Local Bounti Corporation (NYSE:LOCL) Q2 2022 Results Conference Call August 15, 2022 8:00 AM ET Company Participants Craig Hurlbert - Co-Chief Executive Officer and Chairman of the Board Jeff Sonnek - Managing Director, ICR Brian Cook - President Travis Joyner - Co-Chief Executive Officer and Director Kathleen Valiasek - Chief Financial Officer Conference Call Participants Ben Klieve - Lake Street Capital Markets Brian Wright - ROTH Capital Partners Kristen Owen - Oppenheimer Christopher Barnes - Deutsche B ...

Company Overview and Strategy - Local Bounti was founded by Craig and Travis, aiming for long-term CEA leadership with a focus on unit economics [7, 12] - The company utilizes a differentiated approach focusing on unit economics, local and distributed logistics, brand and product diversity, and sustainability [8, 9] - Local Bounti's strategy involves selecting geographic opportunities and analyzing build vs buy strategic approaches to expand its footprint [19, 20] Financial Highlights and Projections - Projected revenues for 2025 are estimated at $462 million [12] - The company has a $170 million debt facility in place with Cargill [12] - Facility capital costs are 30 times EBITDA [13] Technology and Production - Local Bounti employs patent-pending Stack & Flow Technology to achieve superior production unit economics [8] - The company achieves 15x-20x yield of comparable greenhouse farms [13, 15] - Local Bounti's technology uses 90% less water and land usage compared to outdoor growers [10, 15] ESG Alignment - Local Bounti exhibits exceptional ESG performance, directly addressing over half of the U N Sustainable Development Goals [10]

[General Information](index=1&type=section&id=General%20Information) This part covers the company's basic filing details, forward-looking statement disclaimers, and disclosure practices [Form 10-Q Details](index=1&type=section&id=Form%2010-Q%20Details) This section provides basic filing information for the Quarterly Report on Form 10-Q for the period ended March 31, 2022 - The registrant is **LOCAL BOUNTI CORPORATION**, incorporated in Delaware, with its principal executive offices in Hamilton, MT[2](index=2&type=chunk) Securities Registered | 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 | - The registrant is a **Non-accelerated filer**, a **Smaller reporting company**, and an **Emerging growth company**[5](index=5&type=chunk) - As of May 5, 2022, the number of outstanding shares of common stock was **94,105,753**[5](index=5&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that the report contains forward-looking statements subject to risks, and actual results may differ materially - Forward-looking statements reflect current expectations and projections about future events but are not guarantees of future performance[11](index=11&type=chunk) - Key risk factors include the company's **early-stage status with a history of losses**, need for additional financing, risks from the Pete's Acquisition, and reliance on limited facilities[12](index=12&type=chunk)[13](index=13&type=chunk) - Other significant risks involve substantial expenditures for facility build-out, potential cost increases, COVID-19 impacts, and challenges in executing its growth strategy[12](index=12&type=chunk)[15](index=15&type=chunk) [Website and Social Media Disclosure](index=7&type=section&id=WEBSITE%20AND%20SOCIAL%20MEDIA%20DISCLOSURE) The company outlines its channels for disclosing material information, including SEC filings, press releases, and its website - Material information is routinely announced via SEC filings, press releases, public conference calls, and the company's website[17](index=17&type=chunk) - The company intends to use social media channels like Twitter for disclosing information[17](index=17&type=chunk) [Additional Information](index=7&type=section&id=ADDITIONAL%20INFORMATION) This section clarifies the terms used throughout the Quarterly Report to refer to the company - References to 'Company,' 'Local Bounti,' 'we,' 'us,' and 'our' refer to Local Bounti Corporation[19](index=19&type=chunk) [Part I – Financial Information](index=8&type=section&id=Part%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's analysis of financial performance and condition [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes for the reporting period [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Item | March 31, 2022 (Unaudited) | December 31, 2021 | | :-------------------------------- | :------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $71,974 | $96,661 | | Total current assets | $81,311 | $105,508 | | Property and equipment, net | $43,994 | $37,350 | | Total assets | $126,479 | $143,930 | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | $7,431 | $1,912 | | Accrued liabilities | $6,721 | $16,020 | | Total current liabilities | $14,289 | $17,968 | | Long-term debt | $11,110 | $11,199 | | Total liabilities | $39,526 | $42,247 | | Total stockholders' equity | $86,953 | $101,683 | | Total liabilities and stockholders' equity | $126,479 | $143,930 | [Unaudited Condensed Consolidated Statements of Operations](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share data) | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Sales | $282 | $57 | | Cost of goods sold | $234 | $45 | | Gross profit | $48 | $12 | | Research and development | $1,948 | $432 | | Selling, general and administrative | $22,259 | $8,294 | | Total operating expenses | $24,207 | $8,726 | | Loss from operations | $(24,159) | $(8,714) | | Interest expense, net | $(1,643) | $(405) | | Net loss | $(25,772) | $(9,398) | | Net loss per basic and diluted common share | $(0.32) | $(0.19) | | Weighted average common shares outstanding | 81,009,268 | 49,131,554 | [Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Changes in Stockholders' Equity (Deficit) (in thousands) | Item | Balance, Dec 31, 2021 | Stock-based compensation | Net loss | Balance, Mar 31, 2022 | | :-------------------- | :-------------------- | :----------------------- | :------- | :-------------------- | | Additional Paid-in Capital | $169,916 | $11,042 | — | $180,958 | | Accumulated Deficit | $(68,242) | — | $(25,772) | $(94,014) | | Total Stockholders' Equity (Deficit) | $101,683 | $11,042 | $(25,772) | $86,953 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(10,085) | $(3,223) | | Net cash used in investing activities | $(14,673) | $(1,070) | | Net cash provided by financing activities | $71 | $21,604 | | Net (decrease) increase in cash and restricted cash | $(24,687) | $17,311 | | Cash and restricted cash at end of period | $76,390 | $17,356 | - Non-cash investing and financing activities for Q1 2022 included **$8,161 thousand in purchases of property and equipment** in accounts payable and accrued liabilities[27](index=27&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context for the financial statements, covering business operations, accounting policies, and key financial components [1. Business Description](index=14&type=section&id=1.%20Business%20Description) - Local Bounti Corporation is an indoor farming company using proprietary **Stack & Flow Technology™** to grow food sustainably[28](index=28&type=chunk) - On April 4, 2022, the Company completed the acquisition of Pete's, a California-based indoor farming company, for **$122.5 million**[29](index=29&type=chunk)[30](index=30&type=chunk) - Pete's operates three greenhouse facilities and distributes to approximately **10,000 retail locations** across 35 U.S. states and Canadian provinces[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=14&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and include all wholly-owned subsidiaries[31](index=31&type=chunk) - Depreciation and property and equipment classifications were reclassified to enhance comparability with industry peers[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - The Company adopted ASU 2021-04 and ASU 2019-12 on January 1, 2022, with no material impact on the financial statements[37](index=37&type=chunk)[38](index=38&type=chunk) [3. Inventory](index=15&type=section&id=3.