Overview

KVAC is a blank check company formed in the British Virgin Islands on June 18, 2021. The company’s purpose is to acquire, engage in a share exchange, share reconstruction and amalgamation, purchase all or substantially all of the assets of, enter into contractual arrangements, or engage in any other similar business combination with one or more businesses or entities.

On July 27, 2023, KVAC completed its Initial Public Offering (IPO) of 14,950,000 units, including the over-allotment option, at $10 per unit, raising gross proceeds of $149.5 million. Simultaneously, the company sold 678,575 private placement units at $10 per unit, generating an additional $6.79 million.

On March 22, 2024, KVAC entered into a non-binding letter of intent with a clinical-stage biopharmaceutical company based in Boston, U.S. The target company focuses on developing novel drug discovery and next-generation cell and gene therapies. On September 3, 2024, KVAC entered into a merger agreement with Medera Inc. to acquire the target company.

Results of Operations

Since the IPO, KVAC’s activity has been limited to evaluating business combination candidates. The company has not generated any operating revenue and has incurred increased expenses as a public company and due to its search for a business combination target.

For the nine months ended September 30, 2024, KVAC had a net income of $6.6 million, primarily due to general and administrative expenses and interest income. For the nine months ended September 30, 2023, the company had a net loss of $310,566.

For the three months ended September 30, 2024, KVAC had a net income of $1.56 million, compared to a net loss of $305,689 for the same period in 2023.

Liquidity and Capital Resources

As of September 30, 2024, KVAC had $40,504 in cash. The company intends to use the net proceeds from the IPO, including the funds held in the trust account, to acquire a target business and pay related expenses.

KVAC may not be able to obtain additional financing if needed, and if unable to raise additional capital, the company may be required to take measures to conserve liquidity, which could include curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. These conditions raise substantial doubt about the company’s ability to continue as a going concern if a business combination is not consummated by November 27, 2024 (unless further extended).

Off-balance sheet financing arrangements and Contractual obligations

KVAC has no off-balance sheet financing arrangements and no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities.

The company has registration rights agreements with the holders of the founder shares, private placement units, and units that may be issued on conversion of working capital loans or extension loans. The underwriters are also entitled to a cash underwriting discount of 2% of the gross proceeds of the IPO upon the closing of the business combination.

Critical Accounting Policies

KVAC’s significant accounting policies include the treatment of ordinary shares subject to possible redemption, warrant accounting, and net income (loss) per share calculation. The company accounts for ordinary shares subject to possible redemption as temporary equity and warrants as either equity-classified or liability-classified instruments based on an assessment of their specific terms.

The net income (loss) per share is calculated by first considering the undistributed income (loss) allocable to both the redeemable and non-redeemable ordinary shares, and then allocating the undistributed income (loss) ratably based on the weighted average number of shares outstanding.