10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Khosla Ventures Acquisition Co.

(Exact name of registrant as specified in its charter)


Delaware	001-40131	85-1488707
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)


2128 Sand Hill Road
Menlo Park, California		94025
(Address of principal executive offices)		(Zip Code)

(650)

376-8500

(Registrant’s telephone number, including area code)

Securities registered pursuant to

Section

12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	KVSA	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a

shell

company (as defined in Rule

12b-2

of the Exchange Act). Yes ☒ No ☐

As of August 14, 2023, 1,919,456 shares of Class A common stock, par value $0.0001 per share, 5,000,000 shares of Class B common stock, par value $0.0001 per share, and 5,000,000 shares of Class K common stock, par value $0.0001 per share were issued and outstanding, respectively.

KHOSLA VENTURES ACQUISITION CO.

Quarterly Report on Form 10-Q

Table of Contents


PART I. FINANCIAL INFORMATION			1

Item 1. Financial Statements			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk			23
Item 4. Controls and Procedures			23

PA RT II-OTHER INFORMATION			24

Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			24
Item 3. Defaults Upon Senior Securities			24
Item 4. Mine Safety Disclosures			24
Item 5. Other Information			24
Item 6. Exhibits			24

SIGNATURES			25

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

KHOSLA VENTURES ACQUISITION CO.

CONDENSED BALANCE SHEETS


	JUNE 30, 2023 (Unaudited)			DECEMBER 31, 2022
ASSETS
Current assets:
Cash	$	226,460		$	—
Restricted cash		2,175,249			—
Prepaid expenses		326,014			113,285

Total current assets		2,727,723			113,285
Marketable securities held in Trust Account		9,877,547			350,073,997

Total Assets	$	12,605,270		$	350,187,282

LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,003,557		$	59,932
Professional legal fees payable		1,808,997			—
Due to related party		2,591,195			1,158,549
Accrued expenses		3,225			998,599
Income tax payable		762,188			645,963
Franchise tax payable		100,000			394,071
Legal fee accrual		2,256,472			3,415,713
Total current liabilities		8,525,634			6,672,827
Deferred underwriting fees payable		1,207,500			1,207,500

Total liabilities		9,733,134			7,880,327

Commitments and Contingencies
Class A common stock subject to possible redemption, $0.0001 par value; 929,456 and 34,500,000 shares at redemption value at June 30, 2023 and December 31, 2022, respectively		9,877,547			350,073,997
Stockholders’ deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding		—			—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 990,000 issued and outstanding (excluding 929,456 shares subject to possible redemption) at June 30, 2023 and December 31, 2022, respectively		99			99
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 5,000,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		500			500
Additional paid-in capital		—			—
Accumulated deficit		(7,006,010	)		(7,767,641	)

Total stockholders’ deficit		(7,005,411	)		(7,767,042	)

Total Liabilities, Common Stock Subject to Possible Redemption, and Stockholders’ Deficit	$	12,605,270		$	350,187,282

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KHOSLA VENTURES ACQUISITION CO.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
	2023			2022			2023			2022
General and administrative expenses	$	425,210		$	344,160		$	1,197,393		$	715,355
Franchise tax expenses		50,000			50,000			100,000			100,000

Loss from operations		(475,210	)		(394,160	)		(1,297,393	)		(815,355	)
Change in fair value of derivative liabilities		—			—			—			150,000
Gain on marketable securities (net), dividends and interest, held in Trust Account		3,271,429			490,019			7,014,475			518,177
Income (loss) before income tax expense		2,796,219			95,859			5,717,082			(147,178	)

Income tax expense		698,685			49,393			1,474,225			49,393

Net income (loss)	$	2,097,534		$	46,466		$	4,242,857		$	(196,571	)

Weighted average shares outstanding of Class A common stock subject to possible redemption, basic and diluted		27,490,766			34,500,000			30,976,020			34,500,000
Basic and diluted net income (loss) per share, Class A subject to possible redemption	$	0.08		$	0.00		$	0.15		$	(0.00	)
Weighted average shares outstanding of Class A non-redeemable common stock, basic and diluted		990,000			990,000			990,000			990,000
Basic and diluted net loss per share, Class A non-redeemable common stock	$	(0.04	)	$	(0.01	)	$	(0.07	)	$	(0.02	)
Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted		5,000,000			5,000,000			5,000,000			5,000,000
Basic and diluted net loss per share, Class B non-redeemable common stock	$	(0.04	)	$	(0.01	)	$	(0.07	)	$	(0.02	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KHOSLA VENTURES ACQUISITION CO.

CONDENSED STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND

STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

(Unaudited)


	Common Stock Subject to Possible Redemption										Common Stock				Additional					Total
	Class A						Class A				Class B				Paid-In		Accumulated			Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance as of January 1, 2023		34,500,000		$	350,073,997			990,000	$	99		5,000,000	$	500	$	—	$	(7,767,641	)	$	(7,767,042	)
Accretion of Class A common stock to redemption value		—			3,743,046			—		—		—		—		—		(3,743,046	)		(3,743,046	)
Net income		—			—			—		—		—		—		—		2,145,323			2,145,323

Balance as of March 31, 2023 (unaudited)		34,500,000		$	353,817,043			990,000	$	99		5,000,000	$	500	$	—	$	(9,365,364	)	$	(9,364,765	)
Redemption of Class A common stock		(33,570,544	)		(343,677,676	)		—		—		—		—		—		—			—
Reduction to redemption value for estimated tax payment due from redemptions		—			(3,533,249	)		—		—		—		—		—		3,533,249			3,533,249
Accretion of Class A common stock to redemption value		—			3,271,429			—		—		—		—		—		(3,271,429	)		(3,271,429	)
Net income		—			—			—		—		—		—		—		2,097,534			2,097,534

