Local Bounti (LOCL) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents Local Bounti Corporation's unaudited condensed consolidated financial statements and notes, outlining financial position, performance, and cash flows Unaudited Condensed Consolidated Balance Sheets Unaudited Condensed Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $426,774 | $428,035 | | Total Current Assets | $24,947 | $18,823 | | Cash and cash equivalents | $5,286 | $937 | | Restricted cash | $7,885 | $6,529 | | Total Liabilities | $559,496 | $528,535 | | Total Current Liabilities | $19,381 | $55,436 | | Long-term debt, net | $478,330 | $416,577 | | Total Stockholders' Deficit | $(132,722) | $(100,500) | - Total assets decreased slightly from $428.0 million at December 31, 2024, to $426.8 million at June 30, 2025. Total liabilities increased from $528.5 million to $559.5 million, while total stockholders' deficit worsened from $(100.5) million to $(132.7) million[23] Unaudited Condensed Consolidated Statements of Operations Unaudited Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Sales | $12,103 | $9,443 | $23,708 | $17,826 | | Cost of goods sold | $10,631 | $8,092 | $20,775 | $15,689 | | Gross profit | $1,472 | $1,351 | $2,933 | $2,137 | | Total operating expenses | $16,922 | $15,215 | $34,117 | $26,300 | | Loss from operations | $(15,450) | $(13,864) | $(31,184) | $(24,163) | | Net loss | $(21,577) | $(25,267) | $(59,252) | $(49,317) | | Net loss attributable to common stockholders | $(21,577) | $(25,267) | $(59,655) | $(49,317) | | Basic and diluted EPS | $(1.63) | $(3.00) | $(5.40) | $(5.89) | | Weighted average common shares outstanding | 13,270,197 | 8,411,226 | 11,051,720 | 8,368,596 | - Sales increased by 28% for the three months ended June 30, 2025, and by 33% for the six months ended June 30, 2025, compared to the respective prior year periods. Despite increased sales, net loss attributable to common stockholders improved by 15% for the three-month period but worsened by 20% for the six-month period. Basic and diluted EPS improved for both periods[25] Unaudited Condensed Consolidated Statements of Stockholders' Deficit Unaudited Condensed Consolidated Statements of Stockholders' Deficit | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------- | :----------------------------- | | Total Stockholders' Deficit | $(100,500) | $(132,722) | | Common Stock Shares Outstanding | 8,656,122 | 21,784,277 | | Additional Paid-in Capital | $322,729 | $349,758 | | Accumulated Deficit | $(423,230) | $(482,482) | - The total stockholders' deficit increased from $(100.5) million at December 31, 2024, to $(132.7) million at June 30, 2025, primarily due to a net loss of $(59.252) million for the six months ended June 30, 2025. Common stock shares outstanding significantly increased from 8.66 million to 21.78 million, largely due to the conversion of Series A Preferred Stock[27] Unaudited Condensed Consolidated Statements of Cash Flows Unaudited Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(18,270) | $(11,084) | | Net cash used in investing activities | $(10,884) | $(59,824) | | Net cash provided by financing activities | $34,859 | $70,187 | | Net change in cash and cash equivalents and restricted cash | $5,705 | $(721) | | Cash and cash equivalents and restricted cash at end of period | $13,171 | $16,174 | - Net cash used in operating activities increased to $(18.3) million for the six months ended June 30, 2025, from $(11.1) million in the prior year. Net cash used in investing activities significantly decreased to $(10.9) million from $(59.8) million. Net cash provided by financing activities decreased to $34.9 million from $70.2 million, leading to a positive net change in cash of $5.7 million, compared to a negative change of $(0.7) million in the prior year[28] Notes to Unaudited Condensed Consolidated Financial Statements 1. Business Description - Local Bounti Corporation, founded in August 2018, is a controlled environment agriculture (CEA) company headquartered in Hamilton, Montana. It specializes in sustainably grown produce, including living lettuce, herbs, and salad kits, utilizing its patented Stack & Flow Technology, a hybrid of vertical and hydroponic greenhouse farming[31] 2. Summary of Significant Accounting Policies - The financial statements are prepared in accordance with U.S. GAAP and include consolidated accounts of the Company and its wholly-owned subsidiaries[32] - A change in presentation for operating expenses now separately presents 'Sales and marketing' and 'General and administrative' for better clarity, with prior periods recast for comparison[33][34] - The adoption of ASU 2023-09 on Income Taxes for the fiscal year ending December 31, 2025, had no interim impact[35] 3. Inventory Inventory | Inventory Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------- | :----------------------------- | :------------------------------- | | Raw