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 March 31, 2021

OR

2024
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

LEO HOLDINGS III CORP


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


Delaware98-1584830
Cayman Islands001-4012598-1584830

(State or other jurisdictionOther Jurisdiction of

incorporation Incorporation or organization)

Organization)

(Commission

File Number)

(IRSI.R.S Employer

Identification No.)

Albany Financial Center, South Ocean Blvd, Suite #507

P.O. Box SP-63158

New Providence, Nassau, The Bahamas

400 W. Main St.Hamilton,MT59840
(Address Ofof Principal Executive Offices)Offices, Including Zip Code)
(800)640-4016
        (Registrant's Telephone Number, Including Area Code)
 (Zip Code)

(310) 800-1000

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on

which registered

Units, each consisting of one Class A ordinary share, $0.0001Common Stock, par value and one-fifthof one redeemable warrant$0.0001 per share LIII.UNew York Stock Exchange
Class A ordinary shares included as part of the unitsLIIINew York Stock Exchange
Redeemable warrants included as part of the unitsLIII WSLOCL 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-TS-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 accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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-2 of12b-2of the Exchange Act).    Yes      No  

As


The number of June 10, 2021, 27,500,000 Class A ordinaryoutstanding shares par value $0.0001 per share, and 6,875,000 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.


LEO HOLDINGS III CORP

Form 10-Q

For the Period From January 8, 2021 (inception) Through March 31, 2021

Table of Contents

Local Bounti Corporation’s common stock was 8,487,988 at May 7, 2024.

1


TABLE OF CONTENTS

Page
Part I – FINANCIAL INFORMATION
Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023

Item 1.

Financial Statements (Unaudited)1
1
Unaudited Condensed StatementConsolidated Statements of Operations for the Period from January 8, 2021 (Inception) throughthree months ended March 31, 20212024 and
2023
2
Unaudited Condensed StatementConsolidated Statements of Changes in Shareholders’Stockholders' Equity for the Period from January 8, 2021 (Inception) through three months ended
March 31, 20212024 and 2023
3
2023
4
Notes to Unaudited Condensed Consolidated Financial Statements5

Management’s Discussion and Analysis of Financial Condition and Results of Operations18

Quantitative and Qualitative Disclosures About Market Risk22

Controls and Procedures22

Legal Proceedings23

Risk Factors23

Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

25

Item 4.

Mine Safety Disclosures25

Item 5.

SIGNATURES
25

Item 6.

Exhibits26


























2

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

LEO HOLDINGS III CORP

UNAUDITED CONDENSED BALANCE SHEET

   March 31, 2021 

Assets:

  

Current assets:

  

Cash

  $804,139 

Prepaid expenses

   1,063,070 
  

 

 

 

Total current assets

   1,867,209 

Investments held in Trust Account

   275,000,000 
  

 

 

 

Total Assets

  $276,867,209 
  

 

 

 

Liabilities and Shareholders’ Equity:

  

Current liabilities:

  

Accounts payable

  $32,960 

Accounts payable - related party

   9,677 

Accrued expenses

   89,767 
  

 

 

 

Total current liabilities

   132,404 

Deferred underwriting commissions

   9,625,000 

Warrant liabilities

   7,745,000 
  

 

 

 

Total liabilities

   17,502,404 

Commitments and Contingencies (Note 6)

  

Class A ordinary shares, $0.0001 par value; 25,436,480 shares subject to possible redemption at $10.00 per share

   254,364,800 

Shareholders’ Equity:

  

Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding

   —   

Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,063,520 shares issued and outstanding (excluding 25,436,480 shares subject to possible redemption)

   206 

Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,900,000 shares issued and outstanding (1)

   690 

Additional paid-in capital

   4,001,017 

Retained earnings

   998,092 
  

 

 

 

Total shareholders’ equity

   5,000,005 
  

 

 

 

Total Liabilities and Shareholders’ Equity

  $276,867,209 
  

 

 

 

(1)

This number includes up to 900,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. On March 2, 2021, the underwriters partially exercised the over-allotment option to purchase as additional 3,500,000 Units; thus, 25,000 Class B ordinary shares were forfeited.

The accompanying notes are an integral part of these unaudited condensed financial statements.


LEO HOLDINGS III CORP

UNAUDITED CONDENSED

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS OF OPERATIONS

   For the Period from
January 8, 2021 (Inception)
through March 31, 2021
 

Operating expenses

  

General and administrative expenses

  $124,942 

Administrative fee - related party

   9,677 
  

 

 

 

Loss from operations

   (134,619

Change in fair value of warrant liabilities

   1,408,333 

Offering costs associated with issuance of warrants

   (275,622
  

 

 

 

Net income

  $998,092 
  

 

 

 

Weighted average shares outstanding of Class A ordinary shares, basic and diluted

   27,500,000 
  

 

 

 

Basic and diluted net income per share, Class A ordinary shares

  $0.00 
  

 

 

 

Weighted average shares outstanding of Class B ordinary shares, basic and diluted

   6,316,265 
  

 

 

 

Basic and diluted net income per share, Class B ordinary shares

  $0.16 
  

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

LEO HOLDINGS III CORP

UNAUDITED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the period from January 8, 2021 (inception) through March 31, 2021

   Ordinary Shares   Additional      Total 
   Class A  Class B   Paid-in  Retained   Shareholders’ 
   Shares  Amount  Shares   Amount   Capital  Earnings   Equity 

Balance - January 8, 2021 (inception)

   —    $—     —     $—     $—    $—     $—   

Issuance of Class B ordinary shares to Sponsor (1)

   —     —     6,900,000    690    24,310   —      25,000 

Sale of units in initial public offering, less fair value of warrant liabilities for public warrants

   27,500,000   2,750   —      —      270,377,250   —      270,380,000 

Offering costs

   —     —     —      —      (15,504,954  —      (15,504,954

Excess cash received over the fair value of the private warrants

   —     —     —      —      3,466,667   —      3,466,667 

Class A ordinary shares subject to possible redemption

   (25,436,480  (2,544  —      —      (254,362,256  —      (254,364,800

Net income

   —     —     —      —      —     998,092    998,092 
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

 

Balance - March 31, 2021 (unaudited)

   2,063,520  $206   6,900,000   $690   $4,001,017  $998,092   $5,000,005 
  

 

 

  

 

 

  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

 

(1)

This number includes up to 900,000 Class B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. On March 2, 2021, the underwriters partially exercised the over-allotment option to purchase as additional 3,500,000 Units; thus, 25,000 Class B ordinary shares were forfeited.

The accompanying notes are an integral part of these unaudited condensed financial statements.


LEO HOLDINGS III CORP

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

   For the Period from
January 8, 2021 (Inception)
through March 31, 2021
 

Cash Flows from Operating Activities:

  

Net income

  $998,092 

Adjustments to reconcile net income to net cash used in operating activities:

  

Change in fair value of warrant liabilities

   (1,408,333

Offering costs associated with issuance of warrants

   275,622 

Changes in operating assets and liabilities:

  

Prepaid expenses

   (1,038,070

Accounts payable

   32,960 

Accounts payable - related party

   9,677 

Accrued expenses

   4,767 
  

 

 

 

Net cash used in operating activities

   (1,125,285
  

 

 

 

Cash Flows from Investing Activities:

  

Cash deposited in Trust Account

   (275,000,000
  

 

 

 

Net cash used in investing activities

   (275,000,000
  

 

 

 

Cash Flows from Financing Activities:

  

Proceeds from note payable to related party

   111,835 

Repayment of note payable to related party

   (111,835

Proceeds received from initial public offering, gross

   275,000,000 

Proceeds received from private placement

   8,000,000 

Offering costs paid

   (6,070,576
  

 

 

 

Net cash provided by financing activities

   276,929,424 
  

 

 

 

Net increase in cash

   804,139 

Cash - beginning of the period

   —   
  

 

 

 

Cash - end of the period

  $804,139 
  

 

 

 

Supplemental disclosure of noncash activities:

  

Prepaid expenses paid by Sponsor in exchange for issuance of Class B ordinary shares

  $25,000 

Offering costs included in accrued expenses

  $85,000 

Deferred underwriting commissions

  $9,625,000 

Initial value of Class A ordinary shares subject to possible redemption

  $253,038,210 

Change in value of Class A ordinary shares subject to possible redemption

  $1,326,590 

The accompanying notes are an integral part of these unaudited condensed financial statements.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 — Description of Organization and Business Operations

Leo Holdings III Corp (the “Company”) was incorporated as a Cayman Islands exempted companyThis Quarterly Report on January 8. 2021. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search for a target business in the consumer sector. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of March 31, 2021, the Company had not commenced any operations. All activity for the period from January 8, 2021 (inception) through March 31, 2021 relates to the Company’s formationForm 10-Q and the initial public offering (the “Initial Public Offering”) described below and since the Initial Public Offering. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is Leo Investors III LP, a Cayman Islands exempted limited partnership (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on February 25, 2021. On March 2, 2021, the Company consummated its Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), including 3,500,000 additional Units to partially cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $275.0 million, and incurring offering costs of approximately $15.8 million, of which approximately $9.6 million was for deferred underwriting commissions (Note 6).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,333,333 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $8.0 million, and incurring offering costs of approximately $11,000 (Note 4).