Balance as of June 30, 2023 (unaudited)		929,456		$	9,877,547			990,000	$	99		5,000,000	$	500	$	—	$	(7,006,010	)	$	(7,005,411	)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

(Unaudited)


	Common Stock Subject to Possible Redemption								Common Stock				Additional					Total
	Class A				Class A				Class B				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance as of January 1, 2022		34,500,000	$	345,017,029		990,000	$	99		5,000,000	$	500	$	—	$	(15,451,798	)	$	(15,451,199	)
Accretion of Class A common stock to redemption value		—		28,158		—		—		—		—		—		(28,158	)		(28,158	)
Net loss		—		—		—		—		—		—		—		(243,037	)		(243,037	)

Balance as of March 31, 2022 (unaudited)		34,500,000	$	345,045,187		990,000	$	99		5,000,000	$	500	$	—	$	(15,722,993	)	$	(15,722,394	)
Accretion of Class A common stock to redemption value		—		490,019		—		—		—		—		—		(490,019	)		(490,019	)
Net income		—		—		—		—		—		—		—		46,466			46,466

Balance as of June 30, 2022 (unaudited)		34,500,000	$	345,535,206		990,000	$	99		5,000,000	$	500	$	—	$	(16,166,546	)	$	(16,165,947	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KHOSLA VENTURES ACQUISITION CO.

STATEMENTS OF CASH FLOWS

(Unaudited)


	FOR THE SIX MONTHS ENDED JUNE 30, 2023			FOR THE SIX MONTHS ENDED JUNE 30, 2022
Cash Flows from Operating Activities
Net income (loss)	$	4,242,857		$	(196,571	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Dividends and interest, held in Trust Account		—			(518,177	)
Change in fair value of derivative liabilities		—			(150,000	)
Changes in operating assets and liabilities:
Prepaid expenses		(212,729	)		297,974
Accounts payable and accrued expenses (including franchise tax payable and income tax payable)		1,579,402			63,882
Professional legal fees payable		(1,159,241	)		—

Net cash provided by (used in) operating activities		4,450,289			(502,892	)

Cash Flows from Investing Activities
Investment of Marketable securities held in Trust Account		(7,014,475	)		—
Trust Account withdrawal-redemption		343,677,676			—
Trust Account withdrawal-tax payment		3,533,249			—

Net cash provided by investing activities		340,196,450			—

Cash Flows from Financing Activities
Advances from related party		1,432,646			410,014
Redemption of Class A common stock		(343,677,676	)		—

Net cash (used in) provided by financing activities		(342,245,030	)		410,014

Net increase (decrease) in cash and restricted cash		2,401,709			(92,878	)
Cash and restricted cash - beginning of period		—			202,245

Cash and restricted cash- end of period	$	2,401,709		$	109,367

Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds	$	1,358,000		$	0
Supplemental disclosure of noncash investing and financing activities:
Accretion of Class A common stock to redemption value	$	7,014,475		$	518,177

The accompanying notes are an integral part of these unaudited condensed financial statements.

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KHOSLA VENTURES ACQUISITION

CO. NOTES TO FINANCIAL

STATEMENTS

Note 1—Description of Organization, Business Operations and Going Concern

Khosla Ventures Acquisition Co. (the “Company”) is a blank check company formed as a Delaware corporation on January 15, 2021. The Company was incorporated for the purpose of effecting a merger, stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).

As of June 30, 2023, the Company had not commenced any operations. All activity through June 30, 2023 relates to the Company’s formation, its initial public offering (the “IPO”), and the Company’s search for a target to consummate a Business Combination, which are all described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates

non-operating

income in the form of interest income on cash and cash equivalents from the proceeds derived from its initial public offering.

The Company’s sponsor is Khosla Ventures SPAC Sponsor LLC (the “Sponsor”). The Company’s ability to commence operations is contingent upon obtaining adequate financial resources. On March 8, 2021, the Company consummated its IPO of 30,000,000 shares of Class A common stock of the Company, par value $0.0001 per share (each, a “Public Share”), excluding additional Public Shares sold pursuant to the full exercise of the underwriters’ option to purchase additional Public Shares to cover over-allotments. The Public Shares were sold at a price of $10.00 per Public Share, generating gross proceeds to the Company of $300,000,000. On March 8, 2021, the Company’s underwriters exercised in full their option to purchase additional Public Shares in connection with the IPO. The underwriters exercised their option to purchase an additional 4,500,000 Public Shares from the Company at a price of $10.00 per share less the underwriting fees payable. In total, the Company sold 34,500,000 Public Shares in connection with its IPO for gross proceeds of $345,000,000. The underwriters designate March 8, 2021 as the settlement date for such additional Public Shares pursuant to the Underwriting Agreement.

Simultaneously with the closing of the IPO, the Company completed the private sale of 990,000 shares of Class A common stock of the Company, par value $0.0001 per share (the “Private Placement Shares”) at a purchase price of $10.00 per Private Placement Shares, to the Sponsor, generating aggregate gross proceeds to the Company of $9,900,000.

