 2021 and December 31, 2020, 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 
      
Offering Costs

Offering costs consistconsisted of legal, accounting and other expenses incurred through the balance sheet dateInitial Public Offering that arewere directly related to the Initial Public Offering. Offering costs amountingwere allocated to $17,874,801 were charged to stockholder’s equity upon the completion ofseparable financial instruments issued in the Initial Public Offering (see Note 1). As of September 30, 2020, therebased on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were $118,290 of deferred offering costs recordedexpensed as incurred in the accompanying condensed statements of operations.
Warrant Liabilities
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of 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.
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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(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.

sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a

non-cash
gain or loss on the statements of operations.
Income Taxes

The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. As of September 30, 2021 and December 31, 2020, the Company had a deferred tax assets which had a full valuation allowance recorded against them.

The Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s general and administrative costs are generally considered
start-up
costs and are not currently deductible. During the three and nine months ended September 30, 2021, the Company recorded0 income tax expense. The Company’s effective tax rate for the three and nine months ended September 30, 2021 was 0, which differs from the expected income tax rate mainly due to the
start-up
costs (discussed above), which are not currently deductible, and permanent differences due to the change in the fair value of the warrant liabilities.
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 nowere0 unrecognized tax benefits and noand0 amounts accrued for interest and penalties as of September 30, 2021 and December 31, 2020. 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.

The provision for income taxes was deemed to be de minimis for the period from July

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 (inception) through September 30, 2020.

2021

(Unaudited)
Net LossIncome (Loss) 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 lossincome (loss) per common share is computed by dividing net lossincome (loss) by the weighted average number of common shares outstanding for the period. Accretion associated with the redeemable shares of Class A common stock outstanding duringis excluded from income (loss) per common share as the period, excluding redemption value approximates fair value.
The calculation of diluted income (loss) 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 subject to forfeiture. Atin the aggregate. As of September 30, 2021 and 2020, the Company did not have any dilutive securities andor other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted lossnet income (loss) per sharecommon shares is the same as basic lossnet income (loss) per common share for the periodperiods presented.

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

September 30, 2021
   
Nine Months Ended

September 30, 2021
   
For The Period From July 30,
2020 (inception) through
September 30, 2020
 
   
Class A
   
Class B
   
Class A
   
Class B
   
Class A
   
Class B
 
Basic and diluted net income (loss) per common shares
                              
Numerator:                              
Allocation of net income (loss), as adjusted  $89,824,965   $22,456,241   $525,969   $131,492   $0     $(1,251) 
Denominator:                              
Basic and diluted weighted average shares outstanding   31,625,000    7,906,250    31,625,000    7,906,250    0      7,906,250 
                               
Basic and diluted net income (loss) per common share  $2.84   $2.84   $0.02   $0.02   $0     $(0.00) 
Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance CoverageCorporation 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.

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)
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,” approximatesapproximate the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.

nature, except for the warrant liabilities (see Note 10).

Recent Accounting Standards

In August 2020, the FASB issued Accounting Standards Update No.
2020-06,
“Debt—Debt with Conversion and Other Options (Subtopic
470-20)”and
“Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU
2020-06”),
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASU 2020-06 effective as of January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.

NOTE 3.4. 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 one1 share of Class A common stock and one-half
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 7)8).


MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020 (Unaudited)

NOTE 4.5. 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 1,269,231 Private Placement Warrants and Jeffries purchased an additional 174,519 Private Placement Warrants for a total of 1,443,750 Private Placement Warrants, at a price of $1.00 per Private Placement Warrants, or $1,443,750 in the aggregate. Each Private Placement Warrant is exercisable to purchase one1 share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7)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 5.6. 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. The Founder Shares included an aggregate of up to 1,031,250 shares subject to forfeiture to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the number of Founder Shares would equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. As a result of the underwriters’ election to fully exercise their over-allotment option on December 14, 2020, no Founder Shares are currently subject to forfeiture.

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 any 30-trading day 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.

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)
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.

Promissory Notes — Related Parties

On July For the three and nine months ended September 30, 2020, the Sponsor issued an unsecured promissory note to2021, the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. The Promissory Note is non-interest bearingincurred $30,000 and payable on the earlier of (i) March 31, 2021 or (ii) the consummation of the Initial Public Offering.$90,000 in fees for these services, respectively. As of September 30, 2021 and December 31, 2020, there was $92,541 outstanding under the Promissory Note. The outstanding balance under the Promissory Note$10,000 of $135,680 was repaid at the closing of the Initial Public Offering on December 10, 2020.

such fees included in accounts payable and accrued expenses.