%20Inventory) Inventory Composition (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :---------------- | :------------- | :---------------- | | Raw materials | $399 | $145 | | Work-in-process | $173 | $173 | | Finished goods | $104 | $69 | | Packaging | $682 | $467 | | Consignment | — | $163 | | Inventory allowance | $(95) | $(95) | | **Total inventory, net** | **$1,263** | **$922** | [4. Property and Equipment](index=16&type=section&id=4.%20Property%20and%20Equipment) Property and Equipment (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :---------------------- | :------------- | :---------------- | | Greenhouse facility | $11,033 | $10,194 | | Equipment | $4,986 | $3,683 | | Land | $3,991 | $4,122 | | Leasehold improvements | $3,947 | $3,947 | | Construction-in-progress | $21,549 | $16,375 | | Less: Accumulated depreciation | $(1,512) | $(971) | | **Property and equipment, net** | **$43,994** | **$37,350** | Depreciation Expense (in thousands) | Period | Depreciation Expense | | :-------------------------- | :------------------- | | Three months ended March 31, 2022 | $541 | | Three months ended March 31, 2021 | $124 | [5. Accrued Liabilities](index=16&type=section&id=5.%20Accrued%20Liabilities) Accrued Liabilities (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :------------------------ | :------------- | :---------------- | | Accrued construction expenses | $135 | $11,192 | | Accrued insurance | $1,825 | $2,582 | | Accrued payroll | $273 | $792 | | Accrued agriculture expenses | $294 | $461 | | Accrued legal fees | $3,448 | $273 | | Accrued other | $746 | $720 | | **Total accrued liabilities** | **$6,721** | **$16,020** | [6. Debt](index=16&type=section&id=6.%20Debt) Debt Composition (in thousands) | Item | March 31, 2022 | December 31, 2021 | | :------------------------------------ | :------------- | :---------------- | | Subordinated Facility | $16,293 | $16,293 | | Unamortized deferred financing costs, Cargill Credit Agreements | $(5,183) | $(5,094) | | **Total debt** | **$11,110** | **$11,199** | - The Subordinated Facility has an interest rate of **10.5% per annum**, with **$16,293 thousand outstanding** as of March 31, 2022[46](index=46&type=chunk)[47](index=47&type=chunk) - The Senior Facility had **no amounts outstanding** as of March 31, 2022 and December 31, 2021[48](index=48&type=chunk) - The Company was in compliance with all applicable financial covenants under the Cargill Financial credit agreements as of March 31, 2022[49](index=49&type=chunk)[51](index=51&type=chunk) [7. Fair Value Measurements](index=18&type=section&id=7.%20Fair%20Value%20Measurements) Recurring Fair Value Measurements (in thousands) | Item | March 31, 2022 (Level 1) | December 31, 2021 (Level 1) | | :------------------------------------------ | :----------------------- | :-------------------------- | | Money market funds, included in cash and cash equivalents | $71,943 | $96,661 | | **Total** | **$71,943** | **$96,661** | - The fair value of money market funds is determined using quoted market prices, classifying them as **Level 1 measurements**[52](index=52&type=chunk) [8. Stock-Based Compensation](index=19&type=section&id=8.%20Stock-Based%20Compensation) Restricted Common Stock Awards (RSAs) Activity | Item | Number of Shares | Average Grant Date Fair Value | | :-------------------------- | :--------------- | :---------------------------- | | Unvested at December 31, 2021 | 5,479,451 | $1.80 | | Vested | (208,682) | $2.66 | | Unvested at March 31, 2022 | 5,270,769 | $1.84 | - Total expense for RSAs for Q1 2022 was **$917 thousand**, with **$5,302 thousand in unrecognized compensation cost**[54](index=54&type=chunk) Restricted Stock Units (RSUs) Activity | Item | Number of RSUs | Average Grant Date Fair Value | | :-------------------------------- | :------------- | :---------------------------- | | Unvested at December 31, 2021 | 2,395,789 | $9.73 | | Granted | 7,321,188 | $5.67 | | Forfeited | (49,697) | $(9.97) | | Vested | (123,884) | $(9.83) | | Unvested and outstanding at March 31, 2022 | 9,543,396 | $6.61 | - Total expense for RSUs for Q1 2022 was **$10,096 thousand**, with **$51,525 thousand in unrecognized compensation cost**[55](index=55&type=chunk) [9. Income Taxes](index=19&type=section&id=9.%20Income%20Taxes) - The Company incurred net operating losses for Q1 2022 and 2021, resulting in **no provision for income taxes**[56](index=56&type=chunk) Net Operating Losses (NOLs) (in thousands) | Date | U.S. Federal and State NOLs | | :---------------- | :-------------------------- | | March 31, 2022 | $54,600 | | December 31, 2021 | $41,800 | These NOL carryforwards can be carried forward indefinitely. [10. Net Loss Per Share](index=19&type=section&id=10.%20Net%20Loss%20Per%20Share) Net Loss Per Share (in thousands, except share and per share data) | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(25,772) | $(9,398) | | Weighted average common stock outstanding, basic and diluted | 81,009,268 | 49,131,554 | | Net loss per common share, basic and diluted | $(0.32) | $(0.19) | - Diluted loss per common share is the same as basic loss per common share because the effects of potentially dilutive items were **anti-dilutive**[58](index=58&type=chunk) Anti-Dilutive Securities (Weighted-Average Shares Outstanding) | Security | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------- | :-------------------------------- | :-------------------------------- | | CIC Restricted Stock | 5,395,590 | 9,679,209 | | Convertible Notes | — | 3,095 | | Warrants | 11,539,306 | 6,650 | [11. Commitments and Contingencies](index=21&type=section&id=11.%20Commitments%20and%20Contingencies) - Management is not aware of any legal matters expected to have a material adverse effect on the Company's financial position[61](index=61&type=chunk) Non-Cancelable Purchase Commitments (in thousands) | Period | Purchase Commitments | | :---------------- | :------------------- | | Remainder of 2022 | $357 | | 2023 | $402 | | 2024 | $204 | | **Total** | **$963** | Operating Lease Liabilities (in thousands) | Period | Operating Leases | | :---------------- | :--------------- | | Remainder of 2022 | $99 | | 2023 | $96 | | 2024 | $90 | | **Total** | **$285** | [12. Related Party Transactions](index=22&type=section&id=12.%20Related%20Party%20Transactions) - The management services agreement with BrightMark Partners LLC was terminated in March 2021, resulting in **no management fees for Q1 2022**[64](index=64&type=chunk)[65](index=65&type=chunk) - A commercial lease agreement with McLeod Property HM LLC was terminated on March 15, 2022[66](index=66&type=chunk) Accrued Liabilities, Related Party (in thousands) | Date | Amount | | :---------------- | :----- | | March 31, 2022 | $26 | | December 31, 2021 | $8 | [13. Subsequent Events](index=22&type=section&id=13.