References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to VPC Impact Acquisition Holdings II. References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to VPC Impact Acquisition Holdings Sponsor 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 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 Annual Report on Form
10-K
filed with the U.S. Securities and Exchange Commission (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 in the Cayman Islands on January 13, 2021, 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. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, shares 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.

Recent Developments

On August 2, 2021, we entered into a business combination agreement (together with the first amendment dated September 29, 2021, the "Business Combination Agreement") with FinAccel Pte. Ltd. ("FinAccel") and certain other affiliated entities, pursuant to which, among other things, FinAccel would merge with and into our holding company. The Business Combination Agreement was unanimously approved by our board of directors on July 29, 2021.

On March 11, 2022, we entered into a termination and fee agreement (the "Termination Agreement") with FinAccel and certain other affiliated entities. Pursuant to the terms of the Termination Agreement, the parties agreed to mutually terminate the Business Combination Agreement, effective on March 11, 2022, subject to the conditions set forth in the Termination Agreement. In conjunction with the termination of the Business Combination Agreement, the Subscription Agreements, the Investor Rights Agreement, the Founder Holder Agreement and the other Ancillary Documents (as each is defined in the Business Combination Agreement) automatically terminated in accordance with their respective terms as of the same date.



The Termination Agreement provides that we will be entitled to receive (i) an
aggregate sum not to exceed $4,000,000 in reimbursement for certain documented
out-of-pocket
third party expenses incurred by the Company (the "Termination Reimbursement
Amount"), which is payable by FinAccel within six months of the date of the
Termination Agreement and (ii) if we have not consummated an initial business
combination and have determined to redeem our public shares and liquidate or
dissolve thereafter (and we do not withdraw such determination, to the extent
that such determination can be withdrawn), FinAccel will issue and deliver to
the Company a penny warrant, on terms mutually agreeable to FinAccel and us, to
purchase a number of FinAccel's ordinary shares equal to three and
one-half
percent (3.5%) of the Fully Diluted Share Number (as defined in the Termination
Agreement) of FinAccel as of the date of the Termination Agreement, subject to
customary anti-dilution protections (the "Equity Termination Fee"). If FinAccel
engages in any transaction that would be deemed a Sale of the Company (as
defined in the Termination Agreement), then the party surviving the sale
transaction will assume the foregoing obligation, to satisfy the Equity
Termination Fee. If FinAccel fails to pay the Termination Reimbursement Amount,
then a default interest of five percent (5%) per annum will accrue on a daily
basis from the date the Termination Reimbursement Amount was due and payable
until all such unpaid amounts have been paid.

The Termination Agreement contains mutual releases by all parties thereto, for all claims known and unknown, relating and arising out of, or relating to, among other things, the Business Combination Agreement, the ancillary documents to the Business Combination Agreement or the transactions contemplated by the Business Combination Agreement, subject to certain exceptions with respect to claims that cannot be waived by law, the parties obligations under the Termination Agreement and commercial transactions unrelated to the Business Combination Agreement.


                                       14

--------------------------------------------------------------------------------

Table of Contents

Results of Operations

We have neither engaged in any operations (other than searching for a Business Combination after our Initial Public Offering) nor generated any revenues to date. Our only activities through March 31, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after the Initial Public Offering, identifying 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 income on marketable securities held in 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 in connection with completing a Business Combination.

For the three months ended March 31, 2022, we had a net income of $7,629,083, which consists of the change in fair value of warrant liabilities of $8,707,588 and interest earned on investments held in Trust Account of $24,320, offset by general and administrative expenses of $1,102,825.

For the period from January 13, 2021 (inception) through March 31, 2021, we had a net loss of $1,610,097 which consists of transaction costs incurred in connection with warrant liability of $609,973, change in fair value of warrant liabilities of $872,184 and general and administrative expenses of $131,660, offset by interest earned on investments held in Trust Account of $3,720.

Liquidity and Capital Resources

On March 9, 2021 the Company consummated the Initial Public Offering of 25,578,466 units (the "Units") which includes the partial exercise by the underwriters of their over-allotment option in the amount of 3,078,466 Units, at $10.00 per Unit, generating gross proceeds of $255,784,660. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,127,129 warrants (the "Private Placement Warrants") at a price of $1.50 per Private Placement Warrant in a private placement to VPC Impact Acquisition Holdings Sponsor II, LLC (the "Sponsor"), generating gross proceeds of $7,690,693.

Transaction costs amounted to $14,564,011, consisting of $5,115,693 of underwriting fees, $8,952,463 of deferred underwriting fees and $495,855 of other offering costs.

