10X CAPITAL VENTURE ACQUISITION CORP. II Management report and analysis of the financial situation and operating results. (Form 10-K)


References to “Company”, “10X Capital Venture Acquisition Corp. II,” “our”, “we” or “us” refers to 10X Capital Venture Acquisition Corp. II. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the audited financial statements and accompanying notes which are included under “Item 8. Financial Statements and Supplementary Data” of this annual report on Form 10. –K. Certain the information contained in the discussion and analysis presented below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements due to many factors, including those set forth under “Special Note Regarding Forward-Looking Statements”, “Item 1A. Risk Factors” and elsewhere in this annual report. on Form 10-K.


We are a blank check company incorporated on February 10, 2021 like a Cayman Islands exempt corporation incorporated for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities.

At August 13, 2021we consumed our public offering of 20,000,000 units, at
$10.00 per unit, generating gross proceeds of $200 million. Each unit consists of one Class A common share and one-third of a redeemable warrant.

Simultaneously with the closing of the Public Offering, our Sponsor and Cantor purchased a total of 655,000 Private Placement Units, at a price of $10.00
per Private Placement Unit, for a total purchase price of $6,550,000in a private placement.

At the closing of the Public Offer of August 13, 2021a total of
$200,000,000 ($10.00 per Unit), consisting of $196,000,000 of the proceeds of the public offering and $4,000,000 proceeds from the sale of the private placement units were placed in the trust account.

From October 1, 2021our Class A common stock and our public warrants began trading separately on the Nasdaq.

If we have not completed our initial business combination within such time
period, we 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
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
(which interest shall be net of taxes payable and up to $100,000 of interest to
pay dissolution expenses), divided


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by the number of public shares then outstanding, the redemption of which will completely extinguish the rights of the public shareholders as shareholders (including the right to receive further liquidation distributions, if any), and (iii) also promptly as reasonably possible after such redemption, subject to the approval of our remaining shareholders and our Board of Directors, to liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for the claims of creditors and the requirements of other applicable laws.

We cannot assure you that our plans to complete our first business combination will be successful.

Liquidity and going concern

From December 31, 2021we had about $1.4 million outside the trust account and a working capital of approximately $349,000.

Our cash requirements up to December 31, 2021 had been satisfied by a payment from the Sponsor of $25,000 for the founder’s shares to cover certain offering costs and the loan under an unsecured promissory note from the sponsor of
$81,457. The promissory note was fully repaid at the closing of the public offering. In addition, in order to fund transaction costs associated with a business combination, the Limited Partner or an affiliate of the Limited Partner or certain of our officers and directors may, but are not obligated to, provide us with loans of rolling. From December 31, 2021there were no outstanding working capital loans.

As part of our assessment of going concern considerations in accordance with FASB Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, the management has determined that the liquidity condition and the date of compulsory liquidation and subsequent dissolution raises substantial doubt as to our ability to continue our business. No adjustments were made to the carrying values ​​of assets or liabilities if we were to liquidate after November 13, 2022. The financial statements do not include any adjustments that may be necessary if we are unable to continue our business.

Operating results

Our entire activity since inception up to December 31, 2021 related to our
formation, the preparation for the Public Offering, and since the closing of the
Public Offering, the search for a prospective initial business combination. We
will not generate any operating revenues until after the completion of our
initial business combination. We generate
income in the form of investment income from the Trust Account. We will continue
to incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses.

For the period of February 10, 2021 (creation) until December 31, 2021we incurred a net loss of approximately $1.5 millioncomposed of approximately $1.5 million in general and administrative expenses and approximately $87,000 administrative costs related to a related party, partly offset by approximately $5,000 income from investments held in the trust account.

Commitments and contingencies

Registration and rights of shareholders

Under the terms of a recording rights agreement concluded on August 10, 2021, holders of Founder Shares, Private Placement Units, Private Placement Shares and Private Placement Warrants and the Class A common stock underlying such Private Placement Warrants and Private Placement Units which may be issued upon conversion of working capital loans will have registration fees. We will pay for expenses incurred in filing such registration statements.


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Subscription agreement

We granted the underwriters a
option from August 10, 2021 to purchase up to 3,000,000 additional Units at the
Public Offering price less the underwriting discounts and commissions. On
September 25, 2021, the over-allotment option expired.

Subscribers were entitled to a subscription discount of $0.20 per unit, i.e. approximately $4.0 million overall, paid at the closing of the public offering. Besides, $0.35 per unit, i.e. approximately $7.0 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The Deferred Fee will become payable to the Underwriters out of monies held in the Trust Account only if we complete an Initial Business Combination, subject to the terms of the Underwriting Agreement.

Critical accounting policies

The preparation of these financial statements in accordance with we generally accepted accounting principles (“US GAAP”) require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from these estimates. We have identified the following as our significant accounting policies:

Class A common shares redeemable

Class A common shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common shares (including Class A common shares with redemption rights that are either under the control of the holder or subject to redemption in the event of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A common shares are classified as equity. Our Class A common shares have certain redemption rights that are considered beyond our control and subject to the occurrence of uncertain future events. Accordingly, all outstanding Class A common shares that may be repurchased are presented at their redemption value as temporary shareholders’ equity, outside the shareholders’ equity section of our consolidated balance sheet.

Under ASC 480, we have elected to recognize changes in the redemption value
immediately as they occur and adjust the carrying value of the security to equal
the redemption value at the end of each reporting period. This method would view
the end of the reporting period as if it were also the redemption date for the
security. Immediately upon the closing of the Public Offering, we recognized the
accretion from initial book value to redemption amount value. The change in the
carrying value of the redeemable Class A ordinary shares resulted in charges
against additional
capital (to the extent available) and accumulated deficit.

Net earnings (loss) per common share

We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. We have two classes of shares, called Class A common shares and Class B common shares. Income and losses are shared pro rata between the two classes of shares. Net earnings (loss) per common share is calculated by dividing net earnings (net loss) by the weighted average number of common shares outstanding for the relevant period.

Calculation of diluted net income (loss) per common share excludes the effect of public warrants and private placement warrants to purchase an aggregate of 20,000,000 common shares Class A since their inclusion would be anti-dilutive under the treasury stock method. Accordingly, diluted net earnings (loss) per share is the same as basic net earnings (loss) per share for the period from February 10, 2021 (creation) until December 31, 2021. The accretion associated with redeemable Class A common shares is excluded from earnings per share since redemption value approximates fair value.


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Recent accounting pronouncements

In August 2020, the FASB issued ASU
No. 2020-06,
"Debt with Conversion and Other Options (Subtopic
and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic
which simplifies the accounting for convertible instruments. The guidance
removes certain accounting models that separate the embedded conversion features
from the host contract for convertible instruments. ASU
allows for a modified or full retrospective method of transition. This update is
effective for fiscal years beginning after January 1, 2024, and interim periods
within those fiscal years. Early adoption is permitted. We are currently
evaluating the impact this change will have on our financial statements.

Other recent accounting pronouncements issued by the FASB (including its
Emerging Issues Working Group), the American Institute of Chartered Accountantsand the SECOND did not have, or are not considered by management to have, a material effect on our financial statements.

Employment Act

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

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

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