Following the closing of the IPO on March 8, 2021, and the full exercise of the underwriters’ overallotment option on March 8, 2021, an amount of $345,000,000 ($10.00 per Public Share) of the proceeds from the IPO, including $12,075,000 of the underwriting fees payable was placed in a U.S.- based Trust Account at Goldman Sachs, maintained by Continental Stock Transfer & Trust Company, LLC, acting as trustee (“Trust Account”). Except with respect to interest earned on the funds in the Trust Account that may be released to the Company to pay its franchise and income taxes and expenses relating to the administration of the Trust Account, the proceeds from the IPO, including proceeds from the sale of Private Placement Shares and forward purchase shares, which are held in the Trust Account will not be released until the earliest of (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares properly tendered in connection with a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of its obligation to redeem 100% of its public shares if the Company does not complete its initial business combination within 27 months from the closing of the IPO or (ii) with respect to any other provisions relating to stockholders’ rights or

pre-initial

business combination activity, and (c) the redemption of all of the Company’s public shares if it is unable to complete its business combination within

months from the closing of the IPO, subject to applicable law.

On September 21, 2022, the Company received an executed deferred underwriting fees waiver letter from Goldman Sachs & Co. LLC, informing the Company of its decision to waive any entitlement it may have to its deferred underwriting fees payable held in the Trust Account in respect of any Business Combination. The waiver does not cover deferred underwriting fees payable to Piper Sandler & Co. (representing 10% of the total deferred underwriting fees payable).

The Company’s management has broad discretion with respect to the specific application of the net proceeds of its IPO and the sale of Private Placement Shares, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial business combination must be with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the deferred underwriting fees payable and taxes payable on the interest earned on the Trust Account) at the time the Company signs a definitive agreement in connection with the initial business combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise is not required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). There is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the IPO, management has agreed that an amount equal to at least $

10.00

per Public Share sold in the IPO, including the proceeds from the sale of the private placement shares and the sale of forward purchase shares, will be held in the Trust Account and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of

0 days or less or in money market funds meeting certain conditions under Rule

2a-7

promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.

The Company will provide its holders of the Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting fees payable the Company will pay to the underwriters. These Public Shares were recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with

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Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to the amended and restated certificate of incorporation, which was adopted by the Company upon the consummation of the IPO (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the transaction. If the Company seeks stockholder approval in connection with a Business Combination, the holders of the Founder Shares prior to this IPO (the “Initial Stockholders”) have agreed to vote their Founder Shares and any Public Shares purchased during or after the IPO in favor of a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, the Company’s Amended and Restated Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A common stock sold in the IPO, without the prior consent of the Company.

On February 10, 2023, the Company entered into a

non-binding

letter of intent for a potential initial business combination with another company. On June 2, 2023, the Company determined it no longer intends to pursue a potential initial business combination with the counterparty to the letter of intent.

On June 6, 2023, a special meeting of stockholders was held, as a result of which the Company and Continental Stock Transfer & Trust Company entered into Amendment No. 1 (the IMTA Amendment”) to the Investment Management Trust Agreement, dated as of March 8, 2021 (the “IMTA”). The IMTA Amendment extended the date by which the Company must complete a business combination to December 8, 2023 from June 8, 2023. If the Company is unable to complete the potential initial business combination by December 8, 2023 (33 months from the closing of the IPO) (the “Combination Period”), and the stockholders have not amended the certificate of incorporation to extend such period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes as well as expenses relating to the administration of the Trust Account (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

On June 12, 2023, 33,570,544 shares of Class A common stock were exercised by stockholders for their right to redeem at approximately $10.237 per share. Accordingly, as of June 30, 2023, 929,456 shares of Class A common stock subject to possible redemption were outstanding.

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The holders of the Founder Shares (the “Initial Stockholders”) have agreed not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or

pre-initial

business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

The Initial Stockholders’ have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire Public Shares in or after the IPO, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting fees payable held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $

10.00

per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

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Going Concern and Liquidity

As of June 30, 2023, the Company had $2,401,709 in its operating bank account, out of which $2,175,249 is classified as restricted cash for estimated income and franchise tax payments

due to redemptions of the Class A common stock.

The Company had a working capital deficit of $5,797,911. For the six months ended June 30, 2023, $7,014,475 of the amount on deposit in the Trust Account represented the gain on marketable securities (net), dividends and interest, held in Trust Account, which is available for payment of franchise taxes and expenses in connection with the liquidation of the Trust Account. In addition, the Working Capital Loan and advances from related parties are available to the Company to fund operations.

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.

As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with 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 conditions raise substantial doubt about the Company’s ability to continue as a going concern through approximately one year from the date of filing. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Risks and Uncertainties

Global economic conditions have been worsening, and volatility in, the credit and financial markets and rising inflation and interest rate in the U.S. If these conditions persist and deepen, the Company could experience an inability to access additional capital, or our liquidity could otherwise be impacted. Management continues to evaluate the impact related to rising interest rates and current market condition and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position and results of its operations, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The credit and financial markets have experienced extreme volatility and disruptions due to the current conflict between Ukraine and Russia. The conflict is expected to have further global economic consequences, including but not limited to the possibility of severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in inflation rates and uncertainty about economic and political stability. In addition, the United States and other countries have imposed sanctions on Russia which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. Any of the foregoing consequences, including those we cannot yet predict, may cause our business, financial condition, results of operations and the price of our ordinary shares to be adversely affected.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form

10-Q

and Article 8 of Regulation

S-X

of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair statement of the financial position, operating results and cash flows for the period presented.

The interim results for the period ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to

non-emerging

growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the

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time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $2,401,709 total in cash but no cash equivalents as of June 30, 2023. Out of the total cash balance, $2,175,249 is classified as restricted cash as those funds were withdrawn from the Trust Account for estimated income and franchise tax payments. Withdrawals from the Trust Account are legally restricted for the redemption of common stock, payment of taxes, and payment of expenses in connection with liquidation. This restricted cash is not available to the Company for working capital purposes. The Company had no cash or cash equivalents as of December 31, 2022.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the condensed balance sheets that total to the amounts shown on the condensed statements of cash flows.


