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 September 30, 2022

☐	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	86-1777015
(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 November

, 2022, 57,756,825 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			18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			21
ITEM 4. CONTROLS AND PROCEDURES			21
PA RT II-OTHER INFORMATION			22
ITEM 1. LEGAL PROCEEDINGS.			22
ITEM 1A. RISK FACTORS.			22
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.			22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.			22
ITEM 4. MINE SAFETY DISCLOSURES.			23
ITEM 5. OTHER INFORMATION.			23
ITEM 6. EXHIBITS			24
SIGNATURES			25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

KHOSLA VENTURES ACQUISITION CO. III

CONDENSED BALANCE SHEETS


	SEPTEMBER 30, 2022			DECEMBER 31, 2021
	(Unaudited)
ASSETS
Cash	$	—		$	239,105
Prepaid expenses		423,424			843,640

Total current assets		423,424			1,082,745
Marketable securities held in Trust Account		566,723,383			563,330,122
Other non-current assets		—			189,529

Total Assets	$	567,146,807		$	564,602,396

LIABILITIES, COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	26,375		$	39,897
Due to related party		394,401			5,300
Income tax payable		648,154			—
Franchise tax payable		150,000			200,000
Accrued expenses		249,637			9,141

Total current liabilities		1,468,567			254,338
Deferred underwriting fees payable		9,857,789			19,715,578
Class K Founder Shares derivative liabilities		—			6,250,000

Total liabilities		11,326,356			26,219,916

Commitments and Contingencies (Note 5)
Class A common stock subject to possible redemption, 56,330,222 shares at $10.00 per share		566,723,383			563,330,122
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; 1,426,605 issued or outstanding (excluding 56,330,222 shares subject to possible redemption)		143			143
Class B common stock, $0.0001 par value; 30,000,000 shares authorized; 5,000,000 shares issued and outstanding		500			500
Additional paid-in capital		—			—
Accumulated deficit		(10,903,575	)		(24,948,285	)

Total stockholders’ deficit		(10,902,932	)		(24,947,642	)

Total Liabilities, Common Stock Subject to Possible Redemption, and Stockholders’ Deficit	$	567,146,807		$	564,602,396

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

Table of Contents

KHOSLA VENTURES ACQUISITION CO. III

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	For The Three Months Ended September 30, 2022			For The Three Months Ended September 30, 2021			For The Nine Months Ended September 30, 2022			For The Period From January 29, 2021 (Inception) Through September 30, 2021
Formation costs	$	—		$	—		$	—		$	25,000
General and administrative expenses		328,616			352,100			1,280,217			668,108
Franchise tax expenses		50,000			50,000			134,708			150,000

Loss from operations		(378,616	)		(402,100	)		(1,414,925	)		(843,108	)
Financing expenses on derivative classified instrument		—			—			—			(47,887,500	)
Change in fair value of derivative liabilities		—			9,900,000			6,250,000			36,600,000
Gain on marketable securities (net), dividends and interest, held in Trust Account		2,547,203			8,654			3,393,261			17,214

Income (loss) before income tax expense		2,168,587			9,506,554			8,228,336			(12,113,394	)

Income tax expense		524,412			—			648,154			—

Net income (loss)	$	1,644,175		$	9,506,554		$	7,580,182		$	(12,113,394	)

Weighted average shares outstanding of Class A common stock subject to possible redemption, basic and diluted		56,330,222			56,330,222			56,330,222			43,325,554
Basic and diluted net income (loss) per share, Class A subject to possible redemption	$	0.03		$	0.15		$	0.13		$	(0.24	)
Weighted average shares outstanding of Class A non-redeemable common stock, basic and diluted		1,426,605			1,426,605			1,426,605			1,097,940
Basic and diluted net income (loss) per share, Class A non-redeemable common stock	$	(0.01	)	$	0.15		$	0.07		$	(0.30	)
Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted		5,000,000			5,000,000			5,000,000			4,938,776
Basic and diluted net income (loss) per share, Class B non-redeemable common stock	$	(0.01	)	$	0.15		$	0.07		$	(0.24	)

