UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 2019July 3, 2021
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to
                  
Commission File Number: 001-38879
bynd-20210703_g1.jpg
BEYOND MEAT, INC.
(Exact name of registrant as specified in its charter)
Delaware26-4087597
(State or other jurisdiction of
Incorporationincorporation or organization)
(I.R.S. Employer
Identification No.)
119 Standard Street
El Segundo, CA 90245
(Address, including zip code, of principal executive offices)


(866) 756-4112
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading

Symbol(s)
Name of each exchange on which registered
Common Stock, $.0001$0.0001 par valueBYNDThe Nasdaq Stock Market LLC
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 o☒     No   x☐
    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  x☒   No  o☐
    


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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Act.
Large accelerated filero☒Accelerated filero☐
Non-accelerated filerx☐Smaller reporting companyo☐
Emerging growth companyx☐
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.                                 o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).                                                Yes  o☐   No  x☒
As of June 7, 2019,August 11, 2021, the registrant had 60,122,79763,254,448 shares of common stock, $0.0001 par value per share, outstanding.





TABLE OF CONTENTS
Page
Part I. Financial Information
1
1
3
4
5
56
78
2234
3754
3856
Part II. Other Information
3957
Item 1A. Risk Factors
4057
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
6367
6367
6367
6367
6468
6470
Signatures
67



i



Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Qreport includes forward-looking statements within the meaning of the federal securities laws.laws that involve risks and uncertainties concerning the business, products and financial results of Beyond Meat, Inc. (including its subsidiaries unless the context otherwise requires, “Beyond Meat,” “we,” “us,” “our” or the “Company”). We have based these forward-looking statements largely on our current opinions, expectations, beliefs, plans, objectives, assumptions and projections about future events and financial trends affecting the operating results and financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
•the effects of the COVID-19 pandemic on our business, financial condition and results of operations, including on our supply chain, the demand for our products, and, in particular in our foodservice channel, our product and channel mix, the timing and level of retail purchasing, our manufacturing facilities and operations, our inventory levels, our ability to expand and produce in new geographic markets or the timing of such expansion efforts, the pace and success of new product introductions, the timing of new foodservice launches, and on overall economic conditions and consumer confidence and spending levels;
•a resurgence of COVID-19 and the rising impact of COVID-19 variants, such as the Delta variant, which could slow, halt or reverse the reopening process, or result in the reinstatement of social distancing measures, business closures, restrictions on operations, quarantines and travel bans;
•the impact of adverse and uncertain economic and political conditions in the U.S. and international markets;
•the volatility of capital markets and other macroeconomic factors;
•risks related to our debt, including limitations on our cash flow from operations and our ability to satisfy our obligations under the convertible senior notes; our ability to raise the funds necessary to repurchase the convertible senior notes for cash, under certain circumstances, or to pay any cash amounts due upon conversion; provisions in the indenture governing the convertible senior notes delaying or preventing an otherwise beneficial takeover of us; and any adverse impact on our reported financial condition and results from the accounting methods for the convertible senior notes;
•estimates of our expenses, future revenues, capital expenditures, capital requirements and our needs for additional financing;
•our ability to effectively manage our growth;
•our ability to identify and execute cost-down initiatives intended to achieve price parity with animal protein;
•the failure of acquisitions and other investments to be efficiently integrated and produce the results we anticipate;
•the success of operations conducted by joint ventures, such as The PLANeT Partnership, LLC with PepsiCo, Inc., where we share ownership and management of a company with one or more parties who may not have the same goals, strategies or priorities as we do and where we do not receive all of the financial benefit;
•the effects of increased competition from our market competitors and new market entrants;
•changes in the retail landscape, including the timing and level of trade and promotion discounts, our ability to grow market share and increase household penetration, repeat buying rates and purchase frequency, and our ability to maintain and increase sales velocity of our products;
•the timing and success of distribution expansion and new product introductions in increasing revenues and market share;
ii

•the timing and success of strategic partnership launches and limited time offerings resulting in permanent menu items;
•our estimates of the size of our market opportunities;
our ability to effectively manage our growth;
•our ability to effectively expand our manufacturing and production capacity;
•our ability to accurately forecast demand for our products and manage our inventory;
•variations in product selling prices and costs, and the mix of products sold;
•our ability to successfully enter new geographic markets, manage our international expansion and comply with any applicable laws and regulations;regulations including risks associated with doing business in foreign countries, substantial investments in our manufacturing operations in China and the Netherlands, and our ability to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) or other anti-corruption laws;
•the effects of increased competition from our market competitors;global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as COVID-19;
•the success of our marketing effortsinitiatives and the ability to grow brand awareness, and maintain, protect and enhance our brand;brand, attract and retain new customers and grow our market share;
•our ability to attract, maintain and effectively expand our relationships with key strategic foodservice partners;
•our ability to attract and retain our suppliers, distributors, co-manufacturers and customers;
•our ability to procure sufficient high quality,high-quality raw materials to manufacture our products;
•the availability of pea and other protein that meets our standards;
•our ability to diversify the protein sources used for our products;
•our ability to differentiate and continuously create innovative products, respond to competitive innovation and achieve speed-to-market;
•our ability to successfully execute our strategic initiatives;
•the volatility associated with ingredient, packaging and other input costs;
•the impact of inflation across the economy, including higher food, grocery, transportation and fuel costs;
•real or perceived quality or health issues with our products or other issues that adversely affect our brand and reputation;
changes•our ability to accurately predict consumer taste preferences, trends and demand and successfully innovate, introduce and commercialize new products and improve existing products, including in the tastes and preferences of our consumers;new geographic markets;
•significant disruption in, or breach in security of our information technology systems and resultant interruptions in service and any related impact on our reputation;
•management and key personnel changes, the attraction, training and retention of qualified employees and key personnel;personnel and our ability to maintain our company culture as we continue to grow;
•the effects of natural or man-made catastrophic events particularly involving our or any of our co-manufacturers’ manufacturing facilities or our suppliers’ facilities;
•the impact of marketing campaigns aimed at generating negative publicity regarding our products, brand and the plant-based industry category;
•the effectiveness of our internal controls;
•our significant indebtedness and ability to repay such indebtedness;
iii

•our ability to meet our obligations under our campus headquarters lease, the timing of occupancy and completion of the build-out of our space, cost overruns and the impact of COVID-19 on our space demands;
•changes in laws and government regulation affecting our business, including the U.S. Food and Drug Administration (“FDA”) and the U.S. Federal Trade Commission (“FTC”) governmental regulation, and state, local and foreign regulation;
•new or pending legislation, or changes in laws, regulations or policies of governmental agencies or regulators, relating toboth in the U.S. and abroad, affecting plant-based meat, the labeling or naming of our products;products, or our brand name or logo;
the impact of adverse economic conditions;

ii


•the financial condition of, and our relationships with our suppliers, co-manufacturers, distributors, retailers, and foodservice customers;customers, and their future decisions regarding their relationships with us;
•our ability and the ability of our suppliers and co-manufacturers to comply with food safety, environmental or other laws or regulations;
•seasonality;
•the sufficiency of our cash and cash equivalents to meet our liquidity needs and service our indebtedness;
•economic conditions and theirthe impact on consumer spending;
•outcomes of legal or administrative proceedings;proceedings, or new legal or administrative proceedings filed against us;
•our, our suppliers’ and our co-manufacturers’ ability to protect our proprietary technology, and intellectual property and trade secrets adequately;
as well as•the impact of tariffs and trade wars;
•foreign exchange rate fluctuations; and
•the risks discussed in Part I, Item 1A, “Risk Factors,” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on March 1, 2021 (the “2020 10-K”), Part II, Item 1A, “Risk Factors” included herein, and those discussed in other documents we file from time to time with the SEC.
In some cases, you can identify forward-looking statements regarding our future operations, financial condition and prospects, and business strategies. Forward-looking statements generally can be identified by the use of words such as “believe,” “may,” “will,” “will continue,” “could,” “will likely result,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “predict,” “project,” “expect,” “potential” and variations of these terms and similar expressions, as they relate to our company, our business and our management.or the negative of these terms or similar expressions. These forward-looking statements are based on our current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those anticipated or implied in the forward-looking statements. Factors that could cause or contribute
This report also contains estimates and other statistical data obtained from independent parties and by us relating to market size and growth and other data about our industry and ultimate consumers. The number of retail and foodservice outlets are derived from data through June 2021. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such differences include, butestimates and data.
All forward-looking statements attributable to us or persons acting on our behalf are not limited to, those discussedexpressly qualified in this Quarterly Report on Form 10-Q, including, without limitation,their entirety by the risks discussed in Part II, Item 1A, "Risk Factors," and those discussed in other documents we file from time to time with the Securities and Exchange Commission (“SEC”).
cautionary statements set forth above. Forward-looking statements speak only as of the date of this report. You should not put undue reliance on any forward-looking statements. We assume no obligation to publicly update or revise any forward-looking statements to reflect actual results,because of new information, future events, changes in assumptions or changes in other factors affecting forward-looking information,otherwise, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
As used herein, the terms “Beyond“Beyond Meat,” “we,” “us,” “our” and “the Company” refer to Beyond Meat, Inc., a Delaware corporation.
“The Beyond“Beyond Burger,” “Beyond Beef,” “Beyond Chicken,” “Beyond Meat,” “Beyond Sausage,” “Beyond Breakfast Sausage,” “Beyond Meatball,” “Beyond Chicken Tenders,” the Caped Steer Logo, “Go Beyond,” “Eat What You Love”
iv

and “The Cookout Classic” and “The Future of Protein” and “The Future of Protein Beyond Meat” and designClassic,” are registered or pending trademarks of Beyond Meat, Inc. in the United States and, in some cases, in certain other countries. All other brand names or trademarks appearing in this Quarterly Report on Form 10-Qreport are the property of their respective holders. Solely for convenience, the trademarks and trade names contained herein are referred to without the ® and TM™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.




iii
v



Part I. Financial Information
ITEM I. FINANCIAL STATMENTSSTATEMENTS
BEYOND MEAT, INC.
Condensed Balance Sheets
(In thousands, except share and per share data)
(unaudited)
BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(unaudited)
July 3,
2021		December 31,
2020
Assets
Current assets:
Cash and cash equivalents$1,009,337 $159,127 
Accounts receivable63,369 35,975 
Inventory165,746 121,717 
Prepaid expenses and other current assets25,630 15,407 
Total current assets$1,264,082 $332,226 
Property, plant, and equipment, net157,449 115,299 
Operating lease right-of-use assets14,672 14,570 
Prepaid lease costs, non-current26,578 0 
Other non-current assets, net3,739 5,911 
Total assets$1,466,520 $468,006 
Liabilities and Stockholders’ Equity:
Current liabilities:
Accounts payable$49,951 $53,071 
Wages payable648 2,843 
Accrued bonus2,696 57 
Current portion of operating lease liabilities3,651 3,095 
Short-term borrowings under revolving credit facility0 25,000 
Accrued expenses and other current liabilities14,369 4,830 
Short-term finance lease liabilities184 71 
Total current liabilities$71,499 $88,967 
Long-term liabilities:
Convertible senior notes, net$1,127,707 $0 
Operating lease liabilities, net of current portion11,300 11,793 
Finance lease obligations and other long-term liabilities533 149 
Total long-term liabilities$1,139,540 $11,942 
(continued on the next page)
1

 March 30,
2019		 December 31,
2018
Assets   
Current assets:   
Cash and cash equivalents$35,409
 $54,271
Accounts receivable16,194
 12,626
Inventory34,281
 30,257
Prepaid expenses and other current assets6,525
 5,672
Total current assets92,409
 102,826
Property, plant, and equipment, net31,861
 30,527
Other non-current assets, net887
 396
Total assets$125,157
 $133,749
Liabilities, Convertible Preferred Stock and Stockholders’ Deficit:   
Current liabilities:   
Accounts payable$11,663
 $17,247
Wages payable1,085
 1,255
Accrued bonus3,387
 2,312
Accrued expenses and other current liabilities3,094
 2,391
Short-term capital lease liabilities36
 44
Stock warrant liability2,677
 1,918
Total current liabilities$21,942
 $25,167
Long-term liabilities:   
Revolving credit line$6,000
 $6,000
Long-term portion of bank term loan, net19,533
 19,388
Equipment loan, net4,914
 5,000
Capital lease obligations and other long-term liabilities406
 404
Total long-term liabilities$30,853
 $30,792
Commitments and Contingencies (Note 9)

 



 March 30,
2019		 December 31,
2018
Convertible preferred stock:   
Series A convertible preferred stock, par value $0.0001 per share—3,333,500 shares authorized; 3,333,500 shares issued and outstanding as of March 30, 2019 and December 31, 2018$2,000
 $2,000
Series B convertible preferred stock, par value $0.0001 per share—4,802,260 shares authorized; 4,680,565 shares issued and outstanding as of March 30, 2019 and December 31, 20184,999
 4,999
Series C convertible preferred stock, par value $0.0001 per share—8,076,643 shares authorized; 8,076,636 shares issued and outstanding as of March 30, 2019 and December 31, 201814,882
 14,882
Series D convertible preferred stock, par value $0.0001 per share—8,713,207 shares authorized; 8,713,201 shares issued and outstanding as of March 30, 2019 and December 31, 201824,948
 24,948
Series E convertible preferred stock, par value $0.0001 per share—4,740,531 shares authorized; 4,701,449 shares issued and outstanding as of March 30, 2019 and December 31, 201817,214
 17,214
Series F convertible preferred stock, par value $0.0001 per share—4,866,776 shares authorized; 4,866,758 shares issued and outstanding as of March 30, 2019 and December 31, 201829,840
 29,840
Series G convertible preferred stock, par value $0.0001 per share—5,140,257 shares authorized; 5,114,786 shares issued and outstanding as of March 30, 2019 and December 31, 201855,658
 55,658
Series H convertible preferred stock, par value $0.0001 per share—4,209,693 shares authorized; 2,075,216 shares issued and outstanding as of March 30, 2019 and December 31, 201849,999
 49,999
Stockholders’ deficit:   
Common stock, par value $0.0001 per share—60,000,000 shares and 58,669,600 shares authorized at March 30, 2019 and December 31, 2018, respectively; 7,120,933 and 6,951,350 shares issued and outstanding at March 30, 2019 and December 31, 2018, respectively1
 1
Additional paid-in capital9,142
 7,921
Accumulated deficit(136,321) (129,672)
Total stockholders’ deficit$(127,178) $(121,750)
Total liabilities, convertible preferred stock and stockholders’ deficit$125,157
 $133,749
    

BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(unaudited)
July 3,
2021		December 31,
2020
Commitments and Contingencies (Note 10)00
Stockholders’ equity:
Preferred stock, par value $0.0001 per share—500,000 shares authorized, NaN issued and outstanding$0 $0 
Common stock, par value $0.0001 per share—500,000,000 shares authorized; 63,243,498 and 62,820,351 shares issued and outstanding at July 3, 2021 and December 31, 2020, respectively6 6 
Additional paid-in capital496,210 560,210 
Accumulated deficit(241,785)(194,867)
Accumulated other comprehensive income1,050 1,748 
Total stockholders’ equity$255,481 $367,097 
Total liabilities and stockholders’ equity$1,466,520 $468,006 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)

Three Months EndedThree Months EndedSix Months Ended
March 30,
2019		 March 31,
2018		July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net revenues$40,206
 $12,776
Net revenues$149,426 $113,338 $257,590 $210,412 
Cost of goods sold29,435
 10,719
Cost of goods sold102,074 79,687 177,530 139,070 
Gross profit10,771
 2,057
Gross profit47,352 33,651 80,060 71,342 
   
Research and development expenses4,498
 1,605
Research and development expenses13,823 6,016 29,748 12,210 
Selling, general and administrative expenses11,177
 5,737
Selling, general and administrative expenses48,286 34,292 87,240 61,607 
Restructuring expenses394
 294
Restructuring expenses3,844 1,509 6,318 3,882 
Total operating expenses16,069
 7,636
Total operating expenses65,953 41,817 123,306 77,699 
Loss from operations(5,298) (5,579)Loss from operations(18,601)(8,166)(43,246)(6,357)
   
Other expense, net:   
Other (expense) income, netOther (expense) income, net
Interest expense(733) (47)Interest expense(1,022)(569)(1,651)(1,274)
Other, net(618) (70)Other, net180 (1,454)(1,390)(744)
Total other expense, net(1,351) (117)Total other expense, net(842)(2,023)(3,041)(2,018)
   
Loss before taxes(6,649) (5,696)Loss before taxes(19,443)(10,189)(46,287)(8,375)
Income tax expense—
 —
Income tax expense2 16 50 15 
Equity in losses of unconsolidated joint ventureEquity in losses of unconsolidated joint venture207 0 581 0 
Net loss$(6,649) $(5,696)Net loss$(19,652)$(10,205)$(46,918)$(8,390)
Net loss per common share—basic and diluted$(0.95) $(0.98)
Net loss per share available to common stockholders—basic and dilutedNet loss per share available to common stockholders—basic and diluted$(0.31)$(0.16)$(0.74)$(0.14)
Weighted average common shares outstanding—basic and diluted6,974,301
 5,793,801
Weighted average common shares outstanding—basic and diluted63,121,400 62,098,861 63,029,597 61,904,360 
   
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ DeficitComprehensive Loss
(In thousands, except share data)thousands)
(unaudited)


