Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
The management of the Company has re-evaluated the Company's application of ASC
480-10-S99-3A to its accounting classification of the redeemable shares of
Class A Ordinary Shares, par value $0.0001 per share (the "Class A Ordinary
Shares"), issued as part of the units sold in Leo III's initial public offering
(the "IPO") on March 2, 2021. Historically, a portion of the Class A Ordinary
Shares was classified as permanent equity to maintain net tangible assets
greater than $5,000,000 on the basis that Leo III would consummate its initial
business combination only if it had net tangible assets of at least $5,000,001.
Pursuant to such re-evaluation, the Company's management has determined that the
Class A Ordinary Shares include certain provisions that require classification
of the Class A Ordinary Shares as temporary equity regardless of the minimum net
tangible assets required to complete Leo III's initial business combination.
In connection with the change in presentation for the Class A Ordinary Shares
subject to redemption, the Company also restated its net income (loss) per
common share calculation to allocate net income (loss) pro rata all common
stock. This presentation contemplates a business combination as the most likely
outcome, in which case, all shares of common stock pro rata in the income (loss)
of the Company. There has been no change in the Company's total assets,
liabilities or operating results.
WithumSmith+Brown, PC ("Withum") was the Company's independent registered public
accounting firm during the Affected Periods (as defined below) and during the
existence of Leo III.
Therefore, on December 7, 2021, the Company's management and the Audit Committee
of the Board of Directors of the Company (the "Audit Committee") concluded that
Leo III's previously issued (i) audited balance sheet as of March 2, 2021, as
previously restated, as reported in the Current Report on Form 8-K filed on
March 8, 2021, (ii) unaudited interim financial statements for the quarter ended
March 31, 2021, as reported in Quarterly Report on Form 10-Q filed on June 10,
2021, (iii) unaudited interim financial statements for the quarter ended
June 30, 2021, as reported in Quarterly Report on Form 10-Q filed on August 16,
2021, and (iv) unaudited interim financial statements for the quarter ended
September 30, 2021, as reported in Quarterly Report on Form 10-Q filed on
November 12, 2021 (the periods referred to in (i) - (iv), the "Affected
Periods") should no longer be relied upon and should be restated to report
Class A Ordinary Shares as liabilities, restate the statement of changes in
shareholders' equity and restate earnings per share to allocate income and
losses pro rata between the two classes of shares outstanding. Further, the
Audit Committee, in consultation with management, determined that it is
appropriate to restate certain of Leo III's condensed consolidated financial
statements from the Affected Periods.
The historical financial statements of Legacy Local Bounti are not affected by
the above changes.
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting and that the Company's disclosure controls and
procedures were not effective.
The Company has discussed the matters disclosed in this Current Report on Form
8-K with the independent registered public accounting firm of Leo III during the
Affected Periods, Withum.
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Item 9.01 Financial Statements and Exhibits.
(c) List of Exhibits.
Exhibit
No. Description
104 Cover Page Interactive Data File (formatted as Inline XBRL)
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