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

Table of Contents

KHOSLA VENTURES ACQUISITION CO. III

CONDENSED STATEMENTS OF CHANGES IN COMMON STOCK SUBJECT TO POSSIBLE

REDEMPTION AND STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND FOR THE PERIOD FROM JANUARY 29, 2021

(INCEPTION) THROUGH SEPTEMBER 30, 2021

(Unaudited)


	Common Stock Subject to Possible Redemption
	Class A				Class A				Class B
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Deficit
Balance as of January 1, 2022 (audited)		56,330,223	$	563,330,122		1,426,605	$	143		5,000,000	$	500	$	—	$	(24,948,285	)	$	(24,947,642	)
Accretion of Class A common stock to redemption value		—		45,975		—		—		—		—		—		(45,975	)		(45,975	)
Net income		—		—		—		—		—		—		—		5,712,755			5,712,755

Balance as of March 31, 2022 (unaudited)		56,330,223	$	563,376,097		1,426,605	$	143		5,000,000	$	500	$	—	$	(19,281,505	)	$	(19,280,862	)
Accretion of Class A common stock to redemption value		—		800,083		—		—		—		—		—		(800,083	)		(800,083	)
Net income		—		—		—		—		—		—		—		223,252			223,252

Balance as of June 30, 2022 (unaudited)		56,330,223	$	564,176,180		1,426,605	$	143		5,000,000	$	500	$	—	$	(19,858,336	)	$	(19,857,693	)
Deferred underwriting fees waiver		—		—		—		—		—		—		—		9,857,789			9,857,789
Accretion of Class A common stock to redemption value		—		2,547,203		—		—		—		—		—		(2,547,203	)		(2,547,203	)
Net income		—		—		—		—		—		—		—		1,644,175			1,644,175

Balance as of September 30, 2022 (unaudited)		56,330,223	$	566,723,383		1,426,605	$	143		5,000,000	$	500	$	—	$	(10,903,575	)	$	(10,902,932	)


	Common Stock Subject to Possible Redemption
	Class A				Class A				Class B
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders’ Deficit
Balance as of January 29, 2021 (inception)		—	$	—		—	$	—		—	$	—	$	—		$	—		$	—
Issuance of common stock to Sponsor		—		—		—		—		5,000,000		500		12,000			—			12,500
Sale of Class A common stock, net of $31,705,310 issuance costs		56,330,222		531,596,916		—		—		—		—		—			—			—
Sale of Private Placement 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 (unaudited)		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 (unaudited)		56,330,222	$	563,302,226		1,426,605	$	143		5,000,000	$	500	$	—		$	(39,047,351	)	$	(39,046,708	)
Accretion of Class A common stock to redemption value		—		17,214		—		—		—		—		—			(17,214	)		(17,214	)
Net income		—		—		—		—		—		—		—			9,506,554			9,506,554

Balance as of September 30, 2021 (unaudited)		56,330,222	$	563,319,440		1,426,605	$	143		5,000,000	$	500	$	—		$	(29,558,011	)	$	(29,557,368	)

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

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KHOSLA VENTURES ACQUISITION CO. III

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	For The Nine Months Ended September 30, 2022			For The Period From January 29, 2021 (Inception) Through September 30, 2021
Cash Flows from Operating Activities
Net income (loss)	$	7,580,182		$	(12,113,394	)
Adjustments to reconcile net income (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		(3,393,261	)		(17,214	)
Change in fair value of derivative liabilities		(6,250,000	)		(36,600,000	)
Changes in operating assets and liabilities:
Prepaid expenses and other non-current assets		609,745			(1,245,814	)
Accounts payable and accrued expenses (including franchise tax payable and income tax payable)		825,128			268,398

