UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022March 31, 2023
or
 
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to                

Commission File Number001-40125
LOCL Logo.gif
 
LOCAL BOUNTI CORPORATION
(Exact name of registrant as specified in its charter)
 

Delaware98-1584830
(State or other jurisdictionOther Jurisdiction of incorporationIncorporation or organization)Organization)(I.R.S Employer Identification No.)
400 W. Main St.Hamilton,MT59840
(Address of principal executive offices, including zip code)Principal Executive Offices, Including Zip Code)
(800)640-4016
        (Registrant's telephone number, including area code)Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value of $0.0001 per share LOCL New York Stock Exchange
Warrants, each exercisable for one share of Common Stock for $11.50 per share LOCL WS New York Stock Exchange
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
    
Non-accelerated filer ☒ Smaller reporting company ☒
    
    Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Act).    Yes  ☐    No  ☒

The number of outstanding shares of Local Bounti Corporation’s common stock was 103,675,971105,584,835 at November 7, 2022.May 5, 2023.

 
 
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TABLE OF CONTENTS

Page
Part I – FINANCIAL INFORMATION
5
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets at September 30, 2022March 31, 2023 and December 31, 20212022
5
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September
March 31, 2023 and
30, 2022 and 2021
6
Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the three months ended
March 31, 2023 and nine months
ended September 30, 2022 and 2021
7
Unaudited Condensed Consolidated Statements of Cash Flows for the ninethree months ended September 30,
March 31, 2023 and
2022 and 2021
8
Notes to Unaudited Condensed Consolidated Financial Statements
10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3. Quantitative and Qualitative Disclosures About Market Risk
2423
Item 4. Controls and Procedures 
2423
Part II – OTHER INFORMATION
25
Item 1. Legal Proceedings
25
Item 1A. Risk Factors
25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
25
Item 6. Exhibits
2526
SIGNATURES
27

























2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includesand the information incorporated herein by reference contain certain statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by wordsthe use of terms such as "anticipate,"expect," "approximate,"anticipate," "believe," "commit," "continue," "could," "estimate," "expect," "hope," "intend," "may," "outlook," "plan," "project," "potential,"seek," "should," "would,"target," "will," or similar expressions, and other similarvariations or negatives of these words, or expressions. Forward-looking statements reflect Local Bounti’s current expectations or beliefs concerning future events and actual events may differ materially from historical results or current expectations. The readerbut the absence of these words does not mean that a statement is cautioned not to place undue reliance on theseforward-looking.These forward-looking statements which are not a guaranteeinclude, without limitation, statements regarding our ability to raise capital in the future, future financial performance, business strategies including future acquisitions, expansion plans including construction of future performanceCEA facilities, future results of operations, estimated revenues, losses, projected costs, prospects, plans and are subject to a numberobjectives of uncertainties, risks, assumptions, and other factors, many of which are outside the control of Local Bounti.management. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from results expressed or implied in this Quarterly Report on Form 10-Q. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements:

•Local Bounti's ability to effectively integrate the recently acquired operations of Hollandia Produce Group, Inc., which operates under the name Pete's ("Pete's), into our existing operations;
•The uncertainty of projected financial information;
•Local Bounti's increased leverage as a result of additional indebtedness incurred in connection with the recent acquisition of Pete's;
•Restrictions contained in Local Bounti's debt facility agreements with Cargill Financial Services International, Inc. (“Cargill Financial”);
•Local Bounti's ability to repay, refinance, restructure, or extend its indebtedness as it comes due;
•Unknown liabilities that may be assumed in acquisitions;
•Local Bounti's ability to generate significant revenue;
•Thethe risk that Local Bounti may never achieve or sustain profitability;
•Thethe risk that Local Bounti could fail to effectively manage its future growth;
•Thethe risk that Local Bounti will fail to obtain additional necessary capital when needed on acceptable terms or at all;
•Local Bounti's ability to complete the build out of its current or additional facilities;facilities in the future;
•Local Bounti's ability to fulfill its obligations under offtake or other customer agreements and the impact of these types of agreements on operations;
•Reliancereliance on third parties for construction, the risk of delays relating to material delivery and supply chains, and fluctuating material prices;
•Local Bounti's ability to maintainscale its gross margin oroperations and decrease its cost of goods sold over time;
•Thethe potential for damage to or problems with Local Bounti's CEA facilities;
•the impact that current or future acquisitions, investments or expansions of scope of existing relationships have on Local Bounti's business, financial condition, and results of operations;
•unknown liabilities that may be assumed in acquisitions;
•restrictions contained in Local Bounti's debt facility agreements with Cargill Financial Services International, Inc. ("Cargill Financial");
•Local Bounti's ability to attract and retain qualified employees;
•Local Bounti's ability to develop and maintain its brand or brands it may acquire;brands;
•Local Bounti's ability to achieve its sustainability goals;
•Local Bounti's ability to maintain its company culture or focus on its vision as it grows;
•Local Bounti's ability to execute on its growth strategy;
•The risksthe risk of diseases and pests destroying crops;
•Local Bounti's ability to compete successfully in the highly competitive natural food market;
•Local Bounti's ability to defend itself against intellectual property infringement claims;
•ChangesLocal Bounti's ability to effectively integrate the acquired operations of any CEA or similar operations which it acquires into its existing operations;
•changes in consumer preferences, perception, and spending habits in the food industry;
•Thethe risk that seasonality may adversely impact Local Bounti's results of operations;
•Local Bounti's ability to achieverepay, refinance, restructure, or extend its sustainability goals;indebtedness as it comes due;
•Local Bounti's ability to comply with the continued listing requirements of the New York Stock Exchange ("NYSE"); and
•Other risks and uncertainties indicated from time to time, including those underthe other factors discussed in Item 1A, "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in Local Bounti'sof the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022, as supplemented byany updates to those factors set forth in Local Bounti's subsequent Quarterly Reports on Form 10-Q andor Current Reports on Form 8-K,8-K.

The forward-looking statements contained herein are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other reportsassumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward- looking statements. These risks and documents Local Bounti filesuncertainties include, but are not limited to, the "Risk Factors" identified in Part I, Item 1A of the Company's most recent Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time withand it is not possible for us to predict all such risk factors, nor can we assess the SEC.

Local Bounti cautions thateffect of all such risk factors on our business or the foregoing listextent to which any factor or combination of factors is not exclusive and cautions readers notmay cause actual results to place undue reliance upondiffer materially from those contained in any forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Local Bounti does not undertake or accept any obligation or undertaking to update or revise any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

3

statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements. The forward-looking statements made by us in this Quarterly Report on Form 10-Q speak only as of the date made. Local Bounti undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

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

ADDITIONAL INFORMATION
Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to the "Company," "Local Bounti," "we," "us," "our" and similar terms refer to Local Bounti Corporation and its consolidated subsidiaries.
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 PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
September 30,December 31,March 31,December 31,
20222021 20232022
AssetsAssetsAssets
Current assetsCurrent assetsCurrent assets
Cash and cash equivalentsCash and cash equivalents$4,227 $96,661 Cash and cash equivalents$7,468 $13,666 
Restricted cash and cash equivalentsRestricted cash and cash equivalents19,754 4,416 Restricted cash and cash equivalents— 11,272 
Accounts receivable, netAccounts receivable, net2,221 110 Accounts receivable, net2,610 2,691 
Inventory, netInventory, net3,777 922 Inventory, net3,848 3,594 
Prepaid expenses and other current assetsPrepaid expenses and other current assets3,303 3,399 Prepaid expenses and other current assets3,459 2,881 
Total current assetsTotal current assets33,282 105,508 Total current assets17,385 34,104 
Property and equipment, netProperty and equipment, net140,363 37,350 Property and equipment, net196,907 157,844 
Operating lease right-of-use assetsOperating lease right-of-use assets156 55 Operating lease right-of-use assets235 137 
GoodwillGoodwill38,476 — Goodwill38,481 38,481 
Intangible assets, netIntangible assets, net48,949 — Intangible assets, net45,597 47,273 
Other assetsOther assets903 1,017 Other assets24 901 
Total assetsTotal assets$262,129 $143,930 Total assets$298,629 $278,740 



Liabilities and stockholders' equityLiabilities and stockholders' equityLiabilities and stockholders' equity
Current liabilitiesCurrent liabilitiesCurrent liabilities
Accounts payableAccounts payable$8,099 $1,920 Accounts payable$21,849 $13,757 
Accrued liabilitiesAccrued liabilities6,712 16,020 Accrued liabilities10,061 9,426 
Operating lease liabilitiesOperating lease liabilities63 28 Operating lease liabilities81 84 
Total current liabilitiesTotal current liabilities14,874 17,968 Total current liabilities31,991 23,267 
Long-term debt113,584 11,199 
Long-term debt, net of debt issuance costsLong-term debt, net of debt issuance costs122,417 119,814 
Financing obligationFinancing obligation14,241 13,070 Financing obligation14,188 14,139 
Operating lease liabilities, noncurrentOperating lease liabilities, noncurrent84 10 Operating lease liabilities, noncurrent169 187 
Warrant liabilityWarrant liability25,697 — 
Total liabilitiesTotal liabilities142,783 42,247 Total liabilities194,462 157,407 
Commitments and contingencies (Note 11)
Commitments and contingencies (Note 10)Commitments and contingencies (Note 10)
Stockholders' equityStockholders' equityStockholders' equity
Common stock, $0.0001 par value, 400,000,000 shares authorized, 94,330,198 and 86,344,881 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively9 9 
Common stock, 0.0001 par value, 400,000,000 shares authorized, 104,240,153 and 103,700,630 issued and outstanding as of March 31, 2023 and December 31, 2022, respectivelyCommon stock, 0.0001 par value, 400,000,000 shares authorized, 104,240,153 and 103,700,630 issued and outstanding as of March 31, 2023 and December 31, 2022, respectively10 10 
Additional paid-in capitalAdditional paid-in capital272,118 169,916 Additional paid-in capital306,997 300,636 
Accumulated deficitAccumulated deficit(152,781)(68,242)Accumulated deficit(202,840)(179,313)
Total stockholders' equityTotal stockholders' equity119,346 101,683 Total stockholders' equity104,167 121,333 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$262,129 $143,930 Total liabilities and stockholders' equity$298,629 $278,740 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
 
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LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three Months Ended
 September 30,		Nine Months Ended
September 30,		 Three Months Ended March 31,
2022202120222021 20232022
SalesSales$6,285 $159 $12,836 $324 Sales$6,698 $282 
Cost of goods sold(3)(2)
Cost of goods sold(3)(2)
5,015 155 11,535 281 
Cost of goods sold(3)(2)
6,419 234 
Gross profitGross profit1,270 4 1,301 43 Gross profit279 48 
Operating expenses:Operating expenses:Operating expenses:
Research and development(3)(2)
Research and development(3)(2)
3,019 1,418 8,933 2,573 
Research and development(3)(2)
3,576 1,948 
Selling, general and administrative(3)(2)
Selling, general and administrative(3)(2)
20,239 4,269 64,741 15,525 
Selling, general and administrative(3)(2)
15,981 22,259 
Total operating expensesTotal operating expenses23,258 5,687 73,674 18,098 Total operating expenses19,557 24,207 
Loss from operationsLoss from operations(21,988)(5,683)(72,373)(18,055)Loss from operations(19,278)(24,159)
Other income (expense):Other income (expense):Other income (expense):
Management fee income38 18 96 62 
Convertible Notes fair value adjustment— (2,083)— (5,067)
Interest expense, netInterest expense, net(5,154)(3,079)(12,262)(4,752)Interest expense, net(4,299)(1,643)
Other income and expense— (7)— (10)
Other incomeOther income50 30 
Net lossNet loss$(27,104)$(10,834)$(84,539)$(27,822)Net loss$(23,527)$(25,772)
Net loss applicable to common stockholders per basic common share:Net loss applicable to common stockholders per basic common share:Net loss applicable to common stockholders per basic common share:
Basic and dilutedBasic and diluted$(0.30)$(0.22)$(0.98)$(0.57)Basic and diluted$(0.23)$(0.32)
Weighted average common shares outstanding:Weighted average common shares outstanding:Weighted average common shares outstanding:
Basic and dilutedBasic and diluted89,245,019 49,131,555 86,318,432 49,131,555 Basic and diluted100,462,262 81,009,268 