 Preferred Stock  Common Stock Additional Paid-in Capital Loans to Related Parties Accumulated Deficit Total
 Shares Amount  Shares Amount 
Balance at December 31, 201841,562,111
 $199,540
  6,951,350
 $1
 $7,921
 $—
 $(129,672) $(121,750)
  Net loss—
 —
  —
 —
 —
 —
 (6,649) (6,649)
  Exercise of common stock options—
 —
  169,583
 —
 366
 —
 —
 366
  Share-based compensation—
 —
  —
 —
 855
 —
 —
 855
Balance at March 30, 201941,562,111
 $199,540
  7,120,933
 $1
 $9,142
 $—
 $(136,321) $(127,178)
 Preferred Stock  Common Stock Additional Paid-in Capital Loans to Related Parties Accumulated Deficit Total
 Shares Amount  Shares Amount 
Balance at December 31, 201739,361,211
 $148,194
  5,724,506
 $1
 $4,823
 $(951) $(99,786) (95,913)
  Net loss—
 —
  —
 —
 —
 —
 (5,696) (5,696)
  Exercise of common stock options—
 —
  92,310
 —
 88
 —
 —
 88
  Share-based compensation—
 —
  —
 —
 260
 —
 —
 260
  Issuance of Series G preferred stock, net of issuance costs of $7112,945
 1,228
  —
 —
 —
 —
 —
 —
Balance at March 31, 201839,474,156
 $149,422
  5,816,816
 1
 $5,171
 $(951) $(105,482) $(101,261)
Three Months EndedSix Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net loss$(19,652)$(10,205)$(46,918)$(8,390)
Other comprehensive income (loss), net of tax:
Foreign currency translation income (loss), net of tax560 (167)(698)(167)
Comprehensive loss, net of tax$(19,092)$(10,372)$(47,616)$(8,557)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash FlowsStockholders’ Equity
(In thousands)thousands, except share data)
(unaudited)

Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal
SharesAmount
Balance at December 31, 201961,576,494 $6 $526,199 $(142,115)$0 $384,090 
Net income— — — 1,815 — 1,815 
Issuance of common stock under equity incentive plans, net280,883 — 1,002 — — 1,002 
Share-based compensation for equity classified awards— — 5,074 — — 5,074 
Balance at March 28, 202061,857,377 $6 $532,275 $(140,300)$0 $391,981 
Net loss— — — (10,205)— (10,205)
Issuance of common stock under equity incentive plans, net568,263 — 1,590 — — 1,590 
Share-based compensation for equity classified awards— — 6,711 — — 6,711 
Foreign currency translation adjustment— — — — (167)(167)
Balance at June 27, 202062,425,640 $6 $540,576 $(150,505)$(167)$389,910 
  Three Months Ended
  March 30,
2019		 March 31,
2018
Cash flows from operating activities:    
Net loss $(6,649) $(5,696)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 1,905
 733
Share-based compensation expense 855
 260
Amortization of debt issuance costs 58
 9
Change in preferred and common stock warrant liabilities 759
 129
Net change in operating assets and liabilities:    
Accounts receivables (3,568) (991)
Inventories (4,025) (1,144)
Prepaid expenses and other assets 122
 60
Accounts payable (4,349) 1,845
Accrued expenses and other current liabilities 1,608
 (133)
Long-term liabilities 4
 40
Net cash used in operating activities $(13,280) $(4,888)
Cash flows used in investing activities:    
Purchases of property, plant and equipment $(3,795) $(3,719)
Proceeds from sale of fixed assets 132
 —
Purchases of property, plant and equipment held for sale (829) —
Payment of security deposits (501) (13)
Net cash used in investing activities $(4,993) $(3,732)
Cash flows from financing activities:    
Proceeds from Series G preferred stock offering, net of offering costs $—
 $1,229
Repayments on revolving credit line —
 (2,500)
Repayments on term loan —
 (125)
Payments of capital lease obligations (9) (59)
Proceeds from exercise of stock options 366
 87
Payments of deferred offering costs (946) —
Net cash used in financing activities $(589) $(1,368)
Net decrease in cash and cash equivalents $(18,862) $(9,988)
Cash and cash equivalents at the beginning of the period 54,271
 39,035
Cash and cash equivalents at the end of the period $35,409
 $29,047
(continued on next page)


  Three Months Ended
  March 30,
2019		 March 31,
2018
Supplemental disclosures of cash flow information:    
Cash paid during the period for:    
Interest $715
 $38
Non-cash investing and financing activities:    
Non-cash additions to property, plant and equipment $589
 $1,226
Deferred offering costs, accrued not yet paid $69
 $—
(concluded)
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive IncomeTotal
SharesAmount
Balance at December 31, 202062,820,351 $6 $560,210 $(194,867)$1,748 $367,097 
Net loss— — — (27,266)— (27,266)
Issuance of common stock under equity incentive plans, net188,183 — 2,048 — — 2,048 
Purchase of capped calls related to convertible senior notes— — (83,950)— — (83,950)
Share-based compensation for equity classified awards— — 7,376 — — 7,376 
Foreign currency translation adjustment— — — — (1,258)(1,258)
Balance at April 3, 202163,008,534 $6 $485,684 $(222,133)$490 $264,047 
Net loss— — — (19,652)— (19,652)
Issuance of common stock under equity incentive plans, net234,964 — 2,663 — — 2,663 
Share-based compensation for equity classified awards— — 7,863 — — 7,863 
Foreign currency translation adjustment— — — — 560 560 
Balance at July 3, 202163,243,498 $6 $496,210 $(241,785)$1,050 $255,481 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended
July 3,
2021		June 27,
2020
Cash flows from operating activities:
Net loss$(46,918)$(8,390)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization9,207 5,855 
Non-cash lease expense1,580 1,193 
Share-based compensation expense15,239 13,535 
Loss on sale of fixed assets111 183 
Amortization of debt issuance costs1,352 93 
Loss on extinguishment of debt1,037 1,538 
Equity in losses of unconsolidated joint venture581 0 
Net change in operating assets and liabilities:
Accounts receivable(27,713)(5,907)
Inventories(44,741)(61,437)
Prepaid expenses and other assets(9,943)(12,192)
Accounts payable(2,197)21,564 
Accrued expenses and other current liabilities10,157 818 
Prepaid lease costs, non-current(26,578)0 
Operating lease liabilities(1,619)(1,188)
Net cash used in operating activities$(120,445)$(44,335)
Cash flows from investing activities:
Purchases of property, plant and equipment$(51,420)$(26,031)
Purchases of property, plant and equipment held for sale0 (2,288)
Payment of security deposits(145)(9)
Net cash used in investing activities$(51,565)$(28,328)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes$1,150,000 $0 
Purchase of capped calls related to convertible senior notes(83,950)0 
Proceeds from revolving credit facility0 50,000 
Debt issuance costs(23,605)(1,183)
Debt extinguishment costs0 (1,200)
Repayment of revolving credit facility(25,000)0 
Repayment of revolving credit line0 (6,000)
Repayment of term loan0 (20,000)
Repayment of equipment loan0 (5,000)
(continued on the next page)
6

BEYOND MEAT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended
July 3,
2021		June 27,
2020
Principal payments under finance lease obligations(83)(34)
Proceeds from exercise of stock options6,499 3,824 
Payments of minimum withholding taxes on net share settlement of equity awards(1,787)(1,231)
Net cash provided by financing activities$1,022,074 $19,176 
Net increase (decrease) in cash and cash equivalents$850,064 $(53,487)
Effect of exchange rate changes on cash146 (167)
Cash and cash equivalents at the beginning of the period159,127 275,988 
Cash and cash equivalents at the end of the period$1,009,337 $222,334 
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$306 $1,265 
Taxes$98 $15 
Non-cash investing and financing activities:
Non-cash additions to property, plant and equipment$10,251 $4,499 
Non-cash additions to financing leases$580 $0 
Operating lease right-of-use assets obtained in exchange for lease liabilities$1,678 $2,632 
Reclassification of other current liability to additional paid-in capital in connection with the share-settled obligation$1,614 $0 
Note receivable from sale of assets held for sale$0 $5,158 
(concluded)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Introduction
The Company
Beyond Meat, Inc., a Delaware corporation (the(including its subsidiaries unless the context otherwise requires, the “Company”), is one of the fastest growing food companies in the United States, offering a portfolio of revolutionary plant-based meats. The Company builds meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional and environmental benefits of eating the Company’s plant-based meat products. The Company’s brand commitment, “Eat What You Love,” represents a strong belief that by eatingthere is a better way to feed our future and that the Company’spositive choices we all make, no matter how small, can have a great impact on our personal health and the health of our planet. By shifting from animal-based meat to plant-based meats, consumersmeat, we can enjoy more, not less, of their favorite meals, and by doing so, help address concerns related topositively impact four growing global issues: human health, climate change, resource conservationconstraints on natural resources and animal welfare.
On January 14, 2020, the Company registered its subsidiary, Beyond Meat EU B.V., in the Netherlands. On April 28, 2020, the Company registered its subsidiary, Beyond Meat (Jiaxing) Food Co., Ltd. (“BYND JX”), in the Zhejiang Province in China. On June 17, 2021, the Company incorporated its subsidiary, Beyond Meat Canada Inc. in Canada.
The Company’s primary production facilities are located in Columbia, Missouri, and Devault, Pennsylvania, and research and development and administrative offices are located in El Segundo, California. In addition to its own production facilities, the Company uses co-manufacturers in various locations in the United States, Canada and the Netherlands. In the second quarter of 2020, the Company acquired its first manufacturing facility in Europe located in Enschede, the Netherlands. This facility completed operational testing of dry blend production in late 2020. In the second quarter of 2021, this facility completed commercial trial runs for dry blend production and began commercial trial runs for the Company’s extruded product which is expected to be completed by the end of the third quarter of 2021. In addition, in June 2020 the Company announced the official opening of a new co-manufacturing facility to be used for Beyond Meat production built by the Company’s distributor in the Netherlands. In the third quarter of 2020, the Company and BYND JX entered into an investment agreement and related factory leasing contract to design and develop manufacturing facilities in the Jiaxing Economic & Technological Development Zone to manufacture its products.plant-based meat products under the Beyond Meat brand in China. Renovations in the leased facility were substantially completed and trial production began in the first quarter of 2021. In the second quarter of 2021, several commercial trials of certain of the Company’s manufacturing processes were completed. Full-scale end-to-end production is expected by the end of 2021.
The Company sells to a variety of customers in the retail and foodservice channels throughout the United States and internationally primarily through brokersdistributors who purchase, store, sell, and distributors. Alldeliver the Company’s products. In addition, the Company sells directly to customers in the retail and foodservice channels who handle their own distribution. In the third quarter of 2020, the Company launched an e-commerce site to sell its products direct to consumers in the United States.
As of July 3, 2021, approximately 93.0% of the Company’s long-lived assets arewere located in the United States.
Initial Public OfferingCOVID-19 Pandemic
On May 6, 2019,March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The global spread and unprecedented impact of COVID-19 continues to create significant volatility, uncertainty and economic disruption. The Company’s operations and its financial results including net revenues, gross profit, gross margin and operating expenses were negatively impacted by COVID-19 in 2020 and the first half of 2021. The extent of COVID-19’s effect on the Company’s operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic
8
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(including any resurgences), the rising impact of COVID-19 variants, the wide distribution and public acceptance of COVID-19 vaccines, and the level of social and economic restrictions imposed in the United States and abroad in an effort to curb the spread of the virus, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on the Company’s business, results of operations, financial condition or liquidity. While the ultimate health and economic impact of COVID-19 continues to be highly uncertain, the Company completedacknowledges that its initial public offering (“IPO”)business operations and results of common stock, in which it sold 11,068,750 shares,operations, including 1,443,750 shares pursuantits net revenues, gross profit, gross margin, earnings and cash flows, could be adversely impacted through 2021 and likely into 2022. Future events and effects related to the underwriters’ over-allotment option. The shares began trading on the Nasdaq Global Select Market on May 2, 2019. The shares were sold at an IPO price of $25.00 per share for net proceeds of approximately $252.5 million, after deducting underwriting discountsCOVID-19 pandemic cannot be determined with precision and commissions of $19.4 million and estimated offering expenses of approximately $4.8 million payable by the Company. Upon the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 41,562,111 shares of common stock on a one-for-one basis, and warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for a total of 160,767 shares of common stock.actual results could significantly differ from estimates or forecasts.
The accompanying condensed financial statements as of March 30, 2019, including share and per share amounts, do not give effect to the IPO, conversion of the convertible preferred stock, conversion of the convertible preferred stock warrants as of the IPO and such conversions were completed subsequent to March 30, 2019.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the SECSecurities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021 or for any other interim period or for any other future fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the prospectus dated May 1, 2019 (the “Prospectus”) that forms a part of the Company's Registration StatementCompany’s Annual Report on Form S-1 (File No. 333-228453), as10-K for the fiscal year ended December 31, 2020 filed with the SEC pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, on May 3, 2019.March 1, 2021 (the “2020 10-K”). The condensed consolidated balance sheet as of December 31, 20182020 has been derived from the audited financial statements at that date. There have been no material changes in the

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

Company’s significant accounting policies from those that were disclosed in the Prospectus,2020 10-K, except as noted below.
Fiscal YearPrinciples of Consolidation
The condensed consolidated financial statements include the accounts of the Company operates on a fiscal calendar year, and each interim quarter is comprised of one 5-week periodits subsidiaries. All inter-company balances and two 4-week periods, with each week ending on a Saturday. The Company’s fiscal year always begins on January 1 and ends on December 31. As a result, the Company’s first and fourth fiscal quarters maytransactions have more or fewer days included than a traditional 91-day fiscal quarter.been eliminated.
Management’s Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates made by the Company include trade promotion accruals; useful lives of property, plant and equipment; valuation of deferred tax assets; valuation of inventory; incremental borrowing rate used to determine operating lease right-of-use assets and operating lease liabilities; assessment of contract-based factors, asset-based factors, entity-based factors and market-based factors to determine the lease term impacting right-of-use assets and lease liabilities; and the valuation of the fair value of common stock and preferred stockoptions used to determine stockshare-based compensation expense and in the re-measurement of warrants and liabilities.expense. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements.
Reverse Stock Split
On January 2, 2019, the Company effected a 3-to-2 reverse stock split of its outstanding common stock and convertible preferred stock, including outstanding stock options and common and convertible preferred stock warrants. The reverse stock split did not result in an adjustment to par value. All references in the accompanying condensed financial statements and related notes to the number of shares of common stock, convertible preferred stock, warrants and options to purchase common stock and per share data reflect the effect of the reverse stock split.
Cash and Cash Equivalents
The Company maintains cash balances at one financial institution in the United States. The cash balances may, at times, exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation or FDIC up to $250,000. The Company considers all highly liquid investments with original maturity dates of 90 days or less to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts.
Deferred Offering Costs
Offering costs, consisting primarily of legal, accounting, printing and filing services, and other direct fees and costs related to the IPO, are capitalized. As of March 30, 2019 and December 31, 2018, $3.4 million and $3.2 million of offering costs, respectively, have been capitalized and recorded in prepaid expenses and other current assets in the accompanying condensed balance sheets.
Stock Warrant Liability
The Company accounts for freestanding warrants to purchase shares of its convertible preferred stock or common stock as a liability, as the underlying shares of convertible preferred stock and common stock are contingently redeemable and, therefore, may obligate the Company to transfer assets at some point in the future. The warrants were recorded at fair value upon issuance and are subject to re-measurement at each balance sheet date. Any change in fair value is recognized in the condensed statements of operations in other expense.