Net cash used in operating activities		(628,206	)		(1,820,524	)

Cash Flows from Investing Activities
Investment in marketable securities held in 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		389,101			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		389,101			565,608,844

Net (decrease) increase in cash		(239,105	)		486,094
Cash - beginning of period		239,105			—

Cash - end of period	$	—		$	486,094

Supplemental disclosure of noncash investing and financing activities:
Accretion of Class A common stock to redemption value	$	3,393,261		$	17,214
Deferred underwriting fees payable		—		$	19,715,578
Waiver of deferred underwriting fees payable	$	9,857,789		$	—

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

TO FINANCIAL STATEMENTS

Note

1-Description

of Organization, Business Operations and Going Concern

Khosla Ventures Acquisition Co. III (the “Company”) is a blank check company incorporated in Delaware on January 29, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of September 30, 2022, the Company had not commenced any operations. All activity through September 30, 2022 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.

On March 26, 2021, the Company consummated its IPO of 50,000,000 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 partial 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 $500,000,000. On March 30, 2021, the Company’s underwriters exercised in part their option to purchase additional Public Shares in connection with the IPO. The underwriters exercised their option to purchase an additional 6,330,222 Public Shares from the Company at a price of $10.00 per share less the underwriting fees payable. In total, the Company sold 56,330,222 Public Shares in connection with its IPO. The underwriters designate March 30, 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 1,300,000 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 Share, to Khosla Ventures SPAC Sponsor III LLC, (the “Sponsor”), generating proceeds of $13,000,000. In connection with the underwriters’ partial exercise of their over- allotment option, the Company also completed the sale of an additional 126,605 Private Placement Shares at $10.00 per Private Placement Share, generating additional proceeds of $1,266,050. Total gross proceeds from the sale of Private Placement Shares was $14,266,050.

Following the closing of the IPO on March 26, 2021, and the partial exercise of the underwriters’ overallotment option on March 30, 2021, an amount of $563,302,226 ($10.00 per Public Share) of the proceeds from the IPO, including $19,715,578 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 (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 180 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, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the trust account as described below. 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, 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 does not complete its initial Business Combination within 24 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 24 months from the closing of the IPO, subject to applicable law.

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. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding the amount of deferred underwriting fees payable held in Trust and taxes payable on the income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company only intends to complete a Business Combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).

The Company will provide the holders (the “Public Stockholders”) of the Company’s issued and outstanding Class A common stock, par value $0.0001 per share, sold in the IPO (the “Public Shares”) 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 stockholders 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 held in the Trust Account (initially anticipated to be $10.00 per Public Share). 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 the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” If the Company seeks stockholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in connection with a Business Combination in an amount that would cause its net tangible assets to be less than $5,000,001. 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 its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem Public 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 proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, 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.

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The 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% of the Public Shares, without the prior consent of the Company.

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 the 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 by March 26, 2023 (24 months from the closing of the IPO) (the “Combination Period”) and the Company’s stockholders have not amended the Certificate of Incorporation to extend such Combination 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 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), 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 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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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 Citigroup Global Markets Inc. (representing 50% of the total deferred underwriting fees payable). The waiver is recorded in the Company’s condensed statements of change in common stock subject to possible redemption and stockholder’s deficit against accumulated deficit.

Going Concern and Liquidity

As of September 30, 2022, the Company had $0 in its operating bank account, $423,424 in prepaid expenses, and $566,723,383 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $1,045,143. For the nine months ended September 30, 2022, $3,393,261 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. For the period from January 29, 2021 (inception) to September 30, 2021, $17,214 of the amount on the deposit in the Trust Account represented the gain on marketable securities (net), dividends and interest, held in 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

Management continues to evaluate the impact of the

COVID-19

pandemic 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.

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The interim results for the period ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 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 shareholder 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 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 Equivalents

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 no cash equivalents as of September 30, 2022 and December 31, 2021.

