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, 2021

☐	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. III

(Exact name of registrant as specified in its charter)


Delaware	001-40247	85-1777015
(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	KVSC	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, 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

October 7, 202

1, 57,756,827 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.


		Page No.
PART I. FINANCIAL INFORMATION			1

Item 1.	Financial Statements		1

	Unaudited Condensed Balance Sheet as of June 30, 2021		1

	Unaudited Condensed Statement of Operations for the period from January 29, 2021 (inception) through June 30, 2021		2

	Unaudited Condensed Statement of Common Stock Subject to Possible Redemption and Changes in Stockholders’ Deficit for the period from January 29, 2021 (inception) through June 30, 2021		3

	Unaudited Condensed Statement of Cash Flows for the period from January 29, 2021 (inception) through June 30, 2021		4

	Notes to Unaudited Condensed Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19

Item 4.	Controls and Procedures		19

PART II. OTHER INFORMATION			20

Item 1.	Legal Proceedings		20

Item 1A.	Risk Factors		20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20

Item 3.	Defaults Upon Senior Securities		21

Item 4.	Mine Safety Disclosures		21

Item 5.	Other Information		21

Item 6.	Exhibits		21

SIGNATURES			23


ASSETS
Cash and cash equivalents	$	557,632
Prepaid expenses		843,642

Total current assets		1,401,274
Marketable securities held in Trust Account		563,310,786
Other assets		614,814

Total assets	$	565,326,874

LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	50,478
Franchise tax payable		100,000
Advances from related party		5,300

Total current liabilities		155,778
Deferred underwriting fees payable		19,715,578
Class K Founder Shares derivative liabilities		21,200,000

Total liabilities		41,071,356

Commitments and Contingencies (Note 5)
Class A common stock subject to possible redemption, 56,330,222 shares at $10.00 redemption value		563,302,226
Stockholders’ Deficit
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—
Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 1,426,605 issued and outstanding
(excluding 56,330,222 shares subject to possible redemption)		143
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 5,000,000 shares issued and outstanding		500
Additional paid-in capital		—
Accumulated deficit		(39,047,351	)

Total stockholders’ deficit		(39,046,708	)

Total Liabilities, Common Stock subject to Possible Redemption and Stockholders’ Deficit	$	565,326,874


	Three Months Ended June 30,			Inception-to-Date June 30,
	2021			2021
Formation costs	$	—		$	25,000
General and administrative expenses		295,206			316,008
Franchise tax expense		50,000			100,000

Loss from operations		(345,206	)		(441,008	)
Financing expenses on derivative classified instrument		—			(47,887,500	)
Gain on marketable securities (net), dividends and interest, held in Trust Account		8,560			8,560
Change in fair value of derivative liabilities		(4,050,000	)		26,700,000

Loss before income tax expense		(4,386,646	)		(21,619,948	)
Net Loss	$	(4,386,646	)	$	(21,619,948	)

Weighted average shares outstanding of Class A common stock subject to possible redemption, basic and diluted		56,330,222			35,780,991

Basic and diluted net loss per share, Class A common stock subject to possible redemption	$	(0.06	)	$	(0.49	)

Weighted average shares outstanding of Class A non-redeemable common stock, basic and diluted		1,426,605			907,068

Basic and diluted net loss per share, Class A non-redeemable common stock	$	(0.15	)	$	(0.69	)

Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted		5,000,000			5,000,000

Basic and diluted net loss per share, Class B non-redeemable common stock	$	(0.15	)	$	(0.69	)


	Common Stock Subject to Possible Redemption				Common Stock
	Class A				Class A				Class B
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Equity

