KHOSLA VENTURES ACQUISITION II : MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q/A)

References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Khosla Ventures Acquisition Co. II. References to our
"management" or our "management team" refer to our officers and directors,
references to the "Sponsor" refer to Khosla Ventures SPAC Sponsor II 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.
Restatement
This Management's Discussion and Analysis of Financial Condition and Results of
Operations has been amended and restated to give effect to the restatement of
our unaudited financial statements as of and for the period ended March 31, 2021
(the "Restatement"). In the Quarterly Report on Form 10-Q for the period ended
March 31, 2021, originally filed with the SEC on June 1, 2021 (the "Original
Report"), certain errors were made concerning certain financial figures related
to the partial exercise of the underwriters' over-allotment option and the
issuance of private placement shares. This restatement corrects errors related
to the calculation of amounts for shares subject to possible redemption to
reflect the partial exercise of the underwriters' over-allotment option in
connection with the issuance of private placement shares.
The Restatement is more fully described in Note 2 to the Notes to Financial
Statements entitled "Restatement and Revision of Previously Issued Financial
Statements."
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 II 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 40,000,000 Public Shares, at $10.00 per share, generating
gross proceeds of $400.0 million, and incurring offering costs of approximately
$23.6 million, inclusive of approximately $14.6 million in deferred underwriting
commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the Private Placement of 1,100,000 Private Placement Shares at a price of $10.00
per Private Placement Share to the Sponsor, generating proceeds of
$11.0 million. Additional 32,688 Private Placement Shares were sold in
connection with the underwriters' partial exercise of their over-allotment
option for a total proceed of $326,880.
On March 23, 2021, the underwriters partially exercised their over-allotment
option, resulting in an additional 1,634,412 Public Shares issued for total
gross proceeds of $16,344,118. In connection with the underwriters' partial
exercise of their over-allotment option, we also consummated the sale of an
additional 32,688 Private Placement Shares at $10.00 per Private Placement
Share, generating total proceeds of $326,880. A total of $16,344,118 was
deposited into the Trust Account, bringing the aggregate proceeds held in the
Trust Account to $416,344,118.

                                       17
--------------------------------------------------------------------------------
  Table of Contents
Following the closing of the Initial Public Offering, the partial exercise of
the over-allotment option and the Private Placement, $416,344,118 ($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 $1,685,423 in cash, and working capital deficit of
$1,606,543.
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 $124,986 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. On April 7, 2021, we paid off a portion of the balance of the
promissory note to the Sponsor in the amount of $124,686, resulting in a balance
of $300 remaining on the note.
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 $91,111, which consisted of $16,111 in general and administrative
expenses, $25,000 in formation costs, and $50,000 in franchise tax expenses.

                                       18
--------------------------------------------------------------------------------

  Table of Contents
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
$14,572,044 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2021, we were not subject to any market or interest rate risk.
Following the consummation of our Initial Public Offering, the net proceeds of
our Initial Public Offering, including amounts in the Trust Account, have been
invested in U.S. government treasury bills, notes or bonds with a maturity of
180 days or less or in certain money market funds that invest solely in U.S.
treasuries. Due to the short-term nature of these investments, we believe there
will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures

                                       19
--------------------------------------------------------------------------------
  Table of Contents
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial and accounting officer,
we conducted an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the fiscal quarter ended March 31, 2021, as such
term is defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our principal executive
officer and principal financial and accounting officer have concluded that
during the period covered by this report, our disclosure controls and procedures
were not effective due to material weaknesses in internal controls over
financial reporting related to the inaccurate accounting for the value of
private placement shares, underwriting discounts and over-allotment public
shares issued subsequent to the closing of our Initial Public Offering. To
address this material weakness, management has devoted, and plans to continue to
devote, significant effort and resources to the remediation and improvement of
its internal control over financial reporting and to provide processes and
controls over the internal communications within the Company, financial advisors
and independent registered public accounting firm. While we have processes to
identify and appropriately apply applicable accounting requirements, we plan to
enhance these processes to better evaluate our research and understanding of the
nuances of the complex accounting standards that apply to our financial
statements. We plan to include providing enhanced access to accounting
literature, research materials and documents and increased communication among
our personnel and third-party professionals with whom we consult regarding
complex accounting applications. The elements of our remediation plan can only
be accomplished over time, and we can offer no assurance that these initiatives
will ultimately have the intended effects. Other than this issue, our disclosure
controls and procedures were effective at a reasonable assurance level and,
accordingly, provided reasonable assurance that the information required to be
disclosed by us in reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2021, there has been no change in our
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting , as the circumstances that led to the material weakness described
above had not yet been identified. We are in the process of implementing changes
to our internal control over financial reporting to remediate such material
weaknesses, as more fully described above. The elements of our remediation plan
can only be accomplished over time, and we can offer no assurance that these
initiatives will ultimately have the intended effects.

© Edgar Online, source Glimpses