Upon the closing of the Initial Public Offering and the Private Placement, $275.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering andinformation incorporated herein by reference contain certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government securities,statements that constitute "forward-looking statements" within the meaning set forth inof Section 2(a)(16)27A of the Investment CompanySecurities Act of 1940,1933, as amended (the “Investment Company Act”"Securities Act"), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes paid or payable on income earned on the Trust Account) at the time of the signing of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company will provide its holders of the Public Shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders are entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 5). These Public Shares are classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its amended and restated memorandum and articles of association (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. Subsequent to the consummation of the Initial Public Offering, the Company will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with the Company’s legal counsel prior to execution. In addition, the initial shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, the Amended and Restated Memorandum and Articles of Association provides that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)"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 the use of terms such as "expect," "anticipate," "believe," "continue," "estimate," "intend," "may," "plan," "project," "seek," "should," "target," "will," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, 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 facilities, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of 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 generate significant revenue;
the risk that Local Bounti may never achieve or sustain profitability;
the risk that Local Bounti could fail to effectively manage its future growth;
the 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 in the future;
Local Bounti's reliance 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 scale its operations and decrease its cost of goods sold over time;
the potential for damage to or problems with Local Bounti's 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;
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 risk of diseases and pests destroying crops;
Local Bounti's ability to compete successfully in the highly competitive markets in which it operates;
Local Bounti's ability to defend itself against intellectual property infringement claims;
Local 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;
the risk that seasonality may adversely impact Local Bounti's results of operations;
Local Bounti's ability to repay, refinance, restructure, or extend its indebtedness as it comes due;
Local Bounti's ability to comply with the continued listing requirements of the New York Stock Exchange ("NYSE");
Local Bounti's ability to implement any share repurchase program; and
the other factors discussed in Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form 10-K and any updates to those factors set forth in Local Bounti's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 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 restrictedthose that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from redeeming its shares with respectthose expressed or implied by these forward- looking statements. These risks and uncertainties include, but are not limited to, more than an aggregatethe "Risk Factors" identified in Part I, Item 1A of 15%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 and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking
3


statements. Should one or more of the Class A ordinary shares sold in the Initial Public Offering, without the prior consentthese risks or uncertainties materialize, or should any of the Company.

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 Company’s Sponsor, officersforward-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 directors (the “initial shareholders”) agreedothers 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 X). 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 propose an amendmentour 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 Amended"Company," "Local Bounti," "we," "us," "our" and Restated Memorandumsimilar terms refer to Local Bounti Corporation and Articlesits consolidated subsidiaries.
4


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
March 31,December 31,
 20242023
Assets
Current assets
Cash and cash equivalents$8,242 $10,326 
Restricted cash6,489 6,569 
Accounts receivable, net3,360 3,078 
Inventory, net4,960 4,210 
Prepaid expenses and other current assets2,620 2,805 
Total current assets25,671 26,988 
Property and equipment, net344,112 313,166 
Operating lease right-of-use assets155 172 
Intangible assets, net40,461 41,353 
Other assets3,008 73 
Total assets$413,407 $381,752 

Liabilities and stockholders' equity
Current liabilities
Accounts payable$12,778 $14,640 
Accrued liabilities19,314 17,204 
Financing obligation25 — 
Operating lease liabilities76 97 
Total current liabilities32,193 31,941 
Long-term debt, net of debt issuance costs329,775 277,985 
Financing obligation, noncurrent49,397 49,225 
Operating lease liabilities, noncurrent95 114 
Warrant liability11,394 7,214 
Total liabilities422,854 366,479 
Commitments and contingencies (Note 10)
Stockholders' (deficit) equity
          Common stock, 0.0001 par value, 400,000,000 shares authorized,
          8,437,542 and 8,311,229 issued and outstanding as of March 31, 2024 and
          December 31, 2023, respectively
Additional paid-in capital317,930 318,600 
Accumulated deficit(327,378)(303,328)
Total stockholders' (deficit) equity(9,447)15,273 
Total liabilities and stockholders' equity$413,407 $381,752 

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5


LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
 Three Months Ended March 31,
 20242023
Sales$8,383 $6,698 
Cost of goods sold(1)(2)
7,597 6,419 
Gross profit786 279 
Operating expenses:
Research and development(1)(2)
3,487 3,576 
Selling, general and administrative(1)(2)
7,598 15,981 
Total operating expenses11,085 19,557 
Loss from operations(10,299)(19,278)
Other income (expense):
Change in fair value of warrant liability(4,180)— 
Interest expense, net(9,608)(4,299)
Other income37 50 
Net loss$(24,050)$(23,527)
Net loss applicable to common stockholders per basic common share:
Basic and diluted$(2.89)$(3.04)
Weighted average common shares outstanding:
Basic and diluted8,325,944 7,727,866 

(1) Amounts include stock-based compensation as follows:
 Three Months Ended March 31,
 20242023
Cost of goods sold$21 $87 
Research and development93 738 
Selling, general and administrative(1,048)5,134 
Total stock-based compensation expense, net of amounts capitalized$(934)$5,959 

(2) Amounts include depreciation and amortization as follows:
 Three Months Ended March 31,
 20242023
Cost of goods sold$1,203 $936 
Research and development797 566 
Selling, general and administrative1,228 1,956 
Total depreciation and amortization$3,228 $3,458 
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

6


LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 and 2023
(in thousands, except share data)
 Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders'
(Deficit) Equity
 SharesAmount
Balance, December 31, 20238,311,237 $$318,600 $(303,328)$15,273 
Vesting of restricted stock units, net126,305 — — — — 
Stock-based compensation— — (670)— (670)
Net loss— — — (24,050)(24,050)
Balance, March 31, 20248,437,542 $$317,930 $(327,378)$(9,447)

 Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders'
Equity
 SharesAmount
Balance, December 31, 20227,976,980 $$300,645 $(179,313)$121,333 
Vesting of restricted stock units, net41,502 — — — — 
Stock-based compensation— — 6,361 — 6,361 
Net loss— — — (23,527)(23,527)
Balance, March 31, 20238,018,482 $$307,006 $(202,840)$104,167 


See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

7


LOCAL BOUNTI CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended
March 31,
 20242023
Operating Activities:
Net loss$(24,050)$(23,527)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation2,335 1,782 
Amortization of intangible assets893 1,676 
Stock-based compensation expense, net of amounts capitalized(934)5,959 
Allowance for expected credit losses— 
Inventory allowance223 30 
Loss on disposal of property and equipment— 
Change in fair value of warrant liability4,180 — 
Paid-in-kind interest expense9,786 — 
Amortization of debt issuance costs2,100 981 
Interest expense on financing obligation198 50 
Changes in operating assets and liabilities:
Accounts receivable(281)76 
Inventory(973)(284)
Prepaid expenses and other current assets181 
Other assets(2,936)— 
Accounts payable969 571 
Operating lease liabilities(21)— 
Accrued liabilities1,244 4,844 
Net cash used in operating activities(7,083)(7,830)
Investing Activities:
Purchases of property and equipment(34,985)(32,685)
Net cash used in investing activities(34,985)(32,685)
Financing Activities:
Proceeds from issuance of debt39,904 23,045 
Net cash provided by financing activities39,904 23,045 
Net decrease in cash and cash equivalents and restricted cash(2,164)(17,470)
Cash and cash equivalents and restricted cash at beginning of period16,895 24,938 
Cash and cash equivalents and restricted cash at end of period$14,731 $7,468 
















8


Reconciliation of Association that would modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within 24 monthscash, cash equivalents, and restricted cash from the closing of the Initial Public Offering, or March 2, 2023 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equalUnaudited Condensed Consolidated Balance Sheets to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously releasedUnaudited Condensed Consolidated Statements of Cash Flows


Cash and cash equivalents$8,242$7,468 
Restricted cash6,489
Total cash and cash equivalents and restricted cash as shown in the Unaudited Condensed Consolidated Statements of Cash Flows$14,731$7,468

Non-cash activities:
Warrants issued in connection with debt modification$$25,697
Purchases of property and equipment included in accounts payable and accrued liabilities$1,965$7,584
Interest capitalized to property and equipment, net$5,683$2,079
Stock-based compensation capitalized to property and equipment, net$264$577
Non-cash equity settlement on employee receivable$$175

See accompanying Notes to us to fund the Company’s regulatory compliance requirements, and other costs related thereto and/or to pay the Company’s income taxes, if any, (less up to $100,000 of interest to pay dissolution expenses) divided by the number of the then outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

Unaudited Condensed Consolidated Financial Statements

LEO HOLDINGS III CORP

9


LOCAL BOUNTI CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Sponsor agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a


1. Business Combination within the Combination Period. However, if the Sponsor or membersDescription
Description of the Company’s management team acquire Public SharesBusiness

Local Bounti Corporation ("Local Bounti" or the "Company") was founded in or afterAugust 2018 and is headquartered in Hamilton, Montana. The Company is a producer of sustainably grown living lettuce, and loose leaf lettuce. The Company is a controlled environment agriculture ("CEA") company that utilizes patented Stack & Flow Technology®, which is a hybrid of vertical and hydroponic greenhouse farming, to grow healthy food sustainably and affordably. Through the Initial Public Offering, they will be entitledCompany's CEA process, its goal is to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to completeproduce environmentally sustainable products in a Business Combination within the Combination Period. The underwriter agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Accountmanner that will be available to fundincrease harvest efficiency, limit water usage, and reduce the redemptioncarbon footprint of the Public Shares. In the event of suchproduction and distribution it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Liquidity and Capital Resources

As of March 31, 2021, the Company had approximately $804,000 in its operating bank account and working capital of approximately $1.7 million.

The Company’s liquidity needs to date have been satisfied through a contribution of $25,000 from Sponsor to cover for certain expenses in exchange for the issuance of the Founder Shares, the loan of approximately $112,000 from the Sponsor pursuant to the Note (as defined in Note 5), and the proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid the Note in full on March 31, 2021. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (as defined in Note 5). As of March 31, 2021, there were no amounts outstanding under any Working Capital Loan.

Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Note 2 — Basic of Presentation and process.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements are presented and Principles of Consolidation

Management of Local Bounti is responsible for the Unaudited Condensed Consolidated Financial Statements included in U.S. dollarsthis document, which have been prepared in conformityaccordance with accounting principles generally accepted in the United States of America (“GAAP”("GAAP") for financial information and pursuant to. The Unaudited Condensed Consolidated Financial Statements include the rules and regulationsaccounts of the SEC. Accordingly, theyCompany 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 information and footnotesdisclosures required by GAAP.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, 2023 (the "Annual Financial Statements") as filed with the SEC. In the opinion of management, the unaudited condensed financial statements reflectCompany, the accompanying Unaudited Condensed Financial Statements contain all adjustments, which includeconsisting of only normal recurring adjustments, necessary to fairly present its financial position as of March 31, 2024, its results of operations for the fair statement of the balancesthree months ended March 31, 2024 and results2023, its cash flows for the periods presented. Operating resultsthree months ended March 31, 2024 and 2023, and its stockholders' (deficit) equity for the period from January 8, 2021 (inception) throughthree months ended March 31, 20212024 and 2023. Results of operations for the interim periods are not necessarily indicative of the results that mayto be expected throughfor the full year ending December 31, 20212024 or for any future periods.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Emerging Growth Company

period. The Company is an “emerging growth company,” as defined in Section 2(a)Unaudited Condensed Consolidated Balance Sheet at December 31, 2023 was derived from the Annual Financial Statements but does not contain all of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptionsfootnote disclosures from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Annual Financial Statements.

Liquidity

The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revisedincurred losses and it has different application dates for public or private companies,generated negative cash flows from operations since its inception. At March 31, 2024, the Company had an accumulated deficit of $327.4 million and cash and cash equivalents and restricted cash of $14.7 million.

The Ninth Amendment to the credit facilities with Cargill Financial, as an emerging growth company, can adoptdescribed in Note 6, Debt, allows for the new or revised standard at the time private companies adopt the new or revised standard. This may make comparisonpayment in kind of the Company’s financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of usingquarterly interest payments due and payable for the extended transition period difficult or impossible because of the potential differencesquarters ending June 30, 2024, September 30, 2024, and December 31, 2024. The Ninth Amendment also provides for up to $15.0 million in accounting standards used.

Concentration of Credit Risk

Financial instruments that potentially subjectworking capital for the Company, to concentrations$5.0 million of credit risk consistwhich has been drawn down, and the remaining $10.0 million of cash accounts in a financial institution, which at times, may exceed the Federal Depository Insurance Coverage limit of $250,000. As of March 31, 2021,remains available to the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of March 31, 2021.

Investments Held2024. In addition, the Company expects to close in the Trust Account

The Company’s portfoliosecond quarter of investments held2024 on the four previously disclosed Conditional Commitment Letters ("CCLs") from a commercial finance lender that were executed in the Trust Account is comprisedsecond half of U.S. government securities, within2023. Together, the meaning set forth in Section 2(a)(16)CCLs will provide financing of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities, or a combination thereof. The Company’s investments heldapproximately $228 million to fund its 2024 facility expansions, its new greenfield facility in the Trust Account are classified as trading securities. Trading securities are presented onMidwest, and to repay certain existing construction financing which will lower the balance sheets at fair value at the endCompany’s cost of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in net gain from investments held in Trust Account in the accompanying unaudited condensed statement of operations.capital. The estimated fair values of investments held in the Trust Account are determined using available market information.

Use of Estimates

The preparation of unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of revenues and expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Accordingly, the actual results could differ from those estimates.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significantfunding expected pursuant to the fair value measurement.

As of March 31, 2021, the carrying values of cash, accounts payable and accrued expenses approximate their fair values dueCCLs is subject to the short-term nature of the instruments. The Company’s marketable securities held in Trust Account is comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less and are recognized at fair value. The fair value of marketable securities held in Trust Account is determined using quoted prices in active markets.

Offering Costs

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs associated with the Class A ordinary shares were charged to shareholders’ equity upon the completion of definitive documents and the Initial Public Offering.

Class A Ordinary Shares Subject to Possible Redemption

satisfaction of customary closing conditions.


The Company accounts for its Class A ordinary shares subjectbelieves that the additional $10.0 million of working capital from Cargill Financial, the $228 million from a commercial finance lender, the Company's current cash position, cash generated from product sales, and anticipated additional deferrals of future cash interest and principal payments under the Company's credit facilities with Cargill Financial will be adequate to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely withinfund the Company’s control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2021, 25,436,480 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

Income Taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes”. ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman federal income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statement. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially changeplanned operations over the next twelve months.

Net Income per Ordinary Share

Net income per ordinary share is computed by dividing net income applicable to shareholders by12 months from the weighted average numberissuance of ordinary shares outstanding during the period. these Unaudited Condensed Consolidated Financial Statements.


The Company has not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 10,833,333 ordinary shares in the calculation of diluted income per share, because their inclusion wouldalso believes additional cash can be anti-dilutive under the treasury stock method.

The Company’s unaudited condensed statement of operations includes a presentation of income per ordinary shares subject to redemption in a manner similarsecured through other debt or equity financings, if necessary.However, there can be no assurance that equity or debt financing will be available to the two-class method of income (loss) per share. Net income per ordinary share, basicCompany should it need it or, if available, that the terms will be satisfactory to the Company and diluted for Class A ordinary shares is calculated by dividing the investment income earned on the Trust Account of approximately $0 by the weighted average number of Class A ordinary shares outstanding for the period from January 8, 2021 (inception) through March 31, 2021. Net income per ordinary share, basicnot dilutive to existing shareholders. The

10


Company's failure to raise capital as and diluted for Class B ordinary shares is calculated by dividing the net income of approximately $998,000 for the period from January 8, 2021 (inception) through March 31, 2021, less income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding.

Derivative warrant liabilities

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

The Company accountswhen needed could have significant negative consequences for its 10,833,333 warrants issued in connection with its Initial Public Offering (5,500,000)business, financial condition and Private Placement (5,333,333), as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, the Company recognizes the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statementresults of consolidated operations. The fair value of warrants issued by the Company in connection with the Public Offering and Private Placement have been estimated using Monte-Carlo simulations at each measurement date.

Recent


Recently Adopted Accounting Standards

Pronouncements


In August 2020, the FASB issued ASU No. 2020-06,Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’sEntity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity(“ASU 2020-06”), which simplifies the accounting for certain financial instruments with liability and equity characteristics, including convertible instruments and contracts on an entity’s own equity. The standard reduces the number of models used to account for convertible instruments, by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linkedequity contracts to qualify for the derivative scope exception, and it simplifiesrequires the if-converted method for calculation of diluted earnings per share calculation in certain areas.for all convertible instruments. The Company adopted ASU 2020-06this guidance on January 8, 2021 (inception)1, 2024. The adoption of this guidance did not have a material impact on the Company's Unaudited Condensed Consolidated Financial Statements.
. Adoption
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which requires disclosure of specific categories and disaggregation of information in the rate reconciliation table. The ASU also requires disclosure of disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations. The standard is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. Early adoption is permitted and the amendments should be applied on a prospective basis. The Company is currently evaluating the impact of this standard on its Unaudited Condensed Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its Unaudited Condensed Consolidated Financial Statements.


3. Inventory
Inventories consisted of the ASU didfollowing:

March 31,December 31,
20242023
(in thousands)
Raw materials$2,382$1,843
Production3,4803,010
Finished goods74110
Inventory allowance(976)(753)
Total inventory, net$4,960$4,210

4. Property and Equipment

Property and equipment, net consisted of the following:
March 31,December 31,
20242023
(in thousands)
Machinery, equipment, and vehicles$56,194$44,169
Land19,25319,253
Buildings and leasehold improvements86,04466,754
Construction-in-progress198,290196,324
Less: Accumulated depreciation(15,669)(13,334)
Property and equipment, net$344,112$313,166

Depreciation expense related to property and equipment was $2.3 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively.
11




5. Accrued Liabilities
Accrued liabilities consisted of the following:

March 31,December 31,
20242023
(in thousands)
Interest$11,866 $9,786 
Construction3,860 2,995 
Payroll1,679 2,596 
Production731 690 
Professional services456 411 
Other722 726 
Total accrued liabilities$19,314 $17,204 
6. Debt
Debt consisted of the following:

 March 31,December 31,
20242023
 (in thousands)
Senior Facility$317,565$269,395
Subordinated Facility49,65248,132
Unamortized deferred financing costs(37,442)(39,542)
Total debt$329,775$277,985

Agreements with Cargill Financial

On September 3, 2021, Local Bounti Operating Company LLC and certain subsidiaries entered into (a) a credit agreement (the "Senior Credit Agreement") with Cargill Financial Services International, Inc. ("Cargill Financial") for an up to $150.0 million multiple-advance term loan (the "Senior Facility") and (b) a subordinated credit agreement (the "Subordinated Credit Agreement" and, together with the Senior Credit Agreement, the "Original Credit Agreements") with Cargill Financial for an up to $50.0 million multiple-advance term loan (the "Subordinated Facility" and, together with the Senior Facility, the "Facilities").

As previously disclosed in the Company's Annual Financial Statements, Local Bounti Operating Company LLC and certain subsidiaries entered into with Cargill Financial a First Amendment, a Second Amendment, a Third Amendment, Fourth Amendment, a Fifth Amendment, a Sixth Amendment, and a Seventh Amendment to the Original Credit Agreements.

In the first quarter of 2024, Local Bounti Operating Company LLC, the Company, and certain subsidiaries entered into with Cargill Financial an Eighth Amendment and a Ninth Amendment to the Original Credit Agreements (as so amended, collectively referred to as the "Amended Credit Agreements"), as further described below.
Eighth Amendment to Credit Agreements

On January 23, 2024, the Company, along with certain subsidiaries of the Company, entered into an Eighth Amendment to the Original Credit Agreements (the "Eighth Amendment") with Cargill Financial to further amend the Original Credit Agreements. The Eighth Amendment allows for the payment in kind of the quarterly interest payments due and payable for the quarter ending March 31, 2024.