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	226,460	$	—
Restricted cash		—		—
Restricted cash for income and franchise tax payments		2,175,249		—
Total cash and cash equivalents and restricted cash	$	2,401,709	$	—

Marketable Securities Held in Trust Account

The Company’s portfolio of investments held in the Trust Account are comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable securities, dividends and interest held in the Trust Account in the accompanying statements of operations. The fair value for trading securities is determined using quoted market prices in active markets.

Common Stock Subject to Possible Redemption

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480.

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 the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock feature contains certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Class A common stock subject to possible redemption are classified as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

The Class A common stock subject to possible redemption are subject to the subsequent measurement guidance in ASC Topic

480-10-S99

“Distinguishing Liabilities from Equity”. Under such guidance, the Company must subsequently measure the shares to their redemption amount because, as a result of the allocation of net proceeds to transaction costs, the initial carrying amount of the common stock is less than $10.00 per share. In accordance with the guidance, the Company has elected to measure the common stock subject to possible redemption to their redemption amount (i.e., $10.00 per share) immediately as if the end of the first reporting period after the IPO, March 8, 2021, was the redemption date. Such changes are reflected in additional

paid-in

capital, or in the absence of additional

paid-in

capital, in accumulated deficit. For the three and six months ended June 30, 2023, the Company recorded an accretion of $3,271,429 and $7,014,475, respectively, all of which was recorded in accumulated deficit. For the three and six months ended June 30, 2022, the Company recorded an accretion of $490,019 and $518,177, respectively, all of which was recorded in accumulated deficit.

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Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage. As of June 30, 2023 and December 31, 2022, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance and remeasured at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative financial instruments is evaluated at the end of each reporting period.

Fair Value Measurements

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheets.

The fair value hierarchy is categorized into three levels based on the inputs as follows:

•

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

•

Level 2: Observable inputs other than Level 1 inputs. Example of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

•

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

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The fair value of the Company’s financial assets and liabilities, approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities during the reporting period. Actual results could differ from those estimates.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Income Taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be

more-likely-than-not

to be sustained upon examination by taxing authorities. The Company’s management determined that the United States is the Company’s only major tax jurisdiction.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

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Net Income (Loss) Per Share of Common Stock

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding during the period, excluding common stock shares subject to forfeiture.

Class K common stock will convert into Class A common stock after the initial Business Combination only to the extent certain triggering events occur prior to the 10th anniversary of the initial Business Combination, including three equal triggering events based on the Company’s stock trading at $30.00, $40.00 and $50.00 per share following the first anniversary of the closing of the initial Business Combination and also upon specified strategic transactions. The Company has not considered the effect of the Class K common stock in the calculation of diluted net income (loss) per share since the conversion of Class K common stock into Class A common stock is contingent upon the occurrence of future events.

Class B Founder Shares and Private Placement Shares are included in the calculation of

non-redeemable

net loss per share.

The Company’s statements of operations include a presentation of loss per share for shares of common stock subject to possible redemption in a manner similar to the

two-class

method of loss per share. With respect to the accretion of the Class A common stock subject to possible redemption and consistent with ASC Topic

480-10-S99-3A,

the Company has treated the accretion in excess of fair value in the same manner as a dividend, to the extent the redemption value exceeds the fair value, in the calculation of the net income (loss) per common stock. As of June 30, 2023 and 2022, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income (loss) per share is the same as basic loss per share for the periods presented.

A reconciliation of net income (loss) per common stock is as follows:


	For The Six Months Ended June 30, 2023			For The Six Months Ended June 30, 2022
Net income (loss)	$	4,242,857		$	(196,571	)
Accretion of temporary equity in excess of fair value		(7,014,475	)		(518,177	)

Net income (loss) including accretion of temporary equity in excess of fair value	$	(2,771,618	)	$	(714,748	)


	For The Six Months Ended June 30, 2023
	Class A-t (Temporary)			Class A-p (Permanent)			Class B
Basic and diluted net loss per share
Numerator
Allocation of net loss including accretion of temporary equity in excess of fair value	$	(2,322,503	)	$	(74,228	)	$	(374,887	)
Deemed dividend for accretion of temporary equity in excess of fair value		7,014,475			—			—

Allocation of net income (loss) and deemed dividend	$	4,691,972		$	(74,228	)	$	(374,887	)

Denominator
Weighted average shares outstanding, basic and diluted		30,976,020			990,000			5,000,000
Basic and diluted net income (loss) per share	$	0.15		$	(0.07	)	$	(0.07	)

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	For The Six Months Ended June 30, 2022
	Class A-t (Temporary)			Class A-p (Permanent)			Class B
Basic and diluted net loss per share
Numerator
Allocation of net loss including accretion of temporary equity in excess of fair value	$	(609.010	)	$	(17,476	)	$	(88,262	)
Deemed dividend for accretion of temporary equity in excess of fair value		518,177			—			—

Allocation of net loss and deemed dividend	$	(90,833	)	$	(17,476	)	$	(88,262	)

Denominator
Weighted average shares outstanding, basic and diluted		34,500,000			990,000			5,000,000
Basic and diluted net loss per share	$	(0.00	)	$	(0.02	)	$	(0.02	)


	For The Three Months Ended June 30, 2023			For The Three Months Ended June 30, 2022
Net income	$	2,097,534		$	46,466
Accretion of temporary equity in excess of fair value		(3,271,429	)		(490,019	)

Net loss including accretion of temporary equity in excess of fair value	$	(1,173,895	)	$	(443,553	)


	For The Three Months Ended June 30, 2023
	Class A-t (Temporary)			Class A-p (Permanent)			Class B
Basic and diluted net loss per share
Numerator
Allocation of net loss including accretion of temporary equity in excess of fair value	$	(963,875	)	$	(34,711	)	$	(175,309	)
Deemed dividend for accretion of temporary equity in excess of fair value		3,271,429			—			—

