
Part I – FINANCIAL INFORMATION Financial Statements The unaudited financial statements show a significant sales increase from the Pete's acquisition, but the company continues to face net losses and negative operating cash flow Unaudited Condensed Consolidated Balance Sheets Total assets and liabilities increased, driven by property additions and new debt, while cash and stockholders' equity significantly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $7,468 | $13,666 | | Property and equipment, net | $196,907 | $157,844 | | Total assets | $298,629 | $278,740 | | Liabilities & Equity | | | | Accounts payable | $21,849 | $13,757 | | Long-term debt, net | $122,417 | $119,814 | | Warrant liability | $25,697 | $0 | | Total liabilities | $194,462 | $157,407 | | Total stockholders' equity | $104,167 | $121,333 | Unaudited Condensed Consolidated Statements of Operations Sales surged due to the Pete's acquisition, and the net loss narrowed slightly despite the revenue growth Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Sales | $6,698 | $282 | | Gross profit | $279 | $48 | | Loss from operations | $(19,278) | $(24,159) | | Net loss | $(23,527) | $(25,772) | | Basic and diluted EPS | $(0.23) | $(0.32) | - Stock-based compensation expense decreased significantly to $6.0 million in Q1 2023 from $11.0 million in Q1 2022, primarily impacting selling, general and administrative expenses23 - Depreciation and amortization expense increased substantially to $3.5 million in Q1 2023 from $0.5 million in Q1 2022, reflecting asset additions from acquisitions and facility construction23 Unaudited Condensed Consolidated Statements of Cash Flows The company experienced a net cash decrease of $17.5 million, driven by significant investments in property and equipment, partially offset by financing activities Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,830) | $(10,014) | | Net cash used in investing activities | $(32,685) | $(14,673) | | Net cash provided by financing activities | $23,045 | $0 | | Net decrease in cash | $(17,470) | $(24,687) | Notes to Unaudited Condensed Consolidated Financial Statements Notes highlight significant financing activities, including an expanded credit facility and warrant issuance, and key subsequent events like a sale-leaseback transaction - The company's debt agreements with Cargill Financial were amended multiple times, culminating in the Sixth Amendment on March 28, 2023, which expanded the total facilities from $170 million to up to $280 million to fund construction in Georgia, Texas, and Washington43 - In consideration for the expanded credit facility, Local Bounti issued Cargill Financial 69.6 million warrants with a $1.00 exercise price, recorded as a $25.7 million warrant liability4344 - On April 27, 2023, a subsidiary of the company completed a $35 million sale and leaseback transaction for its Carpinteria and Oxnard, California facilities with a 25-year initial lease term6163 - Stockholders approved an amendment to authorize a reverse stock split at a ratio between 1-for-2 and 1-for-25, to be effected at the board's discretion before June 30, 202459 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the sales increase from the Pete's acquisition, ongoing facility expansion, and recent financing activities to fund growth plans Company Overview and Expansion The company is expanding its production capacity through new facility construction in Georgia, Texas, and Washington, following the Pete's acquisition - The company is expanding its Georgia facility, with 'Stack' zone integration expected to be completed in Q4 2023, adding approximately 40% incremental revenue-generating capacity79 - Construction is underway for a new six-acre facility in Mount Pleasant, Texas, expected to commence operations in Q4 202380 - The Pasco, Washington facility is expected to begin operations in Q1 2024, a slight delay to stagger commissioning with the Texas facility81 Results of Operations Q1 2023 saw a $6.4 million sales increase from the Pete's acquisition and a $6.3 million decrease in SG&A expenses due to lower stock compensation Comparison of Operations (in thousands) | Line Item | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Sales | $6,698 | $282 | $6,416 | | Cost of goods sold | $6,419 | $234 | $6,185 | | Research and development | $3,576 | $1,948 | $1,628 | | Selling, general and administrative | $15,981 | $22,259 | $(6,278) | | Loss from operations | $(19,278) | $(24,159) | $4,881 | | Net loss | $(23,527) | $(25,772) | $2,245 | - The increase in sales was primarily due to the acquisition of Pete's at the beginning of April 2022, which added more than 10,000 retail locations89 - SG&A expenses decreased mainly due to a $5.4 million decrease in stock-based compensation and a $3.9 million decrease in transaction costs related to the Pete's acquisition in the prior year95 Liquidity and Capital Resources Despite a history of losses, management believes current cash, sales, and an expanded credit facility are sufficient for the next 12 months - As of March 31, 2023, the company had an accumulated deficit of $202.8 million and cash and cash equivalents of $7.5 million100 - The credit facility with Cargill Financial provides for advances of up to $280.0 million (plus interest and fees paid in kind) to fund operations and construction104 - Management believes current cash, cash flow from operations, proceeds from the sale leaseback transaction, and borrowing capacity are sufficient to fund cash requirements for the next 12 months103 Quantitative and Qualitative Disclosures About Market Risk The company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company - As a smaller reporting company, Local Bounti is exempt from providing quantitative and qualitative disclosures about market risk113 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level116 - No changes in internal control over financial reporting occurred during the three months ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls117 Part II – OTHER INFORMATION Legal Proceedings The company is not aware of any legal proceedings expected to have a material adverse effect on its financials - Management is not aware of any legal matters that are expected to have a material adverse effect on the company58120 Risk Factors A new risk factor was added regarding the proposed Reverse Stock Split and its potential negative impacts on stock price and liquidity - A new risk factor was disclosed, stating there is no assurance that the proposed Reverse Stock Split will increase the stock price or improve marketability and liquidity, and it could be viewed negatively by investors121 Unregistered Sales of Equity Securities and Use of Proceeds No previously unreported unregistered sales of equity securities occurred during the first quarter of 2023 - The company reported no unregistered sales of equity securities during the period covered by the report that were not previously disclosed122 Exhibits This section lists filed exhibits, including credit agreement amendments and required officer certifications - Key exhibits filed include the Third, Fourth, Fifth, and Sixth Amendments to the Credit Agreements with Cargill Financial, along with required CEO and CFO certifications124