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. Accordingly, as of September 30, 2022 and December 31, 2021, 56,330,222 shares of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets.

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

480-10-S99.

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 26, 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 months and nine months ended September 30, 2022, the Company recorded an accretion of $2,547,203 and $3,393,261, respectively, which was recorded in accumulated deficit. For the three months ended September 30, 2021, and for the period from January 29, 2021 (inception) through September 30, 2021, the Company recorded an accretion of $17,214 and $31,722,524, respectively, of which for the period from January 29, 2021 (inception) through September 30, 2021, $14,277,907 was recorded in additional

paid-in

capital and $17,444,617 was recorded in accumulated deficit.

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 September 30, 2022 and December 31, 2021, 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 financial assets and liabilities, except for the Class K Founders Shares derivative liability 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.

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.

Offering Costs

Offering costs consist of legal, accounting, and other costs incurred through the balance sheet date that are directly related to the IPO and were charged to temporary equity upon the completion of the IPO.

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 statements 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.

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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 September 30, 2022 and December 31, 2021. 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.

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 founder shares 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 $20.00, $25.00 and $30.00 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 founder shares in the calculation of diluted income (loss) per share since the conversion of Class K founder shares 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

earnings (loss) per share.

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

two-class

method of income (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, in the calculation of the net income/(loss) per common stock. As of September 30, 2022 and December 31, 2021, 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 income (loss) per share is the same as basic income (loss) per share for the period presented.

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


	For The Nine Months Ended September 30, 2022 (Unaudited)			For The Period From January 29, 2021 (Inception) Through September 30, 2021 (Unaudited)
Net income (loss)	$	7,580,182		$	(12,113,394	)
Accretion of temporary equity in excess of fair value		(3,393,261	)		(2,270,429	)

Net income (loss) including accretion of temporary equity in excess of fair value	$	4,186,921		$	(14,383,823	)

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	For The Three Months Ended September 30, 2022			For The Three Months Ended September 30, 2021
Net income	$	1,644,175		$	9,506,554
Accretion of temporary equity in excess of fair value		(2,547,203	)		(17,214	)

Net income (loss) including accretion of temporary equity in excess of fair value	$	(903,028	)	$	9,489,340


	For The Nine Months Ended September 30, 2022
	Class A-t (Temporary)		Class A-p (Permanent)		Class B
Basic and diluted net income per share
Numerator
Allocation of net income including accretion of temporary equity in excess of fair value	$	3,758,160	$	95,178	$	333,583
Deemed dividend for accretion of temporary equity in excess of fair value		3,393,261		—		—

Allocation of net income and deemed dividend	$	7,151,421	$	95,178	$	333,583

Denominator
Weighted average shares outstanding, basic and diluted		56,330,222		1,426,605		5,000,000
Basic and diluted net income per share	$	0.13	$	0.07	$	0.07


	For The Period from January 29, 2021 (Inception) Through September 30, 2021
	Class A-t (Temporary)			Class A-p (Permanent)			Class B
Basic and diluted net income (loss) per share
Numerator
Allocation of net income (loss) including accretion of temporary equity in excess of fair value	$	(12,876,808	)	$	(326,115	)	$	(1,180,899	)
Deemed dividend for accretion of temporary equity in excess of fair value		2,270,429			—			—

Allocation of net income (loss) and deemed dividend	$	(10,606,379	)	$	(326,115	)	$	(1,180,899	)

Denominator
Weighted average shares outstanding, basic and diluted		43,325,554			1,097,940			4,938,776
Basic and diluted net income (loss) per share	$	(0.24	)	$	(0.30	)	$	(0.24	)

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	For The Three Months Ended September 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	$	(810,554	)	$	(20,528	)	$	(71,947	)
Deemed dividend for accretion of temporary equity in excess of fair value		2,547,203			—			—