(1) Amounts include the impact for non-cash increase in cost of goods sold attributable to the fair value basis adjustment to inventory in connection with acquisition of Pete's as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Cost of goods sold$— $— $1,042 $— 
Total business combination fair value basis adjustment to inventory$— $— $1,042 $— 

(2) Amounts include stock-based compensation as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended March 31,
2022202120222021 20232022
Cost of goods soldCost of goods sold$29 $— $81 $— Cost of goods sold$87 $5 
Research and developmentResearch and development419 — 1,389 — Research and development738 485 
Selling, general and administrativeSelling, general and administrative10,459 — 32,146 4,942 Selling, general and administrative5,134 10,523 
Total stock-based compensation expense$10,907 $— $33,616 $4,942 
Total stock-based compensation expense, net of amounts capitalizedTotal stock-based compensation expense, net of amounts capitalized$5,959 $11,013 

(3)(2) Amounts include depreciation and amortization as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended March 31,
2022202120222021 20232022
Cost of goods soldCost of goods sold$921 $12 $1,874 $32 Cost of goods sold$936 $62 
Research and developmentResearch and development229 113 760 328 Research and development566 312 
Selling, general and administrativeSelling, general and administrative1,757 17 4,195 32 Selling, general and administrative1,956 167 
Total depreciation and amortizationTotal depreciation and amortization$2,907 $142 $6,829 $392 Total depreciation and amortization$3,458 $541 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

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LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2023 and 2022 and 2021
(in thousands, except share data)

Voting Common StockNon-Voting Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit		Total Stockholders'
Equity		 Voting Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit		Total Stockholders'
Equity
SharesAmountSharesAmount SharesAmount
Balance, December 31, 202186,344,881 $9 — $— $169,916 $(68,242)$101,683 
Balance, December 31, 2022Balance, December 31, 2022103,700,630 $10 $300,636 $(179,313)$121,333 
Vesting of restricted stock units, netVesting of restricted stock units, net120,876 — — — — — — Vesting of restricted stock units, net539,523 — — — — 
Stock-based compensationStock-based compensation— — — — 11,042 — 11,042 Stock-based compensation— — 6,361 — 6,361 
Net lossNet loss— — — — — (25,772)(25,772)Net loss— — — (23,527)(23,527)
Balance, March 31, 202286,465,757 9 — — 180,958 (94,014)86,953 
Issuance of common stock for business combination5,654,600 — — — 50,948 — 50,948 
Issuance of common stock for debt modification1,932,931 — — — 17,416 — 17,416 
Issuance of common stock upon exercise of warrants10 — — — — — — 
Vesting of restricted stock units, net115,166 — — — — — — 
Stock-based compensation— — — — 11,783 — 11,783 
Net loss— — — — — (31,663)(31,663)
Balance, June 30, 202294,168,464 9 — — 261,105 (125,677)135,437 
Vesting of restricted stock units, net161,734 — — — — — — 
Stock-based compensation— — — — 11,013 — 11,013 
Net loss— — — — — (27,104)(27,104)
Balance, September 30, 202294,330,198 $9 — $— $272,118 $(152,781)$119,346 
Balance, March 31, 2023Balance, March 31, 2023104,240,153 $10 $306,997 $(202,840)$104,167 

 Voting Common StockNon-Voting Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit		Total Stockholders'
Equity (Deficit)
 SharesAmountSharesAmount
Balance, December 31, 202058,076,019 $1 8,944,465 $— $9,577 $(12,149)$(2,571)
Issuance of common stock— — 2,086,829 — — — — 
Stock-based compensation— — — — 4,942 — 4,942 
Net loss— — — — — (9,398)(9,398)
Balance, March 31, 202158,076,019 1 11,031,294 — 14,519 (21,547)(7,027)
Net loss— — — — — (7,590)(7,590)
Balance, June 30, 202158,076,019 1 11,031,294 — 14,519 (29,137)(14,617)
Net loss— — — — — (10,834)(10,834)
Balance, September 30, 202158,076,019 $1 11,031,294 $— $14,519 $(39,971)$(25,451)
 Voting Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit		Total Stockholders'
Equity
 SharesAmount
Balance, December 31, 202186,344,881 $9 $169,916 $(68,242)$101,683 
Vesting of restricted stock units, net120,876 — — — — 
Stock-based compensation— — 11,042 — 11,042 
Net loss— — — (25,772)(25,772)
Balance, March 31, 202286,465,757 $9 $180,958 $(94,014)$86,953 


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
 

7

LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,		 Three Months Ended
March 31,
20222021 20232022
Operating Activities:Operating Activities:Operating Activities:
Net lossNet loss$(84,539)$(27,822)Net loss$(23,527)$(25,772)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense3,477 392 
Amortization of intangible assets3,352 — 
Stock-based compensation expense33,616 4,942 
Adjustments to reconcile net loss to cash used in operating activities:Adjustments to reconcile net loss to cash used in operating activities:
DepreciationDepreciation1,782 541 
AmortizationAmortization1,676 — 
Reduction of right-of-use assets from operating leasesReduction of right-of-use assets from operating leases— 28 
Stock-based compensation expense, net of amounts capitalizedStock-based compensation expense, net of amounts capitalized5,959 11,013 
Bad debt allowanceBad debt allowance11 4 Bad debt allowance8 2 
Inventory valuation allowance323 (17)
Inventory allowanceInventory allowance30 — 
Loss on disposal of property and equipmentLoss on disposal of property and equipment252 — Loss on disposal of property and equipment— 196 
Change in fair value - Convertible Notes— 5,067 
Change in fair value - Warrant— 10 
Amortization of debt issuance costsAmortization of debt issuance costs2,791 1,721 Amortization of debt issuance costs981 191 
Interest on financing obligationInterest on financing obligation50 71 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accounts receivableAccounts receivable(68)(85)Accounts receivable76 37 
InventoryInventory2 (370)Inventory(284)(341)
Prepaid expenses and other current assetsPrepaid expenses and other current assets976 (5,110)Prepaid expenses and other current assets4 (186)
Other assetsOther assets2,326 115 Other assets— 112 
Accounts payableAccounts payable5,114 1,673 Accounts payable571 2,619 
Operating lease liabilitiesOperating lease liabilities6 — Operating lease liabilities— (25)
Accrued liabilitiesAccrued liabilities(4,849)4,200 Accrued liabilities4,844 1,500 
Net cash used in operating activitiesNet cash used in operating activities(37,210)(15,280)Net cash used in operating activities(7,830)(10,014)
Investing Activities:Investing Activities:Investing Activities:
Purchases of property and equipmentPurchases of property and equipment(40,863)(14,193)Purchases of property and equipment(32,685)(14,673)
Asset acquisition(25,813)— 
Business combination, net of cash acquired(90,552)— 
Net cash used in investing activitiesNet cash used in investing activities(157,228)(14,193)Net cash used in investing activities(32,685)(14,673)
Financing Activities:Financing Activities:Financing Activities:
Proceeds from issuance of Convertible Notes, net— 26,000 
Proceeds from financing obligations333 3,529 
Proceeds from issuance of debtProceeds from issuance of debt119,351 26,793 Proceeds from issuance of debt23,045 — 
Payment of debt issuance costs(2,342)(1,448)
Repayment of debt— (10,654)
Net cash provided by financing activitiesNet cash provided by financing activities117,342 44,220 Net cash provided by financing activities23,045 — 
Net (decrease) increase in cash and cash equivalents and restricted cash(77,096)14,747 
Net decrease in cash and cash equivalents and restricted cashNet decrease in cash and cash equivalents and restricted cash(17,470)(24,687)
Cash and cash equivalents and restricted cash and cash equivalents at beginning of periodCash and cash equivalents and restricted cash and cash equivalents at beginning of period101,077 45 Cash and cash equivalents and restricted cash and cash equivalents at beginning of period24,938 101,077 
Cash and cash equivalents and restricted cash and cash equivalents at end of periodCash and cash equivalents and restricted cash and cash equivalents at end of period$23,981 $14,792 Cash and cash equivalents and restricted cash and cash equivalents at end of period$7,468 $76,390 

Reconciliation of cash, cash equivalents, and restricted cash from the Unaudited Condensed Consolidated Balance Sheets to the Unaudited Condensed Consolidated Statements of Cash Flows
Cash and cash equivalents$4,227$10,376 
Restricted cash and cash equivalents19,7544,416
Total cash and cash equivalents and restricted cash and cash equivalents as shown in the Unaudited Condensed Consolidated Statements of Cash Flows$23,981$14,792















8

Reconciliation of cash, cash equivalents, and restricted cash from the Unaudited Condensed Consolidated Balance Sheets to the Unaudited Condensed Consolidated Statements of Cash Flows

Non-cash investing and financing activities:
Right-of-use asset obtained in exchange for operating lease liability$388$—
Reduction of right-of-use asset and associated lease liability due to lease cancellation$(203)$—
Purchases of property and equipment included in accounts payable and accrued liabilities$7,168$3,062
Stock-based compensation capitalized to property and equipment, net$222$—
Non-cash financing obligation activity$840$—
Issuance of common stock related to modification of line of credit$17,416$—
Non-cash proceeds from issuance of Convertible Notes for services provided$—$50
Cash and cash equivalents$7,468$71,974 
Restricted cash and cash equivalents—4,416
Total cash and cash equivalents and restricted cash and cash equivalents as shown in the Unaudited Condensed Consolidated Statements of Cash Flows$7,468$76,390

Non-cash activities:
Warrants issued in connection with debt modification$25,697$—
Purchases of property and equipment included in accounts payable and accrued liabilities$7,584$8,161
Stock-based compensation capitalized to property and equipment, net$577$29
Non-cash equity settlement on employee receivable$175$—
Non-cash financing obligation activity$—$840

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
9

LOCAL BOUNTI CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business Description
Description of the Business

Local Bounti Corporation ("Local Bounti" or the "Company") was founded in August 2018 and is headquartered in Hamilton, Montana. The Company is a producer of sustainably grown living lettuce, herbs, and loose leaf lettuce. The Company is a controlled environment agriculture ("CEA") company that utilizes patent pending Stack & Flow TechnologyTM, which is a hybrid of vertical and hydroponic greenhouse farming, to grow healthy food sustainably and affordably. Through the Company's CEA process, its goal is to produce environmentally sustainable products in a manner that will increase harvest efficiency, limit water usage, and reduce the carbon footprint of the production and distribution process. The environmental greenhouse conditions help to ensure nutritional value and taste, and the Company's products are non-GMO and use significantly less pesticides and herbicides than traditional farming operations.

