References in this report (the "Quarterly Report") to the "Company," "us," "our" or "we" refer to KL Acquisition Corp. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included herein. Certain capitalized terms used but not defined in the below discussion and elsewhere in this Quarterly Report have the meanings ascribed to them in the footnotes to the accompanying financial statements included as part of this Quarterly Report.

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Quarterly Report including, without limitation, statements under this section regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

Overview

We were incorporated in Delaware on August 26, 2020 for the purpose of entering into a Business Combination.

On January 12, 2021, we consummated our IPO of 28,750,000 Units, including 3,750,000 Units purchased by the underwriters pursuant to the over-allotment option granted by the Company, generating gross proceeds to the Company of $287,500,000. Simultaneously with the closing of the IPO, we completed the private sale of an aggregate of 5,166,667 warrants to our Sponsor, generating gross proceeds of approximately $7,750,000.

A total of $287,500,000, comprised of $281,750,000 of the proceeds from the IPO and $5,750,000 of the proceeds of the sale of the Private Placement Warrants was placed in the Trust Account maintained by Continental Stock Transfer & Trust Company, acting as trustee.

Factors That May Adversely Affect Our Results of Operations

Our results of operations and our ability to complete an initial Business Combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in the Ukraine. We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination.

Recent Development

The Company filed a preliminary proxy statement on Schedule 14A on November 16, 2022 in order to schedule a special meeting, pursuant to which it will seek stockholder approval to, among other matters, amend the Company's amended and restated certificate of incorporation to change the date by which the Company must either (i) consummate its initial Business Combination or (ii) cease all operations, except for the purpose of winding up, and, subject to and in accordance with the terms of the Charter, redeem all of its public shares. The proposed amendment would change the original termination date from January 12, 2023 to such other date as shall be determined by the Company's board of directors in its sole discretion and publicly announced by the Company, provided that such other date shall be no later than December 30, 2022.


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Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities since inception have been organizational activities, those necessary to prepare for our IPO and identifying a target company for our initial Business Combination. We do not expect to generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the form of interest income on cash and cash equivalents held in the Trust Account. 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 in connection with our search for targets for our initial Business Combination.

For the three months ended September 30, 2022, we had a net income of $2,900,745, which consists of a change in fair value of warrant liabilities of $1,471,608 and interest earned on marketable securities held in the Trust Account of $1,297,971, offset by operating costs of $216,760, which consisted mostly of general and administrative expenses, and provision for income taxes of $262,074.

For the nine months ended September 30, 2022, we had a net income of $7,853,572, which consists of a change in fair value of warrant liabilities of $7,091,819 and interest earned on marketable securities held in the Trust Account of $1,715,245, offset by operating costs of $652,157, which consisted mostly of general and administrative expenses, and provision for income taxes of $301,335.

For the three months ended September 30, 2021, we had a net income of $3,184,434, which consists of a change in fair value of warrant liabilities of $3,203,728, interest earned on marketable securities held in the Trust Account of $3,701, offset by operating costs of $22,995.

For the nine months ended September 30, 2021, we had a net income of $7,308,518, which consists of a change in fair value of warrant liabilities of $8,547,301, interest earned on marketable securities held in the Trust Account of $63,609, offset by operating costs of $600,749 and offering expenses related to warrant issuance of $701,643.

Liquidity, Capital Resources, and Going Concern

As of September 30, 2022, we had cash outside the Trust Account of $19,995 available for working capital needs and working capital of $360,044, which excludes $301,335 of income taxes payable and $150,000 of franchise taxes payable that can be paid with the interest earned on the trust and $274,686 of franchise taxes paid from the operating account which are reimbursable with the interest earned on the trust. All remaining cash held in the Trust Account is generally unavailable for our use, except interests earned on the funds held in the Trust Account and released to pay our taxes, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem public shares. As of September 30, 2022, interest of $726,021 in the Trust Account was available to be withdrawn to pay our taxes.

We anticipate that the cash outside of the Trust Account as of September 30, 2022 will not be sufficient to allow us to operate until January 12, 2023. Until consummation of our Business Combination, we will be using the funds not held in the Trust Account, and any additional Working Capital Loans from the initial stockholders, our officers and directors, or their respective affiliates, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

If our estimates of the costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to the Business Combination. Moreover, we will need to raise additional capital through loans from our Sponsor, officers, directors, or third parties. None of our Sponsor, our officers or directors are under any obligation to advance funds to, or to invest in, us. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all.

In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board's Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern," the Company has until January 12, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date and an extension


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has not been approved by the Company's stockholders, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition, mandatory liquidation, should a Business Combination not occur and an extension not approved by the Company's stockholders, and potential subsequent dissolution raise substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after January 12, 2023. The Company intends to continue to search for and seek to complete a Business Combination before the mandatory liquidation date. The Company is within 12 months of its mandatory liquidation date as of the time of filing of this Quarterly Report.

Derivative Warrant Liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

We issued an aggregate of 14,750,000 warrants in connection with our IPO and private placement, which, are recognized as derivative liabilities in accordance with ASC 815-40. Accordingly, we recognize the warrants as liabilities at fair value and adjust the instruments to fair value at each reporting period. The liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in our statements of operations. Our warrant liability for the Private Placement Warrants is based on a Black-Scholes-Merton model. In March 2021, our Public Warrants began trading on the Nasdaq Capital Market. As such, the price for the Public Warrants is based on an unadjusted market price.

Critical Accounting Policies

The preparation of the financial statements and related disclosures in conformity with U.S. GAAP 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 period reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.

Warrant Liabilities

We account for the warrants issued in connection with our IPO in accordance with ASC 815-40, under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820," with changes in fair value recognized in the Statements of Operations in the period of change.

Common Stock Subject to Possible Redemption

We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders' deficit. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. As of September 30, 2022 and December 31, 2021, 28,750,000 and 28,750,000 shares of Class A common stock, respectively, subject to possible redemption were presented at redemption value as temporary equity, outside of the stockholders' deficit section of our balance sheets, respectively.

Net Income Per Share of Common Stock

We have two classes of common stock, which are referred to as "Class A common stock" and "Class B common stock". Earnings and losses are shared pro rata between the two classes of shares. Our 14,750,000 shares of Class A common stock underlying the outstanding warrants were excluded from diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. As a result, diluted net income per share of common stock is the same as basic net income per share of common stock.



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Recent Accounting Standards

In August 2020, the FASB issued ASU 2020-06 to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. As a smaller reporting company, ASU 2020-06 is effective January 1, 2024 for fiscal years beginning after December 15, 2023 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. Management is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. Management has not adopted this guidance as of September 30, 2022.

Our management does not believe that any other recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company's financial statements.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations

As of September 30, 2022, we did not have any off-balance sheet arrangements and did not have any commitments or contractual obligations.

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