Allocation of net income (loss) and deemed dividend	$	2,307,554		$	(34,711	)	$	(175,309	)

Denominator
Weighted average shares outstanding, basic and diluted		27,490,766			990,000			5,000,000
Basic and diluted net income (loss) per share	$	0.08		$	(0.04	)	$	(0.04	)

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	For The Three Months Ended June 30, 2022
	Class A-t (Temporary)			Class A-p (Permanent)			Class B
Basic and diluted net loss per share
Numerator
Allocation of net loss including accretion of temporary equity in excess of fair value	$	(377,935	)	$	(10,845	)	$	(54,773	)
Deemed dividend for accretion of temporary equity in excess of fair value		490,019			—			—

Allocation of net income (loss) and deemed dividend	$	112,084		$	(10,845	)	$	(54,773	)

Denominator
Weighted average shares outstanding, basic and diluted		34,500,000			990,000			5,000,000
Basic and diluted net income (loss) per share	$	0.00		$	(0.01	)	$	(0.01	)

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the accompanying financial statements.

Note 3—Related Party Transactions

Due to Related Party

An affiliate of the Sponsor paid certain operating costs on behalf of the Company. These advances are due on demand and

non-interest

bearing. During the six months ended June 30, 2023 and 2022, the related party paid $1,432,646 and $410,014 of operating costs on behalf of the Company, respectively. During the three months ended June 30, 2023 and 2022, the related party paid $1,015,779 and $331,946 of operating costs on behalf of the Company, respectively. As of June 30, 2023 and December 31, 2022, the amount due to the related party was $2,591,195 and $1,158,549, respectively.

Founder Shares

On January 19, 2021, the Sponsor acquired 10,000,000 Founder Shares (the “Founder Shares”) for an aggregate purchase price of $25,000, consisting of 5,000,000 Class B Founder Shares (also known as “Class B common stock”) and 5,000,000 Class K Founder Shares (also known as “Class K common stock”). Prior to the initial investment in the Company of $25,000 by the Sponsor, the Company had no assets, tangible or intangible. The per share purchase price of the Founder Shares was determined by dividing the amount of cash contributed to the Company by the aggregate number of Founder Shares issued. On February 28, 2021, the Sponsor entered into a security assignment agreement with six of the Company’s independent directors and assigned 240,000 shares of Class B Founder Shares at an aggregate price of $600.

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Class B Founder Shares

The Class B Founder Shares will automatically convert into shares of Class A common stock on the first business day following the completion of our initial Business Combination, at a ratio such that the number of shares of Class A common stock issuable upon conversion of all Class B Founder Shares will equal, in the aggregate on an

as-converted

basis, 15% of the sum of (i) the total number of all shares of Class A common stock issued and outstanding upon completion of this offering (including any over-allotment shares if the underwriters exercise their overallotment option), plus (ii) the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion of the Class B Founder Shares plus (iii) unless waived, the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding (x) any shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock issued, deemed issued, or to be issued, to any seller in the initial Business Combination, (y) any shares of Class A common stock issuable upon conversion of the Class K Founder Shares and (z) any Private Placement Shares. Prior to our initial Business Combination, only holders of shares of our Class B common stock will be entitled to vote on the appointment of directors.

Class K Founder Shares

The Class K Founder Shares will convert into shares of Class A common stock after the initial Business Combination only to the extent certain triggering events occur prior to the 10th anniversary of the initial Business Combination, including three equal triggering events based on our stock trading at $30.00, $40.00 and $50.00 per share following the first anniversary of the closing of our initial Business Combination and also upon specified strategic transactions, in each case, as described in this prospectus. The Class K Founder Shares will be convertible into shares of Class A common stock at a ratio such that the number of shares of Class A common stock issuable upon conversion of all Founder Shares (including both Class B Founder Shares and Class K Founder Shares) will equal, in the aggregate on an

as-converted

basis, 30% of the sum of (i) the total number of all shares of Class A common stock issued and outstanding upon completion of this offering (including any over-allotment shares if the underwriters exercise their overallotment option), plus (ii) the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion of the Class B Founder Shares and Class K Founder Shares plus (iii) unless waived, the total number of shares of Class A common stock issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding (x) any shares of Class A common stock or equity-linked securities exercisable for or convertible into shares of Class A common stock issued, deemed issued, or to be issued, to any seller in the initial Business Combination and (y) any Private Placement Shares. Prior to our initial Business Combination, only holders of shares of our Class B common stock were entitled to vote on the appointment of directors.

The Company accounts for the Class K Founder Shares as equity linked instruments. Based on the guidance in ASC Topic 815, certain adjustments to the settlement amount of the Class K Founder Shares are based on a variable that is not an input to the fair value of a

“fixed-for-fixed”

option as defined under ASC Topic

815-40

“Derivatives and Hedging”. The Class K Founder Shares are recorded as liabilities as these shares are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting.

Working Capital Loans

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 the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital Loans.

Private Placement Shares

Simultaneously with the closing of the IPO, the Sponsor has purchased 990,000 Class A common stock at a price of $10.00 per share in a private placement for an aggregate purchase price of $9,900,000. The Private Placement Shares are identical to the shares of Class A common stock shares sold in this offering, subject to certain limited exceptions. The Private Placement Shares holders do not have the option to redeem their Class A common stock and as a result, the proceeds received in connection with the IPO are excluded from temporary equity. The par value of these shares and related additional paid in capital are classified as permanent equity in the Company’s financial statements.