On April 4, 2022, the Company acquired California-based complementary indoor farming company Hollandia Produce Group, Inc. and its subsidiaries (the "Pete's Acquisition"), which operate under the name Pete’s ("Pete's"). Pete’s is a California-based indoor farming company with three greenhouse growing facilities, including two in California and one in Georgia. The Georgia facility became operational in July 2022. Pete’s has distribution to approximately 10,000 retail locations across 35 U.S. states and Canadian provinces, primarily through direct relationships with blue-chip retail customers, including Albertsons, Kroger, Target, Walmart, Whole Foods, and AmazonFresh. Pete’s primary products include living butter lettuce as well as packaged salad and cress. See Note 3, Acquisitions, for additional discussion of the Pete's Acquisition.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
Management of Local Bounti is responsible for the Unaudited Condensed Consolidated Financial Statements included in this document, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the statements herein.
The Unaudited Condensed Consolidated Financial Statements do not include all of the disclosures required by GAAP for annual financial statements and should be read in conjunction with the audited Consolidated Financial Statements of the Company for the year ended December 31, 20212022 (the "Annual Financial Statements") as filed with the SEC. In the opinion of the Company, the accompanying Unaudited Condensed Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary to fairly present its financial position as of September 30, 2022,March 31, 2023, its results of operations for the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, its cash flows for the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, and its stockholders' equity (accumulated deficit) as of September 30,for the three months ended March 31, 2023 and 2022. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 20222023 or any future period. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2021,2022 was derived from the Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.
There have been no material changes or updates to the Company’s significant accounting policies from those described in the Annual Financial Statements and as updated by our Quarterly Reports on Form 10-Qexcept for the quarters ended March 31, 2022 and June 30, 2022.updates noted below.

NewRecently Adopted Accounting Pronouncements
There have been no new accounting pronouncements recentlyIn June 2016, the FASB issued or newly effectiveASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which amends the guidance on reporting credit losses for assets held at amortized cost and available for sale debt securities. For assets held at amortized cost, the amendment eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that had or areis deducted from the amortized cost of the financial assets to present the net amount expected to be collected. The Company adopted this guidance on January 1, 2023 using the modified retrospective method. The adoption of this guidance did not have a material impact on the Company's Unaudited Condensed Consolidated Financial Statements apart from.

Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liability and equity, including convertible instruments and contracts on an entity’s own equity. The standard reduces the number of models used to account for convertible instruments, removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and requires the if-converted method for calculation of diluted earnings per share for all convertible instruments. The standard is effective for the Company for fiscal years, and interim periods within those described infiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the Annualimpact of this standard on its Consolidated Financial Statements.


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3. AcquisitionsInventory
Inventory consisted of the following:

March 31,December 31,
20232022
(in thousands)
Raw materials$2,217$2,018
Production(1)
2,2552,213
Finished goods(1)
9754
Inventory allowance(721)(691)
Total inventory, net$3,848$3,594
_____________________
(1) Approximately $1.8 million of inventory classified as finished goods at December 31, 2022 has been reclassified to the production category at March 31, 2023 to conform the historical presentation to the current period presentation, which reflects the nature and timing of the Company’s current harvesting and cost accumulation processes.

4. Property and Equipment

Business Combination
On April 4, 2022, the Company acquired 100%Property and equipment consisted of the shares of Pete’s. The purchase price consideration for the acquisition was $92.5 million in cash (subject to customary adjustments) and 5,654,600 shares of Local Bounti common stock, which had an original consideration, at the time of signing, of $30.0 million and a fair value of $50.9 million as of the closing date of the Pete's Acquisition. The acquisition has been accounted for as a business combination. The Company acquired Pete’s in order to leverage Pete's operational scale and retail distribution footprint to create a leading, scaled CEA operator with a national distribution footprint and access to approximately 10,000 retail doors.following:
Acquisition related costs of $204 thousand and $4,449 thousand were included in selling, general and administrative expense in the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022, respectively.
The purchase consideration was preliminary allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess recorded to goodwill as shown below. Goodwill is primarily attributable to the assembled workforce and expanded market opportunities and was allocated to the Company's single reporting unit. The goodwill is deductible for tax purposes over 15 years and a 338(h)(10) election was filed to step up the tax basis of the assets acquired to fair value.
The preliminary allocation is as follows (in thousands):
Intangible assets$52,300
Goodwill38,476
Assets acquired56,454
Liabilities assumed(3,776)
Total fair value of net assets acquired:$143,454
The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but does not exceed twelve months. The purchase price allocation is subject to future adjustments related to income taxes or other contingencies.
The following table sets forth the fair value of the identifiable intangible assets acquired as of the date of the acquisition (in thousands):
Customer relationships$40,200
Trade name7,400
Non-compete agreements4,700
Total:$52,300
The useful life of the customer relationships, trade name, and non-compete agreements are approximately 16 years, seven years, and 18 months, respectively. Amortization expense of intangible assets was $1,256 thousand and $3,352 thousand for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, future amortization expense is expected to be as follows (in thousands):
March 31,December 31,
20232022
(in thousands)
Machinery, equipment, and vehicles$33,271$32,774
Land19,29619,296
Buildings and leasehold improvements56,32255,392
Construction-in-progress96,17156,753
Less: Accumulated depreciation(8,153)(6,371)
Property and equipment, net$196,907$157,844

Depreciation expense related to property and equipment was $1.8 million and $0.5 million for the
Remainder of 2022$1,676
20235,920
20243,570
20253,570
20263,570
Thereafter30,643
Total$48,949
three months ended March 31, 2023 and 2022, respectively.


5. Accrued Liabilities
Accrued liabilities consisted of the following:

March 31,December 31,
20232022
(in thousands)
Interest$4,984 $4,372 
Construction838 825 
Payroll960 1,470 
Production1,105 1,438 
Professional services1,423 894 
Other751 427 
Total accrued liabilities$10,061 $9,426 










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Pro forma financial information
The following unaudited pro forma results of operations have been prepared as though the business combination of Local Bounti and Pete's was completed on January 1, 2021. Pro forma amounts are based on the preliminary purchase price allocation of the acquisition and are not necessarily indicative of results that may be reported in the future. Non-recurring pro forma adjustments including acquisition-related costs directly attributable to the acquisition are included within the reported pro forma revenue and net loss.

Three Months Ended September 30,Nine Months Ended
September 30,
 2022202120222021
(in thousands)(in thousands)
Sales$6,285 $6,010 $18,767 $17,423 
Net loss$(27,104)$(15,847)$(85,424)$(53,272)
Asset Acquisition
On April 4, 2022, in connection with consummating the Pete's Acquisition, Pete’s acquired the properties previously being leased by Pete’s from STORE Master Funding XVIII, LLC ("STORE") pursuant to certain sale-leaseback agreements between Pete’s and STORE for an aggregate cash purchase price of $25.8 million (the "Property Acquisition").
The Company accounted for the properties as an asset acquisition as substantially all of the fair value of the acquisition is concentrated in a single asset or group of similar identifiable assets.
The following table sets forth the fair value of the identifiable assets acquired as of the date of the acquisition (in thousands):
Land$13,800
Construction-in-progress12,013
Total:$25,813

4. Inventory
Inventory consisted of the following:

September 30,December 31,
20222021
(in thousands)
Raw materials$2,106$612
Work-in-process291173
Finished goods1,79869
Consignment—163
Inventory valuation allowance(418)(95)
Total inventory, net$3,777$922

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5. Property and Equipment

Property and equipment consisted of the following:
September 30,December 31,
20222021
(in thousands)
Machinery, equipment, and vehicles$30,752$3,683
Land18,4694,122
Buildings and leasehold improvements53,67014,141
Construction-in-progress41,90816,375
Less: Accumulated depreciation(4,436)(971)
Property and equipment, net$140,363$37,350
Depreciation expense related to property and equipment was $1,651 thousand and $142 thousand for the three months ended September 30, 2022 and 2021, respectively, and $3,477 thousand and $392 thousand for the nine months ended September 30, 2022 and 2021, respectively.


6. Accrued Liabilities
Accrued liabilities consisted of the following:

September 30,December 31,
20222021
(in thousands)
Construction$2,939 $11,192 
Insurance272 2,582 
Payroll775 792 
Production957 461 
Professional services709 273 
Software348 — 
Other712 720 
Total accrued liabilities$6,712 $16,020 
7. Debt
Debt consisted of the following:

September 30,December 31, March 31,December 31,
2022202120232022
(in thousands) (in thousands)
Senior FacilitySenior Facility$124,417$98,442
Subordinated FacilitySubordinated Facility$42,500$16,293Subordinated Facility43,84342,500
Senior Facility93,144—
Unamortized deferred financing costsUnamortized deferred financing costs(22,060)(5,094)Unamortized deferred financing costs(45,843)(21,128)
Total debtTotal debt$113,584$11,199Total debt$122,417$119,814

Agreements with Cargill Financial

In September 2021,As previously disclosed in the Company's Annual Financial Statements, Local Bounti Operating Company LLC ("Local Bounti Operating"), the Company and certain subsidiaries entered into with Cargill Financial a First Amendment, a Second Amendment, and a Third Amendment to the Credit Agreement, dated as of September 3, 2021, and the Subordinated Credit Agreement, dated as of September 3, 2021 (the "Original Credit Agreements," and the facilities thereunder, the "Senior Facility" and the "Subordinated Facility," respectively and, collectively, the "Facilities") (which are further described in the Annual Financial Statements) in March 2022, August 2022, and December 2022, respectively. As further described below, Local Bounti Operating, the Company, and certain subsidiaries entered into (a)with Cargill Financial a credit agreement (the "Original Senior Credit Agreement") for an upFourth Amendment, a Fifth Amendment, and a Sixth Amendment to $150.0 million multiple-advance term loan (the "Senior Facility") and (b) a subordinated credit agreement (the "Original Subordinated Credit Agreement" and, together with the Original Senior Credit Agreement,Agreements (collectively referred to as the "Original"Amended Credit Agreements") for an up to $50.0 million multiple-advance subordinated term loan (the "Subordinated Facility" and, together with the Senior Facility, the "Original Facilities").

FirstFourth Amendment ofto the Original Credit Agreements

On March 14, 2022,January 6, 2023, Local Bounti Operating, the Company and certain subsidiaries entered into an amendmenta Fourth Amendment to the Original Credit Agreements (the "First"Fourth Amendment") to amendwith Cargill Financial. The Fourth Amendment reduced the minimum liquidity covenant in each of the Original Credit Agreements from $20.0 million to $11.0 million.

Fifth Amendment to the Original Credit Agreements

On March 13, 2023, Local Bounti Operating, the Company and certain subsidiaries entered into a Fifth Amendment to the Original Credit Agreements (the "Fifth Amendment") with Cargill Financial. The Fifth Amendment (i) reduced the amount of cash required to be held in the debt service reserve account by approximately $11.0 million until April 2, 2024, at which time the amount of cash required to be held in the debt service reserve account will be an amount equal to the sum of interest and principal payments that would be required under the Amended Credit Agreements for two calendar quarters; (ii) allowed for the payment in kind of the quarterly interest payment due and payable for the quarter ended March 31, 2023; (iii) allowed for the payment in kind of the unused commitment fee payable for the quarter ended March 31, 2023; and (iv) reduced the minimum liquidity covenant in each of the Amended Credit Agreements from $11.0 million to $1.0 million. The aggregate amount of outstanding loans and undrawn commitments under the Amended Credit Agreements remains at $170.0 million (plus interest and fees paid in kind).