%20Subsequent%20Events) - On April 4, 2022, the Company completed the acquisition of Pete's for **$122.5 million**[69](index=69&type=chunk)[70](index=70&type=chunk) - In connection with the Pete's Acquisition, Pete's acquired properties from STORE Master Funding XVIII, LLC for **$25.8 million in cash**[71](index=71&type=chunk) - On April 4, 2022, an amendment to the Cargill Financial credit agreements reduced the aggregate commitment to **$170.0 million** and increased interest rates by **2%**[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for Q1 2022 [Overview](index=23&type=section&id=Overview) - Local Bounti produces sustainably grown produce using its patent-pending **Stack & Flow Technology™**[75](index=75&type=chunk) - The Montana Facility increased its capacity by approximately **140% in Q3 2021** and was fully commissioned in Q4 2021[75](index=75&type=chunk) - The company's growth strategy includes increasing production capacity, expanding to new markets, and broadening its product offerings[76](index=76&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) - On April 4, 2022, Local Bounti acquired Pete's, a California-based indoor farming company with distribution to **~10,000 retail locations**[78](index=78&type=chunk) - The acquisition provides access to Pete's established retail customer base and allows for technology integration to enhance yields[79](index=79&type=chunk) [Environmental, Social and Governance](index=24&type=section&id=Environmental,%20Social%20and%20Governance) - Local Bounti emphasizes sustainability, believing its growing technology delivers clean produce with safer methods[80](index=80&type=chunk) - The company's compact, efficient, and local farms aim to make it among the most sustainable produce suppliers[81](index=81&type=chunk) [Factors Affecting Our Financial Condition and Results of Operations](index=24&type=section&id=Factors%20Affecting%20Our%20Financial%20Condition%20and%20Results%20of%20Operations) - The company expects to expend substantial resources on integrating Pete's operations and building out new CEA facilities[83](index=83&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Historical Operating Results (in thousands) | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | $ Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Sales | $282 | $57 | $225 | | Cost of goods sold | $234 | $45 | $189 | | Gross profit | $48 | $12 | $36 | | Research and development | $1,948 | $432 | $1,516 | | Selling, general and administrative | $22,259 | $8,294 | $13,965 | | Total operating expenses | $24,207 | $8,726 | $15,481 | | Loss from operations | $(24,159) | $(8,714) | $(15,445) | | Management fee income | $30 | $20 | $10 | | Convertible Notes fair value adjustment | — | $(299) | $299 | | Interest expense, net | $(1,643) | $(405) | $(1,238) | | Net loss | $(25,772) | $(9,398) | $(16,374) | [Sales](index=26&type=section&id=Sales) - Sales of produce increased by **$225 thousand** to **$282 thousand** for Q1 2022[86](index=86&type=chunk) - This increase was driven by expanded production at the Montana Facility, leading to sales in over **500 retail locations**[86](index=86&type=chunk) [Cost of Goods Sold](index=26&type=section&id=Cost%20of%20Goods%20Sold) - Cost of goods sold increased by **$189 thousand** in Q1 2022, primarily due to increased sales volume[88](index=88&type=chunk) - The company expects cost of goods sold to decrease as a percentage of sales over time as operations scale[87](index=87&type=chunk) [Research and Development](index=26&type=section&id=Research%20and%20Development) - Research and development costs increased by **$1,516 thousand** in Q1 2022, reflecting increased investment in product expansion[90](index=90&type=chunk) - Ongoing R&D efforts have led to approximately **26 crop turns annually** for commercial loose-leaf lettuce[89](index=89&type=chunk) [Selling, General, and Administrative Expenses](index=26&type=section&id=Selling,%20General,%20and%20Administrative%20Expenses) - Selling, general, and administrative expenses rose by **$13,965 thousand** in Q1 2022[92](index=92&type=chunk) - This increase was primarily driven by a **$6,071 thousand rise in stock-based compensation** and **$3,901 thousand in transaction costs** for the Pete's acquisition[92](index=92&type=chunk) [Management Fee Income](index=26&type=section&id=Management%20Fee%20Income) - Management fee income increased by **$10 thousand** in Q1 2022, related to managing the Montana Facility[93](index=93&type=chunk) [Convertible Notes Fair Value Adjustment](index=26&type=section&id=Convertible%20Notes%20Fair%20Value%20Adjustment) - There was **no Convertible Notes fair value adjustment** for Q1 2022, as all notes were converted in November 2021[96](index=96&type=chunk) - For Q1 2021, the adjustment was **$(299) thousand**[96](index=96&type=chunk) [Interest Expense, net](index=28&type=section&id=Interest%20Expense,%20net) - Net interest expense increased by **$1,238 thousand** in Q1 2022[97](index=97&type=chunk) - This increase was primarily due to a **$1,079 thousand rise in interest and fees** related to Cargill Financial debt[97](index=97&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, Cash Equivalents, and Restricted Cash (in thousands) | Date | Amount | | :---------------- | :----- | | March 31, 2022 | $76,390 | | December 31, 2021 | $101,077 | - The company had an accumulated deficit of **$94,014 thousand** as of March 31, 2022[98](index=98&type=chunk) - The CEA business is capital-intensive, but current cash and borrowing capacity are believed sufficient for the next 12 months[99](index=99&type=chunk)[100](index=100&type=chunk) - The Cargill Financial credit facility was amended on April 4, 2022, reducing the aggregate commitment to **$170.0 million**[104](index=104&type=chunk) [Cash Flow Analysis](index=29&type=section&id=Cash%20Flow%20Analysis) Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(10,085) | $(3,223) | | Net cash used in investing activities | $(14,673) | $(1,070) | | Net cash provided by financing activities | $71 | $21,604 | - Net cash used in operating activities increased to **$(10,085) thousand** in Q1 2022, primarily due to a net loss of **$(25,772) thousand**[107](index=107&type=chunk) - Net cash used in investing activities significantly increased to **$(14,673) thousand** in Q1 2022, mainly due to purchases of property and equipment[109](index=109&type=chunk) - Net cash provided by financing activities decreased to **$71 thousand** in Q1 2022, compared to **$21,604 thousand** in Q1 2021[110](index=110&type=chunk)[111](index=111&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company has not entered into any off-balance sheet arrangements[112](index=112&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no changes to the Company's critical accounting policies and estimates from those described in the Annual Report[113](index=113&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) - For information about recent accounting pronouncements, refer to Note 2 of the Unaudited Condensed Consolidated Financial Statements[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically inflation and interest rate risks [Inflation Risk](index=31&type=section&id=Inflation%20Risk) - The company does not believe inflation has had a material effect on its business to date[116](index=116&type=chunk) - However, significant inflationary pressures on costs that cannot be offset by price increases could harm the business[116](index=116&type=chunk) [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) - Borrowings under the Senior Facility expose the company to market risk from changes in interest rates[117](index=117&type=chunk) - As of March 31, 2022, there was **no outstanding balance** under the Senior Facility[117](index=117&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls, identifying a material weakness and outlining remediation [Evaluation of Disclosure Controls and Procedures](index=31&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of March 31, 2022, the company's disclosure controls and procedures were **not effective** due to a continuing material weakness[118](index=118&type=chunk) - The material weakness is related to the **lack of