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Restatement of Previously Reported Financial Statements

v3.21.2
Restatement of Previously Reported Financial Statements
9 Months Ended
Sep. 30, 2021
LEO HOLDINGS III CORP [Member]  
Error Corrections and Prior Period Adjustments Restatement [Line Items]  
Restatement of Previously Reported Financial Statements
Note 2—Restatement of Previously Reported Financial Statements
The Company concluded it should restate its previously issued financial statements to classify all Class A ordinary shares subject to redemption in temporary equity. In accordance with ASC
480-10-S99,
redemption
provisions not solely within the control of the Company require shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A ordinary shares in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with these condensed financial statements, the Company revised this interpretation to include temporary equity in net tangible assets.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form
8-K
filed with the SEC on March 2, 2021 (the
“Post-IPO
Balance Sheet”) and the Company’s Form
10-Qs
for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”). Therefore, the Company, in consultation with its Audit Committee, concluded that the
Post-IPO
Balance Sheet and the Affected Quarterly Periods should be restated to present all Class A ordinary shares subject to possible redemption as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and the Over-Allotment. As such, the Company is reporting these restatements to those periods in this quarterly report. The previously presented
Post-IPO
Balance Sheet and Affected Quarterly Periods should no longer be relied upon.
The change in the carrying value of the redeemable Class A ordinary shares in the
Post-IPO
Balance Sheet resulted in a reclassification of approximately 2.2 million Class A ordinary shares from permanent equity to temporary equity. The impact of the restatement to the
Post-IPO
Balance Sheet is as follows:
 
 
  
As of March 2, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Balance Sheet
  
  
  
Total assets
  
$
277,526,800
 
  
$
—  
 
  
$
277,526,800
 
  
 
 
 
  
 
 
 
  
 
 
 
Liabilities and shareholders’ equity (deficit)
  
  
  
Total current liabilities
  
$
710,251
 
  
$
—  
 
  
$
710,251
 
Deferred underwriting commissions
  
 
9,625,000
 
  
 
—  
 
  
 
9,625,000
 
Warrant liabilities
  
 
9,153,333
 
  
 
—  
 
  
 
9,153,333
 
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities
  
 
19,488,584
 
  
 
—  
 
  
 
19,488,584
 
Class A ordinary shares subject to possible redemption
  
 
253,038,210
 
  
 
21,961,790
 
  
 
275,000,000
 
Shareholders’ equity (deficit)
  
  
  
Preference shares
  
 
—  
 
  
 
—  
 
  
 
—  
 
Class A ordinary shares
  
 
220
 
  
 
(220
  
 
—  
 
Class B ordinary shares
  
 
690
 
  
 
—  
 
  
 
690
 
Additional
paid-in-capital
  
 
5,327,593
 
  
 
(5,327,593
  
 
—  
 
Accumulated deficit
  
 
(328,497
  
 
(16,633,977
  
 
(16,962,474
  
 
 
 
  
 
 
 
  
 
 
 
Total shareholders’ equity (deficit)
  
 
5,000,006
 
  
 
(21,961,790
  
 
(16,961,784
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
  
$
277,526,800
 
  
$
—  
 
  
$
277,526,800
 
  
 
 
 
  
 
 
 
  
 
 
 
The impact of the restatement on the financial statements for the Affected Quarterly Periods is presented below.
The change in the carrying value of the redeemable Class A ordinary shares at March 31, 2021 resulted in a reclassification of approximately 2.1 million Class A ordinary shares from permanent equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited balance sheet as of March 31, 2021:
 
 
  
As of March 31, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Balance Sheet
  
  
  
Total assets
  
$
276,867,209
 
  
$
—  
 
  
$
276,867,209
 
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities
  
 
17,502,404
 
  
 
—  
 
  
 
17,502,404
 
Class A ordinary shares subject to possible redemption
  
 
254,364,800
 
  
 
20,635,200
 
  
 
275,000,000
 
Shareholders’ equity (deficit)
  
  
  
Preference shares
  
 
—  
 
  
 
—  
 
  
 
—  
 
Class A ordinary shares
  
 
206
 
  
 
(206
  
 
—  
 
Class B ordinary shares
  
 
690
 
  
 
—  
 
  
 
690
 
Additional
paid-in-capital
  
 
4,001,017
 
  
 
(4,001,017
  
 
—  
 
Retained earnings (accumulated deficit)
  
 
998,092
 
  
 
(16,633,977
  
 
(15,635,885
  
 
 
 
  
 
 
 
  
 
 
 
Total shareholders’ equity (deficit)
  
 
5,000,005
 
  
 
(20,635,200
  
 
(15,635,195
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
  
$
276,867,209
 
  
$
—  
 
  
$
276,867,209
 
  
 
 
 
  
 
 
 
  
 
 
 
The Company’s unaudited statement of shareholders’ equity has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash flows for the period from January 8, 2021 (inception) through March 31, 2021:
 
 
  
For the Period from January 8, 2021 (Inception) through
March 31, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Statement of Cash Flows - Supplemental disclosure of noncash activities:
  