The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Shares until 30 days after the completion of the initial Business Combination.

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Forward Purchase Agreement

The Company has entered into a forward-purchase agreement pursuant to which the Sponsor agreed to purchase an aggregate of up to 2,500,000 shares of our Class A common stock (the “forward-purchase shares”) for $10.00 per share, or an aggregate maximum amount of $25,000,000, in a private placement that would close simultaneously with the closing of the initial Business Combination. The proceeds from the sale of these forward- purchase shares, together with the amounts available to the Company from the Trust Account (after giving effect to any redemptions of public shares) and any other equity or debt financing obtained by the Company in connection with the Business Combination, will be used to satisfy the cash requirements of the Business Combination, including funding the purchase price and paying expenses and retaining specified amounts to be used by the post-Business Combination company for working capital or other purposes. To the extent that the amounts available from the Trust Account and other financing are sufficient for such cash requirements, the sponsor (together with any permitted transferees under the forward-purchase agreement) may purchase less than 2,500,000 forward-purchase shares. The forward-purchase shares would be identical to the public shares being sold in this offering, except the forward-purchase shares would be subject to transfer restrictions and certain registration rights, as described herein. The Company performed an assessment in accordance with ASC Topic 480, and ASC Topic 815 to conclude whether the forward-purchase shares constitute a liability and a derivative such that it will be fair valued separately from the Company’s common stock. The Company concludes that the forward-purchase shares should be equity-classified and its embedded features should not be bifurcated.

Note 4 - Commitments & Contingencies

Registration Rights

The holders of the Founder Shares and Private Placement Shares are entitled to registration rights pursuant to the registration agreement signed prior to the consummation of the IPO. The holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statements to become effective until termination of the applicable

lock-up

period.

Underwriting Agreement

The Company granted the underwriters an option to cover over-allotments and for market stabilization purposes. The over-allotment option entitled the underwriters to purchase on a pro rata basis up to 4,500,000 additional Public Shares at the IPO price, less the underwriting fees payable. On March 8, 2021, the Company’s underwriters exercised in full their option to purchase additional Public Shares in connection with the IPO. The underwriters exercised their option to purchase 4,500,000 Public Shares from the Company at a price of $10.00 per share less the underwriting fees payable. This transaction settled on March 8, 2021.

Note 5 - Stockholders’ Deficit

Preferred Stock - The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share. As of June 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

Class A Common Stock - The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share. As of June 30, 2023 and December 31, 2022, there were 990,000 shares of Class A common stock issued and outstanding, excluding 929,456 and 34,500,000 shares of common stock subject to possible redemption at June 30, 2023 and December 31, 2022, respectively.

Class B Common Stock - The Company is authorized to issue 30,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of June 30, 2023 and December 31, 2022 there were 5,000,000 shares of Class B common stock issued and outstanding.

Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders except as required by law.

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Note 6 - Fair Value Measurements

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 including the fair value hierarchy of the valuation inputs that the Company utilized to determine such fair value.


	Level 1		Level 2		Level 3		Total
Assets
Marketable securities held in Trust Account	$	9,877,547	$	—	$	—	$	9,877,547
Liabilities:
Class K Founder Shares derivative liabilities	$	—	$	—	$	—	$	—

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022 including the fair value hierarchy of the valuation inputs that the Company utilized to determine such fair value.


	Level 1		Level 2		Level 3		Total
Assets
Marketable securities held in Trust Account	$	350,073,997	$	—	$	—	$	350,073,997
Liabilities:
Class K Founder Shares derivative liabilities	$	—	$	—	$	—	$	—

Class K Founder Shares Derivative Liabilities

Class K Founder Shares is accounted for as liabilities in accordance with ASC Topic 815 and presented as derivative liabilities on the accompanying June 30, 2023 and December 31, 2022 balance sheets. The derivative liabilities were measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of derivative liabilities in the statements of operations. In order to capture the market conditions associated with the Class K Founder Shares derivative liabilities, the Company applied an approach that incorporated a Monte Carlo simulation, which involved random iterations of future stock-price paths over the contractual life of the Class K Founder Shares. Based on assumptions regarding potential changes in control of the Company, and the probability distribution of outcomes, the payoff to the holder was determined based on the achievement of the various market thresholds within each simulated path. The present value of the payoff in each simulated trial is calculated, and the fair value of the liabilities is determined by taking the average of all present values.

The Company and its valuation advisor evaluated the Class K Founder Shares as of June 30, 2023 and concluded that the liabilities related to the Class K Founder Shares is zero.

The key inputs into the Monte-Carlo simulation model for the Class K Founder Shares derivative liabilities were as follows as of June 30, 2023.


Input	June 30, 2023
Risk-free interest rate		3.82	%
Term to business combination		0.5 years
Expected volatility		de minimis
Stock price	$	10.36
Dividend yield		0.00	%

The key inputs into the Monte-Carlo simulation model for the Class K Founder Shares derivative liabilities were as follows as of December 31, 2022.


Input	December 31, 2022
Risk-free interest rate		3.90	%
Term to business combination		0.6 years
Expected volatility		de minimis
Stock price	$	9.98
Dividend yield		0.00	%

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As of June 30, 2023, the fair value of the Class K Founder Shares derivative liabilities, a Level 3 liability, remains $0. In addition, there were no transfers to and from Levels 1, 2, and 3 for the three and six months ended June 30, 2023.

The following table presents a summary of the changes in the fair value of the Class K Founder Shares derivative liabilities, a Level 3 liability, measured on a recurring basis, as of June 30, 2022:


	Class K Founder Shares Derivative Liabilities
Fair value at January 1, 2022	$	150,000
Change in fair value		(150,000	)

Fair value as of March 31, 2022	$	—
Change in fair value		—

Fair value as of June 30, 2022	$	—

There were no transfers to and from Levels 1, 2, and 3 for the three and six months ended June 30, 2022.