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. As of September 30, 2021 and December 31, 2020, there were no amounts0amounts outstanding under the Working Capital Loans.


MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020 (Unaudited)

NOTE 6.7. COMMITMENTS

Risks and Uncertainties

Management continues to evaluate the impact of the
COVID-19
pandemic on the industry 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.

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 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,3demands, 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.

NOTE 7. STOCKHOLDER’S8. 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. AtAs of September 30, 2021 and December 31, 2020, there were no0 shares of preferred stock issued or 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 one1 vote for each share. At September 30, 2021 and December 31, 2020, there were no31,625,000 shares of Class A common stock issued or outstanding.

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 one1 vote for each share. AtAs of September 30, 2021 and December 31, 2020, 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 our shareholdersthe 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

1-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
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.

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(Unaudited)
NOTE 9. WARRANT LIABILITIES
As of September 30, 2021 and December 31, 2020, 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.


MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020 (Unaudited)

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 60th60th 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 outstanding 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 within a 30-trading day period ending three business days before the Company sends the notice of redemption to warrant holders

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 within
a30-tradingday
period ending 3 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, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless

worthless.

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MUDRICK CAPITAL ACQUISITION CORPORATION II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021
(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 September 30, 2021 and December 31, 2020, 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 ordinary sharescommon 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 10. 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
securities are those securities which the Company has the ability and intent to hold until maturity.
Held-to-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 September 30, 2021, assets held in the Trust Account were comprised of $985 in cash and $321,018,310 in U.S. Treasury securities. At December 31, 2020, assets held in the Trust Account were comprised of $425 in cash and $321,001,741 in U.S. Treasury securities. For the three and nine months ended September 30, 2021, the Company withdrew $35,108 of interest income from the Trust Account to pay franchise and income taxes.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
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MUDRICK CAPITAL ACQUISITION CORPORATION II

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 2021
(Unaudited)

   
Description
  
Level
   
Amortized

Cost
   
Gross

Holding

Gain
   
Fair Value
 
September 30, 2021
  
Assets
:
                    
   
Held-to-Maturity
Investments—U.S. Treasury Securities (Matures on 11/26/2021)
   1   $321,018,310   $964   $321,019,274 
   
Liabilities:
                    
   Warrant Liability – Public Warrants   1    —      —      9,329,375 
   Warrant Liability – Private Placement Warrants   3    —      —      8,720,818 
   
Description
  
Level
   
Amortized

Cost
   
Gross

Holding

Loss
   
Fair Value
 
December 31, 2020  
Assets
:
                    
   
Held-to-Maturity
Investments—U.S. Treasury Securities (Matured on 3/11/2021)
   1   $321,001,741   $(18,297)   $320,983,444 
   
Liabilities:
                    
   Warrant Liability – Public Warrants   1    —      —      12,573,343 
   Warrant Liability – Private Placement Warrants   3    —      —      11,986,758 
The Warrants were accounted for as liabilities in accordance with ASC
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:
   
September 30,

2021
  
December 31,

2020
 
Stock price  $9.07  $6.87 
Strike price  $11.50  $11.50 
Term (in years)   5.0   5.0 
Volatility   10.0%   40.0% 
Risk-free rate   1.09%   0.57% 
Dividend yield   0.0%   0.0% 
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   (3,265,940) 
      
Fair value as of September 30, 2021  $8,720,818 
      
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were 0 transfers between levels during the three and nine months ended September 30, 2021.

NOTE 8.11. SUBSEQUENT EVENTS

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


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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 IIII. 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 Form 10-Q including, 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. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offeringdefinitive merger proxy statement in connection with the Company’s special meeting of stockholders filed with the U.S. Securities and Exchange Commission (the “SEC”). on July 30, 2021. 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.

Revision of Previously Issued Financial Statements
In connection with the preparation of our financial statements as of September 30, 2021, we determined we should revise our previously reported financial statements. We determined, at the closing of our Initial Public Offering, we had improperly valued our Class A common stock subject to possible redemption. As a result, we noted a reclassification adjustment related to temporary equity and permanent equity, which resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.
In connection with the change in presentation for the Class A common stock subject to redemption, we also revised our income (loss) per common share calculation to allocate net income (loss) evenly to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of common stock share pro rata in our income (loss).
Recent Developments
On April 6, 2021, we entered into the Merger Agreement and related agreements with Topps. Pursuant to the Merger Agreement, the Company agreed to acquire all of the outstanding capital stock of Topps. On August 20, 2021, the parties terminated the Topps Merger, effective August 20, 2021.
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.

