CIIG CAPITAL PARTNERS II, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K)

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Report
including, without limitation, statements in this section regarding our
financial position, business strategy and the plans and objectives of management
for future operations, are forward-looking statements. When used in this Report,
words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and
similar expressions, as they relate to us or our management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of our management, as well as assumptions made by, and information
currently available to, our management. Actual results could differ materially
from those contemplated by the forward- looking statements as a result of
certain factors detailed in our filings with the SEC. All subsequent written or
oral forward-looking statements attributable to us or persons acting on our
behalf are qualified in their entirety by this paragraph.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes related thereto contained elsewhere in this Report.

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Overview

We are a blank check company formed under the laws of the State of Delaware on
January 6, 2021 for the purpose of effecting an initial business combination. We
intend to effectuate our initial business combination using cash from the
proceeds of the initial public offering initial public offering and the sale of
the private placement warrants, 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 an initial
business combination will be successful.

Zapp Business Combination

On November 22, 2022, the Company, Zapp, Pubco and Merger Sub entered into the
Zapp Merger Agreement pursuant to which (i) Pubco, Zapp and certain shareholders
of Zapp entered into an Investor Exchange and Support Agreement or a Management
Exchange and Support Agreement, pursuant to which such shareholders will
transfer their respective ordinary shares of Zapp to Pubco in exchange for Pubco
common shares and (ii) immediately thereafter, Merger Sub will merge with and
into the Company, with the Company being the surviving corporation and each
outstanding share of Company common stock (other than certain excluded shares)
converting into the right to receive one Pubco common share as set forth in the
Zapp Merger Agreement.

The Zapp Business Combination is expected to be consummated after the required
approval by the stockholders of the Company and the satisfaction of other
conditions as further described in the Zapp Merger Agreement. For a full
description of the Zapp Merger Agreement and the proposed Zapp Business
Combination, please see “Item 1. Business.”

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.
Our only activities from January 6, 2021 (inception) through December 31, 2022
were organizational activities, those necessary to prepare for the initial
public offering, described below, and identifying a target company for an
initial business combination. We do not expect to generate any operating
revenues until after the completion of our initial 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.

For the year ended December 31, 2022, we had a net loss of $1,716,378, which
consists of formation and operational costs of $5,493,089 and provision for
income taxes of $906,414, offset by interest earned on cash and marketable
securities held in the trust account of $4,683,125.

For the period from January 6, 2021 (inception) through December 31, 2021, we
had a net loss of $1,518,280, which consists of formation and operational costs
of $1,548,562, offset by interest earned on marketable securities held in the
trust account of $30,282.

Liquidity and Capital Resources

On September 17, 2021, we consummated the initial public offering of 28,750,000
units, which includes the full exercise by the underwriter of its over-allotment
option in the amount of 3,750,000 units, at $10.00 per unit, generating gross
proceeds of $287,500,000. Simultaneously with the closing of the initial public
offering, we consummated the sale of 12,062,500 private placement warrants at a
price of $1.00 per private placement warrant in a private placement to the
sponsor generating gross proceeds of $12,062,500.

Following the initial public offering, the full exercise of the over-allotment
option, and the sale of the private placement warrants, a total of $291,812,500
was placed in the trust account. We incurred $16,342,432 in initial public
offering related costs, including $5,750,000 of underwriting fees and $529,932
of other offering costs.

For the year ended December 31, 2022, cash used in operating activities was
$1,355,363. Net loss of $1,716,378 was affected by interest earned on cash and
marketable securities held in the trust account of $4,683,125 and deferred tax
provision $502,902. Changes in operating assets and liabilities provided
$4,541,238 of cash from operating activities.

For the period from January 6, 2021 (inception) through December 31, 2021, cash
used in operating activities was $836,504. Net loss of $1,518,280 was affected
by interest earned on marketable securities held in the trust account of
$30,282. Changes in operating assets and liabilities provided $712,058 of cash
from operating activities.

As of December 31, 2022, we had marketable securities held in the trust account
of $295,886,250 (including approximately $4,683,125 of interest income)
consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest
income on the balance in the trust account may be used by us to pay taxes.
Through December 31, 2022, we withdrew $639,657 interest earned from the trust
account.

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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 and deferred underwriting commissions), to complete our
initial business combination. To the extent that our capital stock or debt is
used, in whole or in part, as consideration to complete our initial 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 December 31, 2022, we had cash of $42,858. 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 an initial business combination.

