Local Bounti Corporation Registration of securities issued in business combination transactions

Registration of securities issued in business combination transactions

Revision to Prior Period Financial Statements

Revision to Prior Period Financial Statements

3 Months Ended

Mar. 31, 2021

Prior Period Adjustment [Abstract]

Revision to Prior Period Financial Statements

Note 10—Revision to Prior Period Financial Statements

During the course of preparing the quarterly report on Form

10-Q

for the period

from January 8, 2021 (inception) through

March 31, 2021, the Company identified a misapplication of accounting guidance related to the Company’s warrants in the Company’s previously issued audited balance sheet dated March 2, 2021, filed on Form

8-K

on March 9, 2021 (the

“Post-IPO

Balance Sheet”).

On April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheets as opposed to equity. Since their issuance on March 2, 2021, the Company’s warrants have been accounted for as equity within the Company’s previously reported balance sheet. After discussion and evaluation, including with the Company’s independent registered public accounting firm and the Company’s audit committee, management concluded that the warrants should be presented as liabilities with subsequent fair value remeasurement.

The warrants were reflected as a component of equity in the

Post-IPO

Balance Sheet as opposed to liabilities on the balance sheets, based on the Company’s application of FASB ASC Topic

815-40,

Derivatives and Hedging, Contracts in Entity’s Own Equity

(“ASC

815-40).

The views expressed in the SEC Staff Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC

815-40

to the warrant agreement. The Company reassessed its accounting for Warrants issued on March 2, 2021, in light of the SEC Staff’s published views. Based on this reassessment, management determined that the warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in the

Company’s

Statement of Operations each reporting period.

The Company concluded that the misstatement was not material to the

Post-IPO

Balance Sheet and the misstatement had no material impact to any prior interim period. The effect of the revisions to the

Post-IPO

Balance Sheet is as follows:


	As of March 2, 2021
	As Previously Reported			Restatement Adjustment			As Restated
Balance Sheet
Total assets	$	277,526,800		$	—		$	277,526,800

Liabilities and shareholders’ equity
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		10,335,251			9,153,333			19,488,584
Class A ordinary shares, $0.001 par value; shares subject to possible redemption		262,191,540			(9,153,330	)		253,038,210
Shareholders’ equity
Preference shares—$0.0001 par value		—			—			—
Class A ordinary shares—$0.001 par value		128			92			220
Class B ordinary shares—$0.001 par value		690			—			690
Additional paid-in-capital		5,052,066			275,527			5,327,593
Accumulated deficit		(52,875	)		(275,622	)		(328,497	)

Total shareholders’ equity		5,000,009			(3	)		5,000,006

Total liabilities and shareholders’ equity	$	277,526,800		$	—		$	277,526,800