adequate finance and accounting personnel**[118](index=118&type=chunk) [Remediation Plan](index=31&type=section&id=Remediation%20Plan) - Management is continuing to implement the remediation plan disclosed in the Annual Report on Form 10-K[119](index=119&type=chunk) - The material weakness will be considered remediated only after management concludes controls are effectively designed and operating[120](index=120&type=chunk) [Changes in Internal Control over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No other material changes in internal control over financial reporting occurred during Q1 2022[121](index=121&type=chunk) [Part II – Other Information](index=32&type=section&id=Part%20II%20%E2%80%93%20OTHER%20INFORMATION) This part contains information on legal proceedings, risk factors, unregistered sales of securities, and filed exhibits [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the financial statement notes for information regarding any legal proceedings involving the company - Information regarding legal proceedings can be found in Note 11, Commitments and Contingencies, to the financial statements[124](index=124&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This section details risks that could materially affect the business, from operations and growth to market and regulatory factors [Summary Risk Factors](index=32&type=section&id=Summary%20Risk%20Factors) - The company is an **early-stage entity with a history of losses**, requiring additional financing to achieve its goals[127](index=127&type=chunk)[128](index=128&type=chunk) - Risks include liabilities from the **Pete's Acquisition**, reliance on a limited number of facilities, and difficulty forecasting future results[127](index=127&type=chunk)[128](index=128&type=chunk) - Other risks encompass the ability to decrease cost of goods sold, potential damage to facilities, and competition in the natural food market[128](index=128&type=chunk) [Risks Related to Local Bounti's Business](index=36&type=section&id=Risks%20Related%20to%20Local%20Bounti's%20Business) - Local Bounti is an early-stage company with a history of losses and expects to incur **significant expenses and continuing losses**[130](index=130&type=chunk)[131](index=131&type=chunk) - The company will require **additional financing** to achieve its goals, and failure to obtain it could force delays or termination of operations[133](index=133&type=chunk)[134](index=134&type=chunk) - Local Bounti relies on a **limited number of facilities**, making operations vulnerable to adverse changes or developments[135](index=135&type=chunk)[137](index=137&type=chunk) - The build-out of new facilities will require **significant capital expenditures** and is subject to delays and unexpected costs[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - The company's ability to decrease cost of goods sold depends on scaling operations, which may be hindered by inflation or supply chain interruptions[141](index=141&type=chunk) - Damage or problems with CEA facilities could severely impact operations and financial condition[142](index=142&type=chunk)[143](index=143&type=chunk) - Failure to attract and retain a skilled local labor force could negatively impact business and results of operations[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk) - Failure to develop and maintain its brand, or negative publicity, could harm the business and competitive position[150](index=150&type=chunk)[151](index=151&type=chunk) - Estimates of market opportunity and forecasts of market growth may be inaccurate[152](index=152&type=chunk) - The effects of **COVID-19** and other public health crises on business, operating results, and cash flows are uncertain[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Inability to maintain company culture as it grows could harm the business and competitive position[159](index=159&type=chunk) - Local Bounti may be unable to successfully execute its growth strategy, which could adversely affect financial results[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Operating costs may be higher than expected due to fluctuating utility prices or increased labor costs[175](index=175&type=chunk)[176](index=176&type=chunk) - Incorrect estimates relating to critical accounting policies could adversely affect results of operations[177](index=177&type=chunk) - Operating as a public company will incur increased costs and require substantial management time[178](index=178&type=chunk) - The company has identified **material weaknesses in internal control over financial reporting**, which could lead to inaccurate financial reporting[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk) - The ability to use **net operating loss carryforwards (NOLs)** may be limited due to potential ownership changes[184](index=184&type=chunk) [Risks Related to the Natural Food Market](index=46&type=section&id=Risks%20Related%20to%20the%20Natural%20Food%20Market) - Local Bounti faces inherent risks in the CEA business, including plant diseases and pest infestations[185](index=185&type=chunk)[186](index=186&type=chunk) - The company operates in a **highly competitive natural foods market**, facing competition from large-scale operations and other indoor growers[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The ability to grow revenue is dependent on increasing crop yield and quality[193](index=193&type=chunk) [Risks Related to Local Bounti's Technology, Intellectual Property and Infrastructure](index=47&type=section&id=Risks%20Related%20to%20Local%20Bounti's%20Technology,%20Intellectual%20Property%20and%20Infrastructure) - Local Bounti may need to defend itself against **intellectual property infringement claims**, which could be time-consuming and expensive[194](index=194&type=chunk) - The loss of any registered trademark or other intellectual property could enable competitors and damage brand reputation[195](index=195&type=chunk)[196](index=196&type=chunk) - Reliance on information technology systems means any failure or security breach could harm the ability to operate the business[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Risks related to the Pete's Acquisition](index=48&type=section&id=Risks%20related%20to%20the%20Pete's%20Acquisition) - The Pete's Acquisition involves **significant capital investment and integration difficulties**, which may detract from core operations[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - Failure to successfully integrate Pete's business could prevent the realization of anticipated acquisition benefits[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Pete's operations are subject to federal, state, and local environmental laws, which could lead to increased costs and penalties[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - The acquisition may lead to increased costs for accounting, internal controls, and compliance[215](index=215&type=chunk)[216](index=216&type=chunk) - Pete's existing facilities may not be adaptable to Local Bounti's new technologies[217](index=217&type=chunk) - Supply chain disruptions could lead to construction delays at acquired facilities, impacting liquidity[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Following the acquisition, operating facilities are concentrated in Montana, California, and Georgia, increasing regional risk[221](index=221&type=chunk) - **Lack of sufficient water**, particularly in California due to drought, could severely impact production[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [Risks Related to our Customers](index=52&type=section&id=Risks%20Related%20to%20our%20Customers) - Local Bounti could be adversely affected by changes in consumer preferences and spending