Sixth Amendment to the Original Credit Agreements

On March 28, 2023, Local Bounti Operating, the Company and certain subsidiaries entered into a Sixth Amendment to the Original Credit Agreements (the "Sixth Amendment") with Cargill Financial. The Sixth Amendment, among other things, (i) expanded the Facilities from $170.0 million to up to $280.0 million (plus, in each case, interest and fees paid in kind), including capital to fund construction at the Company’s facilities in Georgia, Texas, and Washington, subject to certain conditions and at Cargill Financial's discretion; (ii) allowed for the payment in kind of the quarterly interest payment due and payable for the quarter ending June 30, 2023; and (iii) added a minimum production covenant based on a projected production forecast.In consideration for the improved flexibility and the Originalexpanded size of the Facilities, (as amended, the "Amended Facilities"Local Bounti issued Cargill Financial 69.6 million warrants with a per share exercise price of $1.00 per share (the "March 2023 Cargill Warrant"), subject to and effective upon closing the Pete’s Acquisition. On April 4, 2022, the First Amendmenta 5-year term that expires on March 28, 2028.

1312

became effective whereby (a)The Company evaluated the Pete’s Acquisition was funded pursuant tobefore and after cash flow changes resulting from the Amended Facilities, (b)Fourth, Fifth and Sixth Amendments and concluded the aggregate commitment amount ofchange in cash flows underlying these cumulative amendments were not significantly different from the cash flows underlying the terms in the Original Facilities was reduced to $170.0 million, (c) the minimum liquidity covenant was reduced from $30.0 million to $20.0 million (inclusive of existing restricted cash on the Condensed Consolidated Balance Sheets), and (d) the interest rate of each of the Senior Facility and the Subordinated Facility increased by 2%, among other matters. Pursuant to the First Amendment, in connection with the closing of the Pete's Acquisition,Credit Agreements; therefore, the Company (i) paid a $2.0 million amendment fee and (ii) issued 1,932,931 shares of common stock to Cargill Financial. The First Amendment was accounted for these amendments as a modification to a line of credit. Accordingly,rather than as an extinguishment. Consequently, the Company wrote off unamortized debt issuance costs in proportion to the decrease in borrowing capacity$25.7 million fair value of the Original Credit Agreements of $735 thousand. The write-off amountMarch 2023 Cargill Warrant was recorded as interest expense in the Unaudited Consolidated Statement of Operations for the three and nine months ended September 30, 2022. The First Amendment fee of $2.0 million and the issued 1,932,931 shares of common stock with a fair value at the time of issuance of $17.4 million was recorded asan additional debt discount and isthat will amortized to interest expense over the remaining term of the Amended Facilities agreement onCredit Agreements. Fees paid to non-lender third parties as a straight-line basis.result of the modification have been expensed as incurred. The Company determined the fair value of the March 2023 Cargill Warrant using a Black-Scholes-Merton option pricing model with the following input assumptions: (i) $1.00 exercise price, (ii) $0.45 stock price, (iii) 5-year expected term, (iv) 135% volatility, (v) 3.63% risk free rate, and (vi) 0% dividend yield. The Company also evaluated the March 2023 Cargill Warrant for derivative liability accounting treatment and concluded the instrument was a free-standing derivative instrument that did not meet the fixed-for-fixed equity indexation criteria necessary to be accounted for as equity. As such, the $25.7 million fair value of the March 2023 Cargill Warrant was recorded as additional debt discount and a derivative liability in the "Warrant Liability" line item of Company's Unaudited Condensed Consolidated Balance Sheets. The fair value of the warrant will be remeasured each quarter until the instrument is settled or expires with changes in fair value recorded in "Other income (expense)" in the Company's Unaudited Condensed Consolidated Statements of Operations.
The
Subsequent to the Sixth Amendment, the interest rate on the Subordinated Facility subsequent to the First Amendment is 12.5% per annum with accrued interest onand the agreement paid quarterly in arrears on the last business day of each calendar quarter, commencing the last business day of the calendar quarter ended December 31, 2021, and on the maturity date of September 3, 2028.
The interest rate on the Senior Facility subsequent to the First Amendment is equal to SOFR plus a margin (which varies between 7.5% to 8.5% depending on the Senior Facility net leverage ratio). Principal payments are due per annum, with accrued interest paid quarterly in arrears on the first business day of the subsequent quarter (and paid in cash beginning October 1, 2023) through the maturity date ofon September 3, 2028.

Principal payments under the Senior Facility are payable quarterly, beginning April 1, 2025, based on a 10-year straight line amortization schedule, with the remaining unpaid balance under both the Senior Facility and the Subordinated Facility due on the September 3, 2028.2028 maturity date.

Second Amendment ofIn accordance with the Original Credit Agreements,

On August 11, 2022, the Company, along with certain subsidiaries of the Company, entered into a second amendment to the Amended Facilities (the "Second Amendment") with Cargill Financial to amend the Amended Facilities. The Second Amendment provides that, until the earliest to occur of (x) the occurrence of any event of default, (y) the effective date of a qualified equity financing and (z) March 31, 2024, (a) the requirement for the minimum interest amount for the Senior Facility and the Subordinated Facility is reduced to an amount equal to the greater of (i) $0 and (ii) the sum of all interest payments due and payable under the Senior Facility and the Subordinated Facility in respect of term loans outstanding for a period of four calendar quarters.

The Company is required to have an interesta debt service reserve account which is shown as restricted cash and cash equivalents on the Company's Unaudited Condensed Consolidated Balance Sheets. In effect, the SecondThe Fifth Amendment reducesand Sixth Amendment, taken together, reduced the minimum interest amount frombalance to maintain in the sum of all interest payments duedebt service reserve account to $0 through March 31, 2025. From and payable underafter April 1, 2025, the Senior Facility andminimum balance to maintain in the Subordinated Facility for a period of eight calendar quarters downdebt service reserve account will be increased to a period of four calendar quarters, as described above. In addition, the Senior Facility also requires that two quarters of principal be reserved by applying a ten-yearscheduled interest payments and two quarters of scheduled amortization schedule to the outstanding principal balance. In accordance with the Second Amendment, the balance of the Company's interest reserve account was $19,754 thousand at September 30, 2022 as compared to $4,416 thousand at December 31, 2021.payments.

The Amended FacilitiesCredit Agreements also containscontain certain financial covenants that become measurable and effective beginning in the third quarter of 2025, including debt coverage, net leverage, and interest coverage ratios. Additional covenants and other provisions exist that may limit or affect the timing of the Company’sCompany's ability, among other things, to undergo a merger or consolidation, sell certain assets, create liens, guarantee certain obligations of third parties, make certain investments or acquisitions, and declare dividends or make distributions. The credit facility isFacilities are secured with a first-priority lien against substantially all of the assets of the Company and its subsidiaries, including itstheir intellectual property. The Company was in compliance with all applicable covenants as of September 30, 2022.March 31, 2023.

In September 2022, the Company borrowed an additional $7,470 thousand under the term loan. The Amended Facilities have an unused revolving line commitment fee in an amount of 125 basis points per annum of the unused portion of the Amended Facilities.
14

8.7. Fair Value Measurements
The following table sets forth, by level within the fair value hierarchy, the accounting of the Company’s financial assets and liabilities at fair value on a recurring and nonrecurring basis according to the valuation techniques the Company uses to determine their fair value:

September 30, 2022 March 31, 2023
Level 1Level 2Level 3 Level 1Level 2Level 3
(in thousands)(in thousands)
Recurring fair value measurementsRecurring fair value measurements   Recurring fair value measurements   
Assets:Assets:   Assets:   
Money market funds, included in cash and cash equivalents$4,167$—$—
Money market funds Money market funds$7,375$—$—
TotalTotal$4,167$—$—Total$7,375$—$—
December 31, 2021December 31, 2022
Level 1Level 2Level 3Level 1Level 2Level 3
(in thousands)(in thousands)
Recurring fair value measurementsRecurring fair value measurementsRecurring fair value measurements
Assets:Assets:Assets:
Money market funds, included in cash and cash equivalents$96,661$—$—
Money market funds Money market funds$13,997$—$—
TotalTotal$96,661$—$—Total$13,997$—$—
13


The fair value of the Company’sCompany's money market funds is determined using quoted market prices in active markets for identical assets.

As of September 30, 2022March 31, 2023 and December 31, 2021,2022, the carrying value of all other financial assetsthe Company's cash and liabilitiescash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximated their respective fair values. As of September 30, 2022 and December 31, 2021,values due to their short-term maturities. Therefore, no unrealized gains or losses were recorded during the Company hadperiods presented. There were no transfers of financial instruments between levels ofLevel 1, Level 2, and Level 3 during the fair value hierarchy of its liabilities measured at fair value.periods presented.
14
9.
8. Stock-Based Compensation

Restricted Common Stock Awards

A summary of the restricted common stock awards ("RSAs") for three months ended March 31, 2023 is as follows:

Number of Shares of Restricted Common Stock Awards

Average Grant-Date Fair Value
Unvested at December 31, 20223,754,496$1.85
Forfeited(249,269)$2.79
Vested(610,191)$2.63
Unvested at March 31, 20232,895,036$1.00

Total expense of RSAs was $0.2 million and $0.9 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the total compensation cost related to unvested RSAs not yet recognized is $1.6 million. Unvested RSA expense not yet recognized is expected to be recognized over a weighted average period of 1.48 years.

Restricted Stock Units

A summary of the restricted stock units ("RSUs") and restricted common stock awards ("RSAs") activity for the ninethree months ended September 30, 2022March 31, 2023 is as follows:

Number of RSUsAverage Grant-Date Fair ValueNumber of RSAsAverage Grant-Date Fair Value
Unvested at December 31, 20212,395,789$9.735,479,451$1.80
Granted9,117,579$5.87—$—
Forfeited(211,578)$10.13—$—
Vested, Settled(1,128,825)$7.09(594,081)$2.51
Vested, Unsettled700,058$5.67—$—
Unvested and outstanding at September 30, 202210,873,023$6.434,885,370$1.71
Number of RSUsAverage Grant-Date Fair Value
Unvested at December 31, 20229,456,513$6.27
Granted3,495,788$1.33
Forfeited(95,391)$7.59
Vested(2,873,058)$5.93
Vested, unsettled2,084,266$5.98
Unvested and outstanding at March 31, 202312,068,118$1.00

The totalTotal expense value of RSUs, net of amounts capitalized, was $5.8 million and $10.1 million for the three and nine months ended September 30,March 31, 2023 and 2022, was $9,066 thousand and $30,017 thousand. There was no expense for RSUs for the three and nine months ended September 30, 2021.respectively. As of September 30, 2022,March 31, 2023, the total compensation cost related to unvested RSUs not yet recognized is $40,767 thousand and$23.3 million. Unvested RSU expense not yet recognized is expected to be recognized over a weighted average period of 2.482.16 years.

The total expense of RSAs for the three and nine months ended September 30, 2022 was $1,841 thousand and $3,599 thousand. As of September 30, 2022, the total compensation cost related to unvested RSAs not yet recognized is $3,237 thousand and is expected to be recognized over a weighted average period of 1.81 years.