9
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Convertible Senior Notes

As ofOn March 30, 2019,5, 2021, the Company had outstanding warrantsissued $1.0 billion aggregate principal amount of its 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). On March 12, 2021, the initial purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of 60,002the Company’s 0% Convertible Senior Notes due 2027 (the “Additional Notes”, and together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. See Note 7, Debt. The Company accounts for the Notes under Accounting Standards Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (“ASU 2020-06”), which the Company early adopted in the first quarter of 2021 concurrent with the issuance of the Notes. The Company records the Notes in “Long-term liabilities” at face value net of issuance costs. If any of the conditions to the convertibility of the Notes is satisfied, or the Notes become due within one year, then the Company may be required under applicable accounting standards to reclassify the liability carrying value of the Notes as a current, rather than a long-term, liability.
Capped Call Transactions
Capped call transactions cover the aggregate number of shares of itsthe Company’s common stock that will initially underlie the Notes, and generally reduce potential dilution to the Company’s common stock at an exerciseupon any conversion of Notes and/or offset any cash payments the Company may make in excess of the principal amount of the converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of $3.00 per share, 121,694 sharesthe capped call transactions. The Company determined that the freestanding capped call option contracts qualify as equity under the accounting guidance on indexation and equity classification, and recognized the contract by recording an entry to “Additional paid-in capital” (“APIC”) in stockholders’ equity in its condensed consolidated balance sheet. The Company also determined that the capped call option contracts meet the definition of its Series B convertible preferred stock at an exercise pricea derivative under Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging (“ASC 815”), but are not required to be accounted for as a derivative as they meet the scope exception outlined in ASC 815. Instead the capped call options are recorded in APIC and not remeasured.
Issuance Costs
Issuance costs related to the Notes offering were capitalized and offset against proceeds from the Notes. Issuance costs consist of $1.07 per sharelegal and 39,073 shares of its Series E convertible preferred stock at an exercise price of $3.68 per share. On May 6, 2019, uponother costs related to the closingissuance of the IPO,Notes and are amortized to interest expense over the warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for a total of 160,767 shares of common stock at the same respective exercise price per share. Subsequent to the closingterm of the IPO, all outstanding warrantsNotes. Total issuance costs capitalized in the six months ended July 3, 2021 were approximately $23.6 million, of which NaN remained unpaid as of July 3, 2021. There were 0 such issuance costs in the six months ended June 27, 2020.
Foreign Currency
Foreign currency translation income (loss), net of tax, reported as cumulative translation adjustment through “Other comprehensive income (loss)” was $0.6 million and $(0.2) million for the three months ended July 3, 2021 and June 27, 2020, respectively.
Foreign currency translation losses, net of tax, reported as cumulative translation adjustments through “Other comprehensive income (loss)” were $(0.7) million and $(0.2) million for the six months ended July 3, 2021 and June 27, 2020, respectively.
Realized and unrealized foreign currency transaction income (losses) included in “Other, net” were $0.2 million and $(0.1) million in the three and six months ended July 3, 2021, respectively. Realized and unrealized foreign currency transaction gains included in “Other, net” were $0.1 million in each of the three and six months ended June 27, 2020.
10
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to purchase shares of common stock were exercised.Unaudited Condensed Consolidated Financial Statements (continued)
Fair Value of Financial Instruments
The fair value measurement accounting guidance creates a fair value hierarchy to prioritize the inputs used to measure fair value into three categories. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest and Level 3 is the lowest.
The three levels are defined as follows:
•Level 1—1—Unadjusted quoted prices in active markets accessible by the reporting entity for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
•Level 2—2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant value drivers are observable.
•Level 3—3—Valuations derived from valuation techniques in which significant value drivers are unobservable.
The Company’s financial instruments include cash equivalents, accounts receivable, accounts payable, and accrued expenses, for which the carrying amounts approximate fair value due to the short-term maturity of these financial instruments. Based onThe Company’s convertible notes are carried at face value less the borrowing rates currently available to theunamortized debt issuance costs (see Note 7).
The Company for debt with similar terms, the carrying value of the line of credit, term debt with its bank, and equipment loan approximate fair value as well.
The following table sets forth the Company’shad no financial instruments that were measured at fair value on a recurring basis based onas of July 3, 2021 and December 31, 2020, other than the liability classified share-settled obligation to one of the Company’s executive officers (see Note 9) which represents a Level 1 financial instrument. There was no change in the fair value hierarchy (in thousands):
 March 30, 2019
 Level 1 Level 2 Level 3 Total
Financial Liabilities:       
Preferred stock warrant liability$—
 $—
 $1,998
 $1,998
Common stock warrant liability—
 —
 679
 679
Total$—
 $—
 $2,677
 $2,677
        
 December 31, 2018
 Level 1 Level 2 Level 3 Total
Financial Liabilities:       
Preferred stock warrant liability$—
 $—
 $1,441
 $1,441
Common stock warrant liability—
 —
 477
 477
Total$—
 $—
 $1,918
 $1,918

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

of the liability-classified share-settled obligation in the three and six months ended July 3, 2021.
There were no transfers of financial assets or liabilities betweeninto or out of Level 1, Level 2 or Level 3 infor the three and six months ended March 30, 2019 or March 31, 2018. The key assumptions used in the Black-Scholes option-pricing model for the valuation of the preferred stock warrant liability and common stock warrant liability upon re-measurement were as follows:
  For the Three Months Ended
  March 30,
2019		 March 31,
2018
Expected term (in years) 2.0
 3.0
Fair value of underlying shares $19.49
 $3.00
Volatility 55.0% 55.0%
Risk-free interest rate 2.27% 1.98%
Dividend yield —
 —
Generally, increases or decreases in the fair value of the underlying convertible preferred stock and common stock would result in a directionally similar impact in the fair value measurement of the associated warrant liability.
The following table sets forth a summary of the changes in the fair value of the preferred and common stock warrant liabilities:
  For the Three Months Ended
(in thousands) March 30, 2019 March 31, 2018
Beginning balance $1,918
 $550
Change in fair value of warrant liability 759
 129
Ending balance $2,677
 $679
July 3, 2021.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which, along with subsequent ASUs, amends the existing accounting standards for revenue recognition (“Topic 606”). This guidance is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to receive when productsThe Company’s revenues are transferred to customers. ASU 2014-09 was effective for the Company beginning January 1, 2019. The majority of the Company’s contracts with customers generally consist of a single performance obligation to transfer promised goods. Based on the Company’s evaluation process and reviewgenerated through sales of its contracts with customers, the timing and amount of revenue recognized based on ASU 2014-09 is consistent with the Company’s revenue recognition policy under previous guidance. The Company has therefore concluded that the adoption of ASU 2014-09 did not have a material impact on its financial position, results of operations,products to distributors or cash flows.
customers. Revenue is recognized at the point in which the performance obligation under the terms of a contract with the customer have been satisfied and control has transferred. The Company’s performance obligation is typically defined as the accepted purchase order, the direct-to-consumer order, or the contract, with the customer which requires the Company to deliver the requested products at agreed upon prices at the time and location of the customer’s choice. The Company does not offer warranties or a right to return on the products it sells except in the instance of a product recall.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for fulfilling the performance obligation. Sales and other taxes the Company collects concurrent with the sale of products are excluded from revenue. The Company's normal payment terms vary by the type and location of its customers and the products offered. The time between invoicing and when payment is due

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

is not significant. None of the Company's customer contracts as of March 30, 2019 containJuly 3, 2021 contains a significant financing component.
The Company routinely offers sales discounts and promotions through various programs to its customers and consumers. These programs include rebates, temporary on shelf price reductions, buy-one-get-one-free programs, off invoice discounts, retailer advertisements, product coupons and other trade activities. Provision for discounts and incentives are recorded in the same period in which the related revenues are recognized. At the end of each accounting period, the Company recognizes a liability for estimated sales discounts that have been incurred but not paid which totaled $0.9$4.1 million and $0.8
11
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
$3.6 million as of March 30, 2019July 3, 2021 and December 31, 2018,2020, respectively. The offsetting charge is recorded as a reduction of revenues in the same period when the expense is incurred.
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The incremental cost to obtain contracts was not material.
Presentation of Net Revenues by Channel
The Company presents net revenues by geography and distribution channel as follows:
Distribution ChannelDescription
U.S. Retail
Net revenues from retail sales to the U.S. market(1)
U.S. FoodserviceNet revenues from restaurant and foodservice sales to the U.S. market
International RetailNet revenues from retail sales to international markets, including Canada
International FoodserviceNet revenues from restaurant and foodservice sales to international markets, including Canada
____________
(1) Includes net revenues from direct-to-consumer sales.
The following table presents the Company’s net revenues by platform and channel are included in the tables below:channel:
Three Months Ended Six Months Ended
(in thousands)July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net revenues:
U.S.:
Retail$77,195 $90,040 $141,021 $139,963 
Foodservice23,961 6,486 40,703 29,117 
U.S. net revenues101,156 96,526 181,724 169,080 
International:
Retail28,544 9,572 45,743 15,524 
Foodservice19,726 7,240 30,123 25,808 
International net revenues48,270 16,812 75,866 41,332 
Net revenues$149,426 $113,338 $257,590 $210,412 
  For the Three Months Ended
(in thousands) March 30, 2019 March 31, 2018
Net revenues:    
Fresh Platform $38,806
 $9,596
Frozen Platform 4,512
 4,748
Less: Discounts (3,112) (1,568)
Net revenues $40,206
 $12,776
  For the Three Months Ended
(in thousands) March 30, 2019 March 31, 2018
Net revenues:    
Retail $19,579
 $9,288
Restaurant and Foodservice 20,627
 3,488
Net revenues $40,206
 $12,776
Two distributors eachOne distributor accounted for approximately 21%10% of the Company’s gross revenues in the three months ended March 30, 2019;July 3, 2021 and three distributorsone distributor accounted for approximately 34%, 14% and 11%, respectively,16% of the Company’s gross revenues in the three months ended March 31, 2018, which were primarily related to salesJune 27, 2020. One customer accounted for approximately 10% of the Company’s gross revenues in the United Statessix months ended July 3, 2021 and Canada. Approximatelyone distributor accounted for approximately 14% of the Company’s netgross revenues in the six months ended June 27, 2020. No other distributor or customer accounted for more than 10% of the Company’s gross revenues in the three and six months ended March 30, 2019 was from international sales excluding salesJuly 3, 2021 and June 27, 2020.
Investment in Canada. International salesJoint Venture
The Company uses the equity method of accounting to record transactions associated with its joint venture when the Company shares in joint control of the investee. Investment in joint venture is not consolidated but is recorded in “Other non-current assets, net” in the Company’s condensed consolidated balance sheet. The Company recognizes its portion of the investee’s results in “Equity in losses of unconsolidated joint venture” in its condensed consolidated statement of operations. Activity related to the joint venture during the three and six months ended March 31, 2018 were immaterial.July 3, 2021 was not material.
12
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Shipping and Handling Costs
Outbound shipping and handling costs included in selling, general and administrative (“SG&A”) expenses in the three months ended March 30, 2019July 3, 2021 and March 31, 2018June 27, 2020 were $1.3$4.9 million and $1.1$3.2 million, respectively.
Related-Party Transactions
Seth Goldman
The Company entered into a consulting agreement with Seth Goldman, the Company’s Executive Chair, on March 2, 2016, which was amended Outbound shipping and restated on November 15, 2018 and further amended

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

on April 8, 2019. Pursuant to the consulting agreement, the Company will pay Mr. Goldman $20,210.33 per month for services rendered under the consulting agreement and, on the date of each annual meeting of the Company’s stockholders after which Mr. Goldman’s non-employee service on the board of directors will continue, the Company has agreed to grant Mr. Goldman a restricted stock unit award under the 2018 Equity Incentive Plan (the “Plan”), having a grant date fair value of $105,000. Each restricted stock unit grant will vest based on continued servicehandling costs included in equal monthly installments over the 12-month period following the grant date, provided it will vest in full immediately prior to, and contingent upon, a change in control of the company.
The consulting agreement may be terminated by either party at any time upon 120 business days’ written notice. In the event of a defaultSG&A expenses in the performance of the consulting agreement or material breach of any obligations under the consulting agreement, the non-breaching party may terminate the consulting agreement immediately if the breaching party fails to cure the breach within 30 business days after having received written notice by the non-breaching party of the default or breach.
Bernhard van Lengerich
The Company first entered into an advisor agreement with Food System Strategies, LLC in October 2015. Bernhard van Lengerich. Ph.D., a member of the Company’s Board of Directors, is the Chief Executive Officer of Food System Strategies, LLC. Pursuant to this advisor agreement, the Company paid Food System Strategies, LLC $4,000 for each day Dr. van Lengerich provided services, provided the Company paid Food System Strategies, LLC for at least two days of services per month. In February 2016, the Company entered into a new advisor agreement with Food System Strategies, LLC, which superseded the original agreement and provided for a $25,000 monthly retainer and a non-qualified stock option covering 798,848 shares, which vested in equal monthly installments over three years in consideration of Dr. van Lengerich providing services as the Company’s interim Chief Technical Officer and head of research and development, and the increased time commitment associated with these roles. In December 2016, the advisor agreement was amended to provide for a $10,000 monthly retainer to reflect the fact that Dr. van Lengerich would only be providing advisory services five to six days a month going forward. The advisor agreement may be terminated at any time upon written notice to the other party.
Donald Thompson
In the three months ended March 31, 2018, the Company incurred consulting costs payable to a company associated with Donald Thompson, a member of the Company’s Board of Directors, in the amount of $47,162. The Company did not incur any such consulting costs in the three months ended March 30, 2019.July 3, 2021 and June 27, 2020 were $8.2 million and $4.8 million, respectively.
Recently Adopted Accounting Pronouncements
In June 2018,On December 18, 2019, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU No. 2018-07, “Compensation—Stock Compensation2019-12, “Simplifying the Accounting for Income Taxes (Topic 718): Improvements740)” (“ASU 2019-12”). ASU 2019-12 eliminates the need for an organization to Nonemployee Share-Based Payment Accounting (“analyze whether the following apply in a given period (1) exceptions to the incremental approach for intra-period tax allocation, (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments, and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2018-07”). Under ASU 2018-07, the measurement2019-12 also is designed to improve financial statement preparers’ application of equity-classified nonemployee awards will be fixed at the grant date,income tax-related guidance and nonpublic entities are allowed to accountsimplify GAAP for nonemployee awards using certain practical expedients(1) franchise taxes that are already available for employee awards. Thepartially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in tax laws in interim periods. For public business entities, the amendments in ASU 2018-072019-12 are effective for nonpublic business entities for fiscal years, beginning after December 15, 2019, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, but no earlier than the Company’s adoption date of Topic 606. The Company early adopted ASU 2018-072019-12 beginning on January 1, 2019 along with its adoption2021. Adoption of ASU 2014-09. Pursuant to ASU 2018-07, the measurement of equity classified nonemployee awards will be fixed at the grant date, as compared2019-12 did not result in any material changes to the previous requirement to remeasureway the awards through the performance completion date.

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

New Accounting Pronouncements
As an “emerging growth company,” the Jumpstart Our Business Startups Act, or the JOBS Act, allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. As a result, the Company’s financial statements maytax provision is prepared and did not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which makes amendments to the guidance in GAAP on the classification and measurement of financial instruments. ASU 2016-01 significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. For all entities other than public entities, ASU 2016-01 is effective for fiscal years beginning after December 15, 2018, including interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company expects to adopt and implement ASU 2016-01 for the year ending December 31, 2019 and for interim periods beginning January 1, 2020. The Company does not expect that adoption of ASU 2016-01 will have a material impact on the Company’s financial position, results of operations or cash flows.
In February 2016,On August 5, 2020, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity” (“ASU 2016-02”2020-06”). ASU 2016-02 requires lessees2020-06 simplifies accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity, by removing certain separation models that require the separation of a convertible debt instrument into a debt component and an equity or derivative component. ASU 2020-06 removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. After adoption of ASU 2020-06 entities will not separately present in equity an embedded conversion feature in such debt. Instead entities will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible instrument was issued at a substantial premium. ASU 2020-06 also expands disclosure requirements for convertible instruments and simplifies areas of the guidance for diluted earnings-per-share calculations that are impacted by the amendments. Under ASU 2020-06, entities must apply the more dilutive of the if-converted method and the two-class method to generally recognize most operating leases onall convertible instruments; the balance sheets but record expenses ontreasury stock method is no longer available. ASU 2020-06 eliminates an entity’s ability to overcome the presumption of share settlement, and as a result, the issuers of convertible debt that may be settled in any combination of cash or stock at the issuer’s option, must use the more dilutive among the if-converted method and the two-class method in computing diluted net income statements in a manner similar to current accounting.per share, which is typically more dilutive than the net share settlement under the treasury stock method. ASU 2016-02 along with subsequent ASU’s on Topic 8422020-06 is effective for nonpublic companies for theinterim and annual reporting periodperiods beginning after December 15, 2019, and, therefore, effective for the Company beginning January 1, 2020. Early application is2021, with early adoption permitted. The Company is currently evaluatingearly adopted ASU 2020-06 in the impact ASU 2016-02 will have onfirst quarter of 2021 concurrent with the issuance of its Notes. There were no changes to the Company’s previously issued financial statements and currently expects that most operating lease commitments will be subject to ASU 2016-02 and will be recognized as operating lease liabilities and right-of-use assets upon adoption. Whilesince the Company has not yet quantifiedhad no existing convertible notes prior to issuance of the impact, adjustments resulting fromNotes in the first quarter of 2021. Upon adoption of ASU 2016-02 will materially increase total assets2020-06, the Company recorded the issuance of the Notes at their face value net of issuance costs in long-term liabilities and total liabilities relative to such amounts reported prior to adoption.the value of the capped call options in APIC.
Note 3. Restructuring
In May 2017, management approved a plan to terminate the Company’s exclusive supply agreement (the “Agreement”) with one of its co-manufacturers, due to non-performance under the Agreement and on
13
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
May 23, 2017, the Company notified the co-manufacturer of its decision to terminate the Agreement. In the three months ended March 30, 2019July 3, 2021 and March 31, 2018,June 27, 2020, the Company recorded $0.4$3.8 million and $0.3$1.5 million, respectively, in restructuring expenses related to this dispute, which consisted primarily of legal and other expenses. In the six months ended July 3, 2021 and June 27, 2020, the Company recorded $6.3 million and $3.9 million, respectively, in restructuring expenses related to this dispute, which consisted primarily of legal and other expenses. See Note 910 for further information. As of March 30, 2019July 3, 2021 and December 31, 2018, there were no2020, the Company had $2.6 million and $0.8 million, respectively, in accrued and unpaid liabilitiesrestructuring expenses.
Note 4. Leases
Leases are classified as either finance leases or operating leases based on criteria in ASC 842. The Company has operating leases for its corporate offices, including its Manhattan Beach Project Innovation Center where the Company’s research and development facility is located, its manufacturing facilities, warehouses and vehicles, and finance leases for certain of the Company’s equipment. Such leases generally have original lease terms between two and 10 years, and often include 1 or more options to renew. Some leases also include early termination options, which can be exercised under specific conditions. The Company includes options to extend the lease term if the options are reasonably certain of being exercised. The Company does not have residual value guarantees or material restrictive covenants associated with this contract termination.its leases.
Three Months Ended
(in thousands)Statement of Operations LocationJuly 3, 2021June 27, 2020
Operating lease cost:
Lease costCost of goods sold$556 $468 
Lease costResearch and development expenses191 158 
Lease costSelling, general and administrative expenses148 161 
Variable lease cost (1)
Cost of goods sold1 1 
Operating lease cost$896 $788 
Short-term lease costSelling, general and administrative expenses$87 $111 
Finance lease cost:
Amortization of right-of use assetsCost of goods sold$47 $20 
Interest on lease liabilitiesInterest expense5 3 
Finance lease cost$52 $23 
Total lease cost$1,035 $922 
____________
(1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs.
14
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Six Months Ended
(in thousands)Statement of Operations LocationJuly 3, 2021June 27, 2020
Operating lease cost:
Lease costCost of goods sold$1,095 $652 
Lease costResearch and development expenses339 283 
Lease costSelling, general and administrative expenses345 273 
Variable lease cost (1)
Cost of goods sold29 7 
Operating lease cost$1,808 $1,215 
Short-term lease costSelling, general and administrative expenses$113 $175 
Finance lease cost:
Amortization of right-of use assetsCost of goods sold$84 $38 
Interest on lease liabilitiesInterest expense10 7 
Finance lease cost$94 $45 
Total lease cost$2,015 $1,435 
____________
(1) Variable lease cost primarily consists of common area maintenance, such as cleaning and repairs.