habits[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - Demand for greens and herbs is subject to seasonal fluctuations, which may adversely impact results[230](index=230&type=chunk) - The loss or significant reduction in orders from top retail customers could have a material adverse impact on the business[231](index=231&type=chunk) [Risks Related to Legal Matters and Regulations](index=53&type=section&id=Risks%20Related%20to%20Legal%20Matters%20and%20Regulations) - The unavailability or elimination of government and economic incentives could negatively impact the business[232](index=232&type=chunk)[233](index=233&type=chunk) - Local Bounti may be subject to litigation and government inquiries with unpredictable outcomes[234](index=234&type=chunk)[235](index=235&type=chunk) - The business involves significant risks that may not be fully covered by insurance[236](index=236&type=chunk) - Future operations could expose the company to material environmental and regulatory liabilities[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - Political issues and changes in legislation could significantly impact the business[241](index=241&type=chunk) - **Product contamination or food-safety incidents** could expose Local Bounti to lawsuits, product recalls, and reduced demand[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Real or perceived quality or food-safety issues could diminish its brand and reputation[245](index=245&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Local Bounti's operations are subject to extensive regulation by the USDA, FDA, and other authorities[249](index=249&type=chunk)[250](index=250&type=chunk) - Failure by suppliers or distribution partners to comply with regulations could disrupt supply and harm reputation[251](index=251&type=chunk) [Risks Related to Local Bounti's Term Loan Facility](index=57&type=section&id=Risks%20Related%20to%20Local%20Bounti's%20Term%20Loan%20Facility) - The credit facility with Cargill Financial is **secured by all of the company's assets**, including intellectual property[253](index=253&type=chunk) - An uncured event of default could grant Cargill Financial the right to foreclose on all assets[253](index=253&type=chunk) [Risks Relating to Ownership of Our Securities](index=57&type=section&id=Risks%20Relating%20to%20Ownership%20of%20Our%20Securities) - The price of Local Bounti's securities may be **volatile or decline** regardless of operating performance[254](index=254&type=chunk) - Local Bounti has **never paid cash dividends** and does not anticipate doing so in the foreseeable future[255](index=255&type=chunk) - Anti-takeover provisions could impair takeover attempts, potentially limiting stockholders' opportunity to receive a premium[256](index=256&type=chunk) - The company is subject to risks related to taxation in the United States, including potential changes in tax laws[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - The company's application for a PPP Loan could be determined impermissible, potentially leading to penalties[265](index=265&type=chunk)[266](index=266&type=chunk) - As a holding company, Local Bounti is dependent on distributions from its subsidiaries to pay taxes and cover expenses[267](index=267&type=chunk)[268](index=268&type=chunk) - There is no guarantee that public warrants will be in the money, and they may expire worthless[269](index=269&type=chunk)[270](index=270&type=chunk) - The company may redeem unexpired warrants prior to their exercise at a disadvantageous time for holders[271](index=271&type=chunk)[272](index=272&type=chunk) - Future issuance of a substantial number of additional shares would dilute existing shareholders' interests[273](index=273&type=chunk) - The NYSE may delist the company's securities, limiting investors' ability to transact[274](index=274&type=chunk)[275](index=275&type=chunk) - Future sales of shares by existing stockholders may adversely affect the market price of common stock[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - If securities or industry analysts cease publishing research or change recommendations adversely, the stock price could decline[283](index=283&type=chunk) - As an **'emerging growth company'**, Local Bounti takes advantage of certain exemptions from reporting requirements[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities occurred during the reporting period that were not previously disclosed - There were no unregistered sales of equity securities during the period that were not previously reported on a Form 8-K[287](index=287&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed as part of the Quarterly Report, including agreements, certifications, and financial data Exhibits List | Exhibit Number | Description | | :------------- | :---------- | | 2.1* | Business Combination Agreement, dated as of June 17, 2021 | | 3.1 | Certificate of Incorporation of Local Bounti Inc. | | 3.2 | Certificate of Amendment to Certificate of Incorporation of Local Bounti Corporation | | 3.3 | Bylaws of Local Bounti Inc. | | 31.1 | Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2** | Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101 | The following financial statements from Local Bounti's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL: (a) Unaudited Condensed Consolidated Statements of Cash Flows, (b) Unaudited Condensed Consolidated Statements of Operations, (c) Condensed Consolidated Balance Sheets, and (d) Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | | 104 | Cover Page Interactive Data File - the cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included in Exhibit 101). | [Signatures](index=66&type=section&id=SIGNATURES) This part contains the authorized signatures of the company's principal officers, affirming the report's submission [Signatures](index=66&type=section&id=Signatures) This section contains the duly authorized signatures of the company's principal executive, financial, and accounting officers - The report is signed by Craig M. Hurlbert (Co-Chief Executive Officer), Kathleen Valiasek (Chief Financial Officer), and Daniel Martinelli (Chief Accounting Officer) on May 12, 2022[293](index=293&type=chunk)

Local Bounti Corporation (NYSE:LOCL) Q1 2022 Earnings Conference Call May 9, 2022 5:00 PM ET Company Participants Craig M. Hurlbert – Co-Chief Executive Officer and Chairman of the Board Jeff Sonnek – Managing Director, ICR Brian Cook – President Travis Joyner – Co-Chief Executive Officer and Director Kathleen Valiasek – Chief Financial Officer Conference Call Participants Kristen Owen – Oppenheimer Holdings Chris Barnes – Deutsche Bank Securities Ben Klieve – Lake Street Capital Markets Brian Wright – ROTH ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ 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 (Commission File Number) (I.R.S Employer Identific ...

Local Bounti Corporation (NYSE:LOCL) Q4 2021 Earnings Conference Call March 15, 2022 8:30 AM ET Company Participants Jeff Sonnek - Managing Director, ICR Craig Hurlbert - Co-Chief Executive Officer and Chairman of the Board Brian Cook - President and CEO, Pete's Travis Joyner - Co-Chief Executive Officer and Director Kathleen Valiasek - Chief Financial Officer Conference Call Participants Colin Rusch - Oppenheimer Ben Klieve - Lake Street Capital Markets Chris Barnes - Deutsche Bank Securities Brian Wright ...

Investor Presentation March 15, 2022 Strictly Confidential ©2022 Local Bounti Corp Disclaimer FORWARD LOOKING STATEMENTS This presentation of Local Bounti Corporation ("Local Bounti" or the "Company") includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "future," "growth," "opportunity," "well-positioned," "forecast," "intend," "seek," "ta ...