15


10.9. Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common stock outstanding during the period. In computing net loss per share, the Company’sCompany's unvested restricted common stock and warrants are not considered participating securities. Diluted loss per common share is the same as basic loss per common share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’sCompany's net loss. Diluted net loss per common share adjusts basic net loss per share attributable to commonordinary stockholders to give effect to all potential commonordinary shares that were dilutive and outstanding during the period. For the three and nine months ended September 30,March 31, 2023 and 2022, and 2021, no instrument was determined to have a dilutive effect under the treasury method.effect.

15

The following table sets forth the computation of the Company’sCompany's net loss per share attributable to common stockholders (in thousands, except share and per share data):stockholders:
 
Three Months Ended March 31,
Three Months Ended
 September 30,		Nine Months Ended
September 30,		(in thousands, except share and per share data)
2022202120222021 20232022
Net lossNet loss$(27,104)$(10,834)$(84,539)$(27,822)Net loss$(23,527)$(25,772)
Weighted average common stock outstanding, basic and dilutedWeighted average common stock outstanding, basic and diluted89,245,019 49,131,555 86,318,432 49,131,555 Weighted average common stock outstanding, basic and diluted100,462,262 81,009,268 
Net loss per common share, basic and dilutedNet loss per common share, basic and diluted$(0.30)$(0.22)$(0.98)$(0.57)Net loss per common share, basic and diluted$(0.23)$(0.32)

The following table presentsdiscloses the weighted-average shares outstanding of securities that could potentially dilute basic net loss per common share in the future that were not included in the computation of diluted net loss per common share as the impact would be anti-dilutive:

Three Months Ended
 September 30,		Nine Months Ended
September 30,		 Three Months Ended March 31,
2022202120222021 20232022
Restricted StockRestricted Stock5,011,044 10,932,957 5,224,392 10,544,769 Restricted Stock3,244,350 5,395,590 
Convertible Notes— 3,224,068 — 2,097,547 
WarrantsWarrants11,539,296 297,450 11,539,299 209,195 Warrants14,632,512 11,539,306 
11.10. Commitments and Contingencies
Legal Matters

The Company has and may become party to various legal proceedings and other claims that arise in the ordinary course of business. The Company records a liability when it believes that it is probable that a loss will be incurred, and the amount of loss or range of loss can be reasonably estimated. Management is currently not aware of any matters that it expects will have a material adverse effect on the financial position, results of operations, or cash flows of the Company.
12.11. Subsequent Events

The Company has evaluated subsequent events from September 30, 2022 through the date the Unaudited Condensed Consolidated Financial Statements were issued and identified the following:

Private PlacementReverse Stock Split Stockholder Approval

On October 21, 2022April 3, 2023, Local Bounti's board of directors authorized an amendment to the Certificate of Incorporation to, at the discretion of Local Bounti’s board of directors, effect a reverse stock split of the shares of Local Bounti's common stock, at any time prior to June 30, 2024, at a ratio within a range of 1-for-2 to 1-for-25, with the exact ratio and effective time of the reverse stock split to be determined at the discretion of the board of directors without further approval or authorization of our stockholders. The amendment was approved by stockholders at a Special Meeting of Stockholders (the "Agreement Date""Special Meeting") held on April 26, 2023. If the Reverse Stock Split is effected, between every 2 to 25 outstanding shares of Common Stock would be combined and reclassified into one share of Common Stock. The Company will pay cash in lieu of fractional shares resulting from the Reverse Stock Split, if any.

Following approval of this proposal by our stockholders, the board of directors has the sole authority to elect whether or not and when to amend the Certificate of Incorporation to effect the Reverse Stock Split. As such, the actual timing for implementation of the Reverse Stock Split would be determined by the board of directors, in its sole discretion. The actual number of authorized shares of Common Stock after giving effect to the Reverse Stock Split, if and when effected, will depend on the Reverse Stock Split ratio that is ultimately determined by the board of directors.

Sale and Leaseback Transaction

On April 27, 2023, Hollandia Real Estate, LLC ("Hollandia"), a wholly-owned subsidiary of the Company, and STORE Master Funding XXXI, LLC ("STORE") consummated a $35 million multi-site sale and leaseback transaction relating to the Carpinteria Facility and the Oxnard Facility (collectively, the "Hollandia Facilities").

In connection with the sale and leaseback transaction, Hollandia and STORE entered into a securities purchase agreementMaster Lease Agreement (the "Securities Purchase Agreement""Lease") with certain purchasers, dated April 27, 2023 (the "Purchasers""Effective Date"), pursuant to which the Company agreed to issue and sell. Pursuant to the Purchasers, in a private placement, sharesLease, Hollandia will lease the Hollandia Facilities from STORE, subject to the terms and conditions of the Company’s common stock, par value $0.0001 per share (the "Common Stock") at a purchase price of $2.50 per share (the "Private Placement"). The closing price of the Common Stock on the New York Stock Exchange on October 20, 2022 (the last trading day before the Agreement Date), was $2.50 per share.Lease.

    PursuantThe Lease provides for a 25-year term (the "Initial Term"), commencing on the Effective Date and expiring on April 30, 2048. Hollandia has four options to extend the Securities Purchase Agreement,Initial Term for separate renewal terms of five years each (each an "Extension Term" and, together with the Company agreedInitial Term, the "Lease Term"). If Hollandia exercises all of the extension options, then the Lease will expire on April 30, 2068. Hollandia is required to sell andgive written notice to STORE not later than 120 days before the Purchasers agreedend of the then current Initial Term or Extension Term, as applicable, if Hollandia desires to purchase 9,320,000 shares (the "Common Shares") of Common Stock resulting in gross proceedsexercise its option to extend the Company of approximately $23.3 million before deducting estimated offering expenses. Affiliates of certain members of our BoardLease Term.

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of Directors and certain executive officers purchased an aggregate of 280,000 shares of Common StockSubject to adjustment as set forth in the Private Placement. The Company expectsLease, the combined annual minimum rent payable to useSTORE during the net proceeds for general corporate purposes.

Registration Rights Agreement

In connection with the Private Placement, the Company entered into a registration rights agreement (the "Registration Rights Agreement") with the Purchasers, pursuant to which the Company agrees to register for resale the Common Shares (the "Registrable Securities"). Under the Registration Rights Agreement, the Company has agreed to file a registration statement covering the resale by the Purchasersfirst year of the Registrable Securities within 10 business daysLease Term is an amount equal to $3.2 million (the "Base Annual Rent"), payable in equal monthly installments. On May 1, 2024 and each anniversary of such date thereafter during the Lease Term (the "Adjustment Date"), the Base Annual Rent will increase by three percent (3%) of the closing ofBase Annual Rent in effect immediately prior to the Securities Purchase Agreement. The registration statement was filed on October 24, 2022. The Company has agreed to use commercially reasonable efforts to cause such registration statement to become effective and to keep such registration statement effective until such time as there are no longer Registrable Securities held by the Purchasers. The Company has agreed to be responsible for all fees and expenses incurred in connection with the registration of the Registrable Securities.applicable Adjustment Date.

The Company has granted the PurchasersLease contains certain representations, warranties, covenants, obligations, conditions, indemnification provisions and termination provisions customary indemnification rights in connection with the registration statement, including for liabilities arising under the Securities Act of 1933, as amended. The Purchasers have also granted the Company customary indemnification rights in connection with the registration statement.

There have been no other events or transactions that occurred subsequent to September 30, 2022 that require recognition or disclosure.

sale and leaseback transactions.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements, including the Notes to those statements, included elsewhere in this Quarterly Report on Form 10-Q, and the section entitled "Cautionary Note Regarding Forward-Looking Statements."Statements" in this Quarterly Report on Form 10-Q. As discussed in more detail in the section entitled "Cautionary Note Regarding Forward-Looking Statements," this discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements.
OverviewOur Mission and Vision

Local Bounti was founded in August 2018 andOur mission is headquartered in Hamilton, Montana. We are a producer of sustainably grown living lettuce, herbs, and loose leaf lettuce.to bring our farm to your kitchen. Our vision is to deliver the freshest, locally grown produce over the fewest food miles possible.miles. We believe that happy plants make happy taste buds and we are committed to reimagining the standards of freshness. We also believe that local is the best kind of business, and we are committed to helping communities thrive for generations to come. We are committed to building empowered local teams. Together, we believe we are capable of extraordinary things.

Company Overview

Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused today on living and loose leaf lettuce. Founded in 2018, and headquartered in Hamilton, Montana, Local Bounti utilizes its patent pending Stack & Flow TechnologyTM, which is a hybrid of vertical and hydroponic greenhouse farming,Technology™ to grow healthy food sustainably and affordably. ThroughOur proprietary process is a hybrid, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our CEA process, itStack & Flow Technology™ to give our products exactly what they need at every step of their growth cycle. Our goal is our goal to produce our productsgrow in an environmentally sustainable manner that will increasenot only increases harvest efficiency limitand enhances unit economics, but also limits water usage and reducereduces the carbon footprint of the production and distribution process. TheControlling the environmental greenhouse conditions helpin both the 'Stack' and 'Flow' components of our growing system helps to ensure nutritional valuehealthy, nutritious, consistent, and taste,delicious products that are non-genetically modified organisms ("non-GMO"). We use 90% less water, 90% less land, and our products are non-GMO and use significantly less pesticides and herbicides than traditional farmingoutdoor agriculture operations.
Our sustainable growing practices use 90% less landfirst CEA facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019 and 90% less waterreached full commercial operation by the second half of 2020. In 2021, we successfully completed the expansion of our Montana Facility, more than conventional farming methods.doubling our production capacity. Immediately after expansion, this facility was dedicated equally to commercial production and research and development that focused on new products, technology and system design. Today, the majority of the Montana Facility is dedicated to commercial production, but we continue to utilize dedicated space for research and development to improve our existing and future facilities.

On April 4, 2022, weLocal Bounti acquired Pete’s. Pete’s is a California-based indoorcomplementary greenhouse farming company with aHollandia Produce Group, Inc. and its subsidiaries (the "Pete's Acquisition"), which operate under the name Pete's ("Pete's"). Through the Pete's acquisition, we significantly increased our growing footprint, now operating three additional greenhouse growing facilities, including two in California and one in Georgia, the latter of which became operational in July 2022. We now have distribution to approximatelyover 10,000 retail locations across 35 U.S. states and Canadian provinces, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh. Pete's has three greenhouse growing facilities, including two in California and one in Georgia which became operational in July 2022. The new Georgia facility will provide additional capacity to meet existing demand fromToday, our retail customers. Pete’s primary products include living butterlettuce – where it isfor which we are a leading provider with an approximate 80% share of the CEA market within the Western U.S. – as well as packaged salad and cress. Pete’s has been
Local Bounti's founders are Craig M. Hurlbert and Travis M. Joyner, business partners with a track record of building and managing capital-intensive, commodity-based businesses in operation for over 50 years while focusing the last 25 yearsenergy, water, and industrial technology. After initially setting out to invest in leafy greensa CEA business, Craig and has long-standing relationshipsTravis could not find a suitable existing business or technology in which to invest. Instead, they took a clean sheet approach and began to build a business with the majority of its customers. We plan to installlong-term CEA leadership in mind and a focus on unit economics and sustainability. With this background, we created our patent pendinghigh-yield and low-cost Stack & Flow Technology™ at Pete’s facilities, combining the best aspects of vertical and greenhouse growing technologies to deliver higher yields of diverse leafy greens at superior unit economics..