materials | $2,870 | $2,349 | | Production | $4,799 | $5,515 | | Finished goods | $227 | $202 | | Inventory allowance | $(868) | $(1,252) | | Total inventory, net | $7,028 | $6,814 | - Net inventory increased slightly from $6.814 million at December 31, 2024, to $7.028 million at June 30, 2025. This was driven by an increase in raw materials and finished goods, partially offset by a decrease in production inventory and a reduced inventory allowance[36] 4. Property and Equipment Property and Equipment | Property and Equipment Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------ | :----------------------------- | :------------------------------- | | Machinery, equipment, and vehicles | $116,785 | $115,373 | | Land | $19,253 | $19,253 | | Buildings and leasehold improvements | $261,172 | $258,864 | | Construction-in-progress | $6,256 | $6,039 | | Less: Accumulated depreciation | $(38,204) | $(28,551) | | Property and equipment, net | $365,262 | $370,978 | - Net property and equipment decreased from $370.978 million at December 31, 2024, to $365.262 million at June 30, 2025, primarily due to increased accumulated depreciation. Depreciation expense for the three months ended June 30, 2025, was $5.0 million, up from $3.0 million in the prior year, and for the six months, it was $10.0 million, up from $5.3 million[37] 5. Accrued Liabilities Accrued Liabilities | Accrued Liability Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------- | :----------------------------- | :------------------------------- | | Interest | $4,968 | $15,293 | | Construction | $79 | $46 | | Payroll | $1,429 | $631 | | Production | $1,069 | $704 | | Professional services | $419 | $295 | | Other | $1,709 | $1,113 | | Total accrued liabilities | $9,673 | $18,082 | - Total accrued liabilities significantly decreased from $18.082 million at December 31, 2024, to $9.673 million at June 30, 2025. This reduction was primarily driven by a substantial decrease in accrued interest from $15.293 million to $4.968 million[38] 6. Debt Debt | Debt Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------ | :----------------------------- | :------------------------------- | | Senior Facility | $312,000 | $413,359 | | Debt premium, net of amortization | $166,330 | — | | Subordinated Facility | — | $54,564 | | Unamortized deferred financing costs | — | $(31,141) | | Total debt | $478,330 | $436,782 | | Less: Short-term portion | — | $(20,205) | | Total long-term debt | $478,330 | $416,577 | - On March 31, 2025, the Company restructured its credit agreements with Cargill Financial through the Eleventh Amendment. This resulted in the cancellation of $139.0 million of Senior Facility loans and $58.0 million of Subordinated Facility loans, reducing the outstanding Senior Facility principal to $312.0 million[41][42] - A debt premium of $181.7 million (net of unamortized debt discount) was recorded and will be amortized as a reduction to interest expense[43] - The Eleventh Amendment was deemed a troubled debt restructuring, with no gain recognized on debt cancellation[43] - The Senior Facility's interest rate is three-month SOFR plus 2.0% (increasing to 6.0% after March 31, 2031), with a maturity date of December 31, 2035[44][46] - Financial covenants include minimum Consolidated Interest Coverage Ratio, minimum liquidity, minimum Consolidated Adjusted EBITDA, and a current ratio[48] 7. Fair Value Measurements Fair Value Measurements | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Money market funds (Level 1) | $11,771 | $7,448 | | Cargill Amended Warrants Liability (Level 3) | $11,412 | $6,403 | - The fair value of the Cargill Amended Warrants Liability increased from $6.403 million at December 31, 2024, to $11.412 million at June 30, 2025[50] - This increase is primarily due to the Eleventh Amendment, which reduced the warrant exercise price from $6.50 to $4.00 per share and extended the expiration date to March 31, 2033, increasing the warrant's value[51] - The fair value is determined using a Black-Scholes model[51] 8. Stockholders' Deficit - On March 31, 2025, the Company completed a $25 million PIPE Investment, issuing 1,771,586 shares of common stock and 10,728,414 shares of Series A Preferred Stock at $2.00 per share[53] - The Series A Preferred Stock was converted to common stock after stockholder approval on June 11, 2025[54] - The Company recognized a $0.4 million deemed dividend to preferred stockholders due to the increase in the Series A Preferred Stock's redemption value[55] - The Company's 2021 Equity Incentive Plan was amended to increase the number of issuable shares by an additional 2,473,042 shares, effective June 11, 2025, following stockholder approval[56] 9. Stock-Based Compensation Stock-Based Compensation | Stock-Based Compensation | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :----------------------- | :---------------------------------------------- | :-------------------------------------------- | | Total RSU expense, net | $2,200 | $2,800 | | Total RSA expense | $0 | $100 | - Total RSU expense, net of amounts capitalized, was $2.2 million for the three months and $2.8 million for the six months ended June 30, 2025, an increase from $1.5 million and $0.3 million respectively in the prior year[57] - All Restricted Common Stock Awards (RSAs) were vested by June 30, 2025, with no remaining compensation cost[58] - As of June 30, 2025, $7.1 million in compensation cost related to unvested RSUs remains unrecognized, expected to be recognized over 1.67 years[58] 10. Net Loss Per Share Net Loss Per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders (in thousands) | $(21,577) | $(25,267) | $(59,655) | $(49,317) | | Weighted average common shares outstanding | 13,270,197 | 8,411,226 | 11,051,720 | 8,368,596 | | Net loss per common share, basic and diluted | $(1.63) | $(3.00) | $(5.40) | $(5.89) | - Basic and diluted net loss per share were the same for all periods presented as all potentially dilutive securities were anti-dilutive[60] - The net loss per common share improved to $(1.63) for the three months ended June 30, 2025, from $(3.00) in the prior year, and to $(5.40) for the six months, from $(5.89) in the prior year[62] 11. Segment Reporting - The Company operates as a single operating and reportable segment, deriving revenue from the production and sale of agricultural produce in the U.S[63] - The Chief Executive Officer, as the chief operating decision maker (CODM), reviews consolidated financial information to make operating decisions and assess performance[64] Segment Net Loss | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenue | $12,103 | $9,443 | $23,708 | $17,826 | | Segment net loss | $(21,577) | $(25,267) | $(59,252) | $(49,317) | 12. Commitments and Contingencies - The Company is involved in various legal proceedings in the ordinary course of business but is currently unaware of any matters expected to have a material adverse effect on its financial position, results of operations, or cash flows[66] 13. Subsequent Events - On August 1, 2025, the Company entered into a Convertible Note and Warrant Purchase Agreement with U.S. Bounti, LLC, for a $10.0 million convertible note (6.0% interest) and a warrant to purchase 550,000 shares at $0.125 per share[67] - The note is convertible into up to 4,000,000 common shares at $2.50 per share, subject to stockholder approval[67] - Concurrently, on August 1, 2025, the Company executed a Twelfth Amendment to its Senior Credit Agreement with Cargill Financial, resulting in the cancellation of $10.0 million of outstanding loans and reducing the principal to $302.0 million[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management provides an analysis of Local Bounti's financial condition, results of operations, business updates, and liquidity for the reported periods Our Mission and Vision - Local Bounti's mission is to revolutionize agriculture by providing fresh, sustainable, locally grown produce to communities[71] - Its vision is to reimagine freshness through transformative innovation and technology, minimizing food miles and ensuring environmentally sustainable, nutritious, and consistent non-GMO products[71] Company Overview - Local Bounti is a CEA company producing sustainably grown living lettuce, herbs, and salad kits using patented Stack & Flow Technology[72] - The company operates six facilities across the U.S. (Montana, California, Georgia, Washington, Texas) and distributes to approximately 13,000 retail locations in 35 states, including major retailers like Walmart and Kroger[72][73] - The company aims to expand production capacity and market reach through new facility construction, existing facility expansion, or acquisitions, while also exploring new product offerings like berries[72][74] - Its technology uses 90% less water and land than traditional agriculture[74] Commercial Facility Update - The Texas facility reconfiguration for flexible head lettuce and cut product production was completed in late July 2025, now operating at full harvestable capacity with automated harvesting equipment installed[75] - Tower upgrades are planned for Georgia (late August), Texas (late August), and Washington (early September) facilities to enhance production efficiency and yield capacity[76] - The company is advancing a seed cost reduction program for Texas and Washington facilities, building on successful implementations in Georgia, with anticipated implementation throughout Q3 and Q4 2025[76] - Additional annualized cost reduction initiatives of $2.5 million to $3 million are targeted for action in H2 2025[76] - Plans for additional capacity expansion across the network, including