locl-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2022


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

For the transition period from to

LOCAL BOUNTI CORPORATION

(Exact name of registrant as specified in its charter)


Delaware	001-40125		98-1584830
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S Employer Identification No.)
400 W. Main St.	Hamilton	MT	59840
(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (800) 640-4016


220 W. Main St.	Hamilton	MT	59840
(Former address)

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, par value of $0.0001 per share

LOCL

New York Stock Exchange

Warrants, each exercisable for one share of Common Stock for $11.50 per share

LOCL WS

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 an 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 13(a) of the Exchange Act. ☐

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

The number of outstanding shares of Local Bounti Corporation’s common stock was 94,207,910 at August 8, 2022.

TABLE OF CONTENTS


			Page
Part I – FINANCIAL INFORMATION			5

Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 2022 (Unaudited) and December 31, 2021			5
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021			6
Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the three and six months ended June 30, 2022 and 2021			7
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021			8
Notes to Unaudited Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3. Quantitative and Qualitative Disclosures About Market Risk			24

Item 4. Controls and Procedures			24

Part II – OTHER INFORMATION			25

Item 1. Legal Proceedings			25

Item 1A. Risk Factors			25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			25

I tem 5. Other Information			25

Item 6. Exhibits			25

SIGNATURES			27

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," "believe," "estimate," "aim," "project," "intend," "should," "is to be," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from results expressed or implied in this Quarterly Report on Form 10-Q. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements:

•Local Bounti's ability to effectively integrate the recently acquired operations of Pete's into its existing operations;

•the uncertainty of projected financial information;

•Local Bounti's increased leverage as a result of additional indebtedness incurred in connection with the recent acquisition of Pete's;

•restrictions contained in Local Bounti's debt facility agreements with Cargill Financial Services International, Inc. ("Cargill Financial");

•Local Bounti's ability to repay, refinance, restructure, or extend its indebtedness as it comes due;

•unknown liabilities that may be assumed in acquisitions;

•Local Bounti's ability to generate revenue;

•the risk that Local Bounti may never achieve or sustain profitability;

•the risk that Local Bounti could fail to effectively manage its future growth;

•the risk that Local Bounti will fail to obtain additional necessary capital when needed on acceptable terms or at all;

•Local Bounti's ability to build out additional facilities;

•reliance on third parties for construction, delays relating to material delivery and supply chains, and fluctuating material prices;

•Local Bounti's ability to maintain its gross margin or decrease its cost of goods sold over time;

•potential for damage to or problems with Local Bounti's CEA facilities;

•Local Bounti's ability to attract and retain qualified employees;

•Local Bounti's ability to develop and maintain its brand or brands it may acquire;

•Local Bounti's ability to maintain its company culture or focus on its vision as it grows;

•Local Bounti's ability to execute on its growth strategy;

•the risk of diseases and pests destroying crops;

•Local Bounti's ability to compete successfully in the highly competitive natural food market;

•Local Bounti's ability to defend itself against intellectual property infringement claims;

•changes in consumer preferences, perception, and spending habits in the food industry;

•seasonality may adversely impact Local Bounti's results of operations;

•Local Bounti's ability to achieve its sustainability goals; and

•Other risks and uncertainties indicated from time to time, including those under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in Local Bounti’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 30, 2022, as supplemented by this and other subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

Local Bounti cautions that the foregoing list of factors is not exclusive and cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Local Bounti does not undertake or accept any obligation or undertaking to update or revise any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based.

WEBSITE AND SOCIAL MEDIA DISCLOSURE

Investors and others should note that we routinely announce material information to investors and the marketplace using filings with the Securities and Exchange Commission ("SEC"), press releases, public conference calls, presentations, webcasts and our website. We also intend to use certain social media channels as a means of disclosing information about Local Bounti and our products to our customers, investors and the public (e.g., @Local Bounti and #LocalBounti on Twitter). The information posted on social media channels is not incorporated by reference in this Quarterly Report on Form 10-Q or in any other report or document we file with the SEC. While not all of the information that we post to our website or social media accounts is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others to sign up for and regularly follow our social media accounts. Users may automatically receive email alerts and other information about Local Bounti by signing up for email alerts under the "Investors" section of our website at https://investors.localbounti.com.

