References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Khosla Ventures Acquisition Co. III. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Khosla Ventures SPAC Sponsor III LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited condensed
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 final prospectus for its Initial Public
Offering 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 29, 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 Business
Combination using cash from the proceeds of the Initial Public Offering 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 III LLC, a Delaware limited
liability company. The registration statement for our Initial Public Offering
was declared effective on March 23, 2021. On March 26, 2021, we consummated its
Initial Public Offering of 50,000,000 Public Shares, at $10.00 per share,
generating gross proceeds of $500.0 million, and incurring offering costs of
approximately $29.5 million, inclusive of $17.5 million in deferred underwriting
commissions.
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
$13.0 million.
On March 23, 2021, the underwriters partially exercised their over-allotment
option, resulting in an additional 6,330,222 Public Shares issued for total
gross proceeds of $63,302,220. 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 total proceeds of $1,266,050. A total of $63,302,220 was
deposited into the Trust Account, bringing the aggregate proceeds held in the
Trust Account to $563,302,220.

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Following the closing of the Initial Public Offering, the partial exercise of
the over-allotment option and the Private Placement, $563,302,220 ($10.00 per
share) of the net proceeds of the Initial Public Offering and certain of the
proceeds of the Private Placement was held 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 which 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.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, March 23, 2023, or 27 months from the
closing of this offering, June 23, 2023, if we have executed a letter of intent,
agreement in principle or definitive agreement for an initial Business
Combination within 24 months from the closing of this offering (the "Combination
Period"), and our stockholders have not amended the Certificate of Incorporation
to extend such Combination 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.
Liquidity and Capital Resources
As of March 31, 2021, we had approximately $1,304,407 in cash, and working
capital of approximately $1,366,019.
Our liquidity needs prior to March 31, 2021 were satisfied through the proceeds
of $25,000 from the sale of the Founders Shares, and loan from our Sponsor of
approximately $154,483 under the Note. Subsequent to March 31, 2021, our
liquidity has been satisfied through the net proceeds from the consummation of
the Initial Public Offering and the Private Placement held outside of the Trust
Account. We repaid the Note in full on April 7, 2021.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet our needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, we will be using the funds held outside of the Trust Account for
paying existing accounts payable, identifying and evaluating prospective initial
Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures, selecting the target business to
merge with or acquire, and structuring, negotiating and consummating the
Business Combination.
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after our Initial Public Offering) nor generated any revenues to
date. Our only activities from January 29, 2021 (inception) through March 31,
2021 were organizational activities and those necessary to prepare for the
Initial Public Offering, described below. 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
Initial Public Offering. 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 period from January 29, 2021 (inception) through March 31, 2021, we had
a net loss of $95,802, which consisted of $20,802 in general, administrative
expenses and $50,000 in franchise tax expenses.

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Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of March 31, 2021.
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
$19,715,577.70 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 23, 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 1,000,000 forward purchase shares for $10.00 per share, or an aggregate
maximum amount of $10,000,000, 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 deferred underwriting
discount 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 Policies
The preparation of unaudited condensed 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 unaudited condensed
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 policies.
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
unaudited condensed financial statements.

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