In order to fund working capital deficiencies or finance transaction costs in
connection with an initial business combination, the sponsor, or certain of our
officers and directors or their affiliates may, but are not obligated to, loan
us funds as may be required. If we complete an initial business combination, we
would repay such loaned amounts. In the event that an initial 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 Working
Capital Loans may be converted into warrants of the post initial business
combination entity at a price of $1.00 per warrant. The warrants would be
identical to the private placement warrants.

On December 15, 2022, we executed the Convertible Note with the sponsor,
pursuant to which we may borrow up to an aggregate principal amount of $100,000.
The Convertible Note is non-interest bearing and due on the earlier of March 17,
2023 and the date that we consummate our business combination. In the event that
we do not consummate a business combination, we may use a portion of the working
capital held outside of the trust account to repay such additional loaned
amounts but no proceeds from the trust account would be used for such repayment.
Up to $100,000 of such additional loans (if any) may be convertible into
warrants at a price of $1.00 per warrant at the option of the sponsor. The
warrants would be identical to the private placement warrants, including as to
exercise price, exercisability and exercise period. The issuance of the
Convertible Note was approved by our board of directors and the audit committee
on December 15, 2022. The conversion feature was reviewed under ASC 815 and
noted no conditions that would require bifurcation of the conversion feature. As
of December 31, 2022, there was $100,000 outstanding under the Convertible Note.

We will need to raise additional capital through loans or additional investments
from our sponsor or an affiliate of our sponsor or certain of our directors and
officers. Our sponsor or an affiliate of our sponsor or certain of our directors
and officers may, but are not obligated to, loan us funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion,
to meet our working capital needs. Accordingly, we may not be able to obtain
additional financing. If we are unable to raise additional capital, we may be
required to take additional measures to conserve liquidity, which could include,
but not necessarily be limited to, curtailing operations, suspending the pursuit
of a potential transaction and reducing overhead expenses. We cannot provide any
assurance that new financing will be available to us on commercially acceptable
terms, if at all.

In connection with our assessment of going concern considerations in accordance
with FASB ASC Topic 205-40, “Basis of Presentation – Going Concern,” management
has determined that the expected shortfall in working capital over the period of
time between the date the financial statements are issued and our estimated
initial business combination date raises substantial doubt about our ability to
continue as a going concern until the earlier of the consummation of our initial
business combination or the date we are required to liquidate. Based on the
above factors, management determined there is substantial doubt about our
ability to continue as a going concern within one year after the date the
financial statements are issued. The financial statements do not include any
adjustment that might be necessary if we are unable to continue as a going
concern. Our sponsor or an affiliate of our sponsor or certain of our officers
and directors may, but are not obligated to, loan us funds, from time to time or
at any time, in whatever amount they deem reasonable in their sole discretion,
to meet our working capital needs.

Off-Balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 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

We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than our agreement to pay an
affiliate of the sponsor a total of $10,000 per month for office space,
utilities and secretarial and administrative support. We began incurring these
fees on September 14, 2021 and will continue to incur these fees monthly until
the earlier of the completion of the initial business combination and our
liquidation.

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The underwriters are entitled to a deferred fee of $0.35 per unit, or
$10,062,500 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 an initial business combination, subject to the terms of
the underwriting agreement.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity
with U.S. GAAP 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:

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 is
classified as a liability instrument and is measured at fair value.
Conditionally redeemable common stock (including common stock that features
redemption rights that is either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) is 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 balance sheets.

Net Income (Loss) Per Share of Common Stock

Net loss per share of common stock is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
period. We have two classes of common stock, which are referred to as Class A
common stock and Class B common stock. Income and losses are shared pro rata
between the two classes of common stock. This presentation contemplates an
initial business combination as the most likely outcome, in which case, both
classes of common stock share pro rata in our loss. Accretion associated with
the redeemable shares of Class A common stock is excluded from income (loss) per
share of common stock as the redemption value approximates fair value.

Recent Accounting Standards

In August 2020, the FASB issued ASU Topic 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): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies
accounting for convertible instruments by removing major separation models
required under current U.S. GAAP. ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative
scope exception, and it also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal
years, with early adoption permitted. We adopted ASU 2020-06 effective as of
January 6, 2021. The adoption of ASU 2020-06 did not have an impact on our
financial statements.

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 financial statements.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial business
combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in Ukraine. We cannot at
this time fully predict the likelihood of one or more of the above events, their
duration or magnitude or the extent to which they may negatively impact our
business and our ability to complete an initial business combination.

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