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 September 30, 20202021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below.below, identifying a target company for a Business Combination and activities in connection with the announced and subsequently terminated acquisition of Topps. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate
non-operating
income in the form of interest income on marketable securities held after the Initial Public Offering.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 September 30, 2021, we had net income of $112,281,206, which consisted of the change in fair value of warrant liabilities of $114,371,811 and interest earned on investment held in Trust Account of $17,658, offset by general and administrative expenses of $2,108,263.
For the nine months ended September 30, 2021, we had net income of $657,461, which consisted of the change in fair value of warrant liabilities of $6,509,908 and interest earned on investment held in Trust Account of $52,237, offset by general and administrative expenses of $5,904,684.
For the period from July 30, 2020 (inception) through September 30, 2020, we had a net loss of $1,251, which consisted of formation costs.

general and administrative expenses.

Liquidity and Capital Resources

As of September 30, 2020, we had no cash. Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our Sponsor.

Subsequent to the quarterly period covered by this Quarterly Report, onGoing 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.


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Table of Contents
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 nine months ended September 30, 2021, cash used in operating activities was $968,390. Net income of $657,461 was affected by a change in the fair value of warrant liabilities of $6,509,908, interest earned on marketable securities held in Trust Account of $52,237, and changes in operating assets and liabilities, which provided $4,936,294 of cash from operating activities.
As of September 30, 2021, we had cash and investments held in the Trust Account of $321,019,295. 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 September 30, 2021, we had $184,877 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.

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 do not believe we willmay 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 orderwhatever amount they deem reasonable in their sole discretion, to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination.working capital needs. If we are unable to complete ourraise 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 because we do not have sufficient fundsCombination. We cannot provide any assurance that new financing will be available to us we will be forcedon 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 cease operations and liquidateContinue as a Going Concern,” management has determined that if the Trust Account. In addition, following ourCompany is unable to complete a Business Combination if cash on hand is insufficient, we may needby December 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 obtain additional financing in ordercontinue as a going concern. No adjustments have been made to meet our obligations.

the carrying amounts of assets or liabilities should the Company be required to liquidate after December 10, 2022.

Off-Balance
Sheet Arrangements

We did not have any no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 2020.

2021. 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.

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 us 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 we 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 us, 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. We will bear the expenses incurred in connection with the filing of any such registration statements.


Critical Accounting Policies

The preparation of condensed 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 not identified anythe following critical accounting policies.

policies:

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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 to re-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’ equity section of our balance sheets.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. The Company applies the
two-class
method in calculating income (loss) per common share. Accretion associated with the redeemable shares of Class A common stock is excluded from income (loss) per common share as the redemption value approximates fair value.
Recent Accounting Standards

In August 2020, the FASB issued Accounting Standards Update No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic
470-20)”
and “Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2020-06 effective as of January 1, 2021. The adoption of ASU 2020-06 did not have an impact on our financial statements.
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 financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As

We are a smaller reporting company as defined by Rule
12b-2
of September 30, 2020, we werethe Exchange Act and are not subjectrequired to any market or interest rate risk. Followingprovide the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury obligations with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and 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 September 30, 2020, as such term is defined in Rules 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 at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date.
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Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2020 covered by this Quarterly Report on Form 10-Qended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Remediation of a Material weakness in Internal Control over Financial Reporting
We designed and implemented remediation measures to address the material weakness previously identified and enhance our internal control over financial reporting. In light of the material weakness, we enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements, including providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The foregoing actions, which we believe remediated the material weakness in internal control over financial reporting, were completed as of the date of June 30, 2021 and such material weakness was remediated as of September 30, 2021.
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PART II - II—OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Cooper Stockholder Litigation
On May 28, 2021, Jeffery Cooper, a purported stockholder of Mudrick Capital Acquisition Corp. II (“MUDS”), filed a lawsuit in the Supreme Court of the State of New York, County of New York, captioned Jeffery Cooper v. Mudrick Capital Acquisition Corp. II., et al., against MUDS and the MUDS Board (the “Cooper Complaint”). The Cooper Complaint asserted a breach of fiduciary duty claim against the individual defendants and an aiding and abetting claim against MUDS in connection with the proposed transaction between MUDS and Topps. The Cooper Complaint alleged, among other things, that (i) defendants agreed to inadequate consideration in connection with the proposed transaction, and (ii) the proxy statement filed with the SEC on May 13, 2021 in connection with the proposed transaction was materially misleading. The Cooper Complaint sought, among other things, to enjoin the proposed transaction, rescind the transaction or award rescissory damages, and an award of attorneys’ fees and expenses. The Cooper Complaint was voluntarily dismissed on September 10, 2021.
Bass Stockholder Litigation
On August 10, 2021, Lawrence Bass, a purported stockholder of MUDS, filed a putative class action complaint in the Delaware Court of Chancery against MUDS and the MUDS Board, alleging that (i) defendants violated Section 242(b)(2) of the DGCL by denying holders of MUDS’s Class A common stock a separate class vote on the proposal to amend MUDS’s charter in connection with the proposed transaction between MUDS and Topps (the “Charter Proposal”), and (ii) the MUDS Board breached its fiduciary duties as a result of the alleged DGCL violation and the related filing of an allegedly misleading and incomplete definitive proxy statement insofar as it described the vote to effectuate the Charter Proposal (the “Bass Complaint”). Simultaneously, Mr. Bass also filed (i) a motion to expedite and (ii) a motion for preliminary injunction, which sought to prevent the MUDS Board from conducting the vote on the Charter Proposal. On August 16, 2021, the Bass Complaint was voluntarily dismissed, and the motions to expedite and for preliminary injunction were withdrawn.