  
  
Initial value of Class A ordinary shares subject to possible redemption
  
$
 253,038,210
 
  
$
(253,038,210
  
$
—  
 
Change in fair value of Class A ordinary shares subject to possible redemption
  
$
1,326,590
 
  
$
(1,326,590
  
$
—  
 
Accretion of Class A ordinary shares subject to redemption amount
  
$
—  
 
  
$
20,124,954
 
  
$
 20,124,954
 
 
The change in the carrying value of the redeemable Class A ordinary shares at June 30, 2021 resulted in a reclassification of approximately 2.6 million Class A ordinary shares from permanent equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited balance sheet as of June 30, 2021:
 
 
  
As of June 30, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Balance Sheet
  
  
  
Total assets
  
$
 276,386,096
 
  
$
—  
 
  
$
 276,386,096
 
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities
  
 
22,325,494
 
  
 
—  
 
  
 
22,325,494
 
Class A ordinary shares subject to possible redemption
  
 
249,060,600
 
  
 
25,939,400
 
  
 
275,000,000
 
Shareholders’ equity (deficit)
  
  
  
Preference shares
  
 
—  
 
  
 
—  
 
  
 
—  
 
Class A ordinary shares
  
 
259
 
  
 
(259
  
 
—  
 
Class B ordinary shares
  
 
688
 
  
 
—  
 
  
 
688
 
Additional
paid-in-capital
  
 
9,305,166
 
  
 
(9,305,166
  
 
—  
 
Accumulated deficit
  
 
(4,306,111
  
 
(16,633,975
  
 
(20,940,086
  
 
 
 
  
 
 
 
  
 
 
 
Total shareholders’ equity (deficit)
  
 
5,000,002
 
  
 
(25,939,400
  
 
(20,939,398
  
 
 
 
  
 
 
 
  
 
 
 
Total liabilities, Class A ordinary shares subject to possible redemption and shareholders’ equity (deficit)
  
$
276,386,096
 
  
$
—  
 
  
$
276,386,096
 
  
 
 
 
  
 
 
 
  
 
 
 
The Company’s unaudited statement of shareholders’ equity has been restated to reflect the changes to the impacted shareholders’ equity accounts described above.
The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash flows for the period from January 8, 2021 (inception) through June 30, 2021:
 
 
  
For the Period from January 8, 2021 (Inception)

through June 30, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Statement of Cash Flows - Supplemental disclosure of noncash activities:
  
  
  
Initial value of Class A ordinary shares subject to possible redemption
  
$
 253,038,210
 
  
$
(253,038,210
  
$
—  
 
Change in fair value of Class A ordinary shares subject to possible redemption
  
$
(3,977,610
  
$
3,977,610
 
  
$
—  
 
Accretion of Class A ordinary shares subject to redemption amount
  
$
—  
 
  
$
20,124,954
 
  
$
 20,124,954
 
 
In connection with the change in presentation for the Class A ordinary shares subject to possible redemption, the Company has restated its earnings per share calculation to allocate income and losses shares pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per share is presented below for the Affected Quarterly Periods:
 
 
  
For the Period from January 8, 2021 (Inception)
through March 31, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Statement of Operations
  
  
  
Net income
  
$
998,092
 
  
$
—  
 
  
$
998,092
 
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
  
 
27,500,000
 
  
 
(16,198,630
  
 
11,301,370
 
Basic and diluted net income per share, Class A ordinary shares
  
$
—  
 
  
$
0.06
 
  
$
0.06
 
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
  
 
6,316,265
 
  
 
43,324
 
  
 
6,359,589
 
Basic and diluted net income per share, Class B ordinary shares
  
$
0.16
 
  
$
(0.10
  
$
0.06
 
 
 
  
For the Three Months Ended June 30, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Statement of Operations
  
  
  
Net loss
  
$
(5,304,203
  
$
—  
 
  
$
(5,304,203
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
  
 
27,500,000
 
  
 
—  
 
  
 
27,500,000
 
Basic and diluted net income (loss) per share, Class A ordinary shares
  
$
—  
 
  
$
(0.15
  
$
(0.15
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
  
 
6,875,000
 
  
 
—  
 
  
 
6,875,000
 
Basic and diluted net income (loss) per share, Class B ordinary shares
  
$
(0.77
  
$
0.62
 
  
$
(0.15
 
 
 
  
For the Period from January 8, 2021 (Inception)
through June 30, 2021
 
 
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Unaudited Condensed Statement of Operations
  
  
  
Net loss
  
$
(4,306,111
  
$
—  
 
  
$
(4,306,111
  
 
 
 
  
 
 
 
  
 
 
 
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
  
 
27,500,000
 
  
 
(7,210,366
  
 
20,289,634
 
Basic and diluted net income (loss) per share, Class A ordinary shares
  
$
—  
 
  
$
(0.16
  
$
(0.16
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
  
 
6,608,477
 
  
 
37,102
 
  
 
6,645,579
 
Basic and diluted net income (loss) per share, Class B ordinary shares
  
$
(0.65
  
$
0.49
 
  
$
(0.16