Ninth Amendment to Credit Agreements

On March 26, 2024, the Company, along with certain of its subsidiaries, entered into a Ninth Amendment to the Original Credit Agreements (the "Ninth Amendment") with Cargill Financial to further amend the Original Credit Agreements. The Ninth Amendment allows for the payment in kind of the quarterly interest payments due and payable for the quarters ending June 30, 2024, September 30, 2024, and December 31, 2024. The Ninth amendment also
12


provides for up to $15.0 million in working capital for the Company, $5.0 million of which was drawn down, and the remaining $10.0 million of which remains available to the Company.

General provisions to the Amended Credit Agreements

The interest rate on the Subordinated Facility is 12.5% per annum and the interest rate on the Senior Facility is equal to SOFR plus a margin (which varies between 7.5% to 8.5% depending on the Senior Facility net leverage ratio) per annum, with accrued interest paid quarterly in arrears on the first business day of the subsequent quarter through the maturity date on 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 maturity date.

In accordance with the Original Credit Agreements, the Company is required to have a debt service reserve account which is shown as restricted cash on the Consolidated Balance Sheets. The Fifth Amendment and Sixth Amendment, taken together, reduced the minimum balance to maintain in the debt service reserve account to $0 through March 31, 2025. From and after April 1, 2025, the minimum balance to maintain in the debt service reserve account will be increased to two quarters of scheduled interest payments and two quarters of scheduled principal payments.

The Amended Credit Agreements also contain 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'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 Facilities are secured with a first-priority lien against substantially all of the assets of the Company and its subsidiaries, including their intellectual property. The Company was in compliance with all applicable covenants as of March 31, 2024 other than the financial covenant set forth in Section 6.8(g) of the Amended Credit Agreements, for which the Company obtained a permanent waiver from Cargill Financial for the three months ended March 31, 2024.
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:

 March 31, 2024
 Level 1Level 2Level 3
(in thousands)
Recurring fair value measurements   
Assets:   
 Money market funds$14,607$$
Liabilities:
March 2023 Cargill Warrant Liability$$$11,394
December 31, 2023
Level 1Level 2Level 3
(in thousands)
Recurring fair value measurements
Assets:
 Money market funds$16,322$$
Liabilities:
March 2023 Cargill Warrant Liability$$$7,214

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

13


The fair value of the March 2023 Cargill Warrant Liability is determined using a Black-Scholes model. The following table presents changes in the Level 3 fair value measurement for the warrant liability on a recurring basis:

March 31,
2024
(in thousands)
Balance as of December 31, 2023$7,214
Fair value measurement adjustments through other income (expense)4,180
Balance as of March 31, 2024$11,394

The key inputs into the Black-Scholes model used to determine the fair value of the 2023 Cargill Warrant Liability were as follows at their measurement dates:

March 31,
2024
Input
Share price$2.91
Risk-free interest rate4.21%
Volatility128%
Exercise price$6.50
Warrant life (years)4.0
Dividend yield—%

As of March 31, 2024 and December 31, 2023, the carrying value of the Company's cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximated their respective fair values due to their short-term maturities. Therefore, no unrealized gains or losses were recorded during the periods presented. There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.

Common Stock Purchase Warrant Amendment

On January 23, 2024, the Company entered into an Amendment to Common Stock Purchase Warrant (the "Warrant Amendment") with Cargill Financial to amend that certain Common Stock Purchase Warrant, dated March 28, 2023, issued by the Company to Cargill Financial (the "Original Warrant" and as amended, the "Warrant") to amend the exercise price under Section 2(b) thereunder from $13.00 to $6.50 per share of common stock. The impact of the reduced exercise price was included in the mark-to-market net change in fair value of the warrant liability during the three months ended March 31, 2024.

The Original Warrant was issued by the Company to Cargill Financial to purchase up to 5,353,846 shares of common stock. Pursuant to the Warrant Amendment, the Warrant entitles Cargill Financial to purchase 5,353,846 shares of common stock at an exercise price of $6.50 per share.
8. Stock-Based Compensation

Restricted Common Stock Awards

A summary of the restricted common stock awards ("RSAs") for the three months ended March 31, 2024 is as follows:

Number of Shares of Restricted Common Stock Awards

Average Grant-Date Fair Value
Unvested and outstanding at December 31, 2023135,701$23.60
Vested(52,193)$25.73
Unvested and outstanding at March 31, 202483,508$22.27

14


Total expense of RSAs was $0.3 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the total compensation cost related to unvested RSAs not yet recognized is $0.4 million. Unvested RSA expense not yet recognized is expected to be recognized over a weighted average period of 0.8 years.

Restricted Stock Units

A summary of the restricted stock units ("RSUs") activity for the three months ended March 31, 2024 is as follows:

Number of RSUsAverage Grant-Date Fair Value
Unvested and outstanding at December 31, 2023689,837$47.43
Forfeited(72,472)$59.14
Vested(165,575)$59.94
Unvested and outstanding at March 31, 2024451,790$40.94

Total (benefit) expense of RSUs, net of amounts capitalized, was $(1.2) million and $5.8 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the total compensation cost related to unvested RSUs not yet recognized is $4.8 million. Unvested RSU expense not yet recognized is expected to be recognized over a weighted average period of 1.9 years.

9. Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. In computing net loss per share, the Company'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 the three months ended March 31, 2024 and 2023 because the effects of potentially dilutive items were anti-dilutive given the Company's net loss. Diluted net loss per common share represents an adjustment to basic net loss per share attributable to common stockholders giving effect to all potential common shares that were dilutive and outstanding during the period.

The following table sets forth the computation of the Company's net loss per share attributable to common stockholders:
 Three Months Ended March 31,
(in thousands, except share and per share data)
 20242023
Net loss$(24,050)$(23,527)
Weighted average common shares outstanding, basic and diluted8,325,944 7,727,866 
Net loss per common share, basic and diluted$(2.89)$(3.04)

The following table discloses the weighted-average shares outstanding of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share as the impact would be anti-dilutive:
 Three Months Ended March 31,
 20242023
Restricted Stock108,553 249,565 
Warrants6,241,475 1,125,578 
15


10. Commitments and Contingencies
Legal Matters

The Company has and may become party to various legal proceedings and other claims that arise in the Company’sordinary 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.

Recent Issued Accounting Standards

The Company’s management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statement.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 3 — Initial Public Offering

On March 2, 2021, the Company consummated its Initial Public Offering of 27,500,000 Units, including 3,500,000 Over-Allotment Units to partially cover over-allotments, at $10.00 per Unit, generating gross proceeds of $275.0 million, and incurring offering costs of approximately $15.8 million, of which approximately $9.6 million was for deferred underwriting commissions. Each Unit consists of one Class A ordinary share, and one-fifth of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 8).

Note 4 — Private Placement Warrants

Simultaneously with the closingflows of the Initial Public Offering, the Company consummated the Private Placement of 5,333,333 Private Placement Warrants, at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $8.0 million, and incurring offering costs of approximately $11,000.

Each whole Private Placement Warrant is exercisable for one whole Class A ordinary share at a price of $11.50 per share. A portion of the proceeds from the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.

The Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

Note 5 — Related Party Transactions

Founder Shares

On January 18, 2021, the Sponsor paid $25,000 to cover certain expenses of the Company in consideration of 5,750,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”). On February 25, 2021, the Company effected a share capitalization, resulting in an aggregate of 6,900,000 Class B ordinary shares outstanding. The Sponsor agreed to forfeit up to 900,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriter, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters partially exercised their over-allotment option on March 2, 2021 to purchase an addition of 3,500,000 Units, with the remaining portion of the over-allotment option expiring at the conclusion of the 45-day option period. As a result of the partial exercise of the over-allotment option, 25,000 Founder Shares were forfeited.

The initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last sale price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share sub-divisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

Related Party Loans

On January 13, 2021, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This Note was non-interest bearing and payable upon the completion of the Initial Public Offering. As of March 2, 2021, the Company borrowed approximately $112,000 under the Note. The Company repaid the Note in full on March 3, 2021.

Company.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lenders’ discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of March 31, 2021, the Company had no borrowings under the Working Capital Loans.

Administrative Support Agreement

Commencing on the date that the Company’s securities were first listed on the New York Stock Exchange, the Company agreed to pay the Sponsor a total of $10,000 per month for office space, secretarial and administrative services provided to the Company. Upon completion of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. The Company incurred approximately $10,000 in expenses in connection with such services for the period from January 8, 2021 (inception) through March 31, 2021, as reflected in the accompanying unaudited condensed statement of operations. As of March 31, 2021, approximately $10,000 in accounts payable with related party was outstanding, respectively, as reflected in the accompanying unaudited condensed balance sheet.

Note 6 — Commitments and Contingencies

Registration and Shareholder Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon consummation of the Initial Public Offering. These holders were entitled to certain demand and “piggyback” registration rights. However, the registration and shareholder rights agreement provided that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Company granted the underwriter a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters partially exercised their over-allotment option on March 2, 2021 to purchase an additional 3,500,000 Over-Allotment Units. The remaining unexercised over-allotment option expired at the conclusion of the 45-day option period.

The underwriter was entitled to an underwriting discount of $0.20 per unit, or $5.5 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $9.6 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statement. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.

Note 7 — Derivative Warrant Liabilities

Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company agreed that as soon as practicable, but in no event later than twenty business days, after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, the Company will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if the Company’s Class A ordinary shares are at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Once the warrants become exercisable, the Company may redeem the Public Warrants:


in whole and not in part;

16

at a price of $0.01 per warrant;


upon a minimum of 30 days’ prior written notice of redemption;


if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants unless an effective registration statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants is effective and a current prospectus relating to those Class A ordinary shares is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

In addition, commencing on the day the warrants become exercisable, the Company may redeem the outstanding warrants (except with respect to the Private Placement Warrants):

in whole and not in part;

$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares;

if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted for adjustments) for any 20 trading days within the 30-trading day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and

if the closing price of the Class A ordinary shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public Shareholders’ Warrants—Anti-dilution Adjustments”), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

The “fair market value” of Class A ordinary shares shall mean the average last reported sale price of Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. Additionally, in no event will the Company be required to net cash settle any Warrants. If the Company is unable to complete the initial Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

In addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price and the “Redemption of Warrants for Class A ordinary shares” described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described above under “Redemption of Warrants for Class A ordinary shares” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 8 — Shareholders’ Equity

Preference Shares—The Company is authorized to issue 5,000,000 preference shares, with a par value of $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2021, there were no preference shares issued or outstanding.

