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New words:
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adhere, adjacent, allocated, allocation, amortized, APPH, APPHW, ascertain, aspirational, ATI, audit, broad, built, cleaner, combine, conclude, consummated, consummation, content, convenience, conventional, COVID, cultivate, currency, denominated, Department, detailed, diesel, distancing, diversion, documented, doubling, drove, eliminating, enhanced, ESG, essential, Euro, excluding, filer, firm, fluid, foodservice, forecasted, functioning, furnish, gained, generating, harvested, healthy, hedge, hedged, heightening, hinder, implementing, imposing, improvement, inaccurate, ineffective, investor, JPM, launch, listed, maintained, Materiality, method, misstated, mix, notional, organizing, PBC, perfectly, persist, PIPE, presidential, prevention, productivity, promise, promissory, quarantine, ranging, reclassification, reclassified, referenced, relaxed, remedy, remotely, reorganization, residual, Responsibility, safer, secondary, settled, Shopify, size, spoilage, spot, staffing, storage, successor, taxation, tool, travel, treat, unexpectedly, unharvested, website
Financial report summary
?Competition
Local BountiRisks
- There is substantial doubt about our ability to continue as a going concern and we will require significant additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our operations and future growth.
- We have a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future. Our business could be adversely affected if we fail to effectively manage our future growth.
- We face risks inherent in the agriculture business, including the risks of diseases and pests.
- We have an evolving business model, which increases the complexity of our business and makes it difficult to evaluate our future business prospects.
- We currently rely primarily on a single facility for the majority of our operations.
- Any damage to or problems with our CEA facilities, or delays in land acquisition or construction, could severely impact our operations and financial condition.
- Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases.
- Our management has limited experience in operating a public company.
- Mastronardi is currently our exclusive marketing and distribution partner. We are highly dependent on our relationship with Mastronardi, and impairment to or termination of this relationship could adversely affect our results of operations and financial condition.
- Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, public health crises such as the COVID-19 pandemic, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which have in the past and may in the future negatively impact our business and financial performance.
- Further downgrades of the U.S. credit rating, automatic spending cuts, or a government shutdown could negatively
- We could be adversely affected by a change in consumer preferences, perception and spending habits in the food industry, and failure to develop and expand our product offerings or gain market acceptance of our products could have a negative effect on our business.
- We may be unable to successfully execute on our growth strategy.
- We have agreed not to compete with Mastronardi outside of Kentucky and West Virginia, which may limit our business opportunities.
- We build CEA facilities, which may be subject to unexpected costs and delays due to reliance on third parties for construction, material delivery, supply-chains and fluctuating material prices.
- We may not be able to compete successfully in the highly competitive natural food market.
- We have only recently commenced our third harvest, which makes it difficult to forecast future results of operations.
- Our AppHarvest Berea farm is subject to lease obligations that may restrict our ability to operate our business.
- If we fail to develop and maintain our brand, our business could suffer.
- Our brand and reputation may be diminished due to real or perceived quality, food safety, or environmental issues with our products, which could negatively impact our business, reputation, operating results and financial condition.
- Demand for our current and expected future products, which include tomatoes, berries, peppers, cucumbers, other vine produce, and salad greens is subject to seasonal fluctuations and may adversely impact our results of operations in certain quarters.
- If we cannot maintain our company culture or focus on our vision as we grow, our business and competitive position may be harmed.
- Food safety and foodborne illness incidents or advertising or product mislabeling may materially adversely affect our business by exposing us to lawsuits, product recalls, regulatory enforcement actions, or changes in consumer demand increasing our operating costs and reducing demand for our product offerings.
- Our operations are subject to FDA and USDA governmental regulation and state regulation, and there is no assurance that we will be in compliance with all regulations.
- Future acquisitions could disrupt our business and adversely affect our business operations and financial results.
- Changes in existing laws or regulations, or the adoption of new laws or regulations, may increase our costs and otherwise adversely affect our business, results of operations and financial condition.
- Failure by any partner farms, suppliers of raw materials or co-manufacturers to comply with food safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business.
- We are subject to stringent environmental regulation and potentially subject to environmental litigation, proceedings, and investigations.
- The unavailability, reduction or elimination of government and economic incentives could negatively impact our business, prospects, financial condition and operating results.
- We rely on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm our ability to effectively operate our business.
- A cybersecurity incident or other technology disruptions could negatively impact our business.
