LIFECORE BIOMEDICAL INC DE

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the Fiscal Year Ended May 28, 2023, or

For the Transition period from _________ to _________.

Commission file number:000-27446

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:

(952)368-4300

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No☒

The aggregate market value of voting stock held by non-affiliates of the Registrant was approximately $180,939,000 as of November 27, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sales price on the NASDAQ Global Select Market reported for such date.

As of March 14, 2024, there were 30,546,936 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

This Annual Report on Form 10-K being filed by Lifecore Biomedical, Inc. (the “Company”) contains the restatement of previously issued restated consolidated financial statements as of and for the fiscal years ended May 29, 2022 (“FY22”) and May 30, 2021 (“FY21”), and the unaudited consolidated financial statements as of and for the three and nine months ended February 27, 2022 included in the Company’s Annual Report on Form 10-K/A for the year ended May 29, 2022 (the “Form 10-K/A”) filed with the Securities and Exchange Commission (the “SEC”), the unaudited consolidated financial statements as of and for the three months ended August 28, 2022 included in the Company’s Quarterly Report on Form 10-Q/A filed with the SEC, and the Company’s unaudited consolidated financial statements as of and for the periods ending August 30, 2020, November 29, 2020, February 28, 2021, August 29, 2021, November 28, 2021, November 27, 2022 and February 26, 2023 included in the Company’s Quarterly Reports on Form 10-Q filed with the SEC.

Background of Restatement

On October 30, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of the Company (the “Board” or the “Board of Directors”), after discussion with management, concluded that the Company’s previously issued consolidated financial statements as of and for the fiscal years ended May 29, 2022 (“FY22”) and May 30, 2021 (“FY21”) included in the Form 10-K/A, the Company’s unaudited consolidated financial statements as of and for the periods ending August 30, 2020, November 29, 2020, February 28, 2021, August 29, 2021, November 28, 2021, February 27, 2022, August 28, 2022, November 27, 2022 and February 26, 2023 included in the Company’s Quarterly Reports on Form 10-Q or 10-Q/A filed with the SEC (collectively, such periods, the “Non-Reliance Periods” and such financial statements, the “Prior Financial Statements”), should no longer be relied upon and that the Company needed to restate the Prior Financial Statements.

This determination resulted from the identification of errors in the Prior Financial Statements related to adjustments as more specifically described below, involving the calculation of capitalized interest, valuation of inventories, and certain other adjustments related to previously divested businesses reflected in the Prior Financial Statements. In addition, the Company has adjusted certain other items that were previously identified in the Prior Financial Statements and concluded as immaterial, individually and in the aggregate, to the Prior Financial Statements.

The Company has assessed the materiality of these errors in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 99 (“SAB”), Materiality and SAB No. 108, Quantifying Financial Statement Misstatements, and has concluded that the Prior Financial Statements should be restated.

Restatement Overview

The more significant restatement adjustments to the Lifecore segment financial statements contained in the Prior Financial Statements, are described as follows:

1. The Company restated the Lifecore segment revenues and cost of sales in FY21 and FY22 to gross up revenues and cost of sales for certain performance obligations the Company acted as a principal in the arrangements.

2. The Company restated inventories and cost of sales to write down inventories to their net realizable value in FY22 and FY21 and interim periods in FY23, which reduced inventories and increased cost of sales during those periods.

3. The Company restated property and equipment and interest expense to record capitalized interest on assets under construction in FY22 and FY21 and interim periods in FY23, which increased property and equipment and reduced interest expense during those periods.

4. The Company restated FY21 opening retained earnings to account for the cumulative effect of the above restatements.

The more significant restatement adjustments to the Company’s former Curation Foods segment financial information is described as follows:

1. The Company restated FY21 opening retained earnings related to its former Curation Foods businesses non-current other receivables that were not collectable prior to the fiscal year periods presented in the consolidated FY23 financial statements.

2. The Company restated the presentation of certain operating costs and expenses of continuing operations and discontinued operations affecting FY22 and FY21.

The foregoing descriptions of the restatement adjustments within the respective Non-Reliance Periods do not include all adjustments in that they exclude errors concluded as immaterial but that were corrected as part of the restatement.

For a more detailed description of the financial impact of the restatements of the Prior Financial Statements, see Note 13 - Correction of Errors in Previously Reported Fiscal Year 2022 and 2021 Annual Financial Statements and Note 14 – Unaudited Quarterly Consolidated Financial Information included in Part IV, Item 15 of this Annual Report on Form 10-K.

Internal Controls Considerations

In connection with the restatement of the Prior Financial Statements described above, management has identified deficiencies in the internal control over financial reporting that aggregated to material weaknesses in the following components of the COSO framework:

a. Control Environment – maintaining a sufficient complement of personnel to timely support the Company’s internal control objectives and ensuring personnel conduct internal control related responsibilities;

b. Risk Assessment – identification and assessment of risks and changes in the business model resulting from recent disposition activities that impacted the design of control activities, including the precision of management review controls, and the completeness of controls required to support the financial reporting framework;

c. Information and Communication – Design of controls to validate the completeness and accuracy of information used in the performance of control activities; and

d. Monitoring – As a result of the material weaknesses described above, the Company failed to design and implement certain monitoring activities that were responsive to timely identification and remediation of control deficiencies.

As a result of the material weaknesses in the COSO components identified above, the control activities were ineffective and represent a material weakness. Additionally, material errors in the Company's financial statements were identified, primarily relating to the areas of inventory valuation, the capitalization of interest on assets under construction, recording of development revenue and related cost of sales, the presentation of certain operating costs and expenses of continuing operations and discontinued operations, and the write off of other receivables of the Company’s former Curation Foods businesses that were not collectible prior to the fiscal year periods presented in the consolidated financial statements. There were material weaknesses in the Company’s design and operation of controls related to the accounting for and classification of certain non-standard transactions, which included discontinued operations, restructuring costs, and indefinite-lived and long-lived asset impairment tests.

For more information regarding these identified material weaknesses, the material weaknesses previously identified related to the accounting for non-standard transactions, and a discussion of management’s evaluation of the Company’s disclosures controls and procedures and internal controls over financial reporting, refer to “Controls and Procedures” in Part II, Item 9A of this Annual Report on Form 10-K.