Note 7—Income Taxes

The Company’s taxable income primarily consists of interest income on the Trust Account, less any franchise taxes. The Company’s formation costs are generally considered

start-up

costs and are not currently deductible.

The Company recorded an income tax provision of $1,474,225 and $49,393 for the six months ended June 30, 2023 and 2022, respectively. The effective income tax rate were 25.79% and -33.56% for the six months ended June 30, 2023 and 2022, respectively. The 25.79% effective income tax rate differs from the federal statutory rate of 21% as a result of the movement of the valuation allowance against our U.S. state and federal net deferred tax assets. As of June 30, 2023 and December 31, 2022, the Company had $0 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of deferred tax assets and therefore established a full valuation allowance of $1,831,065 and $1,227,072 as of June 30, 2023, and 2022, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. There were no unrecognized tax benefits as of June 30, 2023 and December 31, 2022. No amounts were accrued for the payment of interest and penalties as of June 30, 2023 and December 31, 2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Khosla Ventures Acquisition Co. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Khosla Ventures SPAC Sponsor 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, 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 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 formed under the laws of the State of Delaware on January 15, 2021 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our initial Business Combination using cash from the proceeds of the IPO and the sale of the private placement shares and forward-purchase shares, our capital stock, debt or a combination of cash, stock and debt. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.

Our sponsor is Khosla Ventures SPAC Sponsor LLC, a Delaware limited liability company. The registration statement for our IPO was declared effective on March 3, 2021. On March 8, 2021, we consummated our IPO of 34,500,000 Public Shares at $10.00 per share, generating gross proceeds of $345,000,000, and incurring offering costs of $19,660,260, inclusive of $12,075,000 in deferred underwriting fees payable.

Simultaneously with the closing of the IPO, we consummated the private placement of 990,000 private placement shares at a price of $10.00 per private placement share to the sponsor, generating proceeds of $9,900,000.

Upon the closing of the IPO and the private placement, the $345,000,000 of net proceeds from the IPO and certain of the proceeds of the private placement were placed in a Trust Account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.

On February 10, 2023, we entered into a non-binding letter of intent for a potential initial business combination with another company. On June 2, 2023, the Company determined it no longer intends to pursue a potential initial business combination with the counterparty to the letter of intent.

On June 6, 2023, a special meeting of stockholders was held, as a result of which we and Continental Stock Transfer & Trust Company entered into Amendment No. 1 (the IMTA Amendment”) to the Investment Management Trust Agreement, dated as of March 8, 2021 (the “IMTA”). The IMTA Amendment extended the date by which we must complete a business combination to December 8, 2023 from June 8, 2023. We expect to announce additional details regarding the potential initial business combination if and when a definitive agreement is executed. No assurances can be made that we will successfully negotiate and enter into a definitive agreement with respect to the potential initial business combination, or that it will be consummated on the terms or timeframe currently contemplated, or at all. Any transaction is subject to board and equity holder approval of both companies, regulatory approvals and other customary conditions. If we are unable to complete the potential initial business combination by December 8, 2023 (33 months from the closing of the IPO), and our stockholders have not amended the certificate of incorporation to extend such period, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes as well as expenses relating to the administration of the Trust Account (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

On June 12, 2023, stockholders exercised their right to redeem 33,570,544 shares of Class A common stock at a price of approximately $10.237 per share. Accordingly, as of June 30, 2023, 929,456 shares of Class A common stock subject to possible redemption were outstanding.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations (other than searching for a Business Combination after our IPO) nor generated any revenues to date. Our only activities from January 15, 2021 (inception) through June 30, 2023 were organizational activities and those necessary to prepare for the IPO and the proposed initial Business Combination. We do not expect to generate any operating revenue until after the completion of our Business Combination. We expect to generate non-operating income in the form of interest income on marketable securities held after the IPO. 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 three months ended June 30, 2023, we had a loss from operations of $475,210 which consisted of $425,210 of general and administrative expenses and $50,000 in franchise tax expense. Of the $425,210 of general and administrative expenses, $166,804 related to the amortization of Directors’ and Officers’ liability insurance, $229,550 related to legal expenses and $28,825 related to other professional services. We also recorded a $3,271,429 gain on marketable securities (net), dividends and interest, held in the Trust Account, and $698,685 in income tax expense, resulting in net income of $2,097,534.

For the three months ended June 30, 2022, we had a loss from operations of $394,160, which consisted of $344,160 of general and administrative expenses and $50,000 in franchise tax expenses. Of the $344,160 of general and administrative expenses, $180,948 was related to the amortization of Directors’ and Officers’ liability insurance, $10,732 was related to legal expense and $152,480 was related to professional services. We also recorded a $490,019 gain on marketable securities (net), dividends and interest, held in the Trust Account and a $49,393 in income tax expense, resulting in a net income of $46,466.

For the six months ended June 30, 2023, we had a loss from operations of $1,297,393 which consisted of $1,197,393 of general and administrative expenses and $100,000 in franchise tax expenses. Of the $1,197,393 of general and administrative expenses, $330,039 related to the amortization of Directors’ and Officers’ liability insurance, $649,756 related to legal expenses and $217,598 related to other professional services. We also recorded a $7,014,475 gain on marketable securities (net), dividends and interest, held in the Trust Account, and $1,474,225 in income tax expense, resulting in net income of $4,242,857.