- If we are unable to apply technology effectively in driving value for our clients through our technology-based platforms, our results of operations, client relationships and growth could be adversely affected.
- The loss of any intellectual property could enable other companies to compete more effectively with us.
- We may be unable to obtain or qualify for government grants and incentives in the future.
- If our estimates or judgments relating to our critical accounting estimates prove to be incorrect, our results of operations could be adversely affected.
- Our employees and independent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could negatively impact our business, prospects, financial condition and operating results.
- Adherence to our values and our focus on long-term sustainability may negatively influence our short- or medium-term financial performance.
- As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.
- As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder and public benefit interests, the occurrence of which may have an adverse impact on our financial condition and results of operations.
- Our existing indebtedness could adversely affect our financial condition, results of operation and business growth.
- We may not be able to generate sufficient cash to service our debt and other contractual obligations and may be forced
- If we fail to meet all applicable requirements of Nasdaq and Nasdaq determines to delist our common stock, the
- “Penny stock” rules may make buying or selling our securities difficult which may make our Common Stock less liquid
- We have previously identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
- The valuation of our Private Warrants could increase the volatility in our net income (loss) in our consolidated statements of earnings (loss).
- Concentration of ownership among our executive officers, directors and their affiliates may prevent new investors from influencing significant corporate decisions.
- Because our stock price has and will likely continue to be highly volatile, the market price for our Common Stock may be lower or more volatile than expected.
- The market price of our Common Stock may be influenced by many factors, including:
- Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business. For example, we are subject to securities litigation and our officers and directors are subject to a related derivative complaint, which are expensive and could divert management attention and adversely impact our business.
- If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.
- Future sales of our Common Stock into the public market could cause the market price of our Common Stock to drop significantly, even if our business is doing well.
- Because we have no current plans to pay cash dividends on the Common Stock for the foreseeable future, you may not receive any return on investment unless you sell the Common Stock for a price greater than that which you paid for it.
- Our amended and restated certificate of incorporation designates specific courts as the exclusive forum for certain stockholder litigation matters, which could limit the ability of our stockholders to obtain a favorable forum for disputes with us or our directors, officers or employees.
- There is no guarantee that the Warrants will be in the money at the time they become exercisable, and they may expire worthless.
- We may redeem unexpired Public Warrants prior to their exercise at a time that is disadvantageous to Warrant holders, thereby making such Warrants worthless.
- You will be diluted by any exercises of outstanding Warrants and outstanding options, as well as settlement of outstanding restricted stock units, and/or the sale and issuance of our Common Stock pursuant to the Purchase Agreement with B. Riley Principal Capital, or the ATM Agreement with Cowen. In addition, we may issue additional shares of Common Stock or other equity securities convertible into Common Stock without your approval, which would dilute your ownership interests and may depress the market price of the Common Stock.
- Anti-takeover provisions in our amended and restated certificate of incorporation and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our then current management.
- Our status as a public benefit corporation could make an acquisition of our company, which may be beneficial to our stockholders, more difficult.
- If we fail to retain and motivate members of our management team or other key employees, our business and future growth prospects would be harmed.
- We will continue to incur significant costs as a result of operating as a public company, and our management will continue to devote substantial time to compliance initiatives.
- We are a “smaller reporting company” and have elected to comply with reduced public company reporting requirements, which could make our Common Stock less attractive to investors.
- We have a significant amount of long-lived assets, which are assessed for impairment whenever events or changes in
- Changes in tax laws may materially adversely affect our business, prospects, financial condition and operating results.
- Our ability to use net operating loss carryforwards and other tax attributes may be limited.
Management Discussion
- Net sales for the three months ended March 31, 2023, were $13.0 million compared to $5.2 million for the comparable prior year period. The increase of $7.8 million for the three months ended March 31, 2023, was primarily due to the start-up of operations at AppHarvest Richmond, AppHarvest Somerset and AppHarvest Berea as we increased our tomato production capacity and began to sell strawberries, salad greens and cucumbers. The mitigation efforts at the Berea facility that we began to undertake in April 2023, as more fully described in “Risk Factors – We face risks inherent in the agriculture business, including the risks of diseases and pests”, is expected to negatively impact net sales for the quarter ended June 30, 2023, by approximately $3.0 million. We anticipate that we will make up these sales in the second half of the year and do not expect a material negative impact for the full year ended December 31, 2023.