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, as a result of which the date by which we must complete a business combination was extended to 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 June 8, 2023 (27 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 9, 2021, we entered into an agreement for a proposed initial business combination with Valo Health, a technology company using human-centric data and artificial intelligence (AI) powered computation to transform the drug discovery and development process. Concurrently with such an agreement, we also entered into subscription agreements (the "PIPE I Subscription Agreements") with certain investors (collectively, the "PIPE I Investors"), pursuant to, and on the terms and subject to the conditions of which, the PIPE I Investors collectively subscribed for 16,855,000 shares of Class A common stock for an aggregate purchase price equal to $168,550,000 (the "PIPE I Investment"). On July 30, 2021, we entered into additional subscription agreements (the "PIPE II Subscription Agreements") with certain investors (collectively, the "PIPE II Investors"), pursuant to, and on the terms and subject to the conditions of which, the PIPE II Investors collectively subscribed for an additional 3,231,250 shares of KVSA Common Stock for an aggregate purchase price equal to $32,312,500 (the "PIPE II Investment").


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On November 15, 2021, we and Valo Health mutually agreed to terminate the proposed initial business combination based on market conditions, particularly in the biotechnology area. As such, we continued to search for a potential initial business combination target thereafter. The PIPE I Investment and PIPE II Investment were also both terminated upon the termination of the proposed initial business combination with Valo Health.

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 December 31, 2022 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 revenues 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 year ended December 31, 2022, we had a loss from operations of $2,250,380, which consisted of $2,050,380 in general and administrative expenses, and $200,000 in franchise tax expenses, offset by a change in fair value of the Class K founder share derivative liabilities of $150,000, gains on marketable securities (net), dividends and interest, held in the trust account of $5,056,968, income tax expenses of $1,082,963, resulting in a net income of $1,873,625.

For the period from January 15, 2021 (inception) through December 31, 2021, we had a loss from operations of $5,565,939, which consisted of $30,000 in formation costs, $3,986,443 in incomplete Valo Health business combination expenses, $1,349,496 in general and administrative expenses, and $200,000 in franchise tax expenses. We also incurred $12,137,500 in financing expenses on derivative classified instruments, offset by a change in fair value of the Class K founder share derivative liabilities of $12,000,000 and gains on marketable securities (net), dividends and interest, held in the trust account of $17,029, resulting in a net loss of $5,686,410.

Liquidity and Capital Resources

As of December 31, 2022, the Company had $0 in its operating bank account, $350,073,997 in marketable 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 a working capital deficit of $6,559,542. As of December 31, 2022, $5,056,968 of the amount on deposit in the trust account represented interest income, which is available for payment of income and franchise taxes and other expenses in connection with the liquidation of the trust account.

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.

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 underwriting fee of $0.35 per public share, or $12,075,000 in the aggregate. The deferred underwriting fees 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 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 initial 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 waiver is recorded in the Company's statements of changes in common stock subject to possible redemption and stockholder's deficit against accumulated deficit.


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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") have 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. We have not identified any critical accounting estimates other than the following.

Class K Founder Shares Derivative Liabilities

Class K founder shares are accounted for as a liability in accordance with ASC Topic 815, "Derivatives and Hedging", and presented as derivative liabilities on the December 31, 2022 balance sheet. The derivative liabilities were measured at fair value at inception and on a recurring basis, which 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 liability is determined by taking the average of all present values.

The key inputs used as of December 31, 2022 were as follow: risk free rate: 3.90%; term to business combination: 0.6 years; expected volatility: de minimis and stock price: $9.98.

The key inputs used as of December 31, 2021 were as follow: risk free rate: 1.54%; term to business combination: 0.5 years; expected volatility: 10.5% and stock price: $9.70.

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.

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