Balance as of January 29, 2021 (Inception)		—	$	—		—	$	—		—	$	—	$	—		$	—		$	—
Issuance of common stock to Sponsor		—		—		—		—		5,000,000		500		12,000			—			12,500
Sale of Public Shares, net of $ 31,705,310 issuance costs		56,330,222		531,596,916		—		—		—		—		—			—			—
Sale of Private Plac e ment Shares		—		—		1,426,605		143		—		—		14,265,907			—			14,266,050
Accretion of Class A Common Stock to redemption value		—		31,705,310		—		—		—		—		(14,277,907	)		(17,427,403	)		(31,705,310	)
Net loss		—		—		—		—		—		—		—			(17,233,302	)		(17,233,302	)
Balance as of March 31, 2021		56,330,222	$	563,302,226		1,426,605	$	143		5,000,000	$	500	$	—		$	(34,660,705	)	$	(34,660,062	)
Net loss		—		—		—		—		—		—		—			(4,386,646	)		(4,386,646	)
Balance as of June 30, 2021		56,330,222	$	563,302,226		1,426,605	$	143		5,000,000	$	500	$	—		$	(39,047,351	)	$	(39,046,708	)


Cash Flows from Operating Activities:
Net loss	$	(21,619,948	)
Adjustments to reconcile net loss to net cash used in operating activities:
Financing expenses on derivative classified instrument		47,887,500
Gain on marketable securities (net), dividends and interest, held in Trust Account		(8,560	)
Change in fair value of derivative liabilities		(26,700,000	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(1,458,456	)
Accounts payable and accrued expenses		150,478

Net cash used in operating activities		(1,748,986	)

Cash Flows from Investing Activities:
Investment of cash into Trust Account		(563,302,226	)

Net cash used in investing activities		(563,302,226	)

Cash Flows from Financing Activities:
Proceeds from issuance of Class B and Class K common stock to Sponsor		25,000
Advances from related party		5,300
Proceeds from sale of Public Shares, net of transaction costs		551,312,494
Proceeds from sale of Private Placement Shares		14,266,050

Net cash provided by financing activities		565,608,844

Net increase in cash		557,632
Cash - beginning of period		—

Cash - end of period	$	557,632

Supplemental disclosure of noncash investing and financing activities:
Deferred underwriting fees payable	$	19,715,578


	For the three months ended June 30, 2021 (Unaudited)			Inception-to- date June 30, 2021 (Unaudited)
Net loss	$	(4,386,646	)	$	(21,619,948	)
Accretion of temporary equity to redemption value		(5,069,727	)		(7,322,935	)

Net loss including accretion of temporary equity to redemption value	$	(9,456,373	)	$	(28,942,883	)


	For the three months ended June 30, 2021 (Unaudited)									Inception-to-date June 30, 2021 (Unaudited)
	Class A-t			Class A-p			Class B			Class A-t			Class A-p			Class B
Basic and diluted net loss per share
Numerator
Allocation of net loss including accretion of temporary equity	$	(8,487,994	)	$	(214,965	)	$	(753,414	)	$	(24,841,767	)	$	(629,752	)	$	(3,471,364	)
Accretion of temporary equity to redemption value		5,069,727			—			—			7,322,935			—			—

Allocation of net loss	$	(3,418,267	)	$	(214,965	)	$	(753,414	)	$	(17,518,832	)	$	(629,752	)	$	(3,471,364	)
Denominator
Weighted average shares outstanding, basic and diluted		56,330,222			1,426,605			5,000,000			35,780,991			907,068			5,000,000
Basic and diluted net loss per share	$	(0.06)		$	(0.15)		$	(0.15)		$	(0.49)		$	(0.69)		$	(0.69)


Description	Level		June 30, 2021
Assets:
Marketable securities held in Trust Account		1	$	563,310,786

Liabilities:
Derivative liability – Class K Founder Shares		3	$	21,200,000


Input	January 29, 2021 (Inception)			June 30, 2021
Risk-free interest rate		1.19	%		1.51	%
Term to business combination		1.4 years			1.0 years
Expected volatility		21.50	%		15.00	%
Stock price	$	10.00		$	9.87
Dividend yield		0.00	%		0.00	%


	Class K Founder Shares Derivative Liability
Fair value, January 29, 2021 (inception)	$	47,900,000
Change in fair value of Class K Founder Shares liability		(30,750,000	)

Fair value, March 31, 2021 (unaudited)	$	17,150,000
Change in fair value of Class K Founder Shares liability		4,050,000

Fair value, June 30, 2021 (unaudited)	$	21,200,000


No.		Description of Exhibit

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.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data file (formatted as inline XBRL)


No.		Description of Exhibit

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

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