Class A Ordinary Shares—The Company is authorized to issue 500,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of March 31, 2021, there were 2,063,520 shares of Class A ordinary shares outstanding, excluding 25,436,480 Class A ordinary shares subject to possible conversion that were classified as temporary equity in the accompanying balance sheet.

Class B Ordinary Shares—The Company is authorized to issue 50,000,000 Class B ordinary shares with a par value of $0.0001 per share. On January 18, 2021, the Company issued 5,750,000 Class B ordinary shares. On February 25, 2021, the Company effected a share capitalization, resulting in an aggregate of 6,900,000 Class B ordinary shares outstanding. Of the 6,900,000 Class B ordinary shares outstanding, up to 900,000 shares were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial shareholders would collectively own 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering. The underwriters partially exercised their over-allotment option on March 2, 2021 to purchase an addition of 3,500,000 Units, with the remaining portion of the over-allotment option expiring at the conclusion of the 45-day option period. As a result of the expiration of the over-allotment option, 25,000 Class B ordinary shares were forfeited.

Ordinary shareholders of record are entitled to one vote for each share held on all matters to be voted on by shareholders. Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the shareholders, except as required by law.

The Class B ordinary shares will automatically convert into Class A ordinary shares on the first business day immediately following the consummation of the initial Business Combination at a ratio such that the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of Class A ordinary shares issued and outstanding upon completion of the Initial Public Offering, plus (ii) the sum of the total number of Class A ordinary shares issued or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any private placement warrants issued to the Sponsor upon conversion of Working Capital Loans. In no event will the Class B ordinary shares convert into Class A ordinary shares at a rate of less than one to one.

Note 9 — Fair Value Measurements

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2021 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

   Fair Value Measured as of March 31, 2021 
   Level 1   Level 2   Level 3   Total 

Assets

        

Investments held in Trust Account - U.S. Treasury Securities

  $275,000,000   $—     $—     $275,000,000 

Liabilities:

        

Warrant liabilities - public warrants

   —      —      3,905,000    3,905,000 

Warrant liabilities - private warrants

   —      —      3,840,000    3,840,000 

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels of the hierarchy for the period from January 8, 2021 (inception) through March 31, 2021.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company utilizes a binomial Monte-Carlo simulation to estimate the fair value of the public warrants and private warrants at each reporting period, with changes in fair value recognized in the statement of operations. For the period from January 8, 2021 (inception) through ended March 31, 2021, the Company recognized a decrease in the fair value of warrant liabilities of approximately $1.4 million presented on the accompanying condensed statement of operations.

The change in the fair value of the derivative warrant liabilities for the period from January 8, 2021 (inception) through March 31, 2021 is summarized as follows:

Warrant liabilities at January 8, 2021

  $—   

Issuance of Public and Private Warrants

   9,153,333 

Change in fair value of warrant liabilibites

   (1,408,333
  

 

 

 

Warrant liabilities at March 31, 2021

  $7,745,000 
  

 

 

 

The estimated fair value of the derivative warrant liabilities is determined using Level 3 inputs. Inherent in a Monte-Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its ordinary shares based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides quantitative information regarding Level 3 fair value measurements inputs as their measurement dates:

   March 31, 2021  March 2, 2021 

Exercise price

  $11.50  $11.50 

Stock Price

  $9.66  $9.83 

Term (in years)

   5.50   5.58 

Volatility

   13.90  15.10

Risk-free interest rate

   1.04  0.79

Dividend yield

   —     —   

Note 10 — Revision to Prior Period Financial Statements

During the course of preparing the quarterly report on Form 10-Q for the period from January 8, 2021 (inception) through March 31, 2021, the Company identified a misapplication of accounting guidance related to the Company’s warrants in the Company’s previously issued audited balance sheet dated March 2, 2021, filed on Form 8-K on March 9, 2021 (the “Post-IPO Balance Sheet”).

On April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheets as opposed to equity. Since their issuance on March 2, 2021, the Company’s warrants have been accounted for as equity within the Company’s previously reported balance sheet. After discussion and evaluation, including with the Company’s independent registered public accounting firm and the Company’s audit committee, management concluded that the warrants should be presented as liabilities with subsequent fair value remeasurement.

LEO HOLDINGS III CORP

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The warrants were reflected as a component of equity in the Post-IPO Balance Sheet as opposed to liabilities on the balance sheets, based on the Company’s application of FASB ASC Topic 815-40,Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40). The views expressed in the SEC Staff Statement were not consistent with the Company’s historical interpretation of the specific provisions within its warrant agreement and the Company’s application of ASC 815-40 to the warrant agreement. The Company reassessed its accounting for Warrants issued on March 2, 2021, in light of the SEC Staff’s published views. Based on this reassessment, management determined that the warrants should be classified as liabilities measured at fair value upon issuance, with subsequent changes in fair value reported in the Company’s Statement of Operations each reporting period.

The Company concluded that the misstatement was not material to the Post-IPO Balance Sheet and the misstatement had no material impact to any prior interim period. The effect of the revisions to the Post-IPO Balance Sheet is as follows:

   As of March 2, 2021 
   As Previously
Reported
   Restatement
Adjustment
   As Restated 

Balance Sheet

      

Total assets

  $277,526,800   $—     $277,526,800 
  

 

 

   

 

 

   

 

 

 

Liabilities and shareholders’ equity

      

Total current liabilities

  $710,251   $—     $710,251 

Deferred underwriting commissions

   9,625,000    —      9,625,000 

Warrant liabilities

   —      9,153,333    9,153,333 
  

 

 

   

 

 

   

 

 

 

Total liabilities

   10,335,251    9,153,333    19,488,584 

Class A ordinary shares, $0.001 par value; shares subject to possible redemption

   262,191,540    (9,153,330   253,038,210 

Shareholders’ equity

      

Preference shares - $0.0001 par value

   —      —      —   

Class A ordinary shares - $0.001 par value

   128    92    220 

Class B ordinary shares - $0.001 par value

   690    —      690 

Additional paid-in-capital

   5,052,066    275,527    5,327,593 

Accumulated deficit

   (52,875   (275,622   (328,497
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

   5,000,009    (3   5,000,006 
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

  $277,526,800   $—     $277,526,800 
  

 

 

   

 

 

   

 

 

 

Note 11 — Subsequent Events

Management has evaluated subsequent events to determine if events or transactions occurring through the date the financial statements were issued required potential adjustment to or disclosure in the financial statements and has concluded that all such events that would require recognition or disclosure have been recognized or disclosed.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References to the “Company,” “Leo Holdings III Corp,” “Leo Holdings III,” “our,” “us” or “we” refer to Leo Holdings III Corp.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements, including the unaudited interim condensed financialNotes to those statements, and the notes thereto containedincluded elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, includes and the section entitled "Cautionary Note Regarding Forward-Looking 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, withinwhich involve risks and uncertainties. Our actual results may differ materially from the meaningresults discussed in the forward-looking statements.

Our Mission and Vision
Our mission is to bring our farm to your kitchen. Our vision is to deliver the freshest, locally grown produce over the fewest food miles. We believe that happy plants make happy taste buds and we are committed to reimagining the standards of Section 27Afreshness. 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.
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 patented Stack & Flow Technology® to grow healthy food sustainably and affordably. Our proprietary process is a hybrid, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our Stack & Flow Technology® to give our products exactly what they need at every step of their growth cycle. Our goal is to grow in an environmentally sustainable manner that not only increases harvest efficiency and enhances unit economics, but also limits water usage and reduces the carbon footprint of the Securities Actproduction and distribution process. Controlling the environmental conditions in both the 'Stack' and 'Flow' components of 1933, as amended,our growing system helps to ensure healthy, nutritious, consistent, and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statementsdelicious products that are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.

Overview

We are a blank check company incorporated as a Cayman Islands exempted company on January 8, 2021. We were formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”non-genetically modified organisms ("non-GMO"). We are an emerging growthuse 90% less water, 90% less land, and significantly less pesticides and herbicides than traditional outdoor agriculture operations.


Our first facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019 and reached full commercial operation by the second half of 2020. In 2021, we successfully completed the expansion of our Montana Facility, more than doubling our production capacity. The Montana Facility is currently used for commercial production, as well as research-and-development activities. In 2022, we acquired California-based complementary greenhouse farming company Hollandia Produce Group, Inc. and as such,its subsidiaries, which operated under the name Pete's. Through the Pete's Acquisition, we significantly increased our growing footprint to include two then-existing facilities in California and one under-construction facility in Georgia. The Georgia facility initially became operational in July 2022 and was significantly expanded in 2023. In 2024, we completed construction on two new facilities in Texas and Washington, bringing our total facility count to six.

We distribute our products to over 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh. Our primary products include living butter lettuce – for which we are subject to alla leading provider with an approximate 80% share of the risks associatedCEA market within the Western U.S. – as well as packaged leafy greens and cress. We are currently expanding distribution of our Grab & Go Salad Kits and are set to expand our baby leaf portfolio by introducing several high-velocity offerings including spinach, arugula, 50/50 blend and power greens by the third quarter of 2024. In October 2022, we signed an offtake agreement with emerging growth companies.

Our sponsorSam's Club for our leafy greens production initially starting at our greenhouse facility in Georgia. The offtake agreement provides for the sale of defined minimum quantities of leafy greens from certain facilities and runs through September 2028.