We derive the majority of our revenue from the sale of produce. We grow and package fresh greens that are sold into existing markets and channels such as food retailers and food service distributors from our Montana facility and two California facilities, and beginning in the third quarter of 2022, from our new Georgia facility. Sales are recognized at a point in time when control of the goods is transferred to the customer.

We periodically offer sales incentives to our customers, including temporary price reductions. We anticipate that these promotional activities could impact sales and that changes in such activities could impact period-over-period results. Sales may also vary from period to period depending on the purchase orders we receive, the volume and mix of products sold and the channels through which our products are sold. In response to realized cost inflation, we have implemented contractually allowable price increases which we anticipate to benefit from in the fourth quarter of 20222023 and beyond.

We intend to increase our production capacity and expand our reach to new markets, new geographies, and new customers through either the building of new facilities or through the acquisition of existing greenhouse facilities
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which we will update with our Stack & Flow Technology™. We conduct an ongoing build-versus-buy analysis whenever we decide to build a new facility or acquire an existing facility. We also expect to expand our product offering to new varieties of fresh greens, herbs, berries, and other produce. Additionally, we evaluate commercial opportunities as part of these expansion efforts on an ongoing basis.

In October 2022, we signed a five-year offtake agreement with Sam’sSam's Club for our leafy greens production starting at our greenhouse facility in Georgia. We continue to advance our expansion of the Georgia facility, which will double the existing footprint and further enhance capacity with the addition of our Stack & Flow TechnologyTM to meet pent up demand for Local Bounti packaged salads to current customers and open the opportunity to earn new business in that region.

Commercial Facility Expansion Update

Byron, Georgia Facility Progress - "Stack" Integration on Track for Fourth Quarter Completion

Construction of the greenhouse Phase 1-B was completed early in the second quarter and seeding began in April 2023. As part of our Stack & Flow TechnologyTM implementation, we completed our first "Stack" zone in the fourth quarter of 2022, with the remaining Stack zones that comprise Phase 1-C to be completed early in the fourth quarter 2023. Our Stack & Flow TechnologyTM is expected to add approximately 40% of incremental revenue generating capacity to the finished Georgia facility, which will be comprised of six acres of greenhouses and multiple climate, water, and spectral controlled Stack zones.

Mount Pleasant, Texas Facility Progress

In early January 2023, we started construction of the six-acre facility and have since completed the pad and foundations. The addition of the new facility in northeast Texas is expected to fortify our distribution in markets across Texas, Oklahoma, Louisiana, Mississippi, Arkansas, Kansas, and Missouri. Further, the facility is designed to provide additional capacity to meet existing demand from our direct relationships with blue-chip retailers and distributors throughout the region. The facility is expected to commence operations in the fourth quarter of 2023.

Pasco, Washington Facility Progress

The Pasco, Washington facility continues to progress with anticipated completion in the third quarter of 2023. Thispad and foundation work now complete. The facility will be comprised of multiple stack zones and three acres of greenhouse.

We selected Mount Pleasant, Texas asgreenhouse that will be supported by multiple Stack zones. The facility will help bolster our distribution capabilities in the site for our next facility. This location was selected based on customer demandPacific Northwest and proximity to existing customers' distribution networks. We are working through the closing process for the parcel, which is expected to be completed towardcommence operations early in the endfirst quarter 2024, which reflects our decision to stagger construction to accommodate the commissioning of November 2022, with construction activities beginning shortly thereafter. Theour Texas facility will be comprised of a six-acre greenhouse facility and multiple stack zones. We anticipate the facility will be operational in the fourth quarter of 2023.
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Recent Developments

Environmental, SocialOn March 28, 2023, we entered into the Sixth Amendment to the Original Credit Agreements with Cargill Financial to expand the Facilities from $170 million to up to $280 million (plus, in each case, interest and Governance

Conventional agriculture has been feedingfees paid in kind) per the world for hundredsterms and conditions of years, yet given the negative impacts of climate change, it is now strugglingagreement, including capital to keep pace. Add to that the COVID–19 pandemic, the war in Ukraine and its impact on not only food supply but also the cost of fertilizer and other inputs used in traditional agriculture, an already stressed food supply system is experiencing even more pressure. Sustainability has emerged as a global imperative, and when it comes to agriculture, it is clear we must find ways to do better. We believe growing healthy vegetables is good business, and our growing technology delivers clean produce with safer growing methods, which we believe benefits all stakeholders and differentiates us from traditional agriculture. We expect that consumer demand for clean, nutritious, locally grown, and high-quality products will increase over time.

Our compact, efficient, and local farms provide fresh produce with minimum transportation distances. Combined with our advanced technologies, the locationfund construction of our facilities in less developed communitiesGeorgia, Texas, and areasWashington, subject to certain conditions. In consideration for the improved flexibility and the expanded size of the Facilities, we issued Cargill Financial 69.6 million warrants with available supporting resources such as adequate water and renewable energy, we believe Local Bounti has the potential to be among the most sustainable produce suppliers in the nation.a per share exercise price of $1.00 per share that expire on March 28, 2028.

More informationOn April 27, 2023, we consummated with STORE a $35 million multi-site sale and leaseback transaction relating to the Carpinteria Facility and the Oxnard Facility. The Lease provides for a 25-year term with separate renewal terms of five years each. If we exercise all of the extension options, the Lease will expire on our key environmental, social and governance ("ESG") programs, goals and commitments, and key metrics can be found in our 2021 sustainability report, which is available on our website. Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.April 30, 2068.

While we believeThe combined financing resulting from the Sixth Amendment and the sale and leaseback transaction with STORE described above provides a total of up to $145 million to support our ESG goals align withgrowth plans and immediate efforts to increase production to meet accelerating demand for our long-term growth strategy and financial and operational priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met.products.


Factors Affecting Our Financial Condition and Results of Operations

We expect to expend substantial resources as we:

•identify and invest in future growth opportunities, including new product lines;

•complete construction and commission thecommissioning of new facilities in Pasco, Washington, facility and invest in additional CEA facilities in the future, including our next facility in Mount Pleasant, Texas;

•integrate Pete's operations into our business;

•invest in product innovation and development;
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•invest in sales and marketing efforts to increase brand awareness, engage customers and drive sales of our products; and

•incur additional general administration expenses, including increased finance, legal and accounting expenses associated with being a public company, and growing operations.



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Results of Operations

Three and Nine Months Ended September 30, 2022March 31, 2023 compared to the Three and Nine Months Ended September 30, 2021March 31, 2022

Three Months Ended
 September 30,		 Nine Months Ended September 30,
 20222021$ Change20222021$ Change
(in thousands)(in thousands)
Sales$6,285 $159 6,126$12,836 $324 12,512
Cost of goods sold5,015 155 4,86011,535 281 11,254
Gross profit1,270 4 1,2661,301 43 1,258
Operating expenses:
Research and development3,019 1,418 1,6018,933 2,573 6,360
Selling, general and administrative20,239 4,269 15,970 64,741 15,525 49,216 
Total operating expenses23,258 5,687 17,57173,674 18,098 55,576
Loss from operations(21,988)(5,683)(16,305)(72,373)(18,055)(54,318)
Other income (expense):
Management fee income38 18 2096 62 34
Convertible Notes fair value adjustment— (2,083)2,083— (5,067)5,067
Interest expense, net(5,154)(3,079)(2,075)(12,262)(4,752)(7,510)
Other income and expense— (7)7— (10)10
Net loss$(27,104)$(10,834)(16,270)$(84,539)$(27,822)(56,717)
The following table sets forth our historical operating results for the periods indicated:

Three Months Ended March 31, 
 20232022$ Change
(in thousands)
Sales$6,698 $282 6,416
Cost of goods sold6,419 234 6,185
Gross profit279 48 231
Operating expenses:
Research and development3,576 1,948 1,628
Selling, general and administrative15,981 22,259 (6,278)
Total operating expenses19,557 24,207 (4,650)
Loss from operations(19,278)(24,159)4,881
Other income (expense):—
Interest expense, net(4,299)(1,643)(2,656)
Other income50 30 20
Net loss$(23,527)$(25,772)2,245

The following sections discuss and analyze the changes in the significant line items in our Unaudited Condensed Consolidated Statements of Operations for the comparative periods in the table above.

Sales

Sale of Produce

We derive the majority of our revenue from the sale of produce.produce grown at our facilities. In response to realized cost inflation, we have implemented contractually allowable price increases which we anticipate to benefit from in the fourth quarter of 20222023 and beyond.

Sale of produceSales increased by $6,126 thousand to $6,285 thousand$6.4 million for the three months ended September 30, 2022March 31, 2023, compared to the three months ended September 30, 2021. Sales of produce increased by $12,512 thousand to $12,836 thousand for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.March 31, 2022. The increase for both periods was due primarily to the acquisition of Pete's at the beginning of April 2022, which added more than 10,000 retail locations nationwide.

Cost of Goods Sold

Cost of goods sold consists primarily of costs related to growing produce at our greenhouse facilities, including labor costs, which include wages, salaries, benefits, and stock-based compensation, seeds, soil, nutrients and other input supplies, packaging materials, depreciation, stock-based compensation,utilities and utilities.other manufacturing overhead. We expect that, over time, cost of goods sold will decrease as a percentage of sales, as a result of scaling our business.

Cost of goods sold increased by $4,860 thousand$6.2 million for the three months ended September 30, 2022March 31, 2023, compared to the three months ended September 30, 2021,March 31, 2022, due primarily to proportionate increases in productincreased sales during the three months ended September 30, 2022 compared toMarch 31, 2023 driven by the three months ended September 30, 2021.

Costacquisition of goods sold increased by $11,254 thousand for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, mostly due to proportionate increases in product sales during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Cost of goods sold also increased in the nine months ended September 30, 2022 due to the fair value step-up to expected selling price of acquired inventory from the April 2022 Pete's Acquisition. This acquired inventory was subsequently sold during the second quarter at the stepped-up value or at a zero margin, which negatively impacted year-to-date gross margin by $1,042 or 8.1%. Additionally, cost of goods sold was negatively impacted for the nine months ended September 30, 2022 due to temporary supply chain challenges with suppliers at our California facilities during the second quarter, which resulted in higher costs to fill orders. These temporary supply chain challenges have since been resolved.Pete's.

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Research and Development

Research and development expenses consist primarily of compensation to employees engaged in research and development activities, includingwhich include salaries, benefits, and stock-based compensation, and related benefits, overhead (including depreciation, utilities and other related allocated expenses), and supplies and services related to the development of our growing processes. Our research and development efforts are focused on the development of our processes utilizing our CEA facility,facilities, increasing production yields, developing new leafy green SKUs and value-added products such as grab-and-go salads, and exploring new crops, including berries. We focus our research and development efforts on areas that we believe will generate future revenue and grow our intellectual property portfolio across process improvements, genetics, computer, vision, artificial intelligence, and process controls.

Due to our ongoing research and development, we are currently generating approximately 26 crop turns annually for our commercial loose-leaf lettuce, which compares to approximately 17 to 22 turns annually as of December 31, 2021. We expect that, over the long term, research and development will decrease as a percentage of sales, as a result of the establishment of our growing process.