Table of Contents Washington, D.C. 20549 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to LEO HOLDINGS III CORP (Exact name of registrant as specified in its charter) Cayman Islands 001-40125 98-1584830 (State or other jurisdiction of incorporation or organization) (Commission File Number) (IRS Employer Identification No.) P.O. Box SP-63158 New Providence, Nassau, The Bah ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and explanatory notes for Leo Holdings III Corp [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and comprehensive notes for Leo Holdings III Corp [Unaudited Condensed Consolidated Balance Sheet](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheet%20as%20of%20June%2030%2C%202021) This balance sheet provides a snapshot of the company's assets, liabilities, and shareholders' equity as of June 30, 2021 | Assets/Liabilities/Equity | June 30, 2021 | | :------------------------ | :------------ | | **Assets:** | | | Cash | $460,232 | | Prepaid expenses | $919,083 | | Total current assets | $1,379,315 | | Investments in Trust Account | $275,006,781 | | **Total Assets** | **$276,386,096** | | **Liabilities:** | | | Accounts payable | $11,500 | | Accrued expenses | $122,328 | | Total current liabilities | $133,828 | | Deferred underwriting commissions | $9,625,000 | | Warrant liabilities | $12,566,666 | | **Total Liabilities** | **$22,325,494** | | **Shareholders' Equity:** | | | Class A ordinary shares (subject to redemption) | $249,060,600 | | Class A ordinary shares | $259 | | Class B ordinary shares | $688 | | Additional paid-in capital | $9,305,166 | | Accumulated deficit | $(4,306,111) | | **Total Shareholders' Equity** | **$5,000,002** | | **Total Liabilities and Shareholders' Equity** | **$276,386,096** | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202021%20and%20for%20the%20Period%20from%20January%208%2C%202021%20%28Inception%29%20through%20June%2030%2C%202021) This statement details the company's operating expenses and net loss for the three months and period ended June 30, 2021 | Operating Expenses/Income (Loss) | Three Months Ended June 30, 2021 | Period from Jan 8, 2021 (Inception) through June 30, 2021 | | :------------------------------- | :------------------------------- | :-------------------------------------------------------- | | General and administrative expenses | $461,434 | $586,376 | | Administrative fee - related party | $27,884 | $37,561 | | Loss from operations | $(489,318) | $(623,937) | | Change in fair value of warrant liabilities | $(4,821,666) | $(3,413,333) | | Offering costs associated with issuance of warrants | — | $(275,622) | | Net gain from investments held in Trust Account | $6,781 | $6,781 | | **Net loss** | **$(5,304,203)** | **$(4,306,111)** | | Basic and diluted net income per share, Class A ordinary shares | $0.00 | $0.00 | | Basic and diluted net loss per share, Class B ordinary shares | $(0.77) | $(0.65) | [Unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity%20for%20the%20Period%20from%20January%208%2C%202021%20%28Inception%29%20through%20June%2030%2C%202021) This statement outlines the changes in the company's shareholders' equity from inception through June 30, 2021 | Item | Class A Shares Amount | Class B Shares Amount | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total Shareholders' Equity | | :------------------------------------------------ | :-------------------- | :-------------------- | :------------------------- | :-------------------------------------- | :------------------------- | | Balance - January 8, 2021 (inception) | $— | $— | $— | $— | $— | | Issuance of Class B ordinary shares to Sponsor | — | $690 | $24,310 | — | $25,000 | | Sale of units in initial public offering, less fair value of warrant liabilities for public warrants | $2,750 | — | $270,377,250 | — | $270,380,000 | | Offering costs | — | — | $(15,504,954) | — | $(15,504,954) | | Excess cash received over the fair value of the private warrants | — | — | $3,466,667 | — | $3,466,667 | | Class A ordinary shares subject to possible redemption | $(2,544) | — | $(254,362,256) | — | $(254,364,800) | | Net income | — | — | — | $998,092 | $998,092 | | Balance - March 31, 2021 (unaudited) | $206 | $690 | $4,001,017 | $998,092 | $5,000,005 | | Class B ordinary shares forfeited | — | $(2) | $2 | — | $— | | Class A ordinary shares subject to possible redemption | $53 | — | $5,304,147 | — | $5,304,200 | | Net loss | — | — | — | $(5,304,203) | $(5,304,203) | | **Balance - June 30, 2021 (unaudited)** | **$259** | **$688** | **$9,305,166** | **$(4,306,111)** | **$5,000,002** | [Unaudited Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows%20for%20the%20Period%20from%20January%208%2C%202021%20%28Inception%29%20through%20June%2030%2C%202021) This statement presents the cash inflows and outflows from operating, investing, and financing activities for the period ended June 30, 2021 | Cash Flow Activity | Period from Jan 8, 2021 (Inception) through June 30, 2021 | | :----------------- | :-------------------------------------------------------- | | Net loss | $(4,306,111) | | Adjustments to reconcile net loss to net cash used in operating activities: | | | Change in fair value of warrant liabilities | $3,413,333 | | Offering costs associated with issuance of warrants | $275,622 | | Net gain from investments held in Trust Account | $(6,781) | | Changes in operating assets and liabilities: | | | Prepaid expenses | $(894,083) | | Accounts payable | $11,500 | | Accrued expenses | $37,328 | | **Net cash used in operating activities** | **$(1,469,192)** | | Cash deposited in Trust Account | $(275,000,000) | | **Net cash used in investing activities** | **$(275,000,000)** | | Proceeds from note payable to related party | $111,835 | | Repayment of note payable to related party | $(111,835) | | Proceeds received from initial public offering, gross | $275,000,000 | | Proceeds received from private placement | $8,000,000 | | Offering costs paid | $(6,070,576) | | **Net cash provided by financing activities** | **$276,929,424** | | **Net increase in cash** | **$460,232** | | Cash - beginning of the period | $— | | **Cash - end of the period** | **$460,232** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1 — Description of Organization and Business Operations](index=8&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Organization%20and%20Business%20Operations) This note describes the company's formation as a SPAC, its IPO, private placement, and proposed merger with Local Bounti Corporation - **Leo Holdings III Corp** was incorporated on January 8, 2021, as a Cayman Islands exempted company, formed as a blank check company (SPAC) to effect a business combination, primarily targeting the consumer sector[21](index=21&type=chunk) - The company consummated its Initial Public Offering (IPO) on March 2, 2021, raising **$275.0 million** from 27,500,000 units at $10.00 per unit, incurring approximately **$15.8 million** in offering costs[23](index=23&type=chunk) - Simultaneously with the IPO, a private placement of 5,333,333 warrants at $1.50 each generated **$8.0 million**, with proceeds from both the IPO and private placement totaling **$275.0 million** placed into a Trust Account[24](index=24&type=chunk)[25](index=25&type=chunk) - On June 17, 2021, the Company entered into a merger agreement with **Local Bounti Corporation**, which will result in Local Bounti becoming a wholly-owned subsidiary of the Company after the merger[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 2 — Basis of Presentation and Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the financial statement presentation, adherence to GAAP, and key accounting policies, including warrant classification and temporary equity - The financial statements are presented in U.S. dollars, conform to **GAAP**, and include normal recurring adjustments; the company is an 'emerging growth company' and has elected to use the extended transition period for new accounting standards[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - The company classifies its warrants as **derivative warrant liabilities** at fair value, subject to re-measurement each reporting period, with changes recognized in the statements of operations[54](index=54&type=chunk)[56](index=56&type=chunk) - **Class A ordinary shares