We intend to continue to increase our production capacity and expand our reach to new markets, new geographies, and new customers through the building of new facilities, the expansion of existing facilities, or the acquisition of existing greenhouse facilities, which we would evaluate to 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 continue to explore expanding our product offerings 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.

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Commercial Facility Expansion Update

Byron, Georgia Facility Continues to Operate at Heightened Levels of Production

In the first quarter, we increased production by an additional 50% compared to December 2023, which equates to production that is Leo Investors III lp,approximately three times that of a Cayman Islands exempted limited partnership (the “Sponsor”)year ago, and this has continued through April of 2024. We recently initiated a scaled trial for a differentiated use of our Stack towers that have in a smaller trial demonstrated a further yield increase of at least 10% beyond what is currently being achieved. We expect to receive those results later in the second quarter of 2024. We are focused on satisfying existing demand from retailers across the southeastern U.S. In March of 2024, the Company delivered its first shipment of Spinach to customers from the Georgia facility.

Commissioning at Mount Pleasant, TX and Pasco, WA Facilities; Shipping First Product to Customers

We commenced operations and test seeding at both the Texas and Washington facilities in late January of 2024 and we are shipping our first product to customers in the second quarter. The Texas facility fortifies our distribution in markets across Texas, Oklahoma, Louisiana, Mississippi, Arkansas, Kansas, and Missouri. The Washington facility bolsters our distribution capabilities in the Pacific Northwest to serve our expanding retail customer base.

Capacity Expansion at Existing Facilities in 2024

Plans remain underway to build additional capacity across our network of facilities enabled with our Stack & Flow Technology®. The registration statement for our Initial Public Offering was declared effective on February 25, 2021. On March 2, 2021, we consummated our Initial Public Offeringlocations and degree of 27,500,000 units (the “Units” and, with respectexpansion will be announced at a future date, but construction is currently anticipated to the Class A ordinary shares includedbegin late in the Units being offered, the “Public Shares”), including 3,500,000 additional Unitssecond quarter of 2024, subject to partially cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $275.0 million, and incurring offering costs of approximately $15.8 million, of which approximately $9.6 million was for deferred underwriting commissions.

Simultaneously with the closing of the Initial Public Offering,CCLs from a commercial finance lender discussed in the Company consummatedLiquidity and Capital Resources section of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The planned expansions are designed to provide additional capacity and allow for our growing product assortment to meet existing demand from our direct relationships with blue-chip retailers and distributors. The planned expansions are designed to provide additional capacity and allow for our growing product assortment to meet existing demand from our direct relationships with blue-chip retailers and distributors.


Next Facility to be Opened in the private placement (“Private Placement”)Midwest

We are planning our next high-tech Stack & Flow facility to be built in the Midwestern U.S. The region is in close proximity to existing customers' distribution networks and will support growing retail demand for our products, improve service to retail partners throughout the Midwest, and also provide improved access to the Northeast. We expect to name the future location following completion of 5,333,333 warrants (each,negotiations and are targeting construction to begin in the third quarter of 2024. This future facility is expected to comprise a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $8.0 million, and incurring offering costs approximately $11,000.

Upon the closingsix-acre greenhouse that is supported by multiple Stack zones.


Hamilton, Montana Facility to Transition from R&D to Commercial Production

The transition of the Initial Public OfferingMontana Facility from a research and development focus to a commercially oriented focus growing produce for sale to customers is on track for mid-year completion. This transition will follow the Private Placement, $275.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and will be invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selectedcapacity enhancements brought about by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the completion of a Business Combinationthe Georgia facility and (ii) the commencement of operations at both Texas and Washington and is expected to help drive us toward our goal of achieving positive adjusted EBITDA in early 2025.

Product Development & Distribution

Starting in the second quarter of 2024, we expect to expand distribution of our Grab-and-Go Salad Kits to customers throughout the Trust AccountPacific Northwest and Southern United States, which will include approximately 700 doors of incremental distribution to our current footprint and include four unique flavor offerings: Artisanal Chicken Caesar, Memphis Inspired Chicken, Sweet Poppy Power, and Modern Greek Style.

We are set to expand our baby leaf assortment in the third quarter of 2024 by introducing several high-velocity offerings including Arugula, Baby Spinach & Spring Mix Blend, and Power Greens. While we are still scaling up these products, we are pleased to have delivered our first shipment of Spinach to customers in March of 2024 out of the Georgia facility.
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Factors Affecting Our Financial Condition and Results of Operations

We have expended, and we expect to continue to expend, substantial resources as described below.

we:

Our management has broad discretion

complete construction and commissioning of new and expanded facilities;

standardize operating and manufacturing processes across our facilities;

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

invest in product innovation and development;

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 expenses associated with respectgrowing operations.



Results of Operations

Three Months Ended March 31, 2024 compared to the specific applicationThree Months Ended March 31, 2023

The following table sets forth our historical operating results for the periods indicated:

Three Months Ended March 31, 
 20242023$ Change% Change
(in thousands)
Sales$8,383 $6,698 1,68525%
Cost of goods sold(1)(2)
7,597 6,419 1,17818%
Gross profit786 279 507182%
Operating expenses:
Research and development(1)(2)
3,487 3,576 (89)(2)%
Selling, general and administrative(1)(2)
7,598 15,981 (8,383)(52)%
Total operating expenses11,085 19,557 (8,472)(43)%
Loss from operations(10,299)(19,278)8,979(47)%
Other income (expense):
Change in fair value of warrant liability(4,180)— (4,180)100%
Interest expense, net(9,608)(4,299)(5,309)123%
Other income37 50 (13)(26)%
Net loss$(24,050)$(23,527)(523)2%
(1) Amounts include stock-based compensation as follows:
 Three Months Ended March 31,
 20242023$ Change% Change
(in thousands)
Cost of goods sold$21 $87 (66)(76)%
Research and development93 738 (645)(87)%
Selling, general and administrative(1,048)5,134 (6,182)(120)%
Total stock-based compensation expense, net of amounts capitalized$(934)$5,959 (6,893)(116)%

(2) Amounts include depreciation and amortization as follows:
 Three Months Ended March 31,
 20242023$ Change% Change
Cost of goods sold$1,203 $936 
Research and development797 566 23141%
Selling, general and administrative1,228 1,956 (728)(37)%
Total depreciation and amortization$3,228 $3,458 (230)(7)%
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The following sections discuss and analyze the changes in the significant line items in our Unaudited Condensed Consolidated Statements of Operations for the net proceeds ofcomparative periods in the Initial Public Offering andtable above.

Sales

We derive our revenue from the sale of Private Placement Warrants, although substantially allproduce grown at our facilities. Sales increased by $1.7 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily due to increased production and growth in sales from our facility in Georgia.

Cost of Goods Sold

Cost of goods sold is the direct cost of growing produce for sale at our greenhouse facilities, including labor costs, which consists of wages, salaries, benefits, and stock-based compensation, seeds, soil, nutrients and other input supplies, packaging materials, depreciation, utilities and 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 $1.2 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to increased production and sales of $1.7 million.

Research and Development

Research and development expenses consist primarily of costs related to research and development of our production, harvesting, and post-harvest packaging methods, techniques, and processes, as well as production surplus costs related to the development and testing of our production processes. Our research and development efforts are focused on the development of our processes utilizing our facilities, increasing production yields, developing new leafy green SKUs and value-added products such as grab-and-go salads, and exploring new crops, including spinach, arugula, and berries. We expect that as our facilities continue to scale that research and development expenses will decrease significantly in 2024 and beyond as a result of the net proceeds are intended to be applied generally toward consummating a Business Combination. Thereestablishment of our growing process. Research and development is no assurance that we will be able to complete a Business Combination successfully. We must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes paid or payable on income earned on the Trust Account)performed at the timeMontana and Georgia facilities, where we continue to develop our commercial scale Stack & Flow Technology® and processes for implementation at our other facilities. We expect to transition in 2024 the majority of the signing of the agreement to enter into the initial Business Combination. However, we will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

If we are unable to complete a Business Combination within the Combination Period, we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount thenour Montana Facility from its current focus on deposit in the Trust Account, including interest earned on the funds held in the Trust Accountresearch and not previously released to us to pay our taxes that were paid by us or are payable by us, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of the then-outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.

Liquidity and Capital Resources

As of March 31, 2021, we had approximately $804,000 in its operating bank account and working capital of approximately $1.7 million.

Our liquidity needs to date have been satisfied through a contribution of $25,000 from Sponsor to cover for certain expenses in exchange for the issuance of the Founder Shares, the loan of approximately $112,000 from the Sponsor pursuantdevelopment to a promissory note. We repaidcommercially oriented facility that is growing produce for sale to customers. This transition will follow the note in full on March 3, 2021. Subsequent fromcapacity enhancements brought about by the consummation of the Initial Public Offering, our liquidity has been satisfied through the net proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. To date, there were no amounts outstanding under any Working Capital Loan.

Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

Our entire activity since inception up to March 31, 2021 was in preparation for our formation and the Initial Public Offering. We will not be generating any operating revenues until the closing and completion of our initial Business Combination.

ForGeorgia facility and the period from January 8, 2021 (inception) throughcommencement of operations at both the Texas and Washington facilities and is expected to help drive us toward our goal of achieving positive adjusted EBITDA in early 2025.


Research and development costs decreased by $0.1 million for the three months ended March 31, 2021,2024, compared to the three months ended March 31, 2023. As explained above, as the Georgia facility has been completed and operations have commenced at both the Texas and Washington facilities, there has been a resulting decrease of investment in personnel, materials, supplies, and facility capacity devoted to research and development. However, we had net incomecontinue to incur costs for the development of our production, harvesting, and post-harvest packaging techniques and processes, including production surplus costs related to the development and testing of our commercial scale Stack & Flow Technology and production processes at the Georgia facility.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses consist of employee compensation, including salaries, benefits, and stock-based compensation for our executive, legal, finance, information technology, human resources and sales and marketing teams, expenses for third-party professional services, insurance, marketing, advertising, computer hardware and software, and amortization of intangible assets, among others. We expect selling, general, and administrative expenses to decrease significantly in 2024 due primarily to expected salary cost savings of approximately $998,000, which consisted$5.0 million on an annualized basis as a result of approximately $1.4our recent actions to streamline our organizational structure.