Research and development costs increased by $1,601 thousand$1.6 million for the three months ended September 30, 2022March 31, 2023, compared to the three months ended September 30, 2021. Research and development costs increased by $6,360 thousand for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.March 31, 2022. The increase for both periods was due to increased investment in personnel, materials, supplies, and facility capacity as we continue to expand our product offering and refine our growing process. We incurred costs for research and development of our production, harvesting, and post-harvest packaging techniques and processes, as well as production surplus costs related to the development and testing of our production process.processes.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses consist of employee compensation, including salaries, benefits, and stock-based compensation and related benefits for our executive, legal, finance, information technology, human resources and sales and marketing teams, expenses for third-party professional services, Pete's Acquisition related costs, insurance, marketing, advertising, computer hardware and software, and amortization of intangible assets, among others.

Selling, general, and administrative expenses increaseddecreased by $15,970 thousand$6.3 million for the three months ended September 30, 2022March 31, 2023, compared to the three months ended September 30, 2021,March 31, 2022, primarily due to a $9,472 thousand increase$5.4 million decrease in stock-based compensation expense drivendue to prior year awards that were issued at a higher fair value, as compared to the fair value of awards being expensed in the current period, were fully vested and expensed prior to the current quarter, and a $3.9 million decrease in transaction costs due to the acquisition of Pete's in the prior year. This decrease was partially offset by an increase of $1.7 million in amortization of intangibles acquired as part of the vestingPete's Acquisition, an increase of stock awards, a $2,721 thousand increase$1.4 million in employee salaries, wages, and benefits due to increased headcount from Company growth and to support operations as a public company, a $1,260 thousand increase in amortization of intangibles acquired as part of the Pete's Acquisition, a $944 thousandand an increase in insurance costs, and a $959 thousand increaseof $0.7 million in professional, legal, accounting, and consulting fees.

Selling, general, and administrative expenses increased by $49,216 thousand for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to a $27,203 thousand increase in stock-based compensation expense driven by the vesting of stock awards, a $10,219 thousand increase in employee salaries, wages, and benefits due to increased headcount from Company growth and to support operations as a public company, a $4,449 thousand increase in transaction costs due to the acquisition of Pete's, a $3,357 thousand increase in amortization of intangibles acquired as part of the Pete's Acquisition, a $2,608 thousand increase in insurance costs, and a $2,360 thousand increase in professional legal, accounting, and consulting fees.

Convertible Notes Fair Value Adjustment

During 2021, we entered into a series of identical convertible long-term notes with various parties with a face value of $26,050 thousand that bore interest at 8% with a maturity date of February 8, 2023 (the "Convertible Notes"). All Convertible Notes were converted into shares of common stock in connection with the business combination of Local Bounti and Leo Holdings III Corp on November 19, 2021.

Prior to the conversion of the Convertible Notes into shares of common stock, we measured Convertible Notes at fair value based on significant inputs not observable in the market, resulting in these Convertible Notes being classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of Convertible Notes related to updated assumptions and estimates were recognized as a Convertible Notes fair value adjustment within the results of operations.

There was no Convertible Notes fair value adjustment for the three and nine months ended September 30, 2022 as all the Convertible Notes were converted into shares of common stock in connection with the business combination of Local Bounti and Leo Holdings III Corp on November 19, 2021.

Interest Expense, net

Interest expense consists primarily of contractual interest expenseand amortization of debt issuance costs, net of interest capitalized for construction assets, related to the loans with Cargill Financial and also interest recognized per the terms of our financing obligation related to the Montana facility.

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Interest expense, net increased by $2,075 thousand$2.7 million for the three months ended September 30, 2022,March 31, 2023, compared to the three months ended September 30, 2021.March 31, 2022. The increase is primarily due to a $26,207 thousand$124.4 million increase in the principal amount outstanding on the Senior Facility and a $27.6 million increase in the principal amount outstanding on the Subordinated Facility and a $93,144 thousand increase in the principal amount outstanding on the Senior Facility as well as a variable rate increase on the Senior Facility as compared to the prior year period, which resulted in an additionalincrease to interest expense of $3,808 thousand as compared to the prior year period. Additional interest expense of $932 thousand was incurred from amortization of loan origination fees for the loans with Cargill Financial. This increase was partially offset by a decrease in interest expense of $491 thousand related to a $10,000 thousand term loan with Cargill Financial that was paid off in September 2021 and a decrease in interest expense of $525 thousand related to our Convertible Notes which were converted into shares of common stock in connection with the business combination of Local Bounti and Leo Holdings III Corp on November 19, 2021.

Interest expense, net increased by $7,510 thousand for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase is primarily due to a $26,207 thousand increase in the principal amount outstanding on the Subordinated Facility and a $93,144 thousand increase in the principal amount outstanding on the Senior Facility as well as a variable rate increase as compared to the prior year period which resulted in an additional interest expense of $7,163 thousand. Additional interest expense of $1,864 thousand was incurred from amortization of loan origination fees for the loans with Cargill Financial and $735 thousand of unamortized debt issuance costs that were written off in connection with the First Amendment as described in Note 7, Debt. This increase was offset by a decrease in interest expense of $1,194 thousand related to a $10,000 thousand term loan with Cargill Financial that was paid off in September 2021 and a decrease of $1,364 thousand related to our Convertible Notes which were converted into shares of common stock in connection with the business combination of Local Bounti and Leo Holdings III Corp on November 19, 2021.$2.7 million.

We capitalize interest costs on borrowings during the construction period of major construction projects as part of the cost of the constructed assets. We capitalized $2.1 million of interest during the three months ended March 31, 2023. No interest was capitalized during the three months ended March 31, 2022.

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Liquidity and Capital Resources

We have incurred losses and generated negative cash flows from operations since our inception. At September 30, 2022,March 31, 2023, we had an accumulated deficit of $152,781 thousand$202.8 million and cash of $23,981 thousand comprised of $4,227 cash and cash equivalents and $19,754 restricted cash and cash equivalents used to service our debt with Cargill Financial. On October 21, 2021, we entered into an agreement to issue 9,320,000 shares of Common Stock at a purchase price of $2.50 per share. The gross proceeds to the Company from the sale of these shares was approximately $23.3$7.5 million. See Note 12, Subsequent Events, to the Unaudited Condensed Consolidated Financial Statements for additional information.

As of September 30, 2022,March 31, 2023, the principal amountsamount due under our credit facilities with Cargill Financial totaled $135.6$168.3 million, none of which is classified as current. Availability for reimbursement of construction costs under the credit facility is limited up to 75% of construction costs with the remaining 25% of such costs financed internally from operating cash flow and/or with Local Bounti capital. These debt agreements contain various financial and non-financial covenants and certain restrictions on our business, which include restrictions on additional indebtedness and material adverse effects, that could cause us to be at risk of default. A failure to comply with the covenants and other provisions of thisthese debt instrument,instruments, including any failure to make payments when required, would generally result in events of default under such instruments, which could result in the acceleration of a substantial portion of such indebtedness.

The CEA business is capital-intensive. Currently, our primary sources of liquidity are cash on hand, cash flows generated from the sale of our products, and a credit facility with Cargill Financial. Cash expenditures over the next 12 months are expected to include interest payments on debt obligations, general operating costs for employee wages and related benefits, outside services for legal, accounting, IT infrastructure, and costs associated with plantinggrowing, harvesting and harvesting,selling our products, such as the purchase of seeds, soil, nutrients and other growing supplies, shipping and fulfillment costs, and facility maintenance costs, and construction/expansion of our growing facilities.costs.

We believe that our current cash position, cash flow from operations, the proceeds from the sale leaseback transaction (see Note 11, Subsequent Events, in Notes to the Unaudited Condensed Consolidated Financial Statements) and the borrowing capacity of $34.4 million under our credit facility with Cargill Financial and equity financing as described above and in Noteare sufficient to fund our basic cash requirements for 12 Subsequent Events, tomonths from the date of issuance of the Unaudited Condensed Consolidated Financial Statements are sufficientStatements. Also, while we believe the Cargill Financial credit facility, as most recently amended, provides adequate resources and flexibility to fund our cashplanned construction projects, our future capital requirements forand the next 12 months. We expect that weadequacy of available funds will need to accessdepend on many factors, including those set forth in Part I, Item 1A of the capital markets to finance future cash requirements, which may not occur timely orCompany's most recent Annual Report on satisfactory terms, if at all, and agree to burdensome covenants, grant further security interests in our assets or enter into equity arrangements on terms that are not favorable and dilutive to existing shareholders. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations.Form 10-K. In the event that our plans change, or our cash requirements are greater than we anticipate, we may need to curtail operations.

Cargill Loans

In September 2021, the Company and Cargill Financial entered into the Senior Facility and the Subordinated Facility wherebyFacility. Subsequent to the amendments described in Note 6, Debt, Cargill Financial agreed to makemay in its discretion provide advances tounder the CompanyFacilities of up to $150.0$280.0 million (plus interest and fees paid in kind), including capital to fund construction at the Company’s facilities in Georgia, Texas, and Washington, subject to certain conditions. As of March 31, 2023, a total of $124.4 million and $50.0$43.8 million respectively. Subsequent to the First Amendment as described in Note 7, Debt, the aggregate commitment amount was reduced to $170.0 million and the interest rate on the Subordinated Facility increased by 2% to 12.5% per annum and the interest rateoutstanding on the Senior Facility is equal to the SOFR plus a margin (which varies between 7.5% to 8.5% depending on the Senior Facility net leverage ratio). Accrued interest is paid quarterly in arrears on the last business day of each calendar quarter, commencing on the last business day of the calendar quarter ending December 31, 2021 through the maturity date of September 3, 2028. As of September 30, 2022, a total of $42,500 thousand $93,144 was
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outstanding onand the Subordinated Facility, and the Senior Facility, respectively. The SubordinatedSenior Facility and the SeniorSubordinated Facility are included in "Long-term debt" on the Condensed Consolidated Balance Sheet. We are required to maintain cash on hand to cover four quarters of cash interest payments and two quarters of principal for the Senior Facility calculated by applying a ten-year amortization schedule to the outstanding principal balance. This amount totals $19.8 million and is reflected in the Unaudited Condensed Consolidated Balance Sheet as restricted cash and cash equivalents at September 30, 2022.Sheet.

At September 30, 2022,March 31, 2023, our principal and estimated interest payment obligations for the SubordinatedSenior Facility and the SeniorSubordinated Facility are as follows(1):

(in thousands)(in thousands)(in thousands)
Remainder of 2022$5,174
202320,697
Remainder of 2023Remainder of 2023$16,671
2024202430,012202422,227
2025202530,012202534,847
2026202630,012202639,053
2027202739,053
ThereafterThereafter142,507Thereafter138,428
TotalTotal$258,414Total$290,279
_____________________

(1)Interest is calculated based on a 12.5% interest rate for the Subordinated Facility and a 12.1%13.46% interest rate for the Senior Facility effective as of OctoberApril 1, 2022. The calculation also includes an unused commitment fee of 1.25%.2023.

