apph-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39288

AppHarvest, Inc.

_____________________________________________

(Exact name of registrant as specified in its charter)


Delaware			84-5042965
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

500 Appalachian Way

Morehead, KY 40351

(606) 653-6100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	APPH	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	APPHW	The Nasdaq Stock Market LLC

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 (§232.405 of this chapter) 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 emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-2 of the Exchange Act)

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Total shares of common stock, par value $0.0001, outstanding at May 5, 2023, were 155,108,773.

Table of Contents

APPHARVEST, INC

TABLE OF CONTENTS


			Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Statements of Stockholders’ Equity			3
Condensed Consolidated Statements of Cash Flows			4
Notes to Condensed Consolidated Financial Statements			5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures About Market Risk			23
Item 4. Controls and Procedures			23

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3. Defaults Upon Senior Securities			52
Item 4. Mine Safety Disclosures			52
Item 5. Other Information			52
Item 6. Exhibits			53

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

APPHARVEST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands except per share amounts)


	March 31, 2023		December 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	50,017	$	54,334
Restricted cash	23,450		24,198
Accounts receivable, net	3,669		2,786
Inventories, net	16,105		18,078

Prepaid expenses and other current assets	17,341		14,716
Total current assets	110,582		114,112
Operating lease right-of-use assets, net	2,503		2,626
Property and equipment, net	476,334		456,178



Other assets, net	20,385		22,412
Total non-current assets	499,222		481,216
Total assets	$	609,804	$	595,328
Liabilities and stockholders’ equity
Current Liabilities
Accounts payable	$	30,445	$	16,571
Accrued expenses	14,517		21,996

Current portion of lease liabilities	505		514

Current portion of long-term debt	3,685		3,685


Other current liabilities	45		202
Total current liabilities	49,197		42,968
Long-term debt, net of current portion	178,819		180,537
Lease liabilities, net of current portion	2,509		2,628
Financing obligation	105,680		103,787
Deferred income tax liabilities	4,682		4,925
Private Warrant liabilities	110		119
Other liabilities	63		73
Total non-current liabilities	291,863		292,069
Total liabilities	341,060		335,037
Commitments and contingencies (Note 11)
Stockholders’ equity
Preferred stock, par value $0.0001, 10,000 shares authorized, 0 issued and outstanding, as of March 31, 2023 and December 31, 2022	—		—



Common stock, par value $0.0001, 750,000 shares authorized, 155,084 and 108,511 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	16		11
Additional paid-in capital	658,972		615,452
Accumulated deficit	(397,590)		(363,960)
Accumulated other comprehensive income	7,346		8,788
Total stockholders’ equity	268,744		260,291
Total liabilities and stockholders’ equity	$	609,804	$	595,328

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (Unaudited)

(In thousands except per share amounts)


	Three Months Ended March 31,
		2023		2022
Net sales		$	13,011	$	5,164
Cost of goods sold		34,345		13,554
Gross loss		(21,334)		(8,390)
Operating expenses:
Selling, general and administrative expenses		10,016		21,039


Total operating expenses		10,016		21,039
Loss from operations		(31,350)		(29,429)
Other income (expense):



Interest expense		(2,698)		—

Change in fair value of Private Warrants		9		(1,329)
Other		166		14
Loss before income taxes		(33,873)		(30,744)
Income tax benefit		243		109
Net loss		(33,630)		(30,635)

Other comprehensive (loss) income :
Net unrealized (losses) gains on derivatives contracts, net of tax		(1,442)		4,360
Comprehensive loss		$	(35,072)	$	(26,275)

Net loss per common share:
Basic and diluted		$	(0.26)	$	(0.30)

Weighted average common shares outstanding:
Basic and diluted		131,124		101,321

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


				Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
December 31, 2021	101,136	$	10	$	576,895	$	(187,314)	$	(1,951)	$	387,640

Conversion of Private Warrants	—	—		1,104		—		—		1,104
Stock options exercised	—	—		36		—		—		36
Vesting of restricted stock units	414	—		(953)		—		—		(953)
Stock-based compensation	—	—		6,035		—		—		6,035
Net loss	—	—