into the Midwest, remain under review, pending discussions with retailers to optimize facilities for specific products and expand distribution[77] Product Development & Distribution - Local Bounti launched its salad kit line in April 2025 and plans to introduce a new, larger family-sized Caesar salad kit with a multi-national retailer in the Pacific Northwest in Q4[78] - The company is also expanding its partnership with a leading home delivery service, launching four new private label salad kits in mid-September[78] - The relationship with Walmart is growing, with expanded commitments to serve 13 Walmart distribution centers with Conventional Living Butter Lettuce from California and Texas facilities, commencing in late April[79] Factors Affecting Our Financial Condition and Results of Operations - The Company expects to continue expending substantial resources on completing new and expanded facilities, standardizing operating processes, investing in growth opportunities (new products, innovation), and increasing sales and marketing efforts, all of which will impact financial condition and results of operations[80] Results of Operations Sales Sales | Period | Sales (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :------------------- | :------------- | :------------- | | Three Months Ended June 30, 2025 | $12,103 | $2,660 | 28% | | Three Months Ended June 30, 2024 | $9,443 | | | | Six Months Ended June 30, 2025 | $23,708 | $5,882 | 33% | | Six Months Ended June 30, 2024 | $17,826 | | | - Sales increased due to increased production and growth from the Georgia facility and new sales from the Texas and Washington facilities, which began shipping in Q2 2024[84] Cost of Goods Sold Cost of Goods Sold | Period | Cost of Goods Sold (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :------------------------ | :------------- | :------------- | | Three Months Ended June 30, 2025 | $10,631 | $2,539 | 31% | | Three Months Ended June 30, 2024 | $8,092 | | | | Six Months Ended June 30, 2025 | $20,775 | $5,086 | 32% | | Six Months Ended June 30, 2024 | $15,689 | | | - Cost of goods sold increased primarily due to production ramp-up at the new Texas and Washington facilities and increased production at the Georgia facilities[85] - The company expects COGS to decrease as a percentage of sales as the business scales[86] Research and Development Research and Development Expenses | Period | R&D Expenses (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :-------------------- | :------------- | :------------- | | Three Months Ended June 30, 2025 | $6,485 | $1,966 | 44% | | Three Months Ended June 30, 2024 | $4,519 | | | | Six Months Ended June 30, 2025 | $13,462 | $5,456 | 68% | | Six Months Ended June 30, 2024 | $8,006 | | | - Research and development costs increased significantly, driven by additional development of production, harvesting, and post-harvest packaging techniques[87] - This includes production surplus costs related to commercial-scale Stack & Flow Technology and processes at the Washington and Texas facilities[88] Sales and Marketing Sales and Marketing Expenses | Period | Sales & Marketing Expenses (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :------------------------------ | :------------- | :------------- | | Three Months Ended June 30, 2025 | $2,392 | $296 | 14% | | Three Months Ended June 30, 2024 | $2,096 | | | | Six Months Ended June 30, 2025 | $4,506 | $625 | 16% | | Six Months Ended June 30, 2024 | $3,881 | | | - Sales and marketing costs increased due to higher salaries, commissions, benefits, payroll-related expenses, and increased transportation and delivery costs resulting from higher sales volumes[90][91] General, and Administrative General and Administrative Expenses | Period | G&A Expenses (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :-------------------- | :------------- | :------------- | | Three Months Ended June 30, 2025 | $8,045 | $(555) | (6)% | | Three Months Ended June 30, 2024 | $8,600 | | | | Six Months Ended June 30, 2025 | $16,149 | $1,736 | 12% | | Six Months Ended June 30, 2024 | $14,413 | | | - General and administrative expenses decreased by $0.6 million for the three months ended June 30, 2025, due to lower salaries, professional fees, and property tax, partially offset by increased stock-based compensation and depreciation[93] - For the six months, G&A increased by $1.7 million, driven by higher stock-based compensation, depreciation, and insurance, partially offset by decreases in salaries, professional fees, and property tax[94] Change in Fair Value of Warrant Liability Change in Fair Value of Warrant Liability | Period | Change in Fair Value of Warrant Liability (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :--------------------------------------- | :------------- | :------------- | | Three Months Ended June 30, 2025 | $(1,499) | $(2,595) | (237)% | | Three Months Ended June 30, 2024 | $1,096 | | | | Six Months Ended June 30, 2025 | $(5,009) | $(1,925) | 62% | | Six Months Ended June 30, 2024 | $(3,084) | | | - The increase in the fair value of warrant liability is primarily due to the Eleventh Amendment, which decreased the per share exercise price of the Original Warrants from $6.50 to $4.00 and extended the expiration date[95] - This change in terms increased the value of the warrants and the related liability[95] - An additional increase for the three months ended June 30, 2025, was due to a net increase in the closing stock price[95] Interest Expense, net Interest Expense, net | Period | Interest Expense, net (in thousands) | YoY Change ($) | YoY Change (%) | | :-------------------------------- | :--------------------------- | :------------- | :------------- | | Three Months Ended June 30, 2025 | $(4,602) | $7,898 | (63)% | | Three Months Ended June 30, 2024 | $(12,500) | | | | Six Months Ended June 30, 2025 | $(23,440) | $(1,332) | 6% | | Six Months Ended June 30, 2024 | $(22,108) | | | - Interest expense, net, decreased by $7.9 million for the three months ended June 30, 2025, primarily due to a $10.6 million decrease in interest expense from the Eleventh Amendment's principal reduction and a $1.7 million increase in debt premium amortization[97] - This was partially offset by a $4.4 million decrease in capitalized interest (no interest capitalized in Q2 2025)[97] - For the six months, interest expense, net, increased by $1.3 million, driven by a $10.1 million decrease in capitalized interest compared to the prior year (due to Washington and Texas facility construction)[98] - This increase was partially offset by a $7.0 million decrease in interest expense from the Eleventh Amendment and a $1.7 million increase in debt premium amortization[98] Liquidity and Capital Resources - As of June 30, 2025, Local Bounti had an accumulated deficit of $482.5 million and cash and cash equivalents and restricted cash of $13.2 million[99] - The principal amount outstanding under the Cargill Financial credit facility was $312.0 million, all classified as long-term[100] - The CEA business is capital-intensive, with primary liquidity sources being cash on hand, product sales, and Cargill Financial credit facilities[101] - The company expects to incur significant operating costs over the next 12 months and may need additional debt, equity, or sale leaseback financing, with no assurance of availability or favorable terms[102] Cargill Loans - As of June 30, 2025, $312.0 million principal was outstanding on the Senior Facility[103] - The Eleventh Amendment reduced the principal balance and interest rate, and a debt premium will amortize as a reduction to interest expense over the 10-year term[103] - Interest payment terms vary: cash payments on $100 million (2027-2029), cash or PIK on excess over $100 million (2027-2029), cash payments on up to $200 million (2030-2031), cash or PIK on excess over $200 million (2027-2031)[104][105] - After March 31, 2031, all interest is cash-payable[106] - Principal repayment of 50% of free cash flow begins in Q4 2027, with a maturity date of December 31, 2035[106] Financing Obligations - The Company has two financing obligations from sale leaseback transactions for the Montana Facility ($6.9 million, 20-year lease) and the California Facilities ($35 million, 25-year lease)[107] Financing Obligation Payments | Fiscal Year | Financing Obligation Payments (in thousands) | | :---------- | :----------------------------------------- | | Remainder of 2025 | $2,534 | | 2026 | $5,158 | | 2027 | $5,297 | | 2028 | $5,439 | | 2029 | $5,585 | | Thereafter | $115,948 | | Total | $139,961 | Cash Flow Analysis Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(18,270) | $(11,084) | | Net cash used in investing activities | $(10,884) | $(59,824) | | Net cash provided by financing activities | $34,859 | $70,187 | | Cash and cash equivalents and restricted cash at end of period | $13,171 | $16,174 | Net Cash Used In Operating Activities - Net cash used in operating activities was $(18.3) million for the six months ended June 30, 2025, primarily due to a net loss of $(59.3) million, partially offset by non-cash adjustments including $15.3 million in paid-in-kind interest, $5.0 million change in warrant liability, $10.0 million depreciation, and $2.9 million stock-based compensation[110] - For the six months ended June 30, 2024, net cash used in operating activities was $(11.1) million, driven by a net loss of $(49.3) million, partially offset by $21.7 million paid-in-kind interest, $5.3 million depreciation, $4.2 million amortization of debt issuance costs, and $3.1 million change in warrant liability[111] Net Cash Used In Investing Activities - Net cash used in investing activities decreased significantly to $(10.9) million