Supplemental balance sheet information as of July 3, 2021 and December 31, 2020 related to leases are as follows:
(in thousands)Balance Sheet LocationJuly 3, 2021December 31, 2020
Assets
Operating leasesOperating lease right-of-use assets$14,672 $14,570 
Finance leases, netProperty, plant and equipment, net708 212 
Prepaid lease costs, non-current(1)
Prepaid lease costs, non-current26,578 — 
Total lease assets$41,958 $14,782 
Liabilities
Current:
Operating lease liabilitiesCurrent portion of operating lease liabilities$3,651 $3,095 
Finance lease liabilitiesShort-term finance lease liabilities184 71 
Long-term:
Operating lease liabilitiesOperating lease liabilities, net of current portion11,300 11,793 
Finance lease liabilitiesFinance lease obligations and other long-term liabilities533 149 
Total lease liabilities$15,668 $15,108 
_______________
(1) Payments to a construction escrow account for the Campus Lease that has not commenced as of July 3, 2021. See Note 10.
15
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)

The following is a schedule by year of the maturities of lease liabilities with original terms in excess of one year, as of July 3, 2021:
July 3, 2021
(in thousands)Operating LeasesFinance Leases
Remainder of 2021$1,964 $101 
20224,000 194 
20233,327 181 
20241,715 146 
20251,322 115 
20261,644 10 
Thereafter2,270 0 
Total undiscounted future minimum lease payments16,242 747 
Less imputed interest(1,291)(30)
Total discounted future minimum lease payments$14,951 $717 
Weighted average remaining lease terms and weighted average discount rates were:
July 3, 2021
Operating LeasesFinance Leases
Weighted average remaining lease term (years)5.94.1
Weighted average discount rate2.7 %2.3 %
Note 4.5. Inventories
Major classes of inventory were as follows:
(in thousands)July 3,
2021		December 31,
2020
Raw materials and packaging$86,998 $83,702 
Work in process31,908 12,887 
Finished goods46,840 25,128 
Total$165,746 $121,717 

16
 March 31, December 31,
(in thousands)2019 2018
Raw materials and packaging$16,385
 $13,756
Work in process6,198
 2,517
Finished goods11,698
 13,984
Total$34,281
 $30,257

BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Note 5.6. Property, Plant and Equipment
Property, plant, and equipment are stated at cost and capitalfinance lease assets are included. A summary of property, plant, and equipment as of March 30, 2019July 3, 2021 and December 31, 2018,2020, is as follows:
(in thousands) March 30, 2019 December 31, 2018(in thousands)July 3,
2021		December 31,
2020
Manufacturing equipment $28,866
 $25,314
Manufacturing equipment$82,284 $62,521 
Research and development equipment 7,111
 6,088
Research and development equipment15,162 12,342 
Leasehold improvements 7,166
 7,080
Leasehold improvements16,836 9,277 
Capital leases 883
 882
BuildingBuilding12,712 12,569 
Finance leasesFinance leases867 212 
Software 125
 60
Software1,071 402 
Furniture and fixtures 203
 195
Furniture and fixtures642 614 
Vehicles 210
 210
Vehicles584 377 
LandLand3,953 3,995 
Assets not yet placed in service 1,877
 3,374
Assets not yet placed in service64,955 46,148 
Total property, plant and equipment $46,441
 $43,203
Total property, plant and equipment$199,066 $148,457 
Less: accumulated depreciation and amortization 14,580
 12,676
Accumulated depreciation and amortizationAccumulated depreciation and amortization(41,617)(33,158)
Property, plant and equipment, net $31,861
 $30,527
Property, plant and equipment, net$157,449 $115,299 
Depreciation and amortization expense for the three months ended March 30, 2019July 3, 2021 and March 31, 2018,June 27, 2020 was $1.9$4.9 million and $0.7$3.3 million, respectively. Of the total depreciation and amortization expense in the three months ended March 30, 2019July 3, 2021 and March 31, 2018, $1.4June 27, 2020, $3.9 million and $0.6$2.5 million, respectively, were recorded in cost of goods sold and $0.5sold; $0.9 million and $0.1$0.7 million, respectively, were recorded in research and development expenses; and $30,000 and $0.1 million, respectively, were recorded in SG&A expenses in the Company’s condensed consolidated statements of operations.
Depreciation and amortization expense for the six months ended July 3, 2021 and June 27, 2020 was $9.2 million and $5.9 million, respectively. Of the total depreciation and amortization expense in the six months ended July 3, 2021 and June 27, 2020, $7.4 million and $4.4 million, respectively, were recorded in cost of goods sold; $1.8 million and $1.4 million, respectively, were recorded in research and development expenses; and $60,000 and $0.1 million, respectively, were recorded in SG&A expenses in the Company’s condensed consolidated statements of operations.
The Company has $1.9 million and $1.0 million inhad 0 property, plant and equipment concluded tothat meet the criteria for assets held for sale as of July 3, 2021 and areDecember 31, 2020, respectively. Amounts previously classified as assets held for sale were sold for amounts that approximated book value for which a note receivable of $4.5 million, net of payments received, was recorded, of which $4.0 million is included in prepaid“Prepaid expenses and other current assets” and $0.5 million is included in “Other non-current assets, net” in the Company’s condensed consolidated balance sheet at July 3, 2021. At December 31, 2020, the Company had a note receivable of $4.6 million from the sale of assets held for sale, of which $2.4 million was included in “Prepaid expenses and other current assets” and $2.2 million was included in “Other non-current assets, net” in the Company’s condensed consolidated balance sheet.

17
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Note 7. Debt
The following is a summary of debt balances as of July 3, 2021 and December 31, 2020:
(in thousands)July 3,
2021		December 31,
2020
Convertible senior notes$1,150,000 $0 
Revolving credit facility0 25,000 
Debt issuance costs(22,293)0 
Total debt outstanding$1,127,707 $25,000 
Less: current portion of long-term debt0 25,000 
Long-term debt$1,127,707 $0 
Convertible Senior Notes
On March 5, 2021, the Company issued $1.0 billion aggregate principal amount of its 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. On March 12, 2021, the initial purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of the Company’s 0% Convertible Senior Notes due 2027 (the “Additional Notes”, and together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. The initial conversion price of the condensed balance sheetsNotes is $206.00 per share of common stock, which represents a premium of approximately 47.5% over the closing price of the Company’s common stock on March 2, 2021. The Notes will mature on March 15, 2027, unless earlier repurchased, redeemed or converted. The Notes were issued pursuant to, and are governed by, an indenture, dated as of March 30, 20195, 2021, (the “Indenture”) between the Company and December 31, 2018, respectively.U.S. Bank National Association, as trustee (the Trustee”). The Company expectsused $84.0 million of the net proceeds from the sale of the Notes to sell such assets in 2019 for amounts that approximate book value.
Note 6. Debtfund the cost of entering into capped call transactions, described below. The proceeds from the issuance of the Notes were approximately $1.0 billion, net of capped call transaction costs of $84.0 million and debt issuance costs totaling $23.6 million.
The Notes are senior, unsecured obligations and are (i) equal in right of payment with the Company’s debt balancessenior, unsecured indebtedness; (ii) senior in right of payment to the Company’s indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.
The Notes do not bear regular interest, and the principal amount of the Notes do not accrete. However, special interest and additional interest may accrue on the Notes at a rate per annum not exceeding 0.50% (subject to certain exceptions) upon the occurrence of certain events relating to the failure to file certain SEC reports or to remove certain restrictive legends from the Notes.
The initial conversion rate is 4.8544 shares of common stock per $1,000 principal amount of the Notes, which represents an initial conversion price of $206.00 per share of common stock. The conversion rate and conversion price are detailed below:subject to customary adjustments upon the occurrence of certain events as described in the Indenture.
The holder may convert the Notes during the 5 consecutive business days immediately after any 10 consecutive trading day period, if the trading price per $1,000 principal amount of Notes, as determined following a request by a holder, for each trading day of the measurement period was less than ninety eight percent (98%) of the product of the last report sale price per share of common stock on such trading day and the conversion rate on such trading day.
The holder can convert its Notes during any calendar quarter, commencing after the calendar quarter ending on June 30, 2021, provided the last reported sale price of the common stock for at least 20 trading
18
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands)March 30, 2019 December 31, 2018
2018 Revolving Credit Facility (defined below)$6,000
 $6,000
2018 Term Loan Facility (defined below)20,000
 20,000
Equipment financing loan5,000
 5,000
Debt issuance costs(553) (612)
Total debt outstanding$30,447
 $30,388
Less: current portion of long-term debt—
 —
Long-term debt$30,447
 $30,388
days is greater than or equal to 130% of the conversion price, during the 30 days consecutive trading days ending on the last trading day of a calendar quarter.
Before December 15, 2026, noteholders have the right to convert their Notes upon the occurrence of certain events. From and after December 15, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company has the right to elect to settle conversions either in cash, shares or in a combination of cash and shares of its common stock. However, upon conversion of any Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 20 trading days, will be paid in cash up to at least the principal amount of the Notes being converted.
The Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after March 20, 2024 and on or before the 20th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Note for redemption will constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.
The Company recordsmust repay the note principal in cash, but may elect to settle the conversion value either in cash, shares or in a combination of cash and shares of its common stock.
If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to limited exceptions, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.
The Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of special interest and additional interest on the Notes, are subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $100 million; and (vi) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries.
In the event of the Company’s liquidation, dissolution or winding up, holders of the Company’s common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of the Company’s debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.
19
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Holders of the Company’s common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to the Company’s common stock. The rights, preferences and privileges of the holders of the Company’s common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that the Company may designate in the future.
If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and any accrued and unpaid special interest and additional interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, may declare the principal amount of, and any accrued and unpaid special interest and additional interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 365 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes.
The total amount of debt issuance costs of $23.6 million was recorded as a reduction of carrying value of the debtto “Convertible senior notes, net” in the accompanying condensed consolidated balance sheets. Debt issuance costs, net of amortization, totaled $0.6 million as of March 30, 2019sheet and December 31, 2018. Debt issuance costs are being amortized as interest expense over the term of the loan for which amortization of $58,000 and $9,000 was recorded duringNotes using the effective interest method. During the three and six months ended March 30, 2019 and March 31, 2018, respectively.

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

Amended and Restated Loan and Security Agreement
In June 2018,July 3, 2021, the Company refinanced its then existing revolving credit facility and term loan facility under a loan and security agreement with Silicon Valley Bank (“SVB”) (the “Amended LSA”). The Amended LSA includes a $6.0 million revolving credit facility (the “2018 Revolving Credit Facility”) and a term loan facility (the “2018 Term Loan Facility”) comprised of (i) a $10.0 million term loan advance at closing, (ii) a conditional $5.0 million term loan advance, if no event of default has occurred and is continuing through the borrowing date, and (iii) an additional conditional term loan advance of $5.0 million if no event of default has occurred and is continuing based upon a minimum level of gross profit for the trailing 12-month period. The 2018 Term Loan Facility has a floating interest rate that is equal to 4.0% above the prime rate, with interest payable monthly and principal amortizing commencing on January 1, 2020, and will mature in June 2022. Borrowings under the 2018 Revolving Credit Facility carry a variable annual interest rate of prime rate plus 0.75% to 1.25% with an additional 5% on the outstanding balances in the event of a default. The 2018 Revolving Credit Facility matures in June 2020.
The 2018 Term Loan Facility and the 2018 Revolving Credit Facility (the “SVB Credit Facilities,”) contain customary negative covenants that limit the Company’s ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or consolidate. The SVB Credit Facilities are secured by a blanket lien on all of the Company’s personal property assets. The SVB Credit Facilities also contain customary affirmative covenants, including delivery of audited financial statements. The Company was in compliance with the covenants in the SVB Credit Facilities as of March 30, 2019.
As of March 30, 2019 and December 31, 2018, the Company had $6.0recognized $1.0 million and $20.0$1.3 million, in borrowings on the 2018 Revolving Credit Facility and 2018 Term Loan Facility, respectively, and had no availability to borrow under either of these loan facilities. In the three months ended March 30, 2019 and March 30, 2018, the Company incurred $0.6 million and $18,000 in interest expense related to the SVB credit facilities. The interest rates on the 2018 Revolving Credit Facility and the 2018 Term Loan Facility at March 30, 2019 were 6.25% and 9.50%, respectively.
Equipment Loan Facility
The Company had $5.0 million in borrowings outstanding as of March 30, 2019 and December 31, 2018 under the equipment loan facility. The interest rate on the equipment loan facility at March 30, 2019 and December 31, 2018 was 11.75% and 11.5%, respectively. For the three months ended March 30, 2019 and March 31, 2018, the Company recorded $0.1 million and $0, respectively, in interest expense related to the equipment loan facility.
Warrant Liabilities
In connection with its financing arrangements, the Company has issued warrants to purchase shares of its convertible preferred stock. For oneamortization of the financing arrangements,debt issuance costs related to the Company issued warrants to purchase 121,694 sharesNotes. There was 0 such expense in the three and six months ended June 27, 2020.
The following is a summary of Series B convertible preferred stockthe Company’s Notes as of July 3, 2021:
(in thousands)Principal AmountUnamortized Issuance CostsNet Carrying AmountFair Value
AmountLeveling
0% Convertible senior notes due on March 15, 2027$1,150,000$22,293$1,127,707$1,155,750Level 2
The Notes are carried at an exerciseface value less the unamortized debt issuance costs on the Company’s condensed consolidated balance sheets. As of July 3, 2021, the estimated fair value of the Notes was approximately $1.2 billion. The Notes are quoted on the Intercontinental Exchange and are classified as Level 2 financial instruments. The estimated fair value of the Notes was determined based on the actual bid price of $1.07 per share. For a separate financing arrangement, the Company issued warrants to purchase 39,073 sharesNotes on July 2, 2021, the last business day of Series E convertible preferred stock at an exercise pricethe period.
As of $3.68 per share. InJuly 3, 2021, the remaining life of the Notes is approximately 5.7 years.
Capped Call Transactions
On March 2, 2021, in connection with the Company’s refinancingpricing of its credit facilities with SVB,the offering of the Convertible Notes, the Company issuedentered into capped call transactions (the “Base Capped Call Transactions”) with the option counterparties and used $73.0 million in net proceeds from the sale of the Convertible Notes to SVBfund the cost of the Base Capped Call Transactions. On March 12, 2021, in connection with the Additional Notes, the Company entered into capped call transactions (the “Additional Capped Call Transactions”) with the option counterparties and its affiliates warrantsused $11.0 million of the net proceeds from the sale of the Additional Notes to purchase anfund the cost of the Additional Capped Call Transactions. The Base Capped Call Transactions and the Additional Capped Call Transactions (collectively, the “Capped Call Transactions”) cover, subject to customary adjustments, the aggregate number of 60,002 shares of itsthe Company’s common stock at an exercise price of $3.00 per share. The warrants remained outstanding as of March 30, 2019that will initially underlie the Notes, and December 31, 2018. On May 6, 2019, upon the closing of the IPO, the warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for a total of 160,767 shares of common stock at the same respective exercise price per share. Subsequentare expected generally to reduce potential dilution to the closing of the IPO, all outstanding warrants to purchase shares ofCompany’s common stock were exercised. See Note 2 for further information on the warrant liabilities.

20
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
stock upon any conversion of Notes and/or offset any cash payments the Company may make in excess of the principal amount of the converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is $279.32, which represents a premium of 100% over the last reported sale price of the Company’s common stock on March 2, 2021. The aggregate $84.0 million paid for the Capped Call Transactions was recorded as a reduction to APIC.