Selling, general, and administrative expenses decreased by $8.4 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily related to a $6.2 million decrease in change instock-based compensation expense that was a result of prior year awards that were issued at a higher fair value, as compared to the fair value of warrant liabilities offset by approximately $125,000 generalawards being expensed in the current period, that fully vested and administrative expensesexpensed in the prior quarter. In addition, stock-based compensation resulted in a net benefit for the three months ended March 31, 2024 due to forfeitures of RSU awards in the current period that were granted at significantly higher grant-date fair values than the RSU awards currently being expensed. Additional decreases as compared to the prior year period were a $1.2 million decrease in legal, accounting, and approximately $10,000 in related party administrativeprofessional consulting fees, and approximately $276,000 offering costs associated with issuancea $0.7 million decrease in depreciation and amortization.

20


Change in Fair Value of public and private warrants.

Contractual Obligations

Administrative Support Agreement

CommencingWarrant Liability


The change in fair value of warrant liability includes the mark-to-market adjustments to the warrant liability to reflect its fair value as of the end of the reporting period. The increase in fair value of the warrant liability is primarily due to the increase in our closing stock price at March 31, 2024 compared to the closing stock price on the prior measurement date that the Company’s securities were first listed on the New York Stock Exchange, the Company agreed to pay the Sponsorof December 31, 2023. The period-end close stock price is a total of $10,000 per month for office space, secretarial and administrative services providedkey input to the Company. Upon completionBlack-Scholes model we use to measure and estimate the fair value of the initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. We incurred approximately $10,000 in expenses in connection with such services for the period from January 8, 2021 (inception) through March 31, 2021, as reflected in the accompanying unaudited condensed statement of operations. As of March 31, 2021, approximately $10,000 in accounts payable with related party was outstanding, respectively, as reflected in the accompanying unaudited condensed balance sheet.

Registration and Shareholder Rights

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans) were entitled to registration rights pursuant to a registration and shareholder rights agreement signed upon consummation of the Initial Public Offering. These holders were entitled to certain demand and “piggyback” registration rights. However, the registration and shareholder rights agreement provided that we will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. We will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

We granted the underwriter a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 3,600,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The underwriters partially exercised their over-allotment option on March 2, 2021 to purchase an additional 3,500,000 Over-Allotment Units. The remaining unexercised over-allotment option expired at the conclusion of the 45-day option period.

The underwriter was entitled to an underwriting discount of $0.20 per unit, or $5.5 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or approximately $9.6 million in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies

Class A ordinary shares subject to possible redemption

We account for its Class A ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2021, 25,436,480 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our balance sheet.

Net Income per Ordinary Share

Net income per ordinary share is computed by dividing net income applicable to shareholders by the weighted average number of ordinary shares outstanding during the period. We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 10,833,333 ordinary shares in the calculation of diluted income per share, because their inclusion would be anti-dilutive under the treasury stock method.

Our unaudited condensed statement of operations includes a presentation of income per ordinary shares subject to redemption in a manner similar to the two-class method of income (loss) per share. Net income per ordinary share, basic and diluted for Class A ordinary shares is calculated by dividing the investment income earned on the Trust Account of approximately $0 by the weighted average number of Class A ordinary shares outstanding for the period from January 8, 2021 (inception) through March 31, 2021. Net income per ordinary share, basic and diluted for Class B ordinary shares is calculated by dividing the net income of approximately $998,000 for the period from January 8, 2021 (inception) through March 31, 2021, less income attributable to Class A ordinary shares, by the weighted average number of Class B ordinary shares outstanding.

Derivative warrant liabilities

We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.


Interest Expense, net

Interest expense consists primarily of contractual interest and amortization of debt issuance costs, net of interest capitalized for construction assets, related to the loans from Cargill Financial and also interest recognized per the terms of our financing obligation related to the Montana Facility and the California Facilities. We accountcapitalize interest costs on borrowings during the construction period of major construction projects as part of the cost of the constructed assets.

Interest expense, net increased by $5.3 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase is primarily due to an increase in the principal amount outstanding on the Senior Facility, and, to a lesser extent, a variable rate increase on the Senior Facility period over period, both of which increased interest expense by $4.4 million over the prior year period. Also contributing to the net increase was $0.9 million of incremental interest expense for the financing obligations related to the California Facilities. During the three months ended March 31, 2024 and 2023, we capitalized $5.7 million and $2.1 million of interest, respectively.

Liquidity and Capital Resources

We have incurred losses and generated negative cash flows from operations since our inception. At March 31, 2024, we had an accumulated deficit of $327.4 million and cash and cash equivalents and restricted cash of $14.7 million.

The Facilities with Cargill Financial contain various financial and non-financial covenants and certain restrictions on our business, which include restrictions on additional indebtedness, minimum liquidity and other financial covenants, 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 these debt 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 and capital resources are cash on hand, cash flows generated from the sale of our products, and the Facilities with Cargill Financial. Cash expenditures over the next 12 months are expected to include general operating costs for employee wages and related benefits, outside services for legal, accounting, IT infrastructure, and costs associated with growing, harvesting and selling our products, such as the purchase of seeds, soil, nutrients and other growing supplies, shipping and fulfillment costs, and facility maintenance costs.

The Ninth Amendment to the credit facilities with Cargill Financial, as described in Note 6, Debt, of the Unaudited Condensed Consolidated Financial Statements, allows for the payment in kind of the quarterly interest payments due and payable for the quarters ending June 30, 2024, September 30, 2024, and December 31, 2024. The Ninth Amendment also provides for up to $15.0 million in working capital for the Company, $5.0 million of which has been drawn down, and the remaining $10.0 million of which remains available to the Company as of March 31, 2024. In addition, the Company expects to close in the second quarter of 2024 on the four previously disclosed CCLs from a commercial finance lender that were executed in the second half of 2023. Together, the CCLs will provide financing of approximately $228 million to fund its 10,833,333 warrants issued2024 facility expansions, its new greenfield facility in connection with its Initial Public Offering (5,500,000)the Midwest, and Private Placement (5,333,333), as derivative warrant liabilities in accordance with ASC 815-40. Accordingly, we recognizeto repay certain existing construction financing which will lower the warrant instruments as liabilities at fair value and adjustsCompany’s cost of capital. The funding expected pursuant to the instruments to fair value at each reporting period. The liabilities areCCLs is subject to re-measurementthe completion of definitive documents and the satisfaction of customary closing conditions.

The Company believes that the remaining $10.0 million of working capital from Cargill Financial, the $228 million from a commercial finance lender, the Company's current cash position, cash generated from product sales, and anticipated additional deferrals of future cash interest and principal payments under the Company's credit facilities with Cargill Financial will be adequate to fund the Company’s planned operations over the next 12 months from the issuance of these Unaudited Condensed Consolidated Financial Statements.
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We also believe additional cash can be secured through other debt, equity financings, or sale leaseback financing, if necessary. However, there can be no assurance that equity or debt financing will be available to us should we need it or, if available, that the terms will be satisfactory to us and not dilutive to existing shareholders. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in Part I, Item 1A of the Company's most recent Annual Report on Form 10-K. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations.

Cargill Loans

In September 2021, the Company and Cargill Financial entered into the Senior Facility and the Subordinated Facility. Subsequent to the amendments described in Note 6, Debt, of the Unaudited Condensed Consolidated Financial Statements, Cargill Financial may in its discretion provide advances under the Facilities of up to $343.5 million (plus paid-in-kind interest and fees), including capital to fund construction at each balance sheet date until exercised,the Company’s facilities in Georgia, Texas, and anyWashington, subject to certain conditions. As of March 31, 2024, a total of $317.6 million and $49.7 million was outstanding on the Senior Facility and the Subordinated Facility, respectively. The Senior Facility and the Subordinated Facility are included in "Long-term debt" on the Unaudited Condensed Consolidated Balance Sheets.

At March 31, 2024, our principal and estimated interest payment obligations for the Senior Facility and the Subordinated Facility are as follows(1):

(in thousands)
Remainder of 2024$37,550
202577,608
202686,788
202786,788
2028303,325
Total$592,059
_____________________

(1) Interest is calculated based on a 12.5% interest rate for the Subordinated Facility and a 13.81% interest rate for the Senior Facility effective as of April 1, 2024.

Financing Obligations

We have two financing obligations related to sale leaseback transactions that did not qualify for sales treatment of the underlying assets. In June 2020, the Company completed the construction of the Montana Facility. Subsequent to its completion, the Company entered into a sale leaseback transaction of the Montana Facility with Grow Bitterroot, LLC, a related party, for total consideration of $6.9 million with an initial term of 15 years. On April 27, 2023, Hollandia Real Estate, LLC, a wholly owned subsidiary of the Company, and STORE Master Funding XXXI, LLC consummated a $35 million multi-site sale and leaseback transaction relating to our Carpinteria Facility and our Oxnard Facility (collectively, the "California Facilities").

The following table summarizes future aggregate financing obligation payments by fiscal year for both the California Facilities and the Montana Facility:
Financing Obligation
(in thousands)
Remainder of 2024$3,689
20255,024
20265,158
20275,297
20285,439
Thereafter121,532
Total financing obligation payments146,139

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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:

Three Months Ended
March 31,
 20242023
(in thousands)
Net cash used in operating activities$(7,083)$(7,830)
Net cash used in investing activities(34,985)(32,685)
Net cash provided by financing activities39,90423,045
Cash and cash equivalents and restricted cash at beginning of period16,89524,938
Cash and cash equivalents and restricted cash at end of period$14,731 $7,468 

Net Cash Used In Operating Activities

Net cash used in operating activities was $7.1 million for the three months ended March 31, 2024 due to a net loss of $24.1 million and an increase in other assets of $2.9 million. This was partially offset by non-cash activities of $9.8 million in paid-in-kind interest, a non-cash loss of $4.2 million related to change in fair value is recognizedof warrant liability, $2.3 million in our statementdepreciation expense, $0.9 million in amortization expense, and $2.1 million in amortization of operations. The fair valuedebt issuance costs.