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Cash Flow Analysis

A summary of our cash flows from operating, investing, and financing activities is presented in the following table:

Nine Months Ended
September 30,		Three Months Ended
March 31,
(in thousands) 20232022
20222021(in thousands)
Net cash used in operating activitiesNet cash used in operating activities$(37,210)$(15,280)Net cash used in operating activities$(7,830)$(10,014)
Net cash used in investing activitiesNet cash used in investing activities(157,228)(14,193)Net cash used in investing activities(32,685)(14,673)
Net cash provided by financing activitiesNet cash provided by financing activities117,34244,220Net cash provided by financing activities23,045—
Cash and cash equivalents and restricted cash at beginning of periodCash and cash equivalents and restricted cash at beginning of period101,07745Cash and cash equivalents and restricted cash at beginning of period24,938101,077
Cash and cash equivalents and restricted cash at end of periodCash and cash equivalents and restricted cash at end of period$23,981 $14,792 Cash and cash equivalents and restricted cash at end of period$7,468 $76,390 

Net Cash Used In Operating Activities

Net cash used in operating activities was $37,210 thousand$7.8 million for the ninethree months ended September 30, 2022March 31, 2023 due to a net loss of $84,539 thousand,$23.5 million. This was partially offset by non-cash activities of $33,616 thousand$6.0 million in stock-based compensation expense, $2,791 thousand in amortizationnet of debt issuance costs, $3,477 thousandamounts capitalized, $1.8 million in depreciation expense, $3,352 thousandand $1.7 million in amortization expense, and $3,507 thousandexpense. Additional offset was due to $5.2 million net increase of cash from changes in assets and liabilities.

Net cash used in operating activities was $15,280 thousand$10.0 million for the ninethree months ended September 30, 2021March 31, 2022 due to a net loss of $27,822 thousand,$25.8 million. This was partially offset by non-cash activities of $4,942 thousand$11.0 million in stock-based compensation expense $5,067 thousand in fair value adjustments to the Convertible Notes, $1,721 thousand in amortization of debt issuance costs, $392 thousandand $0.5 million in depreciation expense, and $423 thousandexpense. Additional offset was due to $3.7 million net increase of cash from changes in assets and liabilities.

Net Cash Used In Investing Activities

Net cash used in investing activities was $157,228 thousand$32.7 million for the ninethree months ended September 30, 2022,March 31, 2023, due primarily to the acquisitions described in Note 3, Acquisitions, including the Pete's Acquisition for net cash outlay of $90,552 thousand and the Property Acquisition for net cash outlay of $25,813 thousand. Additional cash used in investing activities related to $40,863 thousand of purchases of equipment and other items for the Washington,Pasco, Georgia, and MontanaTexas CEA facilities.

Net cash used in investing activities was $14,193 thousand$14.7 million for the ninethree months ended September 30, 2021,March 31, 2022, due primarily to purchases of property and equipment and other items related to the expansion of the Montana facility and the purchase of land for the Pasco Washington facility.and the Montana CEA facilities.

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Net Cash Provided By Financing Activities

Net cash provided by financing activities was $117,342 thousand$23.0 million for the ninethree months ended September 30, 2022, due primarily to $119,351 thousandMarch 31, 2023, comprised of $23.0 million of net proceeds from the issuance of debt with Cargill Financial. This was partially offset by the payment of debt issuance costs of $2,342 thousand.debt.

Net cash provided by financing activities was $44,220 thousand for the nine months ended September 30, 2021, due to proceeds of $26,000 thousand from the issuance of Convertible Notes, proceeds of $26,793 thousand from the issuance of long-term debt, and proceeds of $3,529 thousand from financing obligations related to the sale leaseback transaction with Grow Bitterroot for the Montana facility. This increase was partially offset by a $10,654 thousand cash repayment of debt and $1,448 thousand in debt issuance costs.

Critical Accounting Policies and Estimates

There have been no changes to the Company'sCompany’s critical accounting policies and estimates from those described under "Critical“Critical Accounting Policies and Estimates"Estimates” in the Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021 and our quarterly report on Form 10-Q for the quarters ended March 31 and June 30, 2022.

Recent Accounting Pronouncements

For more information about recent accounting pronouncements, see Note 2 of the Unaudited Condensed Consolidated Financial Statements, which is incorporated into this Item 2 by reference thereto.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

AsWe are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this information is not required.item.
Item 4. Controls and Procedures


Limitations on effectiveness of control and procedures

In designing and evaluation our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls relative to their costs.

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Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Co-Chief Executive Officers and Chief Financial Officer, has evaluated our disclosure controls and procedures, as such term is defined under Exchange Act Rule 13a-15(e). as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Co-Chief Executive Officersprincipal executive officer and Chief Financial Officerprincipal financial officer concluded that, as of September 30, 2022,March 31, 2023, our disclosure controls and procedures were not effective due toat the continuing material weakness in internal control over financial reporting related to the lack of adequate finance and accounting personnel as disclosed in "Part II. Item 9A. Controls and Procedures" in our Annual Report on Form 10-K for the year ended December 31, 2021.

Remediation Plan

Management is continuing to implement the remediation plan as disclosed in "Part II. Item 9A. Controls and Procedures" in our Annual Report on Form 10-K for the year ended December 31, 2021, to ensure that the deficiency contributing to the material weakness is remediated such that this control will operate effectively.

We believe that these actions, and the improvements we expect to achieve as a result, will effectively remediate the material weakness. However, the material weakness in our internal control over financial reporting will not be considered remediated until management has concluded, through testing, that controls are designed effectively.reasonable assurance level.
Changes in Internal Control over Financial Reporting

Other than as described above,There were no changechanges in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act Rule 13a-15(f)) occurredAct) during the ninethree months ended September 30, 2022March 31, 2023 that have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 11,10, Commitments and Contingencies, to the Unaudited Condensed Consolidated Financial Statements for information regarding legal proceedings.

Item 1A. Risk Factors

There have been no material updates to our risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, other than the following:

We cannot assure you that our proposed Reverse Stock Split will increase our stock price, marketability or our liquidity.

While we expect that the Reverse Stock Split, if implemented, will increase the market price of our Common Stock, it is possible that it will not. Some investors may view a reverse stock split negatively. We cannot assure you that, if implemented, our Common Stock will be more attractive to institutional or other long term investors or that it will attract brokers and investors who trade in lower priced stocks. Even if we implement the Reverse Stock Split, the market price and liquidity of our Common Stock may decrease due to other factors, including our future performance. The percentage market price decline as updated byan absolute number and as a percentage of our Quarterly Report on Form 10-Q foroverall market capitalization may be greater than would occur in the quarters ended March 31absence of the Reverse Stock Split. In addition, if the Reverse Stock Split is implemented, it will increase the number of our stockholders who own "odd lots" of fewer than 100 shares of Common Stock. Brokerage commission and June 30, 2022.other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares of Common Stock. Accordingly, the Reverse Stock Split may not achieve the desired results of increasing the stock price, marketability and liquidity of our Common Stock, which could materially adversely affect our business, financial condition and results of operations.

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

There were no unregistered sales of our equity securities during the period covered by this quarterly report thatwhich were not previously reported in a Current Report on Form 8-K.























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Item 6. Exhibits

Exhibit
Number		Description
2.1
Agreement and Plan of Merger, dated as of June 17, 2021, by and among Leo Holdings III Corp, Longleaf Merger Sub, Inc., Longleaf Merger Sub II, LLC, and Local Bounti Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 21, 2021).
2.2
Purchase and Sale Agreement, dated as of March 14, 2022, by and among Local Bounti Corporation and (i) the Hollandia Produce Group, Inc. Employee Stock Ownership Trust, (ii) Mosaic Capital Investors I, LP, True West Capital Partners Fund II, L.P. f/k/a Seam Fund II, L.P., (iii) Mosaic Capital Investors LLC, solely in its capacity as Sellers’ Representative, (iv) Hollandia Produce Group, Inc., and (v) Local Bounti Operating Company LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2022).
2.3
Unit Purchase and Sale Agreement, dated as of March 14, 2022, by and among Local Bounti Corporation, Local Bounti Operating Company LLC, and each of the holders of Class B Common Units of Hollandia Produce GA, LLC (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2022).
2.4
Purchase and Sale Agreement, dated as of March 14, 2022, by and among Local Bounti Corporation, Local Bounti Operating Company LLC, Mosaic Capital Investors I, LP, True West Capital Partners Fund II, L.P. f/k/a Seam Fund II, L.P., and Hollandia Produce Ga Investor Corporation (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2022).
3.1
Certificate of Incorporation of Local Bounti CorporationInc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 22, 2021).
3.2
Certificate of Amendment to Certificate of Incorporation of Local Bounti Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2022).
3.3
Bylaws of Local Bounti Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 22, 2021).
10.14.1
SecondCommon Stock Purchase Warrant, dated as of March 28, 2023, by and between Local Bounti Corporation and Cargill Financial Services International, Inc. (incorporated by reference to Exhibit 4.6 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023).
10.1*
Third Amendment to Credit Agreements, and Subordination Agreement, dated as of August 11,December 30, 2022, by and among Local Bounti Operating Company LLC, Local Bounti Corporation and certain subsidiaries, and Cargill Financial Services International, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on January 6, 2023).
10.210.2*
Securities Purchase Agreement,Fourth Amendment to Credit Agreements, dated as of October 21, 2022,January 6, 2023, by and among Local Bounti Operating Company LLC, Local Bounti Corporation and certain subsidiaries, and Cargill Financial Services International, Inc. (incorporated by reference to Exhibit 10.2 to the Purchasers named therein.Company's Current Report on Form 8-K, filed with the SEC on January 6, 2023).
10.310.3*
Registration Rights Agreement,Fifth Amendment to Credit Agreements, dated as of October 21, 2022,March 13, 2023, by and among Local Bounti Operating Company LLC, Local Bounti Corporation and certain subsidiaries, and Cargill Financial Services International, Inc. (incorporated by reference to Exhibit 10.1 to the Purchasers named therein.Company's Current Report on Form 8-K, filed with the SEC on March 17, 2023).
10.4*
Sixth Amendment to Credit Agreements, dated as of March 28, 2023, by and among Local Bounti Operating Company LLC, Local Bounti Corporation and certain subsidiaries, and Cargill Financial Services International, Inc. (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023).
10.5†
Local Bounti Corporation Director Compensation Policy, adopted March 17, 2023 (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023).
10.6
Form of Support Agreement, dated as of March 28, 2023. (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K, filed with the SEC on March 31, 2023).
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 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
32.2**
Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
101The following financial statements from Local Bounti’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022,March 31, 2023, formatted in Inline XBRL: (a) Unaudited Condensed Consolidated Statements of Cash Flows, (b) Unaudited Condensed Consolidated Statements of Operations, (c) Unaudited Condensed Consolidated Balance Sheets, and (d) Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104Cover Page Interactive Data File - the cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2022,March 31, 2023, formatted in Inline XBRL (included in Exhibit 101).
_____________________
*Schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The registrant hereby agrees to furnish supplementally a copy of any omitted schedule to the SEC upon its request.
**This document is being furnished in accordance with SEC Release Nos. 33‑8212 and 34‑47551.
†Indicates a management contract or compensatory plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Local Bounti Corporation
/s/ Craig M. Hurlbert
Name:  Craig M. Hurlbert
Title:    Co-Chief Executive Officer
 Date: November 14, 2022May 12, 2023
(Principal Executive Officer)
/s/ Kathleen Valiasek
Name:  Kathleen Valiasek
Title:    Chief Financial Officer
 Date: November 14, 2022May 12, 2023
(Principal Financial and Accounting Officer)

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