Revolving Credit Facility
Note 7. Stockholders’ DeficitOn March 2, 2021, the Company terminated its secured revolving credit agreement, dated as of April 21, 2020 (the “Credit Agreement”), among the Company, as borrower, the lenders party thereto and Convertible Preferred StockJPMorgan Chase Bank, N.A., as the administrative agent, and in connection with such termination: (i) all borrowings outstanding under the Credit Agreement were repaid in full by the Company; and (ii) all liens and security interests under the Credit Agreement in favor of the lenders thereunder were released.
The Company recorded debt issuance costs on the revolving credit facility in “Prepaid and other non-current assets, net” in the accompanying condensed consolidated balance sheet. Debt issuance costs associated with the revolving credit facility were amortized as interest expense over the term of the loan. In the three and six months ended July 3, 2021, debt issuance costs of $0 and $41,000, respectively, related to the Company’s prior revolving credit facility were amortized to interest expense. In the three and six months ended June 27, 2020, debt issuance costs of $57,000 and $93,000, respectively, related to the Company’s prior revolving credit facility and equipment loan were amortized to interest expense.
In the three months ended July 3, 2021 and June 27, 2020, the Company incurred $0 and $0.4 million, respectively, in interest expense related to its bank credit facilities. In the six months ended July 3, 2021 and June 27, 2020, the Company incurred $0.3 million and $0.9 million, respectively, in interest expense related to its bank credit facilities. In the three and six months ended June 27, 2020, the Company incurred $0.1 million and $0.2 million, respectively, in interest expense related to its equipment loan facility, which was terminated on April 21, 2020.
As of December 31, 2020, the Company had $25.0 million in outstanding borrowings and had no excess availability under the revolving credit facility. On February 25, 2021, the Company paid down the outstanding borrowings and had 0 borrowings outstanding under the revolving credit facility. The revolving credit facility was terminated on March 30, 2019,2, 2021. Upon termination of the revolving credit facility, unamortized debt issuance costs of $1.0 million associated with the revolving credit facility were written off as “Loss on extinguishment of debt,” which is included in “Other, net” in the condensed consolidated statement of operations.
Concurrent with the Company’s execution of the campus headquarters lease, as a security deposit, the Company delivered to the landlord a letter of credit under the revolving credit facility in the amount of $12.5 million. Upon termination of the revolving credit facility, the letter of credit continued in effect, unsecured.
Note 8. Stockholders’ Equity
As of July 3, 2021, the Company’s shares consisted of 60,000,000500,000,000 authorized shares of common stock, par value $0.0001 per share, of which 7,120,93363,243,498 shares of common stock were issued and outstanding, and 43,882,867500,000 authorized shares of preferred stock, par value $0.0001 per share, of which 3,333,5000 shares of Series A Preferred Stock, 4,680,565 shares of Series B Preferred Stock, 8,076,636 shares of Series C Preferred Stock, 8,713,201 shares of Series D Preferred Stock, 4,701,449 shares of Series E Preferred Stock, 4,866,758 shares of Series F Preferred Stock, 5,114,786 shares of Series G Preferred Stock and 2,075,216 shares of Series H Preferred Stock were issued and outstanding.
Upon the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock automatically converted into 41,562,111 shares of common stock on a one-for-one basis. On May 6, 2019, the Company filed an Amended and Restated Certificate of Incorporation authorizing the Company to issue 500,000,000 shares of common stock, $0.0001 par value per share, and 500,000 shares of undesignated preferred stock, $0.0001 par value per share with rights and preferences determined by the Company’s Board of Directors at the time of issuance of such shares.
As of December 31, 2018,2020, the Company’s shares consisted of 58,669,600500,000,000 authorized shares of common stock, par value $0.0001 per share, of which 6,951,35062,820,351 shares were issued and outstanding, and 43,882,867500,000 authorized shares of preferred stock, par value $0.0001 per share, of which 3,333,5000 shares of Series A Preferred Stock, 4,680,565 shares of Series B Preferred Stock, 8,076,636 shares of Series C Preferred Stock, 8,713,201 shares of Series D Preferred Stock, 4,701,449 shares of Series E Preferred Stock, 4,866,758 shares of Series F Preferred Stock, 5,114,786 shares of Series G Preferred Stock and 2,075,216 shares of Series H Preferred Stock were issued and outstanding.
The Company has not declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock.

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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Note 8.9. Share-Based Compensation
On April 11, 2011,In 2019, the Company’s stockholders approved the 2011 Equity Incentive Plan (“2011 Plan”), and most recently amended the 2011 Plan on April 10, 2019. The 2011 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock and restricted stock unit awards to eligible participants. Eligible participants are employees, directors and consultants. As of March 30, 2019, there were 9,462,455 shares of common stock authorized for issuance under the 2011 Plan.
The 2011 Plan was amended, restated and re-named the 2018 Equity Incentive Plan (“2018(the “2018 Plan”), which became effective as of April 30, 2019,and the day priorremaining shares available for issuance under the 2011 Plan were added to the effectivenessshares reserved for issuance under the 2018 Plan. As of January 1, 2021, the registration statement filed in connection with the IPO. The 2018 Plan provides for the grant of stock options (including incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares to the Company’s employees, directors, and consultants. The maximum aggregate number of shares that may be issued under the 2018 Plan is 14,482,356increased to 18,771,398 shares, which includes an increase of 2,144,521 shares effective January 1, 2021 under the terms of the Company’s common stock. In addition,2018 Plan.
The following table summarizes the number of shares reservedavailable for issuancegrant under the 2018 Plan will be increased automatically on the first day of each fiscal year beginning with the 2020 fiscal year, by a number equal to the least of: (i) 2,144,521 shares; (ii) 4.0% of the shares of common stock outstanding on the last day of the prior fiscal year; or (iii) such number of shares determined by the Company’s Board of Directors.Plan:
The 2018 Plan may be amended, suspended or terminated by the Company’s Board of Directors at any time, provided such action does not impair the existing rights of any participant, subject to stockholder approval of any amendment to the 2018 Plan as required by applicable law or listing

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)
Shares Available for Grant
Balance - December 31, 20205,021,270 
Authorized2,144,521 
Granted(225,184)
Shares withheld to cover taxes13,109 
Forfeited88,156 
Balance - July 3, 20217,041,872 

requirements. Unless sooner terminated by the Company’s Board of Directors, the 2018 Plan will automatically terminate on November 14, 2028.
As of March 30, 2019July 3, 2021 and December 31, 2018,2020, there were 4,900,3283,892,262 and 5,120,2934,218,278 shares, respectively, issuable under stock options outstanding, 4,504,914outstanding; 303,392 and 4,335,331275,989 shares, respectively, issuable under unvested RSUs outstanding; 7,561,863 and 7,127,079 shares, respectively, issued for stock option exercises, RSU settlement, and restricted stock grants,grants; and 57,2137,041,872 and 6,8595,021,270 shares, respectively, available for grant under the 20112018 Plan.
As of March 30, 2019, there were 4,577,114 shares of common stock reserved for future grant or issuance under the 2018 Plan, from which (i) options to purchase 264,033 shares of common stock were granted on April 3, 2019, having an exercise price of $20.02 per share, (ii) options to purchase (A) 1,000,000 shares of common stock were granted on April 18, 2019, (B) 51,999 shares of common stock were granted on April 29, 2019, and (C) 50,000 shares of common stock were granted on May 1, 2019, in each case to be effective upon and subject to the effectiveness of the registration statement relating to the Company’s IPO and having an exercise price equal to the IPO price of $25.00 per share, and (iii) awards covering 99,433 shares of restricted stock were granted on April 18, 2019 at a purchase price of $0.01 per share and which will be issued upon payment of the purchase price.
Stock Options
No stock option grants were awardedFollowing are the assumptions used in the Black-Scholes valuation model for options granted during the periods shown below:
Three Months EndedSix Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Risk-free interest rate1.3%0.5%1.3%0.7%
Average expected term (years)7.07.07.07.0
Expected volatility74.0%55.0%72.8%55.0%
Dividend yield0000

Option grants to new employees in the six months ended July 3, 2021 and June 27, 2020 generally vest 25% of the total award on the first anniversary of the vesting commencement date, and thereafter vest monthly over the remaining 3-year period, subject to continued employment through the vesting date. Option grants to continuing employees in the six months ended July 3, 2021 and June 27, 2020 generally vest monthly over a 48-month period, subject to continued employment through the vesting date. An option grant to one executive officer in the six months ended July 3, 2021 vested over three months ended March 30, 2019.from the vesting commencement date.
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
The following table summarizes the Company’s stock option activity during the threesix months ended March 30, 2019:July 3, 2021:
 Number
of
Stock
Options		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual
Life (Years)		 
Aggregate
Intrinsic
Value (in thousands)(1)
Outstanding at December 31, 20185,120,293
 $3.13
 7.3 $81,371
Granted—
 $—
 — $—
Exercised(169,583) $2.16
 — $2,859
Cancelled/Forfeited(50,382) $4.34
 — $—
Outstanding at March 30, 20194,900,328
 $3.15
 7.0 $80,076
Vested and exercisable at March 30, 20192,981,633
 $1.11
 5.9 $54,793
Vested and expected to vest at March 30, 20193,967,483
 $2.16
 5.9 $68,759
Number
of
Stock
Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value (in thousands)(1)
Outstanding at December 31, 20204,218,278 $21.20 6.6$443,595 
Granted107,614 $136.91 —$— 
Exercised(370,884)$17.50 —$42,141 
Cancelled/Forfeited(62,746)$38.16 —$— 
Outstanding at July 3, 20213,892,262 $24.47 6.1$494,019 
Vested and exercisable at July 3, 20212,755,956 $12.03 5.3$383,659 
Vested and expected to vest at July 3, 20213,657,335 $21.04 6.0$476,710 
__________
(1) Aggregate intrinsic value is calculated as the difference between the value of common stock on the transaction date and the exercise price multiplied by the number of shares issuable under the stock option. Aggregate intrinsic value of shares outstanding at the beginning and end of the reporting period is calculated as the difference between the value of common stock on the beginning and end dates, respectively, and the exercise price multiplied by the number of shares outstanding.
During the three months ended March 30, 2019July 3, 2021 and March 31, 2018,June 27, 2020, the Company recorded in aggregate $0.6$3.7 million and $0.2$3.6 million, respectively, of share-based compensation expense related to options issuedoptions. During the six months ended July 3, 2021 and June 27, 2020, the Company recorded $7.1 million and $6.6 million, respectively, of share-based compensation expense related to employees and nonemployees.options. The share-based compensation expense is included in cost of goods sold, research and development expenses and SG&A expenses in the Company’s condensed consolidated statements of operations.
As of March 30, 2019 and December 31, 2018,July 3, 2021, there was $2.3 million and $2.4$19.3 million in unrecognized compensation expense related to nonvested stock option awards which is expected to be recognized over 2.7a weighted average period of 1.7 years.
Restricted Stock Units
RSU grants to new employees in the six months ended July 3, 2021 and June 27, 2020 vest 25% of the total award on the first anniversary of the vesting commencement date, and thereafter vest quarterly over the remaining 3 years of the award, subject to continued employment through the vesting date. RSU grants in the six months ended July 3, 2021 include fully vested RSUs granted to an executive officer issued in settlement of the obligation discussed below under Share-Settled Obligation. An RSU grant to one executive officer in the six months ended July 3, 2021 vested 100% over three months from the vesting commencement date. RSU grants to continuing employees in the six months ended July 3, 2021 and 2.9 years, respectively.June 27, 2020 generally vest quarterly over 16 quarters, subject to continued employment through the vesting date. An RSU grant to one executive officer in the six months ended July 3, 2021 vests quarterly over four quarters, subject to continued employment through the vesting date. Annual RSU grants to directors on the Company’s Board of Directors (the “Board”) vest monthly over a one year period and RSU grants to new directors on the Board vest monthly over a three year period. RSU grants to nonemployee brand ambassadors in the six months ended July 3, 2021 vest quarterly over four quarters from the vesting commencement date, subject to continued service through the vesting date. RSU grants to consultants in the six months ended June 27, 2020 vest quarterly over eight quarters from the vesting commencement date, subject to continued service through the vesting date.

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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
The following table summarizes the Company’s RSU activity during the six months ended July 3, 2021:
Number of UnitsWeighted
Average
Grant Date Fair Value Per Unit
Unvested at December 31, 2020275,989 $114.99 
Granted117,570 $125.41 
Vested(1)
(64,757)$121.00 
Cancelled/Forfeited(25,410)$0 
Unvested at July 3, 2021303,392 $118.17 
________
(1) Includes 13,109 shares of common stock that were withheld to cover taxes on the release of vested RSUs and became available for future grants pursuant to the 2018 Plan.

During the three months ended July 3, 2021 and June 27, 2020, the Company recorded $3.3 million and $2.7 million, respectively, of share-based compensation expense related to RSUs. During the six months ended July 3, 2021 and June 27, 2020, the Company recorded $6.3 million and $4.3 million, respectively, of share-based compensation expense related to RSUs. The share-based compensation expense is included in cost of goods sold, research and development expenses and SG&A expenses in the Company’s condensed consolidated statements of operations.
As of July 3, 2021, there was $18.9 million in unrecognized compensation expense related to unvested RSUs which is expected to be recognized over a weighted average period of 1.6 years.
Share-Settled Obligation
Share-based compensation expense in the three months ended July 3, 2021 and June 27, 2020 includes $0.8 million and $0.9 million, respectively, for a liability classified, share-settled obligation to an executive officer related to a sign-on award pursuant to the terms of the executive officer’s offer letter. Share-based compensation expense in the six months ended July 3, 2021 and June 27, 2020 includes $1.6 million and $1.8 million, respectively, for a liability classified, share-settled obligation to an executive officer related to a sign-on award pursuant to the terms of the executive officer’s offer letter. The share-based compensation expense related to this share-settled obligation is included in SG&A expenses in the Company’s condensed consolidated statements of operations.
The Company is obligated to deliver a variable number of shares based on a fixed monetary amount on the first annual anniversary of the executive officer’s commencement date and on each quarterly anniversary thereafter through the second annual anniversary. The liability classified award is considered unearned until the requirements for issuance of the shares are met and is included in “Accrued expenses and other current liabilities” on the Company’s condensed consolidated balance sheets as of July 3, 2021 and December 31, 2020 in the amount of $1.0 million. As of July 3, 2021, there was $0.7 million in unrecognized compensation expense related to this share-settled obligation which is expected to be recognized over approximately 0.2 years.
In the first six months of 2021, two quarterly tranches related to this obligation were earned, and the Company delivered to this executive officer 13,804 fully vested RSUs with a settlement date fair value of $1.6 million.
24
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)

Restricted Stock to Nonemployees
In October 2018, the Company’s Board of Directors approved the issuance of 135,791 shares of restricted stock with a fair value of $17.03 per share and a purchase price of $0.02 per share to nonemployees serving as the Company’s brand ambassadors. The Company has the right to repurchase the unvested shares upon a voluntary or involuntary termination of a brand ambassador’s service; however, as shares vest monthly over 12 to 24 months, they are being released from the repurchase option (and all such shares will be released from the repurchase option by November 1, 2020).
The following table summarizes the Company’s restricted stock activity during the threesix months ended March 30, 2019:July 3, 2021:
Number
of Shares of
Restricted Stock		Weighted
Average
Remaining
Contractual
Life (Years)		Weighted
Average
Grant Date
Fair Value
Per Share
Unvested at December 31, 202012,184 0.3$20.02 
Granted0 —$0 
Vested/Released(12,184)—$20.02 
Cancelled/Forfeited0 —$0 
Unvested at July 3, 20210 —$0 
 Number
of Shares of
Restricted Stock		 Weighted
Average
Remaining
Contractual
Life (Years)		 
Weighted
Average
Grant Date
Fair Value
Per Share
Outstanding at December 31, 2018100,127
 1.6 $17.03
Granted—
 — $—
Vested/Released(12,946) — $—
Cancelled/Forfeited—
 — $—
Outstanding at March 30, 201987,181
 1.4 $17.03

As of July 3, 2021, 0 shares of restricted stock that had been purchased by nonemployee brand ambassadors remained subject to vesting requirements and repurchase pursuant to restricted stock purchase agreements.
During the three months ended March 30, 2019,July 3, 2021 and June 27, 2020, the Company recorded in aggregate $0.3$34,000 and $0.4 million, inrespectively, of share-based compensation expense related to restricted stock issued to nonemployee brand ambassadors, which is included in SG&A expenses in the Company’s condensed consolidated statements of operations.
During the six months ended July 3, 2021 and June 27, 2020, the Company recorded $0.2 million and $0.8 million, respectively, of share-based compensation expense related to restricted stock issued to nonemployee brand ambassadors, which is included in SG&A expenses in the Company’s condensed consolidated statements of operations.
As of March 30, 2019,July 3, 2021, there was $1.4 million in0 unrecognized compensation expense related to nonvestedunvested restricted stock which is expectedgranted to be recognized over 1.4 years.
In April 2019, the Company’s Board of Directors approved the issuance of 99,433 shares of restricted stock with a fair value of $20.02 per share and a purchase price of $0.02 per share to nonemployees serving as the Company’snonemployee brand ambassadors. The Company has the right to repurchase the unvested shares upon a voluntary or involuntary termination of a brand ambassador’s service; however, as shares vest monthly over 24 months, they are being released from the repurchase option (and all such shares will be released from the repurchase option by May 18, 2021).
Employee stock purchase planStock Purchase Plan
On November 15, 2018,As of July 3, 2021, the Company’s Boardmaximum aggregate number of Directors adopted itsshares that may be issued under the 2018 Employee Stock Purchase Plan (“2018 ESPP”(the “ESPP”), which was subsequently approved by the Company’s stockholders and became effective on April 30, 2019, the day immediately prior to the effectiveness of the registration statement filed in connection with the IPO. The 2018 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code (the “Code”) for U.S. employees. In addition, the 2018 ESPP authorizes grants of purchase rights that do not comply with Section 423 of the Code under a separate non-423 component for non-U.S. employees and certain non-U.S. service providers. The Company has reserved 804,1951,876,455 shares of common stock, for issuanceincluding an increase of 536,130 shares effective January 1, 2021 under the 2018 ESPP. In addition, the number of shares reserved for issuance under the 2018 ESPP will be increased automatically on the first day of each fiscal year for a period of up to ten years, starting with the 2020 fiscal year, by a number equal to the least of: (i) 536,130 shares; (ii) 1%terms of the shares of common stock outstanding on the last day of the prior fiscal year; or (iii) such lesser number of shares determined by the Company’s Board of Directors.ESPP. The 2018 ESPP is expected to be implemented through a series of offerings under which participants are granted purchase rights to purchase shares of the Company’s

