References in this quarterly report on Form
10-Q
(the "Quarterly Report") to "we," "us" or the "Company" refer to Sandbridge X2
Corp. References to our "management" or our "management team" refer to our
officers and directors, and references to the "Sponsor" refer to Sandbridge X2
Holdings LLC. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited condensed 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 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", 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 Offering filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's SEC filings can be accessed on the EDGAR
section of the SEC's website at www.sec.gov. Except as expressly required by
applicable securities law, the Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
January 15, 2021 formed for the purpose of entering into a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the "Business Combination"). We intend
to effectuate our Business Combination using cash from the proceeds of our
initial public offering (the "Initial Public Offering") and the sale of the
Private Placement Warrants (as defined below), 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 nor generated any revenues to date.
Our only activities through June 30, 2021 were organizational activities, those
necessary to prepare and consumate the Initial Public Offering, described below,
and the search for a target company for a Business Combination. We do not expect
to generate any operating revenues until after the completion of our Business
Combination. We generate
non-operating
income in the form of interest and dividend income on marketable securities held
in our trust account (the "Trust Account"). 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 period from January 15, 2021 (inception) through June 30, 2021, we had
net loss of $3,291,121 which consists of operating costs of $424,979,
transaction costs allocated to warrant liability of $380,000 and a change in the
fair value of our warrant liability of $2,489,652, offset by interest income on
marketable securities held in the Trust Account of $3,043 and dividend income of
$467.
For the three months ended June 30, 2021, we had net loss of $5,069,599 which
consists of operating costs of $342,307, a change in the fair value of our
warrant liability of $4,730,339, offset by interest income on marketable
securities held in the Trust Account of $2,580 and dividend income of $467.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of shares of our Class B common stock by the
Sponsor and loans from our Sponsor.
On March 12, 2021, we completed the Initial Public Offering of 23,817,701 Units,
which included the partial exercise by the underwriters of their
over-
allotment option in the amount of 1,817,701 Units, at $10.00 per Unit,
generating gross proceeds of $238,177,010. Simultaneously with the closing of
the Initial Public Offering, we completed the sale of 4,509,027 Private
Placement Warrants (the "Private Placement Warrants") at a price of $1.50 per
Private Placement Warrant in a private placement to the Sponsor, generating
gross proceeds of $6,763,540.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Placement Warrants, a total
of $238,177,010 was placed in the Trust Account. We incurred $13,376,865 in
Initial Public Offering related costs, consisting of $4,367,540 in cash
underwriting fees, $8,336,195 of deferred underwriting fees and $673,130 of
other offering costs.

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For the period from January 15, 2021 (inception) through June 30, 2021, cash
used in operating activities was $919,455. Net loss of $3,291,121 was affected
by transaction costs allocated to warrant liability of $380,000, interest earned
on marketable securities held in the Trust Account of $3,043 and dividend earned
on marketable securities held in the Trust Account of $467, and change in the
fair value of the warrant liability of $2,489,652. Changes in operating assets
and liabilities used $494,476 of cash for operating activities.
As of June 30, 2021, we had marketable securities held in the Trust Account of
$238,180,520 consisting of exchange traded funds.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest and dividend earned on the Trust
Account (less income taxes payable), to complete our Business Combination. We
may withdraw interest and dividend to pay franchise and income 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 June 30, 2021, we had cash of $830,626 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, the Sponsor, an affiliate of the
Sponsor, or our officers and directors may, but are not obligated to, loan us
funds as may be required. If we complete a Business Combination, we would repay
such loaned amounts. 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, including as to exercise price,
exercisability and exercise period. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans. The loans would be repaid upon consummation of a Business
Combination, without interest.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our 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.
On May 25, 2021, the Company received a notice from the New York Stock Exchange
(the "NYSE") indicating that the Company was not in compliance with
Section 802.01E of the NYSE Listed Company Manual as a result of its failure to
timely file the Quarterly Report on Form
10-Q
for the quarter ended March 31, 2021 (the "Q1 2021 Form
10-Q")
with the SEC. The notice had no immediate effect on the listing or trading of
the Company's securities on the NYSE. The NYSE has informed the Company that it
will have six months from May 24, 2021 to file the Q1 2021
Form 10-Q
with the SEC and may regain compliance with the NYSE listing standards at any
time prior to that date by filing its Q1 2021
Form 10-Q.
The Company filed the Q1 2021
Form 10-Q
on June 22, 2021.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities that would be considered
off-balance
sheet arrangements as of June 30, 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 commencing on March 9, 2021, to pay an
affiliate of the Sponsor $10,000 per month for office space, utilities and
secretarial and administrative support services. Upon the earlier of the
completion of a Business Combination and its liquidation, we will cease paying
these monthly fees.
Certain of the underwriters of the Initial Public Offering are entitled to a
deferred fee of $0.35 per share, or $8,336,195 in the aggregate, which reflects
the underwriters' partial exercise of their
over-allotment
option. 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. The
underwriters did not receive any upfront underwriting discount or commissions on
the 1,980,000 Units purchased by the members of our Sponsor that are affiliated
with PIMCO, but will receive deferred underwriting commissions with respect to
such Units.

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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 period reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:

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Warrant Liability
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in Accounting Standards
Codification ("ASC") 815 "Derivatives and Hedging" 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 condensed statement of operations. The fair value of the
warrants was estimated using quoted prices in an active market.
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 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 common stock (including common stock 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, 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 condensed balance sheet.
Net Income (Loss) Per Common Share
We apply the
two-class
method in calculating earnings per share. Net income per common share, basic and
diluted for Class A redeemable common stock is calculated by dividing the
interest income earned on the Trust Account, net of applicable franchise and
income taxes, by the weighted average number of Class A redeemable common stock
outstanding for the period. Net income (loss) per common share, basic and
diluted for Class B non-redeemable common stock is calculated by dividing the
net income, less income attributable to Class A redeemable common stock, by the
weighted average number of Class B non-redeemable common stock outstanding for
the period presented.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures 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 June 30, 2021, as such term
is defined in Rules 13a-15(e) and
15d-15(e)
under the Exchange Act. Based upon that evaluation, our certifying officers
concluded that, solely due to the Company's restatement of its balance sheet as
of March 12, 2021 to reclassify the Company's warrants to liabilities in
accordance with applicable accounting policies, our disclosure controls and
procedures were not effective as of June 30, 2021. We have corrected the
accounting for the warrants in the March 31, 2021 Quarterly Report on Form
10-Q.
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 2021 covered by this Quarterly Report on
Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting as the circumstances that led to the
restatement of our financial statements had not yet been identified. However,
management did implement changes in internal control over financial reporting
during second quarter of 2021 designed to remediate a material weakness solely
related to the presentation of the Company's warrants as equity instead of
liability. We plan to enhance 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. Our
plans at this time include increasing communication among our personnel and
third-party professionals with whom we consult regarding complex accounting
applications. The elements of our remediation plan can only be accomplished over
time, and we can offer no assurance that these initiatives will ultimately have
the intended effects.

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