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 September 30, 2021 were organizational activities,
those necessary to prepare and consummate 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 September 30, 2021, we
had a net loss of $1,031,029 which consists of operating costs of $1,653,465,
transaction costs allocated to warrant liability of $380,000, offset by a change
in the fair value of our warrant liability of $995,861, interest income on
marketable securities held in the Trust Account of $3,043 and dividend income of
$3,532.
For the three months ended September 30, 2021, we had net income of $2,260,092
which consists of operating costs of $1,228,486, offset by a change in the fair
value of our warrant liability of $3,485,513 and dividend income of $3,065.
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 September 30, 2021,
cash used in operating activities was $1,046,477. Net loss of $1,031,029 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 income earned on marketable securities held in the Trust Account of
$3,532, and change in the fair value of the warrant liability of $995,861.
Changes in operating assets and liabilities provided $606,988 of cash for
operating activities.
As of September 30, 2021, we had marketable securities held in the Trust Account
of $238,183,585 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 income earned on the
Trust Account (less income taxes payable), to complete our Business Combination.
We may withdraw interest and dividend income 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 September 30, 2021, we had cash of $703,604 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 $1.50 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.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities that would be considered
off-balance
sheet arrangements as of September 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 the binomial lattice method.
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' deficit section of our condensed balance sheet.
Net Income (Loss) Per Common Share
Net loss per share of common stock is computed by dividing net loss by the
weighted average number of shares of common stock outstanding during the period.
We apply the two-class method in calculating earnings per share. Accretion
associated with the redeemable shares of Class A common stock is excluded from
earnings per share as the redemption value approximates fair value.
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 September 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 our disclosure controls and procedures were effective as of
September 30, 2021.
Changes in Internal Control Over Financial Reporting
The previously reported material weakness related to the misapplication of
accounting for the Company's warrants as liabilities was remediated during the
quarter ended September 30, 2021. There were no other changes in our internal
control over financial reporting that occurred during the three months ended
September 30, 2021, covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Remediation of a Material weakness in Internal Control Over Financial Reporting
We recognize the importance of the control environment as it sets the overall
tone for the Company and is the foundation for all other components of internal
control. Consequently, 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 condensed consolidated financial
statements, including providing enhanced access to accounting literature,
research materials and documents and increased communication among our
management 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 September 30, 2021.

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                                      PART
                                    II-OTHER
                                  INFORMATION

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