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

common stock on specified dates during such offerings. The administrator has not yet approved an offering under the 2018 ESPP.
Note 9.10. Commitments and Contingencies
Leases
Effective March 1, 2019,On January 14, 2021, the Company entered into a lease for its principal executiveLease (the “Campus Lease”) with HC Hornet Way, LLC, a Delaware limited liability company (the “Landlord”), to house the Company’s headquarters offices, lab and innovation space in El Segundo, California, for anCalifornia. The initial term of 5the Campus Lease is 12 years, commencing on the earlier of 210 days following substantial completion of the base building by the Landlord or the date the Company occupies any portion of the Premises (other than Phase I-A) for purposes of conducting business operations therein, subject to adjustment as provided in the Campus Lease. The Company has 2 renewal options, each for a period of five years. The
25
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Under the terms of the Campus Lease, the Company will lease an aggregate lease amountof approximately 281,110 rentable square feet in a portion of a building located at 888 Douglas Street, El Segundo, California (the “Premises”), to be built out by the Landlord and delivered to the Company in three phases over a 26-month period. Aggregate payments towards base rent for the five-yearPremises over the term of the lease will be approximately $159.3 million.
Although the Company is $2.7 million.involved in the design of the tenant improvements of the Premises, the Company does not have title or possession of the assets during construction. In addition, the Company does not have the ability to control the leased Premises until each phase of the tenant improvements is complete. As of July 3, 2021, the tenant improvements associated with Phase 1-A had not been completed, and the underlying asset had not been delivered to the Company. Accordingly, there was no lease commencement during the quarter ended July 3, 2021. Therefore, the Company has not recognized an asset or a liability for the Campus Lease in its condensed consolidated balance sheet as of July 3, 2021. The future minimumCompany contributed $26.6 million in payments to a construction escrow account during the second quarter of 2021. These payments are recorded in “Prepaid lease payments requiredcosts, non-current” in the Company’s condensed consolidated balance sheet as of July 3, 2021, which will ultimately be recorded as a component of a right-of-use asset upon lease commencement. The Company anticipates further contributions as the Landlord continues to build out the Premises and anticipates that Phase-1A will be completed and the lease commencement date will occur during the fourth quarter of 2021 or the first quarter of 2022.
Concurrent with the Company’s execution of the Campus Lease, as a security deposit, the Company delivered to the Landlord a letter of credit in the amount of $12.5 million which amount will decrease to: (i) $6.3 million on the fifth (5th) anniversary of the Rent Commencement Date (as defined in the Campus Lease); (ii) $3.1 million on the eighth (8th) anniversary of the Rent Commencement Date; and (iii) $0 in the event the Company receives certain credit ratings; provided the Company is not then in default of its obligations under noncancelable leasethe Campus Lease. Upon termination of the revolving credit facility, the letter of credit continued in effect, unsecured.
China Investment and Lease Agreement

On September 22, 2020, the Company and BYND JX entered into an investment agreement with the Administrative Committee (the “JX Committee”) of the Jiaxing Economic & Technological Development Zone (the “JXEDZ”) pursuant to which, among other things, BYND JX has agreed to make certain investments in the JXEDZ in two phases of development, and the Company has agreed to guarantee certain repayment obligations of BYND JX under such agreement. In the second quarter of 2021, the Company received $0.2 million in subsidies related to thisits investment in BYND JX from the Jiaxing Economic Development Zone Finance Bureau which is recorded in “Other, net” in the Company’s condensed consolidated statement of operations.
During Phase 1, the Company has agreed to invest $10.0 million in the JXEDZ through an intercompany investment in BYND JX and BYND JX has agreed to lease are $2.6a facility in the JXEDZ for a minimum of two (2) years. In connection with such agreement, BYND JX entered into a factory leasing contract with an affiliate of the JX Committee, pursuant to which BYND JX has agreed to lease and renovate a facility in the JXEDZ and lease it for a minimum of two (2) years. In the event that the Company and BYND JX determine, in their sole discretion, to proceed with the Phase 2 development in the JXEDZ, BYND JX has agreed in the first stage of Phase 2 to increase its registered capital by $30.0 million due through 2023 (approximately $0.5 million annually) and $0.1 million thereafter.to acquire the land use right to a state-owned land plot in the JXEDZ to conduct development and construction of a new production facility. Following the first stage of Phase 2, the Company and BYND JX may determine, in their sole discretion, to permit BYND JX to obtain a second state-owned land plot in the JXEDZ in order to construct an additional facility thereon.
26
BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Purchase Commitments
As of March 30, 2019,July 3, 2021, the Company had committeda commitment to purchase pea protein inventory totaling $46.1$124.1 million,. approximately $44.9 million in the remainder of 2021 and $79.2 million in 2022. In addition, as of July 3, 2021, the Company had approximately $62.3 million in purchase order commitments for capital expenditures primarily to purchase machinery and equipment. Payments for these purchases will be due within 12 months from July 3, 2021.
Litigation
Don Lee Farms
On May 25, 2017, Don Lee Farms, a former co-manufacturerdivision of the CompanyGoodman Food Products, Inc., filed a complaint against the Company in the Superior Court of the State of California for the County of Los Angeles asserting claims for (1) breach of contract, (2) misappropriation of trade secrets, (3) unfair competition under the California Business &and Professions Code, Section 17200 Et. Seq., (4) money owed and due, (5) declaratory relief and (6) injunctive relief, each arising out of the Company’s decision to terminate an exclusive supply agreement dated December 2, 2014 between the Company and the former co-manufacturer, pursuant to its terms (see Note 3).Don Lee Farms. The Company deniesdenied all of these claims and filed counter-claimscounterclaims on July 27, 2017, alleging (1) breach of contract, (2) unfair competition under the California Business &and Professions Code Section 17200 Et. Seq., and (3) conversion, and is in the process of litigating this matter.
conversion. In October 2018, the former co-manufacturer filed an amended complaint that added one of the Company’s then current contract manufacturers as a defendant, principally for claims arising from the then current contract manufacturer’s alleged use of the former co-manufacturer’s alleged trade secrets, and for replacing the former co-manufacturer as one of the Company’s current co-manufacturers. The then current co-manufacturercontract manufacturer filed an answer denying all of the former co-manufacturer’sDon Lee Farms’ claims and a cross-complaint against Beyond Meat asserting claims of total and partial equitable indemnity, contribution, and repayment. On March 11, 2019, the former co-manufacturerDon Lee Farms filed a second amended complaint to add claims of fraud and negligent misrepresentation against the Company. On May 30, 2019, the judge denied the Company’s motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to proceed. AOn June 19, 2019, the Company filed an answer denying Don Lee Farms' claims.
On January 24, 2020, a writ judge granted Don Lee Farms a right to attach in the amount of $628,689 on the grounds that Don Lee Farms had established a “probable validity” of its claim that Beyond Meat owes Don Lee Farms money for a small batch of unpaid invoices. This determination was not made by the trial judge. The trial judge has yet to determine the legitimacy or merits of Don Lee Farms’ claims.
On January 27, 2020, Don Lee Farms filed a third amended complaint to add 3 individual defendants, all of whom are current or former employees of the Company, including Mark Nelson, the Company’s former Chief Financial Officer and Treasurer, to Don Lee Farms’ existing fraud claims alleging that those individuals were involved in the alleged fraudulent misrepresentations. On June 23, 2020, the judge denied Beyond Meat and the individual defendants’ motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to proceed. On July 6, 2020, the Company and the individual defendants filed an answer denying all of Don Lee Farms’ claims, including denying all allegations of fraud and negligent misrepresentation.
On August 11, 2020, the Company filed an amended cross-complaint against Don Lee Farms, its parent Goodman Food Products, Inc. and its owners and employees, Donald, Daniel, and Brandon Goodman. Among other claims, the amended cross-complaint alleges that Don Lee Farms defrauded Beyond Meat, misappropriated its trade secrets, and infringed its trademarks.
On January 28, 2021, Don Lee Farms filed a motion for summary adjudication on its breach of contract and money owed claims and on Beyond Meat’s breach of contract claims. On February 18, 2021, Don Lee Farms and Donald, Daniel and Brandon Goodman filed a motion for summary adjudication on Beyond Meat’s fraud, negligent misrepresentation, and conversion claims.
On February 16, 2021, the Court entered an order consolidating this action with an action that Don Lee Farms filed against CLW Foods, LLC, a current Beyond Meat contract manufacturer. On February 22, 2021, CLW Foods, LLC requested a continuance of the trial date, has beenwhich the Court granted.
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
On March 19, 2021, Don Lee Farms requested the dismissal, without prejudice, of Don Lee Farm’s claims against the Company’s former contract manufacturer, ProPortion Foods, LLC and current contract manufacturer CLW Foods, LLC. On, March 23, 2021, ProPortion Foods, LLC requested that its claims against the Company be dismissed without prejudice. On March 26, 2021, the Court granted Don Lee Farms’ request to dismiss its claims against ProPortion Foods, LLC and CLW Foods, LLC; and granted ProPortion Foods, LLC request to dismiss its claims against the Company.
On May 7, 2021, the Court ruled on Don Lee Farms’ motions for summary adjudication. The Court granted Don Lee Farms’ motion for summary adjudication on its breach of contract and money owed claims, and Beyond Meat’s negligent misrepresentation and conversion claims. The Court denied Don Lee Farms’ motion for summary adjudication on Beyond Meat’s breach of contract and fraud claims, allowing Beyond Meat’s claims to proceed to trial.
On June 11, 2021, former Beyond Meat employees Mark Nelson and Tony Miller, and current employee, Jessica Quetsch (collectively, the “individual defendants”), filed a motion for summary judgment on DLF’s fraud claim asserted against them. The individual defendants’ summary judgment hearing is currently scheduled for August 25, 2021. On June 11, 2021, the Company filed a motion for summary adjudication on DLF’s fraud and negligent misrepresentation claims, misappropriation of trade secret claim, and unfair competition claim under the California Business and Professions Code. The Company’s summary adjudication hearing is currently scheduled for August 27, 2021.
The previous trial date, June 14, 2021, was continued. Trial is currently set for May 18, 2020. At this timeSeptember 27, 2021.
Don Lee Farms is seeking from Beyond Meat and the individual defendants unspecified compensatory and punitive damages, declaratory and injunctive relief, including the prohibition of Beyond Meat’s use or disclosure of the alleged trade secrets, and attorneys’ fees and costs. The Company is seeking from Don Lee Farms monetary damages, restitution of monies paid to Don Lee Farms, injunctive relief, including the prohibition of Don Lee Farms’ use or disclosure of Beyond Meat’s trade secrets and the prohibition of Don Lee Farms’ infringing use of Beyond Meat’s trademarks, and attorneys’ fees and costs.
The Company believes it was justified in terminating the supply agreement with Don Lee Farms, that the Company did not misappropriate Don Lee Farms’ alleged trade secrets, that the Company is not liable for the fraud or negligent misrepresentation alleged in the third amended complaint, and that Don Lee Farms is liable for the conduct alleged in the Company’s amended cross-complaint. Conversely, as alleged in the Company’s amended cross-complaint, the Company believes Don Lee Farms misappropriated the Company’s trade secrets, defrauded the Company, and ultimately has infringed the Company’s trademarks.
The Company is currently in the process of litigating this matter and intends to vigorously defend itself and its current and former employees against the claims and to prosecute the Company’s own claims. The Company cannot assure you that Don Lee Farms will not prevail in all or some of their claims against the Company or the individual defendants, or that the Company will prevail in some or all of its claims against Don Lee Farms. For example, if Don Lee Farms succeeds in the lawsuit, the Company could be required to pay damages, including but not limited to contract damages reasonably estimatecalculated at what the potential liabilityCompany would have paid Don Lee Farms to produce the Company’s products through 2019, the end of the contract term, and Don Lee Farms could also claim some ownership in the intellectual property associated with the production of certain of the Company’s products or in the products themselves, and thus claim a stake in the value the Company has derived and will derive from the use of that intellectual property after the Company terminated its supply agreement with Don Lee Farms. Based on the Company’s current knowledge, the Company has determined that the amount of any material loss or range of any losses that is reasonably possible to result from this lawsuit is not estimable.
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Securities Related Litigation
On January 30, 2020, Larry Tran, a purported shareholder of Beyond Meat, filed a putative securities class action lawsuit in the United States District Court for the Central District of California against Beyond Meat and two of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and the Company’s former Chief Financial Officer and Treasurer, Mark Nelson. As noted in previous filings, the Tran securities class action was dismissed with prejudice on October 27, 2020, except for the class allegations of absent putative class members, which were dismissed without prejudice.
On March 16, 2020, Eric Weiner, a purported shareholder of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively on behalf of the Company, against 2 of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and the Company’s former Chief Financial Officer and Treasurer, Mark Nelson, and each of the Company’s directors, including one former director, who signed the Company’s initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust enrichment and waste of corporate assets, all relating to the Company’s ongoing litigation but believeswith Don Lee Farms, related actions taken by Beyond Meat and the finalnamed individuals during the period of May 2, 2019 to March 16, 2020, and the Tran securities case brought against the Company.
On March 18, 2020, Kimberly Brink and Melvyn Klein, purported shareholders of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively on behalf of the Company, against 2 of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and the Company’s former Chief Financial Officer and Treasurer, Mark Nelson, and each of the Company’s directors, including one former director, who signed the Company’s initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust enrichment and waste of corporate assets, all relating to the Company’s ongoing litigation with Don Lee Farms, related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 18, 2020, and the Tran securities case brought against the Company.
On April 1, 2020, the United States District Court for the Central District of California entered an order consolidating the Weiner action and the Brink action for all purposes and designated the consolidated case In re: Beyond Meat, Inc. Derivative Litigation (the “California Derivative Action”). On April 13, 2020, the Court entered an order appointing co-lead counsel for the California Derivative Action. On June 23, 2020, the Court entered an order approving a Joint Stipulation Regarding Stay of Actions. Under the terms of the stay approval order, all proceedings in the California Derivative Action are stayed until (1) the Tran securities class action is dismissed, with prejudice, and all appeals related thereto have been exhausted; or (2) any motion to dismiss the Tran securities class action is denied in whole or in part. On April 20, 2021, the parties filed a joint stipulation regarding briefing schedule, and the Court entered a schedule on April 21, 2021.
On May 24, 2021, the plaintiffs in the California Derivative Action filed a First Amended Complaint (“FAC”). The FAC names the same defendants named in the originally-filed consolidated complaint and adds four additional defendants, including ProPortion Foods, LLC (“ProPortion”) and CLW Foods, LLC (“CLW”). The FAC asserts claims under Section 14(a) of the Exchange Act, claims of breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement against the individual defendants, and aiding and abetting claims against CLW and ProPortion. All of these claims relate to the Company’s dealings and ongoing litigation with Don Lee Farms, and related actions taken by Beyond Meat and the named individuals during the period of April 2016 to the present. On July 2, 2021, the Court entered a Joint Stipulation Regarding Extension of Briefing Schedule so that the parties may attempt to reach resolution of the lawsuit. A status report is due to the Court on October 1, 2021, and defendants’ responsive pleading to the FAC is due by October 15, 2021. Defendants believe the claims are without merit and intend to vigorously defend all claims asserted. The Company is unable to estimate potential losses, if any, related to this lawsuit.
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
On May 27, 2020, Kevin Chew, a purported shareholder of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court of the District of Delaware, putatively on behalf of the Company, against 2 of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and the Company’s former Chief Financial Officer and Treasurer, Mark Nelson, and each of the Company’s directors, including one former director, who signed the Company’s initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act and claims of breaches of fiduciary duty, relating to the Company’s ongoing litigation will notwith Don Lee Farms, related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to May 27, 2020. On June 16, 2020, the Court entered an order staying all proceedings in the derivative action until (1) the Tran securities class action is dismissed, with prejudice, and all appeals related thereto have been exhausted; or (2) any motion to dismiss the Tran securities class action is denied in whole or in part. On June 17, 2020, the Court entered an order administratively closing the derivative case based on the stay order. On July 29, 2021, the Court entered a material adverse effectJoint Stipulation to Continue the Stay of the Action, staying the case until the resolution of the California Derivative Action. Defendants believe the claims are without merit and intend to vigorously defend all claims asserted. The Company is unable to estimate potential losses, if any, related to this lawsuit.
On June 17, 2020, James Janolek, a purported shareholder of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court of the District of Delaware, putatively on its financial position, resultsbehalf of operations, the Company, against 2 of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and the Company’s former Chief Financial Officer and Treasurer, Mark Nelson, and each of the Company’s directors, including one former director, who signed the Company’s initial public offering registration statement. The lawsuit asserts claims under Sections 14(a) and 20(a) of the Exchange Act, claims of breaches of fiduciary duty as directors and/or cash flows.officers of Beyond Meat, and claims of unjust enrichment and waste of corporate assets, all relating to the Company’s ongoing litigation with Don Lee Farms, related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to June 17, 2020. On July 10, 2020, the Court entered an order staying all proceedings in the derivative action until (1) the Tran securities class action is dismissed, with prejudice, and all appeals related thereto have been exhausted; or (2) any motion to dismiss the Tran securities class action is denied in whole or in part. On July 10, 2020, the Court entered an order administratively closing the derivative case based on the stay order. On November 9, 2020, Plaintiff filed a Notice of Voluntary Dismissal without prejudice and without costs or attorney fees to either party.
The Company is involved in various other legal proceedings, claims, and litigation arising in the ordinary course of business. Based on the facts currently available, the Company does not believe that the disposition of such matters that are pending or asserted will have a material effect on its financial statements.

