Landec(LFCR) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenues for the three months ended February 23, 2025, were $35,154,000, a slight decrease of 1.5$35,704,000 for the same period in 2024[11] - Gross profit for the nine months ended February 23, 2025, was $26,316,000, representing an increase of 7.1$24,578,000 in the prior year[11] - Operating loss for the three months ended February 23, 2025, was $(9,029,000), compared to a loss of$(895,000) for the same period in 2024[11] - Net loss for the nine months ended February 23, 2025, was $(37,570,000), compared to a net income of$19,096,000 for the same period in 2024[12] - The company reported a basic loss per share of $(0.47) for the three months ended February 23, 2025, compared to earnings of$0.48 per share for the same period in 2024[12] - For the nine months ended February 23, 2025, Lifecore Biomedical reported a net loss of $37,570,000 compared to a net income of$19,096,000 for the same period in 2024[16] Cash and Liquidity - Cash and cash equivalents decreased to $5,417,000 as of February 23, 2025, down from$8,462,000 as of May 26, 2024[9] - The company reported cash and cash equivalents of $5,417,000 at the end of the period, down from$19,091,000 at the beginning of the period[16] - Cash flows from operating activities resulted in a net cash used of $5,553,000 for the nine months ended February 23, 2025, an improvement from$8,459,000 in the prior year[16] - The company believes its cash from operations and available credit will be sufficient to finance operational and capital requirements for at least the next twelve months[173] Assets and Liabilities - Total assets decreased to $237,693,000 as of February 23, 2025, from$253,960,000 as of May 26, 2024[9] - Total liabilities decreased to $190,267,000 as of February 23, 2025, compared to$200,058,000 as of May 26, 2024[9] - The company’s accumulated deficit increased to $(204,093,000) as of February 23, 2025, from$(166,523,000) as of May 26, 2024[9] - The balance of redeemable convertible preferred stock increased to $45,197,000 as of February 23, 2025, from$44,312,000 at the end of the previous reporting period[16] Expenses - Research and development expenses for the three months ended February 23, 2025, were $2,045,000, a decrease of 5.8$2,170,000 in the same period last year[11] - Stock-based compensation increased to $8,343,000 in the nine months ended February 23, 2025, compared to$4,603,000 in the same period of 2024[16] - Total operating expenses for the nine months increased by 37% to $48,888 million, driven by a significant rise in selling, general, and administrative expenses[157] - Operating expenses increased by 48$18.874 million for the three months ended February 23, 2025, compared to $12.789 million for the same period in 2024[141] Debt and Financing - As of February 23, 2025, total debt net of discounts was$124,939 million, slightly up from $124,668 million on May 26, 2024[64] - The Company’s term loan principal is$184,361 million, with a significant portion due in 2029 amounting to $170,325 million[64] - The Term Loan Credit Facility has an effective annual interest rate of 20.9$18,490 million under the restructuring plan, with expected remaining costs of $1,971 million, leading to total expected costs of$16,519 million[48] Revenue Concentration - The Company had significant revenue concentrations during the three months ended February 23, 2025, with two customers accounting for 54% and 18% of total revenues, compared to 52% and 14% in the same period of 2024[89] - Alcon accounted for 43% of the Company's revenues for the nine months ended February 23, 2025, highlighting its significance as a major customer[117] Stock and Equity - Lifecore Biomedical issued common stock, net of fees, amounting to $23,858,000 during the nine months ended February 23, 2025[16] - The Company issued 5,928,775 shares of common stock on October 3, 2024, for gross proceeds of approximately$24,300, with an issuance cost of $467[78] - As of February 23, 2025, the aggregate liquidation preference of the Redeemable Convertible Preferred Stock was$45,455, with $561 of dividends in arrears[80] Operational Highlights - Lifecore's vertically integrated capabilities allow for rapid movement from product development to commercial production, enhancing supply chain efficiency[132] - The FDA completed a GMP inspection of Lifecore in May 2025, with an initial response to observations provided within the expected timeframe[128] - The company has made strategic capital investments to extend its formulation and filling capacity to meet increasing partner demand[131] Compliance and Governance - Certifications of the Principal Executive Officer and Principal Financial Officer were filed pursuant to the Sarbanes-Oxley Act of 2002, ensuring compliance with regulatory requirements[192] - Management is committed to remediating material weaknesses in internal control over financial reporting, including engaging a third-party consultant and enhancing the internal audit function[180]