Net cash used in operating activities was $7.8 million for the three months ended March 31, 2023 due to a net loss of warrants issued$23.5 million. This was partially offset by usnon-cash activities of $6.0 million in connection withstock-based compensation expense, net of amounts capitalized, $1.8 million in depreciation expense, and $1.7 million in amortization expense. Additional offset was due to $5.2 million net increase of cash from changes in assets and liabilities.

Net Cash Used In Investing Activities

Net cash used in investing activities was $35.0 million for the Public Offeringthree months ended March 31, 2024, due primarily to purchases of construction materials and Private Placementservices, equipment, and other items for the Washington and Texas facilities.

Net cash used in investing activities was $32.7 million for the three months ended March 31, 2023, due primarily to purchases of construction materials and services, equipment, and other items for the Washington, Georgia, and Texas facilities.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $39.9 million for the three months ended March 31, 2024, comprised of $39.9 million of net proceeds from the issuance of debt.

Net cash provided by financing activities was $23.0 million for the three months ended March 31, 2023, comprised of $23.0 million of net proceeds from the issuance of debt.

Critical Accounting Policies and Estimates

There have been estimated using Monte-Carlo simulations at each measurement date.

Recent Adoptedno changes to the Company’s critical accounting policies and estimates from those described under "Critical Accounting Standards

In August 2020,Policies and Estimates" in the FASB issued ASU No. 2020-06, Debt—Debt with ConversionManagement's Discussion and Other Options (Subtopic 470-20)Analysis of Financial Condition 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 (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualifyResults of Operations of our Annual Report on Form 10-K for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. We adopted ASU 2020-06 on January 1, 2021. Adoptionyear ended December 31, 2023.


Recent Accounting Pronouncements

For more information about recent accounting pronouncements, see Note 2 of the ASU did not impact our financial position, results of operations or cash flows.

Recent Issued Accounting Standards

Our management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.

Off-Balance Sheet Arrangements

As of March 31, 2021, we did not have any off-balance sheet arrangements as defined inUnaudited Condensed Consolidated Financial Statements, which is incorporated into this Item 303(a)(4)(ii) of Regulation S-K.

JOBS Act

The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided2 by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

reference thereto.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are not required to provide the information otherwise required under this item. As of March 31, 2021, we were not subject to any market or interest rate risk. The net proceeds of the Initial Public Offering, including amounts in the Trust Account, will be invested in U.S. government securities with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

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Item 4.

Controls and Procedures

On April 12, 2021,

Item 4. Controls and Procedures


Limitations on effectiveness of control and procedures

In designing and evaluating 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 staff atdesired control objectives. In addition, the Securitiesdesign of disclosure controls and Exchange Commission (the “SEC staff”) issued a statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “SEC Statement”). Inprocedures must reflect the SEC Statement, the SEC staff noted that certain provisions in the typical SPAC warrant agreement may require that the warrants be classified as a liability measured at fair value, with changes in fair value reported each period in earnings, as compared to the historical treatment of the warrants as equity, which has been the practice of most SPACs, including us. We had previously classified our private placement warrants and public warrants as equity (for a full description of our private placement warrants and public warrants, refer to the registration statement on Form S-1 (File No. 333- 252294), filed in connection with the Company’s initial public offering, declared effective by the SEC on February 25, 2021).

After considering the SEC Statement, we concludedfact that there were misstatementsare resource constraints and that management is required to apply judgment in evaluating the March 2, 2021 audited closing balance sheet we filed with the SEC on Form 8-K on March 9, 2021. Based on the guidance in Accounting Standards Codification (“ASC”) 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, we concluded that provisions in the warrant agreement preclude the warrants from being accounted for as componentsbenefits of equity. As the warrants meet the definition of a derivative as contemplated in ASC 815, the warrants should have been recorded as derivative liabilities on the balance sheet and measured at fair value at inception and at each reporting date in accordance with ASC 820, “Fair Value Measurement”, with changes in fair value recognized in the statement of operations in the period of change. Further, ASC 815 requires that upfront costs and fees relatedpossible controls relative to items for which the fair value option is elected (our warrant liabilities) should have been recognized as expense as incurred.

We have corrected the accounting for the warrants in this Quarterly Report on Form 10-Q. The effect of the revision on specific line items in our March 2, 2021 audited closing date balance sheet can be found in Note 10 of the Notes to unaudited condensed financial statements.

their costs.


Evaluation of Disclosure Controls and Procedures

In connection


Our management, with the participation of our March 2, 2021 audited closing balance sheet, our management reassessed the effectiveness ofChief Executive Officer 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 principal executive officer and principal financial officer concluded that, as of March 31, 2021. As a result of that reassessment and in light of the SEC Statement, our management determined that2024, our disclosure controls and procedures as of March 31, 2021 were not effective solely as a result of its classification ofat the warrants as components of equity instead of as derivative warrant liabilities. Due solely to the events that led to our restatement, management has made changes in internal controls related to the accounting for warrants issued in connection with our initial public offering. In light of the material weakness that we identified, we performed additional analysis as deemed necessary to ensure that our financial statements for the period from January 8, 2021 (inception) through March 31, 2021, were prepared in accordance with U.S. GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.

reasonable assurance level.

Changes in Internal Control over Financial Reporting


There were no changes 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) during the most recent fiscal quarterthree months ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our previously filed financial statements described above had not yet been identified. In light of the restatement of the previously filed financial statements, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.

reporting.


24


PART II—II - OTHER INFORMATION

Item 1.

Legal Proceedings

None.

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

Item 1A.

Risk Factors

As of the date of this Quarterly Report on Form 10-Q, there

Item 1A. Risk Factors

There have been no material changesupdates to theour risk factors disclosedincluded in our final prospectus filed with the SEC on March 9, 2021, except for the below risk factor. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.

On April 12, 2021, the SEC Staff issued the SEC Statement, wherein the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to being treated as equity. Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our warrants, and pursuant to the guidance in ASC 815, Derivatives and Hedging, determined the warrants should be classified as derivative liabilities measured at fair value on our balance sheet, with any changes in fair value to be reported each period in earnings on our statement of operations.

As a result of the recurring fair value measurement, our financial statements may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.

We have 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.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described elsewhere in this Quarterly Report, we identified a material weakness in our internal control over financial reporting related to the accounting for the warrants we issued in connection with our Initial Public Offering and private placement in March 2021. As a result of this material weakness, our management concluded that our disclosure controls and procedures were not effective as of March 31, 2021. This material weakness resulted in a misstatement of our warrant liabilities, additional paid-in capital and accumulated deficit in our previously issued audited balance sheet dated March 2, 2021, filed on a CurrentAnnual Report on Form 8-K on March 9, 2021.

Any failure to maintain effective internal control over financial reporting or disclosure controls and procedures could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by10-K for the stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.

year ended December 31, 2023.

We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.

We identified a material weakness in our internal controls over financial reporting. As a result of such material weakness, the change in accounting for our warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Simultaneously with

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

There were no unregistered sales of our equity securities during the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,333,333 Private Placement Warrants, atperiod covered by this quarterly report which were not previously reported in a price of $1.50 per Private Placement Warrant with the Sponsor, generating gross proceeds of $8.0 million.

In connection with the Initial Public Offering, our sponsor had agreed to loan us an aggregate of up to $250,000 pursuant to the Note. This loan is non-interest bearing and payableCurrent Report on the consummation of the Initial Public Offering. As of March 31, 2021, the loan balance was $0.

Of the gross proceeds received from the Initial Public Offering and the full exercise of the option to purchase additional Shares, $275.0 million was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the Private Placement are invested in U.S. government treasury bills with a maturity of 180 days or less and in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations.

We paid a total of approximately $5.5 million in underwriting discounts and commissions related to the Initial Public Offering. In addition, the underwriters agreed to defer $9.6 million in underwriting discounts and commissions.

Item 3.

Defaults upon Senior Securities

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Form 8-K.

Item 5.

Other Information.

None.

Item 5. Other Information


During the fiscal quarter ended March 31, 2024, none of our directors or officers informed us of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as those terms are defined in Regulation S-K, Item 408.
25


Item 6. Exhibits

Item 6.
Exhibit
Number

Exhibits.

Description

Exhibit

Number

3.1
Description
31.1*3.2
3.3
4.1
10.1*
10.2*
31.1
31.2
31.2*
32.1**
32.1*
32.2*Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

*

These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and are deemed not filed for purposes(b) of Section 1350, Chapter 63 of Title 18, United States Code)

32.2**
101The following financial statements from Local Bounti’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, 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 amended, nor shall they be deemed incorporated by referenceblocks 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 March 31, 2024, formatted in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific referenceInline XBRL (included in such filing.

Exhibit 101).

SIGNATURE

_____________________

*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.
26


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned hereuntothereunto duly authorized.

Local Bounti Corporation

Dated: June 10, 2021

LEO HOLDINGS III CORP/s/ Craig M. Hurlbert
Name:  Craig M. Hurlbert

By:

/s/ Lyndon Lea

Name:

Lyndon Lea

Title:

Chief Executive Officer

and Director
 Date: May 10, 2024
(Principal Executive Officer)
/s/ Kathleen Valiasek
Name:  Kathleen Valiasek
Title:    Chief Financial Officer
 Date: May 10, 2024
(Principal Financial and Accounting Officer)


27