References in this Quarterly Report on
Form 10-Q
for the quarterly period ended June 30, 2022 (the "Quarterly Report") to "we,"
"us," "our" or the "Company" are to 10X Capital Venture Acquisition Corp. II,
except where the context requires otherwise. References to our "management" or
our "management team" refer to our officers and directors. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with our unaudited consolidated
condensed financial statements and related notes thereto included 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 Securities Exchange Act of 1934, as amended (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 Quarterly Report 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 our
Annual Report on
Form 10-K for
the year ended December 31, 2021 (the "Annual Report") filed with the U.S.
Securities and Exchange Commission (the "SEC") on March 30, 2022 and elsewhere
in our filings with the SEC. The Company's securities filings can be accessed on
the EDGAR section of the SEC's website at www.sec.gov. Except as expressly
required by applicable securities law, the Company disclaims any intention or
obligation to update or revise any forward-looking statements whether as a
result of new information, future events or otherwise.

Overview

We are a blank check company incorporated on February 10, 2021 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.



On August 13, 2021, we consummated our initial public offering (the "Public
Offering") of 20,000,000 units, at $10.00 per unit (the "Units"), generating
gross proceeds of $200 million. Each Unit consists of one Class A ordinary
share, par value $0.0001 per share, and
one-third
of one redeemable warrant (such Class A ordinary shares, the "Public Shares" and
such warrants, the "Public Warrants").

Simultaneously with the closing of the Public Offering, 10X Capital SPAC Sponsor II LLC, a Cayman Islands limited liability company (the "Sponsor"), and Cantor Fitzgerald & Co. ("Cantor") purchased an aggregate of 655,000 private placement units (the "Private Placement Units"), each Private Placement Unit consisting of one Class A ordinary share (the "Private Placement Shares") and one-third of one redeemable warrant (the "Private Placement Warrants"), at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $6,550,000, in a private placement.

Upon the closing of the Public Offering on August 13, 2021, a total of $200 million ($10.00 per Unit), comprised of $196 million from the proceeds of the Public Offering and $4 million from the proceeds of the sale of the Private Placement Units, was placed in a trust account (the "Trust Account").

As of October 1, 2021, our Class A ordinary shares and our Public Warrants began separately trading on Nasdaq.


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Recent Developments

On August 12, 2022, the Company, 10X Magic First Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("First Merger Sub"), 10X Magic Second Merger Sub, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company ("Second Merger Sub"), and Prime Blockchain Inc., a Delaware corporation ("PrimeBlock") entered into a Mutual Termination of Merger Agreement pursuant to which the parties mutually agreed to terminate the Merger Agreement effective as of such date.

As a result of the termination of the Merger Agreement, the Merger Agreement and the Support Agreements (as defined in the Merger Agreement) are of no further force and effect.

In addition, pursuant to its terms, that certain stock purchase agreement, dated March 31, 2022 by and between the Company and CF Principal Investments, LLC, a Delaware limited liability company, was automatically terminated upon the termination of the Merger Agreement.

We intend to continue to pursue the consummation of an initial business combination with an appropriate target.


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Liquidity and Going Concern

As of June 30, 2022, we had approximately $619,000 outside of the Trust Account and a working capital deficit of approximately $5.6 million.

Our liquidity needs up to June 30, 2022 had been satisfied through a payment from the Sponsor of $25,000 for Class B ordinary 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 upon the closing of the Public Offering. In addition, in order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, provide us working capital loans. As of June 30, 2022 and December 31, 2021, there were no amounts outstanding under any working capital loans.


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In connection with 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," management has determined that the liquidity condition and date for
mandatory liquidation and subsequent dissolution raises substantial doubt about
our ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after November 13, 2022. The condensed consolidated financial statements do not
include any adjustment that might be necessary if we are unable to continue as a
going concern. The Company intends to complete a Business Combination before the
mandatory liquidation date. Over this time period, the Company will be using the
funds outside of the Trust Account for paying existing accounts payable,
identifying and evaluating prospective initial business combination candidates,
performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business Combination.

Results of Operations



Our entire activity from inception to June 30, 2022 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
non-operating
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 three months ended June 30, 2022, we incurred a net loss of approximately $3,739,000, which consisted of approximately $3,949,000 in general and administrative expense and $60,000 in administrative expenses-related party, partially offset by approximately $270,000 in income from investments held in Trust Account.

For the three months ended June 30, 2021, we had net loss of $34, which consisted of general and administrative expenses.

For the six months ended June 30, 2022, we incurred a net loss of approximately $5,645,000, which consisted of approximately $5,815,000 in general and administrative expense and $120,000 in administrative expenses-related party, offset by approximately $290,000 in income from investments held in Trust Account.

For the period from February 10, 2021 (inception) through June 30, 2021, we had net loss of $11,731, which consisted of general and administrative expenses.

Commitments and Contingencies

Registration and Shareholder Rights

Pursuant to a registration rights agreement entered into on August 10, 2021, the holders of Class B ordinary shares, Private Placement Units, Private Placement Shares and Private Placement Warrants and the Class A ordinary shares underlying such Private Placement Warrants and Private Placement Units that may be issued upon conversion of the working capital loans will have registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement



We granted the underwriters a
45-day
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.

The underwriters were entitled to an underwriting discount of approximately $4.0 million, paid upon the closing of the Public Offering. In addition, 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 from the amounts held in the Trust Account solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement.


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Critical Accounting Policies

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We have identified the following as our critical accounting policies:

Class A Ordinary Shares Subject to Possible Redemption

Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders' equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, all outstanding Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of 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
paid-in
capital (to the extent available) and accumulated deficit.

Net Income (Loss) per Ordinary Share

We comply with accounting and disclosure requirements of FASB ASC Topic 260, "Earnings Per Share." We have two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. This presentation assumes a business combination as the most likely outcome. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average shares of ordinary shares outstanding for the respective period.

The calculation of diluted net income (loss) per ordinary share does not consider the effect of the Public Warrants and the Private Placement Warrants to purchase an aggregate of 20,000,000 Class A ordinary shares since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per share for the three months ended June 30, 2022 and for the period from February 10, 2021 (inception) through June 30, 2021. Accretion associated with the redeemable Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.

Recent Accounting Pronouncements



In August 2020, the FASB issued ASU
No. 2020-06,
"Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic
815-40)"
("ASU
2020-06"),
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
2020-06
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 condensed consolidated
financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on our condensed consolidated financial statements.


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JOBS Act



The Jumpstart Our Business Startups Act of 2012 (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
non-emerging
growth companies. As a result, our condensed consolidated 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
non-emerging
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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