for the six months ended June 30, 2025, from $(59.8) million in the prior year, primarily due to reduced purchases of construction materials, services, and equipment for the Washington and Texas facilities[112] Net Cash Provided By Financing Activities - Net cash provided by financing activities was $34.9 million for the six months ended June 30, 2025, comprising $21.4 million from Series A Preferred Stock issuance, $10.5 million from debt issuance, and $3.5 million from common stock issuance[113] - For the six months ended June 30, 2024, net cash provided by financing activities was $70.2 million, entirely from net proceeds from debt issuance[113] Critical Accounting Policies and Estimates - There have been no changes to the Company's critical accounting policies and estimates from those described in the Annual Report on Form 10-K for the year ended December 31, 2024[114] Recent Accounting Pronouncements - Information regarding recent accounting pronouncements is incorporated by reference from Note 2 of the Unaudited Condensed Consolidated Financial Statements[115] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Local Bounti Corporation is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[116] Item 4. Controls and Procedures This section addresses the effectiveness of Local Bounti's disclosure controls and procedures and reports on any changes in internal control over financial reporting Limitations on effectiveness of control and procedures - Management acknowledges that any controls and procedures, regardless of design, can only provide reasonable assurance of achieving desired control objectives due to inherent limitations and resource constraints[118] Evaluation of Disclosure Controls and Procedures - As of June 30, 2025, management, with the participation of the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level[119] Changes in Internal Control over Financial Reporting - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[120] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 12 of the financial statements for information regarding legal proceedings, indicating no material adverse effects are expected - Information regarding legal proceedings is provided in Note 12, Commitments and Contingencies, to the Unaudited Condensed Consolidated Financial Statements[123] Item 1A. Risk Factors This section updates risk factors, highlighting the significant influence of concentrated ownership and the company's 'controlled company' status under NYSE rules - Following the conversion of Series A Preferred Stock, U.S. Bounti, LLC (controlled by Charles R. Schwab) holds approximately 55% of voting power and Mr. Schwab beneficially owns approximately 60% of outstanding common stock[124] - This concentrated ownership allows significant influence over decisions, including director elections and corporate transactions, potentially delaying or blocking changes in control[124] - The Company qualifies as a 'controlled company' under NYSE rules, which provides exemptions from certain corporate governance requirements (e.g., independent directors majority, independent nominating/compensation committees)[125] - However, the Company does not currently, and does not expect to, rely on these exemptions and complies with all relevant NYSE corporate governance requirements[127] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities during the reporting period that were not previously disclosed in a Current Report on Form 8-K - No unregistered sales of equity securities occurred during the fiscal quarter ended June 30, 2025, that were not previously reported in a Current Report on Form 8-K[126] Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter - No directors or officers informed the Company of the adoption or termination of a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the fiscal quarter ended June 30, 2025[129] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, credit agreements, warrant amendments, and certifications - The exhibits include corporate documents (Certificate of Incorporation, Bylaws), debt restructuring agreements (Eleventh Amendment to Senior Credit Agreement), warrant amendments, securities purchase agreements, investor rights agreements, support agreements, and certifications (CEO/CFO certifications under Sarbanes-Oxley Act)[131] - Financial statements formatted in Inline XBRL (Unaudited Condensed Consolidated Statements of Cash Flows, Operations, Balance Sheets, and Notes) are included as Exhibit 101, with the cover page in Inline XBRL as Exhibit 104[131] SIGNATURES This section contains the signature of the authorized representative of Local Bounti Corporation, confirming the due filing of the report - The report is signed by Kathleen Valiasek, President, Chief Executive Officer, and Chief Financial Officer of Local Bounti Corporation, on August 14, 2025[135]