ADDITIONAL INFORMATION

Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to the "Company," "Local Bounti," "we," "us," "our" and similar terms refer to Local Bounti Corporation and its consolidated subsidiaries.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LOCAL BOUNTI CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30,		December 31,
	2022		2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	22,703	$	96,661
Restricted cash and cash equivalents	18,583		4,416
Accounts receivable, net	2,248		110

Inventory, net	3,106		922
Prepaid expenses and other current assets	3,572		3,399
Total current assets	50,212		105,508
Property and equipment, net	123,615		37,350
Operating lease right-of-use assets	176		55
Goodwill	36,598		—
Intangible assets, net	52,923		—
Other assets	906		1,017
Total assets	$	264,430	$	143,930

Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	5,167	$	1,920
Accrued liabilities	4,289		16,020

Operating lease liabilities	71		28

Total current liabilities	9,527		17,968
Long-term debt	105,182		11,199


Financing obligation	14,190		13,070
Operating lease liabilities, noncurrent	94		10

Total liabilities	128,993		42,247

Commitments and contingencies (Note 11)

Stockholders' equity
Common stock, $0.0001 par value, 400,000,000 shares authorized, 94,168,464 and 86,344,881 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	9		9
Additional paid-in capital	261,105		169,916
Accumulated deficit	(125,677)		(68,242)
Total stockholders' equity	135,437		101,683
Total liabilities and stockholders' equity	$	264,430	$	143,930

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Sales	$	6,269	$	108	$	6,551	$	165
Cost of goods sold(1)(2)(3)	6,281		81		6,520		126
Gross profit	(12)		27		31		39
Operating expenses:
Research and development(2)(3)	3,073		723		5,914		1,155
Selling, general and administrative(2)(3)	23,141		2,962		44,502		11,256

Total operating expenses	26,214		3,685		50,416		12,411
Loss from operations	(26,226)		(3,658)		(50,385)		(12,372)
Other income (expense):
Management fee income	28		24		58		44
Convertible Notes fair value adjustment	—		(2,685)		—		(2,984)


Interest expense, net	(5,465)		(1,268)		(7,108)		(1,673)
Other income and expense	—		(3)		—		(3)
Net loss	$	(31,663)	$	(7,590)	$	(57,435)	$	(16,988)

Net loss applicable to common stockholders per basic common share:
Basic and diluted	$	(0.36)	$	(0.15)	$	(0.68)	$	(0.35)
Weighted average common shares outstanding:
Basic and diluted	88,607,316		49,131,555		84,830,885		49,131,555

(1) Amounts include the impact for non-cash increase in cost of goods sold attributable to the fair value basis adjustment to inventory in connection with acquisition of Pete's as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	1,042	$	—	$	1,042	$	—
Total business combination fair value basis adjustment to inventory	$	1,042	$	—	$	1,042	$	—

(2) Amounts include stock-based compensation as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	47	$	—	$	52	$	—
Research and development	485		—		970		—
Selling, general and administrative	11,164		—		21,687		4,942
Total stock-based compensation expense	$	11,696	$	—	$	22,709	$	4,942

(3) Amounts include depreciation and amortization as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of goods sold	$	891	$	12	$	953	$	20
Research and development	218		105		531		215
Selling, general and administrative	2,272		7		2,438		15
Total depreciation and amortization	$	3,381	$	124	$	3,922	$	250

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 and 2021

(in thousands, except share data)


	Voting Common Stock			Non-Voting Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance, December 31, 2021	86,344,881	$	9	—	$	—	$	169,916	$	(68,242)	$	101,683


Vesting of restricted stock units, net	120,876	—		—	—		—		—		—
Stock-based compensation	—	—		—	—		11,042		—		11,042
Net loss	—	—		—	—		—		(25,772)		(25,772)
Balance, March 31, 2022	86,465,757	9		—	—		180,958		(94,014)		86,953
Issuance of common stock for business combination	5,654,600	—		—	—		50,948		—		50,948
Issuance of common stock for debt modification	1,932,931	—		—	—		17,416		—		17,416
Issuance of common stock upon exercise of warrants	10	—		—	—		—		—		—
Vesting of restricted stock units, net	115,166	—		—	—		—		—		—
Stock-based compensation	—	—		—	—		11,783		—		11,783
Net loss	—	—		—	—		—		(31,663)		(31,663)
Balance, June 30, 2022	94,168,464	$	9	—	$	—	$	261,105	$	(125,677)	$	135,437


	Voting Common Stock			Non-Voting Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance, December 31, 2020	58,076,019	$	1	8,944,465	$	—	$	9,577	$	(12,149)	$	(2,571)
Issuance of common stock	—	—		2,086,829	—		—		—		—


Stock-based compensation	—	—		—	—		4,942		—		4,942
Net loss	—	—		—	—		—		(9,398)		(9,398)
Balance, March 31, 2021	58,076,019	1		11,031,294	—		14,519		(21,547)		(7,027)




Net loss	—	—		—	—		—		(7,590)		(7,590)
Balance, June 30, 2021	58,076,019	$	1	11,031,294	$	—	$	14,519	$	(29,137)	$	(14,617)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Six Months Ended June 30,
	2022		2021
Operating Activities:
Net loss	$	(57,435)	$	(16,988)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	1,826		250
Amortization of intangible assets	2,096		—

Stock-based compensation expense	22,709		4,942
Bad debt allowance	7		(8)
Inventory allowance	378		8
Loss on disposal of property and equipment

SEC Form 10-Q filed by Local Bounti Corporation