subject to possible redemption** are classified as temporary equity due to redemption rights outside the company's control[58](index=58&type=chunk) [Note 3 — Initial Public Offering](index=15&type=section&id=Note%203%20%E2%80%94%20Initial%20Public%20Offering) This note details the company's IPO, including gross proceeds, unit structure, and associated offering costs - On March 2, 2021, the Company completed its IPO of **27,500,000 units** at **$10.00 per unit**, generating **$275.0 million** gross proceeds, with each unit including one Class A ordinary share and one-fifth of one redeemable warrant[67](index=67&type=chunk) - Offering costs for the IPO amounted to approximately **$15.8 million**, with **$9.6 million** allocated to deferred underwriting commissions[67](index=67&type=chunk) [Note 4 — Private Placement Warrants](index=15&type=section&id=Note%204%20%E2%80%94%20Private%20Placement%20Warrants) This note describes the private placement of warrants, including proceeds, exercise terms, and redemption characteristics - Concurrently with the IPO, the Company completed a private placement of **5,333,333 Private Placement Warrants** to the Sponsor at **$1.50 per warrant**, raising **$8.0 million**[68](index=68&type=chunk) - These warrants are exercisable for one Class A ordinary share at **$11.50 per share**, are non-redeemable, and exercisable on a cashless basis when held by the Sponsor or permitted transferees[69](index=69&type=chunk) [Note 5 — Related Party Transactions](index=15&type=section&id=Note%205%20%E2%80%94%20Related%20Party%20Transactions) This note discloses transactions with related parties, including founder share issuance, loans, and administrative service fees - The Sponsor acquired **6,900,000 Class B ordinary shares** (Founder Shares) for **$25,000**, with 25,000 Founder Shares forfeited due to partial exercise of the over-allotment option, resulting in **6,875,000 Class B shares** outstanding[71](index=71&type=chunk) - The Sponsor loaned the Company approximately **$112,000**, which was repaid in full on March 3, 2021, with potential future Working Capital Loans for business combination transaction costs[73](index=73&type=chunk)[74](index=74&type=chunk) - The Company pays the Sponsor **$10,000 per month** for administrative services, incurring **$28,000** for the three months ended June 30, 2021, and **$38,000** from inception through June 30, 2021[76](index=76&type=chunk) [Note 6 — Commitments and Contingencies](index=16&type=section&id=Note%206%20%E2%80%94%20Commitments%20and%20Contingencies) This note outlines the company's registration rights, deferred underwriting commissions, and potential COVID-19 impacts - The Company has **registration rights agreements** with holders of Founder Shares, Private Placement Warrants, and potential Working Capital Loan warrants[77](index=77&type=chunk) - The underwriter received a **$5.5 million** underwriting discount at IPO closing, with an additional **$9.6 million** in deferred underwriting commissions payable upon completion of a Business Combination[79](index=79&type=chunk) - Management acknowledges the potential negative effect of the **COVID-19 pandemic** on the Company's financial position and search for a target, though the specific impact is not yet determinable[80](index=80&type=chunk) [Note 7 — Warrants](index=17&type=section&id=Note%207%20%E2%80%94%20Warrants) This note details the terms, exercisability, and redemption conditions for both public and private warrants - **Public Warrants** become exercisable 30 days after a Business Combination or 12 months from IPO closing, provided a registration statement is effective, and expire five years after a Business Combination or earlier upon redemption/liquidation[82](index=82&type=chunk)[83](index=83&type=chunk) - The Company may redeem Public Warrants at **$0.01 per warrant** if Class A ordinary shares trade at or above **$18.00** for 20 trading days within a 30-day period[86](index=86&type=chunk) - **Private Placement Warrants** are identical to Public Warrants but are non-redeemable and exercisable on a cashless basis as long as held by initial purchasers or permitted transferees[84](index=84&type=chunk) [Note 8 — Shareholders' Equity](index=18&type=section&id=Note%208%20%E2%80%94%20Shareholders%27%20Equity) This note specifies the authorized and outstanding share capital, including Class A and Class B ordinary shares, and their conversion terms - The Company is authorized to issue **5,000,000 preference shares**, **500,000,000 Class A ordinary shares**, and **50,000,000 Class B ordinary shares**[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - As of June 30, 2021, there were **2,593,940 Class A ordinary shares** outstanding (excluding 24,906,060 subject to redemption) and **6,875,000 Class B ordinary shares** outstanding[92](index=92&type=chunk)[93](index=93&type=chunk) - **Class B ordinary shares** will automatically convert into Class A ordinary shares upon the consummation of the initial Business Combination, at a ratio ensuring they represent **20%** of the total outstanding shares post-IPO and equity-linked securities[95](index=95&type=chunk) [Note 9 — Fair Value Measurements](index=19&type=section&id=Note%209%20%E2%80%94%20Fair%20Value%20Measurements) This note explains the fair value measurement of investments and warrant liabilities, including valuation methodologies and recognized changes Fair Value Measured as of June 30, 2021 | Item | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------ | :---------- | :------ | :---------- | :---------- | | Investments held in Trust Account – U.S. Treasury Securities | $275,006,781 | $— | $— | $275,006,781 | | Warrant liabilities – public warrants | $6,380,000 | $— | $— | $6,380,000 | | Warrant liabilities – private warrants | $— | $— | $6,186,666 | $6,186,666 | - The Company recognized a loss in the fair value of warrant liabilities of approximately **$4.8 million** for the three months ended June 30, 2021, and **$3.4 million** from inception through June 30, 2021[98](index=98&type=chunk) - The fair value of Private Warrants and Public Warrants (prior to active trading) is determined using a **Monte-Carlo simulation model**, relying on assumptions for stock-price volatility, expected life, risk-free interest rate, and dividend yield[98](index=98&type=chunk)[100](index=100&type=chunk) [Note 10 — Subsequent Events](index=20&type=section&id=Note%2010%20%E2%80%94%20Subsequent%20Events) This note confirms that no subsequent events requiring adjustment or disclosure were identified up to the financial statement issuance date - The Company evaluated subsequent events up to the financial statement issuance date and identified **no events requiring adjustment or disclosure**[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, liquidity, and critical accounting policies [Overview](index=21&type=section&id=Overview) This overview describes the company's formation as a SPAC, its IPO, private placement, and the requirement for a business combination - **Leo Holdings III Corp** is a blank check company formed on January 8, 2021, for the purpose of effecting a business combination, focusing on the consumer sector[105](index=105&type=chunk) - The company completed its IPO on March 2, 2021, raising **$275.0 million**, and a private placement generating **$8.0 million**, with **$275.0 million** of these proceeds placed in a Trust Account[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) - The company must complete a business combination with an aggregate fair market value of at least **80%** of the assets held in the Trust Account[109](index=109&type=chunk) [Proposed Business Combination](index=22&type=section&id=Proposed%20Business%20Combination) This section details the company's definitive merger agreement with Local Bounti Corporation - On June 17, 2021, the Company entered into a merger agreement with **Local Bounti Corporation**, which will result in Local Bounti becoming a wholly-owned subsidiary of the Company[112](index=112&type=chunk)[113](index=113&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, working capital, and sources of liquidity to meet operational needs - As of June 30, 2021, the Company had approximately **$460,000** in its operating bank account and working capital of approximately **$1.2 