Note 10.11. Income Taxes
For the three months ended March 30, 2019July 3, 2021 and March 31, 2018June 27, 2020, the Company recorded no$2,000 and $16,000, respectively, in income tax expense in its condensed consolidated statements of operations. For the six months ended July 3, 2021 and June 27, 2020, the Company recorded $50,000 and $15,000, respectively, in income tax expense in its condensed consolidated statements of operations.
The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements (continued)

than not that its net deferred tax assets will not be realized in the U.S. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against substantially all deferred tax assets. WhenIf the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets will be made and the adjustment would have the effect of increasing net income in the period such determination is made.
As of March 30, 2019,July 3, 2021, the Company does notdid 0t have any accrued interest or penalties related to uncertain tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
positions in income tax expense. The Company is subject to U.S. federal tax authority and U.S. state tax authority examinations for all years with respect to net operating loss and credit carryforwards.

In response to the COVID-19 pandemic, the United States passed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act in March 2020 and on March 11, 2021 the United States enacted the American Rescue Plan Act of 2021. These Acts include various income and payroll tax measures. The income tax and payroll tax measures did not materially impact the Company’s financial statements.
Note 11.12. Net Loss Per Share AttributableAvailable to Common Stockholders
The Company calculates basic and diluted net loss per share attributableavailable to common stockholders in conformity with the two-class method required for companies with participating securities. ThePursuant to ASU 2020-06, the Company considers all seriesapplies the more dilutive of convertible preferred stock issuedthe if-converted method and outstanding prior to the IPO to be participating securities. Under the two-class method the net loss attributable to common stockholders is not allocated to the convertible preferred stock as the holdersits Notes.
Computation of convertible preferred stock issued and outstanding prior to the IPO do not have a contractual obligation to share in losses.
The diluted net loss per share attributableavailable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposesthree and six months ended July 3, 2021 excludes the dilutive effect of this calculation,3,892,262 shares issuable under stock options to purchase common stock, common stock warrants and securities such as convertible preferred stock303,392 RSUs outstanding at July 3, 2021 because the Company incurred a net loss and convertible preferred stock warrants that were issued and outstanding before the Company’s IPO, are considered common stock equivalents but have been excluded from the calculationtheir inclusion would be anti-dilutive. Computation of diluted net loss per share attributableavailable to common stockholders for the three and six months ended July 3, 2021 also excludes adjustments under the two-class method relating to a liability classified, share-settled obligation to an executive officer to deliver a variable number of shares based on a fixed monetary amount (see Note 9) because the shares to be delivered are not participating securities as their effect is antidilutive. Basicthey do not have voting rights and dilutedare not entitled to participate in dividends until they are issued. Computation of net loss per share available to common stockholders for the three and six months ended July 3, 2021 also excludes the dilutive effect of the Notes because the Company recorded a net loss and their inclusion would be anti-dilutive. Computation of net loss per share wasavailable to common stockholders for the samethree and six months ended June 27, 2020 excludes the dilutive effect of 4,562,663 option shares and 287,439 RSUs because their inclusion would be anti-dilutive. Computation of net loss per share available to common stockholders for each period presented,the three and six months ended June 27, 2020 also excludes adjustments under the two-class method relating to a liability classified, share-settled obligation to an executive officer to deliver a variable number of shares based on a fixed monetary amount (see Note 9) because the shares to be delivered are not participating securities as the inclusion of all potential common shares outstanding wouldthey do not have been antidilutive.voting rights and are not entitled to participate in dividends until they are issued.
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(in thousands, except share and per share amounts) Three Months Ended
 March 30, 2019 March 31, 2018
Numerator:    
Net loss attributable to common stockholders $(6,649) $(5,696)
Denominator:    
Weighted average common shares outstanding—basic 6,974,301
 5,793,801
Dilutive effect of stock equivalents resulting from stock options, common stock warrants, preferred stock warrants and convertible preferred stock (as converted) —
 —
Weighted average common shares outstanding—diluted 6,974,301
 5,793,801
Net loss per common share—basic and diluted $(0.95) $(0.98)

BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
(in thousands, except share and per share amounts)Three Months EndedSix Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Numerator:
Net loss available to common stockholders$(19,652)$(10,205)$(46,918)$(8,390)
Undistributed net income available to unvested restricted stockholders0 0 0 0 
Net loss available to common stockholders—basic(19,652)(10,205)(46,918)(8,390)
Denominator:
Weighted average common shares outstanding—basic63,121,400 62,098,861 63,029,597 61,904,360 
Dilutive effect of shares issuable under stock options0 0 0 0 
Dilutive effect of RSUs0 0 0 0 
Dilutive effect of share-settled obligation0 0 0 0 
Dilutive effect of Notes, if converted(1)
0 0 0 0 
Weighted average common shares outstanding—diluted63,121,400 62,098,861 63,029,597 61,904,360 
Net loss per share available to common stockholders—basic$(0.31)$(0.16)$(0.74)$(0.14)
Net loss per share available to common stockholders—diluted$(0.31)$(0.16)$(0.74)$(0.14)
__________
(1) As the Company recorded net losses in the three and six months ended July 3, 2021, inclusion of shares from the conversion premium or spread would be anti-dilutive. The Company had 0 Notes outstanding during the three and six months ended June 27, 2020.
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BEYOND MEAT, INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements (continued)
Note 13. Subsequent Event

Subsequent to the quarter ended July 3, 2021, on July 15, 2021, the Company purchased 12.9 acres of real property in Columbia, Missouri containing approximately 142,317 square feet of office/warehouse space, from where the Company had been conducting warehousing activities under a lease, for cash consideration of $10.4 million, subject to adjustment for customary prorations, transfer taxes, escrow holdbacks and other adjustments. Transaction costs were not material. The following weighted-average outstanding sharesCompany has not completed its evaluation of common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholdersaccounting for the periods presented because the impact of including them would have been antidilutive:this transaction.
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  March 30, 2019 March 31, 2018
Convertible preferred stock (as converted) 41,562,111
 39,474,156
Preferred stock warrants (as converted to common stock warrants and subsequently exercised) 160,767
 160,767
Common stock warrants (as exercised) 60,002
 —
Total 41,782,880
 39,634,923




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors,” of our 2020 Form 10-K and Part II, Item 1A.1A, “Risk Factors” and “ Note“Note Regarding Forward-Looking Statements” included elsewhere in this report.report and those discussed in other documents we file from time to time with the SEC. The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this quarterly report and our audited consolidated financial statements and notes thereto included in our final prospectus dated May 1, 2019 (the “Prospectus”) that forms a part2020 10-K. Our historical results are not necessarily indicative of the results to be expected for any future periods and our Registration Statement on Form S-1 (File No. 333-228453), as filed withoperating results for the Securitiesthree and Exchange Commission (“SEC”) pursuantsix months ended July 3, 2021 are not necessarily indicative of the results to Rule 424 promulgated underbe expected for the Securities Act of 1933, as amended (the “Securities Act”), on May 3, 2019.fiscal year ending December 31, 2021 or for any other interim period or for any other future year or period.

Overview
Beyond Meat is one of the fastest growing food companies in the United States, offering a portfolio of revolutionary plant-based meats. We build meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional and environmental benefits of eating our plant-based meat products. Our brand commitment, “EatEat What You Love,” represents a strong belief that by eatingthere is a better way to feed our future and that the positive choices we all make, no matter how small, can have a great impact on our personal health and the health of our planet. By shifting from animal-based meat to plant-based meats, consumersmeat, we can enjoy more, not less, of their favorite meals, and by doing so help address concerns related topositively impact four growing global issues: human health, climate change, resource conservation,constraints on natural resources and animal welfare. The success of our breakthrough innovation model and products has allowed us to appeal to a broad range of consumers, including those who typically eat animal-based meats, positioning us to compete directly in the $1.4 trillion global meat industry.

We sell a range of plant-based products across the three main meat platforms of beef, pork and poultry. TheyAs of June 2021, our products were available at approximately 119,000 retail and foodservice outlets in more than 80 countries worldwide, across mainstream grocery, mass merchandiser, club store, convenience store, and natural retailer channels, direct to consumer, and various food-away-from-home channels, including restaurants, foodservice outlets and schools.
Our primary production facilities are offeredlocated in ready-to-cook formats (primarily merchandisedColumbia, Missouri, and Devault, Pennsylvania, and research and development and administrative offices are located in El Segundo, California. In addition to our own production facilities, we use co-manufacturers in various locations in the meat case),United States, Canada and the Netherlands. In the second quarter of 2020, we acquired our first manufacturing facility in Europe located in Enschede, the Netherlands. This facility completed operational testing of dry blend production in late 2020. In the second quarter of 2021, this facility completed commercial trial runs for dry blend production and began commercial trial runs for our extruded product which is expected to be completed by the end of the third quarter of 2021. In addition, in June 2020 we refer to asannounced the official opening of a new co-manufacturing facility, built by our “fresh” platform, and ready-to-heat formats (merchandiseddistributor in the freezer)Netherlands, to be used for Beyond Meat production. In the third quarter of 2020, we and BYND JX entered into an investment agreement and related factory leasing contract to design and develop manufacturing facilities in the Jiaxing Economic & Technological Development Zone to manufacture plant-based meat products under the Beyond Meat brand in China. Renovations in the leased facility were substantially completed and trial production began in the first quarter of 2021. In the second quarter of 2021, several commercial trials of certain of our manufacturing processes were completed. Full-scale end-to-end production is expected by the end of 2021.
On January 15, 2021, we entered into a 12-year lease with two 5-year renewal options to house our corporate headquarters, lab and innovation space in El Segundo, California. See Note 10, which we referCommitments and Contingencies, to as our “frozen” platform.the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
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On May 6, 2019,January 25, 2021, we completedentered into The PLANeT Partnership, LLC (“TPP”), a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack and beverage products made from plant-based protein. We believe TPP will allow us to reach more consumers by entering new product categories and distribution channels, increasing accessibility to plant-based protein around the world.
On March 5, 2021, we issued $1.0 billion aggregate principal amount of our 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 12, 2021, the initial public offering (“IPO”purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of the Company’s 0% Convertible Senior Notes due 2027 (the “Additional Notes”, and together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. The initial conversion price of the Notes is $206.00 per share of common stock, in which we sold 11,068,750 shares, including 1,443,750 sharesrepresents a premium of approximately 47.5% over the closing price of the Company’s common stock on March 2, 2021. The Notes will mature on March 15, 2027, unless earlier repurchased, redeemed or converted. The Notes were issued pursuant to, the underwriters’ over-allotment option. The shares began trading on the Nasdaq Global Select Market on May 2, 2019. The shares were sold atand are governed by, an IPO priceindenture (the “Indenture”), dated as of $25.00 per share forMarch 5, 2021, between us and U.S. Bank National Association, as trustee. We used $84.0 million of the net proceeds from the sale of the Notes to fund the cost of entering into capped call transactions, described below and intend to use the remainder of the net proceeds for general corporate purposes and working capital. The proceeds from the issuance of the Notes were approximately $252.5 million, after deducting underwriting discounts and commissions$1.0 billion, net of $19.4capped call transactions cost of $84.0 million and estimated offering expenses of approximately $4.8 million payable by us. Upondebt issuance costs totaling $23.6 million. See Note 7, Debt, to the closingNotes to Unaudited Condensed Consolidated Financial Statements elsewhere in this report.
On March 2, 2021, in connection with the pricing of the IPO, all outstandingoffering of the Convertible Notes, we entered into capped call transactions (the “Base Capped Call Transactions”) with the option counterparties and used $73.0 million in net proceeds from the sale of the Convertible Notes to fund the cost of the Base Capped Call Transactions. On March 12, 2021, in connection with the Additional Notes, we entered into capped call transactions (the “Additional Capped Call Transactions”) with the option counterparties and used $11.0 million in net proceeds from the sale of the Additional Notes to fund the cost of the Additional Capped Call Transactions. The Base Capped Call Transactions and the Additional Capped Call Transactions (collectively, the “Capped Call Transactions”) cover, subject to customary adjustments, the aggregate number of shares of our convertible preferredcommon stock automaticallythat will initially underlie the Notes, and are expected generally to reduce potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted into 41,562,111 sharesNotes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is $279.32, which represents a premium of 100% over the last reported sale price of the Company’s common stock on March 2, 2021. The aggregate $84.0 million paid for the Capped Call Transactions was recorded as a one-for-one basis,reduction to APIC.
The condensed consolidated financial statements for the period ended July 3, 2021 include the accounts of the Company and warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for 160,767 shares of common stock.its foreign subsidiaries, Beyond Meat EU B.V., BYND JX and Beyond Meat Canada Inc. All inter-company balances and transactions have been eliminated.
We operate on a fiscal calendar year, and each interim quarter is comprised of one 5-week period and two 4-week periods, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth fiscal quarters may have more or fewer days included than a traditional 91-day fiscal quarter.

Impact of COVID-19 on Our Business
The COVID-19 pandemic has had, and we expect will continue to have, certain negative impacts on our business. COVID-19 has led governments and other authorities around the world to implement significant measures intended to control the spread of the virus, including social distancing measures, business closures or restrictions on operations, quarantines and travel bans. While some of these restrictions were lifted or eased in many jurisdictions as the rates of COVID-19 infections have decreased or stabilized and various COVID-19 vaccines are being distributed, a resurgence of COVID-19 and the rising impact of various COVID-19 variants in some markets has slowed, halted or reversed the reopening process altogether.
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We have established a cross-functional task force that meets regularly and continually monitors and tracks relevant data, including guidance from local, national and international health agencies. This task force works closely with our senior leadership and is instrumental in making critical, timely decisions and is committed to continuing to communicate to our employees as more information is available to share. While our manufacturing facilities and our Manhattan Beach Project Innovation Center remained operational, beginning in March 2020 employees at our corporate headquarters began working remotely. Beginning in July 2021, our corporate employees returned to work and are provided a flexible working schedule of working in the office or from home depending on job responsibilities, company need and performance. At all facilities, we have implemented mandatory face coverings while indoors, comprehensive preventative hygienic measures to support the health and safety of our employees, a mandatory vaccine policy absent approved accommodations, and required weekly testing. At our manufacturing facilities, we have implemented a series of physical distancing and hygienic practices to further support the health and safety of our manufacturing employees. Travel and field marketing activities have resumed with instructions to adhere to COVID-19-related guidelines. All employees returning from international travel are required to quarantine for three days and provide a negative COVID-19 certificate 24 hours prior to returning onsite. Illness prevention policies have been updated company-wide to state that no employee may be onsite when experiencing any symptom of illness. Employees must remain home when sick and may not return onsite until symptom-free and must provide a negative COVID-19 certificate 24-hours prior to returning.
For the first half of 2021, we generated foodservice channel net revenues of $70.8 million compared to $54.9 million in the first half of 2020. Foodservice channel net revenues have been improving each successive quarter after the decline in the second quarter of 2020, and in the second quarter of 2021 they exceeded the level seen in the first quarter of 2020 by 6.0%. Foodservice channel net revenues in the second quarter of 2021 were $43.7 million as compared to $41.2 million in the first quarter of 2020, prior to COVID-19. Despite the apparent recovery in the foodservice channel compared to a year ago, we recognize that our anticipation of continued recovery in foodservice channel is based on the assumption that COVID-19 infection rates both in the U.S. and abroad will be reasonably contained. In response to the recent more virulent COVID-19 variants’ impact in some markets, new lockdowns, curfews and other restrictive measures are being imposed which have slowed, halted or reversed the reopening process altogether and may adversely impact the foodservice recovery. We continue to partner with our QSR and foodservice customers during this challenging environment and during the quarter continued to offer promotional programs to many of our foodservice partners to allow them to offer our products to consumers at reduced price points or on other promotional terms. The impacts of the ongoing COVID-19 pandemic also continue to result in delays in tests or launches of our products among our foodservice customers and negatively impact the rate of our growth. Excluding our sales to large QSR customers, our foodservice channel has broad exposure to certain outlets that have been disproportionately affected by COVID-19. These include, among others: amusement parks; academic institutions; hospitality; corporate catering services; movie theaters; sports arenas; and bars and pubs. As such, we continue to expect recovery in our foodservice channel net revenues to generally lag the broader foodservice sector. While we saw some improvement in demand in our foodservice business during the first half of 2021, amid relaxed stay-at-home orders in some states, the environment remains highly uncertain given the ongoing pandemic and the resurgence of COVID-19 and its variants.
For the first half of 2021, we generated retail channel net revenues of $186.8 million, representing an increase of 20.1% as compared to the first half of 2020. The increase in our net revenues in the retail channel during the first half of 2021, as compared to the prior-year period, was primarily driven by our expansion in total retail outlets and new product introductions. In the second quarter of 2021, retail channel net revenues increased $6.1 million, or 6.2%, as compared to the second quarter of 2020, when we experienced a surge in retail demand amid panic buying in response to COVID-19.
For the six months ended July 3, 2021, our retail and foodservice channels accounted for approximately 72.5% and 27.5% of our net revenues, respectively, as compared to approximately 73.9% and 26.1% of our net revenues, respectively, in the six months ended June 27, 2020. Although we experienced a recovery in foodservice channel net revenues in the first half of 2021, the resurgence of COVID-19 and its variants and the resulting changes in the marketplace are likely to continue to cause fluctuation in our quarterly results, including in the mix of our distribution channels.
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It is challenging to estimate the extent of the adverse impact of the COVID-19 pandemic on our results of operations due to continued uncertainty regarding the duration, magnitude and effects of the COVID-19 pandemic. While the ultimate health and economic impact of COVID-19 continues to be highly uncertain, we acknowledge that our business operations and results of operations, including our net revenues, gross profit, gross margin, earnings and cash flows, could be adversely impacted through 2021 and likely into 2022, including as a result of:
•weak demand in the foodservice channel due to the ongoing impact of COVID-19, including the resurgence of COVID-19 and its variants, despite the resumption of customer traffic in foodservice establishments;