For the three months ended March 31, 2022, cash used in operating activities was $122,078. Net income of $7,629,083 was affected by interest earned on investments held in the Trust Account of $24,320 and changes in fair value of warrant liabilities of $8,707,588. Changes in operating assets and liabilities provided $980,747 of cash for operating activities.

For the period from January 13, 2021 (inception) through March 31, 2021, cash used in operating activities was $1,309,327. Net loss of $1,610,097 was affected by formation cost paid by Sponsor in exchange for issuance of Founder Shares of $5,000, interest earned on investments held in the Trust Account of $3,720, changes in fair value of warrant liabilities of $872,184, and transaction costs incurred in connection with warrants of $609,973. Changes in operating assets and liabilities used $1,182,667 of cash for operating activities.

As of March 31, 2022, we had marketable securities held in the Trust Account of $255,830,678 consisting of money market funds invested in U.S. Treasury Securities. We may withdraw interest from the Trust Account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extent that our share capital 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.

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 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 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 Private Placement Warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.

Off-Balance

Sheet Arrangements



We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of March 31, 2022. We do not participate in transactions
that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities,
guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.

Contractual Obligations

The Company entered into an agreement, commencing on March 4, 2021, to pay the Sponsor up to $10,000 per month for office space, utilities, secretarial and administrative support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three months ended March 31, 2022, the Company incurred and accrued $30,000 in fees for these services. For the period from January 13, 2021 (inception) through March 31, 2021, the Company incurred and paid $10,000 in fees for these services.


                                       15

--------------------------------------------------------------------------------

Table of Contents

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,952,463 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.

Subscription Agreement

Concurrently with entering into the Business Combination Agreement, Holdco (as defined in the Business Combination Agreement) entered into subscription agreements with certain investors (the "PIPE Investors") (the "Subscription Agreements"), pursuant to which such investors would have subscribed for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) in a private placement for $10.00 per share substantially concurrently at the Closing (as defined in the Business Combination Agreement) for an aggregate purchase price of $120 million. The proceeds from the private placement would have been used for general working capital purposes following the Closing.

In light of the termination of the Proposed Business Combination and pursuant to the Business Combination Agreement, we have terminated the existing Subscription Agreements with all PIPE Investors.

Going Concern

As of March 31, 2022, the Company had $327,360 in its operating bank accounts, $632,450 in marketable securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its ordinary shares in connection therewith and a working capital deficit of $2,886,926.

The Company intends to complete a Business Combination by March 9, 2023. However, in the absence of a completed Business Combination, the Company may require additional capital. 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 Financial Accounting Standard Board's ("FASB") Accounting
Standards Update ("ASU")
2014-15,
"Disclosures of Uncertainties about an Entity's Ability to Continue as a Going
Concern," the Company has until March 9, 2023 to consummate a Business
Combination. It is uncertain that the Company will be able to consummate a
Business Combination by this time. If a Business Combination is not consummated
by this date, there will be a mandatory liquidation and subsequent dissolution
of the Company. Management has determined that the liquidity condition and
mandatory liquidation, should a Business Combination not occur, and potential
subsequent dissolution raises 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 March 9, 2023. The Company intends to complete its Business Combination in
advance of the mandatory liquidation date.

Critical Accounting Policies and Estimates

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 identified the following critical accounting policies and estimates:

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 share 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 warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 480, Distinguishing Liabilities from Equity ("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 our own ordinary shares, 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.

Class A Ordinary Shares Subject to Possible Redemption

We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory redemption are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including 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, ordinary shares are classified as shareholders' equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders' deficit section of our condensed balance sheets.

Net Income (loss) Per Ordinary Share

Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period. The Company applies the two-class method in calculating earnings per share. This presentation contemplates a business combination as the most likely outcome, in which case, both classes of shares share pro rata in the income/loss of the Company. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.


                                       16

--------------------------------------------------------------------------------

Table of Contents

Recent Accounting Standards



In August 2020, FASB issued Accounting Standards Update ("ASU")
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)
("ASU
2020-06")
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use
the
if-converted
method for all convertible instruments. ASU
2020-06
is effective for fiscals years beginning after December 15, 2023 and should be
applied on a full or modified retrospective basis, with early adoption permitted
beginning on January 1, 2021. The Company is currently assessing the impact, if
any, that ASU
2020-06
would have on its financial position, results of operations or cash flows, if
adopted.

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.

© Edgar Online, source Glimpses