million**[115](index=115&type=chunk) - Liquidity needs have been met through a **$25,000** contribution from the Sponsor, a **$112,000** loan from the Sponsor (repaid), and net proceeds from the Private Placement not held in the Trust Account[116](index=116&type=chunk) - Management believes the Company has **sufficient working capital and borrowing capacity** to meet its needs through the earlier of a business combination or one year from the filing date[117](index=117&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's net loss for the reporting periods, highlighting key expense drivers - For the three months ended June 30, 2021, the Company reported a **net loss of approximately $5.3 million**[121](index=121&type=chunk) - The net loss for the three months was primarily driven by **$461,000 in general and administrative expenses**, **$28,000 in related party administrative fees**, and a **$4.8 million loss** from the change in fair value of warrant liabilities[121](index=121&type=chunk) - From inception (January 8, 2021) through June 30, 2021, the Company had a **net loss of approximately $4.3 million**, including **$586,000 in G&A**, **$38,000 in administrative fees**, **$3.4 million loss** from warrant fair value changes, and **$276,000 in offering costs**[122](index=122&type=chunk) [Contractual Obligations](index=23&type=section&id=Contractual%20Obligations) This section outlines the company's ongoing administrative service fees and deferred underwriting commissions - The Company pays the Sponsor **$10,000 per month** for administrative services, totaling **$28,000** for the three months ended June 30, 2021, and **$38,000** from inception through June 30, 2021[123](index=123&type=chunk) - The underwriter is entitled to **$9.6 million in deferred underwriting commissions**, payable from the Trust Account upon completion of a Business Combination[127](index=127&type=chunk) [Critical Accounting Policies](index=24&type=section&id=Critical%20Accounting%20Policies) This section discusses the company's key accounting policies, particularly for redeemable shares and warrant liabilities - **Class A ordinary shares subject to possible redemption** are classified as temporary equity due to redemption rights outside the Company's control[128](index=128&type=chunk) - **Warrants issued** are accounted for as derivative warrant liabilities at fair value, with changes recognized in the statements of operations[132](index=132&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) This section addresses the adoption of new accounting standards and their impact on the company's financial statements - The Company adopted **ASU No. 2020-06** on January 1, 2021, which simplifies accounting for convertible instruments, with **no material impact** on its financial position, results of operations, or cash flows[134](index=134&type=chunk) [Off-Balance Sheet Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements as of the reporting date - As of June 30, 2021, the Company did not have **any off-balance sheet arrangements**[136](index=136&type=chunk) [JOBS Act](index=25&type=section&id=JOBS%20Act) This section explains the company's status as an 'emerging growth company' and its election for delayed accounting standard adoption - The Company qualifies as an **'emerging growth company'** under the JOBS Act and has elected to delay the adoption of new or revised accounting standards, which may affect comparability with other public companies[137](index=137&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company, as a smaller reporting company, is not required to provide extensive market risk disclosures. It states that as of June 30, 2021, it was not subject to any material market or interest rate risk due to its investments in short-term U.S. government securities and money market funds - As of June 30, 2021, the Company was **not subject to any material market or interest rate risk**[139](index=139&type=chunk) - Proceeds in the Trust Account are invested in **U.S. government securities** with maturities of 185 days or less or in money market funds, minimizing interest rate risk due to their short-term nature[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section discusses the evaluation of the company's disclosure controls and procedures, noting a previously reported material weakness related to the classification of warrants. Despite this, management believes the financial statements fairly present the company's financial condition. Remediation efforts are ongoing [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the evaluation of disclosure controls, noting a material weakness in warrant classification but affirming fair financial statement presentation - A **material weakness in internal control over financial reporting** was identified, related to the classification of public, private warrants, and units as equity instead of derivative liabilities[142](index=142&type=chunk) - Despite the material weakness, management believes the condensed consolidated financial statements in this Form 10-Q **fairly present the financial condition, results of operations, and cash flows**[143](index=143&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section discusses the absence of material changes in internal control, while outlining ongoing remediation efforts for identified weaknesses - **No changes in internal control over financial reporting** materially affected or are reasonably likely to materially affect internal control during the most recent fiscal quarter[144](index=144&type=chunk) - The Company enhanced processes to identify and apply accounting requirements for complex standards, including increased access to literature and communication, but **remediation is not yet fully complete** as of June 30, 2021[144](index=144&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The Company reported no legal proceedings as of the filing date - There are **no legal proceedings** to report[146](index=146&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The Company stated that there have been no material changes to the risk factors previously disclosed in its final prospectus and prior quarterly report - **No material changes** to the risk factors disclosed in the final prospectus (March 9, 2021) and the Quarterly Report on Form 10-Q (March 31, 2021) as of the date of this report[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20from%20Registered%20Securities) This section details the unregistered sale of equity securities through a private placement of warrants and the use of proceeds from the registered Initial Public Offering, including the amounts placed in the Trust Account and underwriting commissions - The Company consummated a Private Placement of **5,333,333 Private Placement Warrants** at **$1.50 per warrant**, generating gross proceeds of **$8.0 million**[149](index=149&type=chunk) - **$275.0 million** from the Initial Public Offering was placed in the Trust Account, invested in U.S. government treasury bills and money market funds[151](index=151&type=chunk) - The Company paid approximately **$5.5 million** in underwriting discounts and commissions, with an additional **$9.6 million** deferred[152](index=152&type=chunk) [Item 3. Defaults Upon Senior Securities](index=28&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - There were **no defaults upon senior securities**[153](index=153&type=chunk) [Item 4. Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - **Mine Safety Disclosures are not applicable** to the Company[154](index=154&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - There is **no other information** to report[155](index=155&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL taxonomy documents Exhibits Filed | Exhibit Number | Description | | :------------- | :---------- | | 31.1* | Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2* | Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1* | Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 32.2* | Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

Table of Contents LEO HOLDINGS III CORP (Exact name of registrant as specified in its charter) 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, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Cayman Islands 001-40125 98-1584830 (State or other jurisdiction of inc ...