For the six months ended June 30, 2022, we had a loss from operations of $815,355, which consisted of $715,355 of general and administrative expenses and $100,000 in franchise tax expense. Of the $715,355 of general and administrative expenses, $359,577 was related to the amortization of Directors’ and Officers’ liability insurance, $32,032 was related to legal expense and $323,746 was related to additional professional services. We also recorded a $150,000 change in fair value of derivative liabilities, $518,177 gain on marketable securities (net), dividends and interest, held in the Trust Account and a $49,393 in income expense, resulting in a net loss of $196,571.

Liquidity and Capital Resources

As of June 30, 2023, the Company had $2,401,709 in its operating bank account, out of which $2,175,249 is classified as restricted cash for estimated income and franchise tax payments. The Company had a working capital deficit of $5,797,911. As of June 30, 2023, $7,014,475 of the amount on deposit in the Trust Account represented interest income, which is available for payment of franchise taxes and expenses in connection with the liquidation of the Trust Account. In addition, the Working Capital Loan and advances from related parties are available to the Company to fund operations.

As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with 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 conditions raise substantial doubt about the Company’s ability to continue as a going concern through approximately one year from the date of filing. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.

The underwriters are entitled to a deferred fee of $0.35 per public share, or $12,075,000 in the aggregate. The deferred fee will be waived by the underwriters in the event that the Company does not complete a Business Combination, subject to the terms of the underwriting agreement.

On March 3, 2021, we entered into a forward-purchase agreement pursuant to which the sponsor (together with any permitted transferees under the forward-purchase agreement, the “Khosla Entities”) has agreed to purchase an aggregate of up to 2,500,000 forward-purchase shares for $10.00 per share, or an aggregate maximum amount of $25,000,000, in a private placement that will close simultaneously with the closing of the initial Business Combination. The Khosla Entities will purchase a number of forward-purchase shares that will result in gross proceeds to us necessary to enable us to consummate our initial Business Combination and pay related fees and expenses, after first applying amounts available to us from the Trust Account (after paying the underwriting fees payable and giving effect to any redemptions of Public Shares) and any other financing source obtained by us for such purpose at or prior to the consummation of our initial Business Combination, plus any additional amounts mutually agreed by us and the Khosla Entities to be retained by the post-Business Combination company for working capital or other purposes. The Khosla Entities’ obligation to purchase forward-purchase shares will, among other things, be conditioned on the Business Combination (including the target assets or business, and the terms of the Business Combination) being reasonably acceptable to the Khosla Entities and on a requirement that such initial Business Combination is approved by a unanimous vote of our board of directors. In determining whether a target is reasonably acceptable to the Khosla Entities, we expect that the Khosla Entities would consider many of the same criteria as we will consider but will also consider whether the investment is an appropriate investment for the Khosla Entities.

Critical Accounting Estimates

The preparation of 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. There have been no significant changes in our critical accounting estimates as compared to the critical accounting estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations” included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2022.

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 financial statements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

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, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as of June 30, 2023, our disclosure controls and procedures were not effective due to material weaknesses in internal controls over financial reporting related to inaccurate accounting. Management identified errors in its historical financial statements related to the accounting for the Class A common stock, the Class K founder shares, and cash flow statement presentation. Because the Class A common stock issued in the IPO can be redeemed or become redeemable subject to the occurrence of future events considered outside of the Company’s control, the Company should have classified all of these redeemable shares in temporary equity and remeasured these redeemable shares to their redemption value (i.e., $10.00 per share) as of the end of the first reporting period after the date of the Company’s IPO. Management also concluded that it incorrectly accounted for the Class K founder shares as permanent equity versus derivative liabilities. Management also concluded that it incorrectly presented the gain on marketable securities (net), dividends and interest, held in the Trust Account as operating activities in cash flow statement versus investing activities.

To address these material weaknesses, management has devoted, and plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting and to provide processes and controls over the internal communications within the Company, financial advisors and independent registered public accounting firm. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our financial statements. We plan to provide enhanced access to accounting literature, research materials and documents and increased 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. Following identification of the material weaknesses and prior to filing this Quarterly Report on Form 10-Q, we completed substantive procedures for the period covered by this report. Based on these procedures, management believes that our financial statements included in this report have been prepared in accordance with U.S. generally accepted accounting principles. Our principal executive officer and principal financial and accounting officer have certified that, based on their knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented in this report.

Changes in internal control over financial reporting

As of June 30, 2023, we are in the process of implementing changes to our internal control over financial reporting to remediate such material weaknesses, as more fully described above. 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. Other than the changes described above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2023 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 1A.

Risk Factors.

Factors that could cause our actual results to differ materially from those in this report include the risk factors described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

There were no sales of unregistered securities during the three months ended June 30, 2023.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not Applicable.

Item 5.

Other Information.

None.

Item 6.

Exhibits.

The following exhibits are filed or furnished as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Incorporated by Reference

Filed/

Exhibit

Filing

Furnished

Number

Exhibit Description

Form

File No.

Exhibit

Date

Herewith

3.1(a)

Second Amended and Restated Certificate of Incorporation, dated March 4, 2021

8-K

001-40131

3.1

3/9/21

3.1(b)

Amendment to the Second Amended and Restated Certificate of Incorporation, dated March 4, 2021

8-K

001-40131

3.1

6/12/23

3.2

Bylaws

S-1

333-253096

3.3

2/12/21

4.1

Specimen Class A Common Stock Certificate

S-1

333-253096

4.1

2/12/21

10.1

Amendment No. 1 to the Investment Management Trust Agreement, dated June 6, 2023, entered into between the Company and Continental Stock Transfer & Trust Company.

8-K

001-40131

10.1

6/12/23

31.1

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002

31.2

Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

**	Furnished herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SEC Form 10-Q filed by Khosla Ventures Acquisition Co.