Allocation of net income (loss) and deemed dividend	$	1,736,649		$	(20,528	)	$	(71,947	)

Denominator
Weighted average shares outstanding, basic and diluted		56,330,222			1,426,605			5,000,000
Basic and diluted net income (loss) per share	$	0.03		$	(0.01	)	$	(0.01	)


	For The Three Months Ended September 30, 2021
	Class A-t (Temporary)		Class A-p (Permanent)		Class B
Basic and diluted net income per share
Numerator
Allocation of net income including accretion of temporary equity in excess of fair value	$	8,517,585	$	215,714	$	756,040
Deemed dividend for accretion of temporary equity in excess of fair value		17,214		—		—

Allocation of net income and deemed dividend	$	8,534,799	$	215,714	$	756,040

Denominator
Weighted average shares outstanding, basic and diluted		56,330,222		1,426,605		5,000,000
Basic and diluted net income per share	$	0.15	$	0.15	$	0.15

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-Initial

Public Offering

Pursuant to the IPO, the Company sold 50,000,000 Public Shares at a purchase price of $10.00 per Public Share, excluding Public Shares sold pursuant to the partial exercise of the underwriters’ option to purchase additional Public Shares to cover over-allotments.

The underwriters exercised their option to purchase an additional 6,330,222 shares of Class A common stock from the Company at a price of $10.00 per share less the underwriting discounts and commissions. In total, the Company sold 56,330,222 shares of Class A common stock in connection with its Initial Public Offering. Accordingly, between the close date of the Initial Public Offering and September 30, 2021, an additional $563,302,226 was placed in the Trust Account, comprised of proceeds from the sale of additional Class A common stock pursuant to the exercise of the underwriters’ over- allotment option, which settled on March 30, 2021.

Simultaneously with the closing of the Initial Public Offering, we consummated the Private Placement of 1,300,000 Private Placement Shares at a price of $10.00 per Private Placement Share to the Sponsor, generating proceeds of $13,000,000. In connection with the underwriters’ partial exercise of their over-allotment option, we also consummated the sale of an additional 126,605 Private Placement Shares at $10.00 per Private Placement Share, generating additional proceeds of $1,266,050. Total gross proceeds from the sale of Private Placement Shares was $14,266,050.

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Note

4-Related

Party Transactions

Promissory Note – Related Party

On February 8, 2021, the Company issued an unsecured promissory note to the Sponsor pursuant to which the Company could borrow up to $300,000 in the aggregate. The note was

non-interest

bearing and payable on the earlier to occur of (i) December 31, 2021 or (ii) the consummation of the IPO. The outstanding balance under the promissory note was repaid upon consummation of the IPO. The Company can no longer borrow under the Promissory Note.

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 nine months ended September 30, 2022 and the period from January 29, 2021 (inception) through September 30, 2021, the related party paid $389,101 and $5,300 of operating costs on behalf of the Company. During the three months ended September 30, 2022 and 2021, the related party paid $0 and $0 of operating costs on behalf of the Company, respectively. As of September 30, 2022 and December 31, 2021, the amount due to the related party was $394,401 and $5,300, respectively.

Founder Shares

On January 29, 2021, the Sponsor acquired 10,000,000 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 March 10, 2021, the Sponsor entered into a security assignment agreement with three of the Company’s independent directors and assigned 120,000 shares of Class B common stock at an aggregate price of $300.

Class B Founder Shares

The Class B founder shares will automatically convert into 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 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 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 Class A common stock issued or deemed issued or issuable upon conversion of the Class B founder shares plus (iii) the total number 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 Class A common stock or equity-linked securities exercisable for or convertible into 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 issued to our sponsor, its affiliates or any member of our management team upon conversion of working capital loans. Prior to our initial Business Combination, only holders 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 $20.00, $25.00 and $30.00 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 founder shares were entitled to vote on the appointment of directors.

The Company accounts for the Class K founder shares as equity linked instruments. 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.

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.

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