Nextdoor Holdings, Inc. current report, 31 August 2021

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Business Context and Reporting Period

This Form 8-K, dated August 31, 2021 and signed September 1, 2021, was filed by Khosla Ventures Acquisition Co. II, not Nextdoor Holdings, Inc. The company was a special purpose acquisition company and had not generated operating revenue before completing an initial business combination.

Financial Metrics and Accounting Impact

  • The filing does not provide updated revenue, profit, cash flow, margin, debt, or liquidity amounts.
  • The company reevaluated the accounting treatment of its Class K common stock issued to its sponsor in a private placement.
  • The Class K shares will be classified as derivative liabilities measured at fair value, with changes in fair value recognized in earnings.
  • The resulting charge is non-cash but may adversely affect reported results of operations.

Material Changes Versus Prior Periods

Management and the Audit Committee concluded that the previously issued unaudited financial statements as of March 31, 2021 and for the period from inception on January 15, 2021 through March 31, 2021 should no longer be relied upon. The company also stated that its audited financial statements as of February 1, 2021, its inception-period financial statements, and its March 26, 2021 audited balance sheet should no longer be relied upon.

The company planned to amend its March 31, 2021 Form 10-Q to reflect restated financial statements and the reclassification of the Class K shares.

Guidance, Risks, and Unusual Items

  • Unless the Class K share terms are amended, the company expects to continue classifying the shares as liabilities.
  • Recurring fair-value measurement of the Class K share liabilities will create additional costs and could adversely affect reported operating results.
  • The filing does not provide earnings guidance or an updated business-combination outlook.
  • Marcum LLP was dismissed as independent registered public accounting firm, and BDO USA, LLP was appointed as the replacement auditor.

Investor Verification Points

  1. Verify the amended March 31, 2021 Form 10-Q and the quantitative impact of the Class K share reclassification.
  2. Confirm the revised balance-sheet classification, fair value, and related earnings effects.
  3. Determine whether the Class K share terms were subsequently amended to avoid derivative-liability treatment.
  4. Review later filings for the status and terms of the company’s proposed business combination and any further restatements.