Item 1A. Risk Factors.

As of the date of this Quarterly Report, therea smaller reporting company, we are not required to include risk factors in our annual report on
Form 10-K.
There have been no material changes with respect to those riskthe list of material risks, uncertainties and other factors previouslythat could have a material effect on the Company and its operations as disclosed in our Registration Statement
Form 10-K/A
filed with the SEC. AnySEC on May 10, 2021. Please also refer to the Risk Factors section of these factors could resultthe Company’s definitive merger proxy statement in a significant or material adverse effectconnection with the Company’s special meeting of stockholders filed with the SEC on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

July 30, 2021.

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

On December 10, 2020, we consummated the Initial Public Offering of 27,500,000 Units. On December 14, 2020, in connection with the underwriters’ election to fully exercise their over-allotment option, we sold an additional 4,125,000 Units. The Units sold in the Initial Public Offering and the full exercise of over-allotment option sold at an offering price of $10.00 per Unit, generating total gross proceeds of $316,250,000. Jefferies LLC acted as sole book-running manager. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-249402 and 333-251188). The Securities and Exchange Commission declared the registration statement effective on December 7, 2020.


None.

Simultaneous with the consummation of the Initial Public Offering and the full exercise of the over-allotment option, we consummated the private placement of an aggregate of 12,818,750 warrants at a price of $1.00 per Private Placement Warrant, generating total proceed of $12,818,750. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.

Of the gross proceeds received from the Initial Public Offering including the over-allotment option, and the Private Placement Warrants, $320,993,750 was placed in the Trust Account.

We paid a total of $6,325,000 in underwriting discounts and commissions and $481,051 for other offering costs related to the Initial Public Offering. In addition, the underwriters agreed to defer $11,068,750 in underwriting discounts and commissions.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

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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
1.1 Underwriting Agreement, dated December 7, 2020, by and among the Company and Jefferies. (1)
3.1Amended and Restated Certificate of Incorporation. (1)
4.1Warrant Agreement, dated December 7, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1)
10.1Letter Agreement, dated December 7, 2020, by and among the Company, its officers, its directors and the Sponsor. (1)
10.2Investment Management Trust Agreement, dated December 7, 2020, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (1)
10.3Registration Rights Agreement, dated December 7, 2020, by and between the Company, the Sponsor and Jefferies. (1)
10.4Sponsor Private Placement Warrant Purchase Agreement, dated December 7, 2020, by and between the Company and the Sponsor. (1)
10.5Jefferies Private Placement Warrant Purchase Agreement, dated December 7, 2020, by and between the Company and Jefferies. (1)
10.6Administrative Support Agreement, dated December 7, 2020, by and between the Company and the Sponsor. (1)
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*  XBRL Instance Document
101.CAL*  XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*  XBRL Taxonomy Extension Schema Document
101.DEF*  XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*  XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*  XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*
Filed herewith.
**
Furnished.
(1)Previously filed as an exhibit to our Current Report on Form 8-K filed on December 11, 2020 and incorporated by reference herein.

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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: January 21,November 10, 2021By:
/s/ Jason Mudrick
 Name: Jason Mudrick
 Title:Chief Executive Officer and Chairman
 (Principal Executive Officer)
Date: January 21,November 10, 2021By:
/s/ Glenn Springer
 Name:Glenn Springer
 Title:Chief Financial Officer
 (Principal Accounting and Financial Officer)


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