•increased unit cost of goods sold due to lower production volumes in response to weaker demand, which would adversely impact coverage of fixed production costs within our manufacturing facilities;

•increased promotional programs and trade discounts to our retail and foodservice customers resulting in negative impacts on our gross margins;

•potential disruption to the supply chain caused by distribution and other logistical issues;
•potential disruption or closure of our facilities or those of our suppliers or co-manufacturers due to employee contraction of COVID-19;
•the timing and success of strategic partnership launches and resumption of any expansion plans for our product lines for those QSR customers who are in trial or test phase;
•reduced consumer confidence and consumer spending (including as a result of lower discretionary income due to unemployment or reduced or limited work as a result of measures taken in response to the pandemic), including spending to purchase our products; and negative trends in consumer purchasing patterns due to consumers’ disposable income, credit availability, debt levels and inflation;
•reduced confidence by our foodservice partners due to the resurgence of COVID-19 and its variants, as well as reimplementation of safety measures in certain jurisdictions and its potential impact on customer demand levels;
•further foodservice customer closures (including re-closures in connection with resurgences of COVID-19) or further reduced operations, as well as foodservice labor challenges;
•our ability to introduce new foodservice products as QSR and other partners look to simplify menu offerings as a result of the pandemic;
•uncertainty in the length of recovery time for the U.S. and world economies; and
•disruptions in our ability to expand to new international locations.
Future events and effects related to COVID-19 cannot be determined with precision and actual results could significantly differ from estimates or forecasts.
Environmental, Social and Governance
As a disruptive leader in the food industry, the Company has established itself as a leading producer of plant-based protein products that deliver a reduced environmental footprint and mitigate the social and welfare issues inherent to the production and consumption of animal protein. In order to continue that work and position itself as a leader in the integration of environmental and social change, the Company has committed to developing a comprehensive environmental, social and governance (“ESG”) program. As part of the development of its ESG program, the Company has completed a materiality analysis and is working on leveraging that analysis to create comprehensive ESG goals that will assist the Company with its commitment to ensuring responsible and sustainable business practices within its organization.
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Components of Our Results of Operations and Trends and Other Factors Affecting Our Business
Net Revenues
We generate net revenues primarily from sales of our products including The Beyond Burger, Beyond Sausage and other plant-based meat products to our customers which includeacross mainstream grocery, mass merchandiser, club store, convenience store, and natural retailers, as well asretailer channels, direct-to-consumer, and various food-away-from-home channels, including restaurants, and other foodservice outlets and schools, mainly in the United States.


We have experienced substantial growth inpresent our net revenues in the past three years. by geography and distribution channel as follows:
Distribution ChannelDescription
U.S. Retail
Net revenues from retail sales to the U.S. market(1)
U.S. FoodserviceNet revenues from restaurant and foodservice sales to the U.S. market
International RetailNet revenues from retail sales to international markets, including Canada
International FoodserviceNet revenues from restaurant and foodservice sales to international markets, including Canada
___________
(1) Includes net revenues from direct-to-consumer sales.

The following factors and trends in our business have driven net revenue growth over this periodprior periods and are expected to be key drivers of our net revenue growth, forsubject to the foreseeable future:duration, magnitude and effects of COVID-19 as discussed above:
•increased penetration across our retail channel, including mainstream grocery, mass merchandiser, club store, convenience store, and natural retailer customers,channels, and our restaurant and foodservice channel, including increased desire by foodservice establishments, including large full service restaurants foodservice outletsand/or global QSR customers, to add plant-based products to their menus and schools;to highlight these offerings;
increased velocity•the strength and breadth of our fresh productpartnerships with global QSR restaurants and retail and foodservice customers;
•distribution expansion, increased sales velocity, household penetration, purchase frequency and repeat buying rates across our channels, by which we mean that the volumechannels;
•increased international sales of our products sold per outlet has generally increased period-over-period dueacross geographies, markets and channels as we continue to greater adoptionexpand the breadth and depth of our international distribution and demand forgrow our products;numbers of international customers;
•our continued innovation and product commercialization, including enhancing existing products and introducing new products, such as Beyond Meatballs, Beyond Breakfast Sausage Patties and Beyond Breakfast Sausage Links, the recent launches of the latest iteration of our Beyond Burger and Beyond Chicken Tenders across our plant-based platforms that appeal to a broad range of consumers, includingspecifically those who typically eat animal-based meat;
impact of•enhanced marketing efforts as we continue to build our brand, amplify our value proposition around taste, health and sustainability, serve as a best-in-class partner to strategic and other QSR customers to support product development and category management, and drive consumer adoption of our products;products, including, for example, our billboard campaign, food truck tours in selected cities, our first Reddit AMA, our presence on TikTok, our NBA Twitter campaign during the NBA finals, mobile pop-ups in select U.S. cities to give consumers an exclusive first taste of our latest innovative products ahead of in-store availability, increased social activity to build consumer awareness and excitement, shopper marketing programs to incentivize consumer trial, and a robust Spotify podcast campaign around the launch of the latest iteration of our Beyond Burger;
•overall market trends, including growing consumer awareness and demand for nutritious, convenient and high protein plant-based foods.foods; and
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•increased production levels as we invest in production infrastructure and scale production to meet demand for our products across our distribution channels both domestically and internationally.
In addition to the factors and trends above, we expect the following to positively impact net revenues going forward:forward, subject to the duration, magnitude and effects of the COVID-19 pandemic:
increased•expansion of our own internal production levels asfacilities domestically and abroad to produce our woven proteins, blends of flavor systems and binding systems, and finished goods, while forming additional strategic relationships with co-manufacturers; and
•localized production and third-party partnerships to increase the availability and speed with which we scale production to meet demand forcan get our products across our distribution channels both domestically and internationally, including Australia, Europe, Hong Kong, Israel, South Africa, South Korea and parts of the Middle East; and
increased desire by restaurant and foodservice establishments to add plant-based products to their menus and to highlight these offerings.
Net revenues from sales in our retail channel increased by 110.8% in the three months ended March 30, 2019 to $19.6 million from $9.3 million in the three months ended March 31, 2018. Net revenues from sales in our restaurant and foodservice channel increased by 491.4% in the three months ended March 30, 2019 to $20.6 million from $3.5 million in the three months ended March 31, 2018. We expect further growth in both channels as we increase our production capacity in response to demand.customers internationally.
We distribute our products internationally using distributors in Australia, Chile, the European Union, Hong Kong, Ireland, Israel, the Middle East, New Zealand, South Korea, Taiwan and the United Kingdom. Our international net revenuesmore than 80 countries worldwide as of June 2021. In addition to our own production facilities, we use co-manufacturers in the three months ended March 30, 2019 and March 31, 2018 were approximately 14% and 1%, respectively, of our net revenues. All of our long-lived assets arevarious locations in the United States, Canada and we have no long-lived assetsthe Netherlands. International net revenues increased 187.1% and 83.6%, respectively, in any international locations. Netthe three and six months ended July 3, 2021, as compared to the prior-year periods. The increase in net revenues fromwas primarily due to growth in sales to the Canadian market are included with net revenues from sales to the United States market.
Over the next few years, the main driver of growth in our net revenues is expected to be sales of our fresh products, primarily The Beyond Burger, in both our retail channel customers, mainly as a result of increased sales velocities, new product introductions and our restaurantincreased distribution, and, to a lesser extent, the recovery in foodservice channel predominantlychannels from the severe impact of COVID-19 that we experienced in the United States, as well as internationally. We also expect net revenues and gross margin to benefit from increased salessecond quarter of our fresh products due to the higher net selling price per pound of our fresh platform products compared to our frozen platform products.2020.
As we seek to continue to rapidly grow our net revenues, we face several challenges. In 2017, continuing into 2018, demand forThe extent of COVID-19’s effect on our products exceededoperational and financial performance will depend on future developments, including the duration, spread and intensity of COVID-19 (including any resurgences), the rising impact of COVID-19 variants, the wide distribution and public acceptance of COVID-19 vaccines, and the level of social and economic restrictions imposed on the United States and abroad in an effort to curb the spread of the virus, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. For example, the impact of COVID-19 on any of our expectationssuppliers, co-manufacturers, distributors or transportation or logistics providers may negatively affect the price and availability of our ingredients and/or packaging materials and impact our supply chain. Additionally, if we are forced to scale back hours of production capacity, significantly constraining our net revenue growth relative to our total demand opportunity. While we have significantly expandedor close our production capacityfacilities or our Manhattan Beach Project Innovation Center in response to address production shortfall,the pandemic, we expect our business, financial condition and results of operations would be materially adversely affected. In addition, our growth strategy to expand our operations internationally may experience a lagbe impeded. Although our foodservice channel net revenues showed recovery in production relativethe second quarter of 2021 from the severely depressed levels seen in the second quarter of the prior year, there is uncertainty related to the COVID-19 infection rates, as well as the reimplementation of safety measures in certain jurisdictions, and potential impact on customer demand iflevels. The uncertainty created by COVID-19 significantly increases the difficulty in forecasting operating results and strategic planning. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our growth rate exceedsbusiness, results of operations, financial condition or liquidity. However, the pandemic has had and may continue to have a material adverse impact on our expectations.


business, results of operations, financial condition and cash flows and may adversely impact the trading price of our common stock. Future events and effects related to the COVID-19 pandemic cannot be determined with precision and actual results could significantly differ from estimates or forecasts.
We routinely offer sales discounts and promotions through various programs to customers and consumers. These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. We anticipate that we will need to continue to offer more trade and promotion discounts to both our retail and foodservice customers to drive increased consumer trial and in response to COVID-19, and in response to increased competition. The expense associated with these discounts and promotions is estimated and recorded as a reduction in total gross revenues in order to arrive at reported net revenues. WeAt the end of each accounting period, we recognize a liability for estimated sales discounts that have been incurred but not paid which totaled $4.1 million and $3.6 million as of July 3, 2021 and December 31, 2020, respectively. In the absence of offsetting measures, we anticipate that these promotional activities couldwill impact our net revenues as well as negatively impact our gross margins and profitability and that changes in such activities couldwill impact period-over-period results.
In addition, because we do not have any purchase commitments from our distributors or customers, the amount of net revenues we recognize will vary from period to period depending on the volume and mix of our products sold, particularly between products in our fresh and frozen platforms, and the
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channels through which our products are sold, causing variability in our results. Similarly, the timing of retail shelf resets are not within our control, and to the extent that retail customers change the timing of such events, variability of our results may also increase.
We expect to face increasing competition across all channels, especially as additional plant-based protein product brands continue to enter the marketplace.
Gross Profit
Gross profit consists of our net revenues less cost of goods sold. Our cost of goods sold primarily consists of the cost of raw materials and ingredients for our products, direct and indirect labor and certain supply costs, co-manufacturing fees, in-bound and internal shipping and handling costs incurred in manufacturing our products, warehouse storage fees, plant and equipment overhead, depreciation and amortization expense, as well as the cost of packaging our products. In order to keep pace with demand,anticipation of future growth, we have had to very quickly scale production and we have not always been able to meet all demand for our products. As a result, we have had to quickly expand our sources of supply for our core protein inputs such as pea protein. Our growth has also significantly increased facility and warehouse utilization rates.
We intend to continue to increase our production capabilities at our two in-house manufacturing facilities in Columbia, Missouri.Missouri, Devault, Pennsylvania, the Netherlands and China, while expanding our co-manufacturing capacity and exploring additional production facilities domestically and abroad. As a result of expansion initiatives, we expect our cost of goods sold to increase in absolute dollars to increase to support our growth. However, we expect such expenses
Subject to decrease as a percentagethe ultimate duration, magnitude and effects of net revenues over time asCOVID-19, we continue to scaleexpect that gross profit improvements will be delivered primarily through improved volume leverage and throughput, greater internalization and geographic localization of our business.
Gross margin improved by 10.7 pointsmanufacturing footprint and expansion of our own internal production facilities domestically and abroad to 26.8% in the three months ended March 30, 2019 from 16.1% in the three months ended March 31, 2018. Gross margin benefited from an increase in the amountproduce our woven proteins, blends of product sold, improvedflavor systems and binding systems, and finished goods, materials and packaging input cost reductions, tolling fee efficiencies, end-to-end production efficiencies and fromprocesses across a greater proportion of revenues from productsour manufacturing network, scale-driven efficiencies in our fresh platform which have a higher net selling price per pound. As we continue to expand productionprocurement and are able to increase manufacturing efficiency and leverage thefixed cost absorption, diversification of our fixed productioncore protein ingredients, product and staff costs, we expectprocess innovations and reformulations, cost-down initiatives through ingredient and process innovation and improved supply chain logistics and distribution costs. We are also working to substantially increase our gross margin. We also expect to continue to increaseimprove gross margin through ingredient cost savings achieved through scale of purchasing and through expanding our co-manufacturing network and negotiating lower tolling fees. We intend to pass some of these cost savings on to the consumer as we pursue our goal to achieve price parity with animal protein in at least one of our product categories by 2024.
Margin improvement may, however, continue to be negatively impacted by our focus on investing heavily in our business, establishing infrastructure in the U.S., EU and China, investing in personnel, partnerships and product pipeline, investing in our headquarters campus and expanding our Manhattan Beach Project Innovation Center, growing our customer base, volume deleveraging, aggressive pricing strategies and increased discounting, expanding into new geographies and markets, enhancing our production infrastructure, improving our innovation capabilities, enhancing our product offerings and increasing consumer engagement by applying increasing pressure on the three key levers of taste, health and cost that we believe are critical for mass adoption.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, bonuses, share-based compensation, scale-up expenses, and share-based compensation.depreciation and amortization expense on research and development assets. Our research and development efforts are focused on enhancements to our product formulations and production processes in addition to the development of new products. We expect to continue to invest substantial amounts in research and development, as most recently evidenced in the build-out of our state-of-the-art Manhattan Beach Project Innovation Center. Researchresearch and development and innovation are core elements of our business strategy, asand we believe they represent a critical competitive advantage for us. We believe that we need to continue to rapidly innovate in order to be able to continue to capture a larger market share of consumers who typically eat animal-based meats. WeOver time and subject to the duration, magnitude and effects of the COVID-19 pandemic, we expect these expenses to increase somewhat in absolute dollars, but to decrease as a percentage of net revenues as we continue to scale production.production volume.
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SG&A Expenses
SG&A expenses consist primarily of selling, marketing selling and administrative expenses, including personnel and related expenses, share-based compensation, outbound shipping and handling costs, non-manufacturing rentlease expense, depreciation and amortization expense on non-manufacturing assets and other miscellaneousnon-production operating items.expenses. Marketing and selling expenses include share-based compensation awards to brand ambassadors, advertising costs, costs associated with consumer promotions,


product samples and sales aids incurred to acquire new customers, retain existing customers and build our brand awareness. Administrative expenses include the expenses related to management, accounting, legal, IT and other office functions.
We expect SG&A expenses to increase in absolute dollars to increase as we increase our domestic and international expansion efforts, to meet our product demand and incur costs related to our status as a public company.
Our selling and marketing expense is expected to increase, both through a greater focus on marketing and through additions to our sales organizations. We expect to significantly expand our marketing efforts, to achieveand incur greater brand awareness, attract new customersoutbound shipping and increase market penetration. We have historically had a very small sales force, with only nine full-time sales employeeshandling costs as of December 31, 2017 growing to 22 full-time sales employees as of March 30, 2019. our revenues increase.
As we continue to grow, including internationally, we expect to expand our sales and marketing force to address additional opportunities, which couldwould substantially increase our selling and marketing expense. Our administrative expenses are expected to increase as a public company with increased personnel cost in accounting, finance, legal, IT and compliance-related expenses.functions.
Restructuring Expenses
In May 2017, management approved a plan to terminate an exclusive supply agreement with one of our co-manufacturers. See “—Results of Operations—Three Months Ended March 30, 2019 ComparedNote 3, Restructuring, and Note 10, Commitments and Contingencies, to Three Months ended March 31, 2018—Restructuring Expenses”the Notes to Unaudited Condensed Consolidated Financial Statements, included elsewhere in this report.
Seasonality
Generally, we expect to experience greater demand for a discussion of these expenses.
Other, Net
Other, net includes expense primarily associated with the remeasurementcertain of our preferred stock warrant liabilityproducts during the summer grilling season. In 2021, U.S. retail channel net revenues during the second quarter were 21% higher than the first quarter. In 2020, the impact of COVID-19 masked this seasonal impact. As our business continues to grow, we expect to see additional seasonality effects, especially within our retail channel, with revenue contribution from this channel tending to be greater in the second and common stock warrant liability prior to the IPO. On May 6, 2019, upon completionthird quarters of the IPO,year. In an environment of uncertainty from the warrants exercisableimpact of COVID-19, we are unable to assess the ultimate impact on the demand for convertible preferred stock were automatically converted into warrants exercisable for common stock. Subsequent to the closing of the IPO, all outstanding warrants to purchase shares of common stock were exercised by surrendering shares of common stock towards the exercise price.
Loss from Operations
Loss from operations in the first quarter of 2019 was $5.3 million compared toour products as a loss of $5.6 million in the first quarter of the prior year. This improvement was driven entirely by the year-over-year increase in gross profit, partially offset by higher operating expenses as the Company continues to invest in its internal research and development and marketing capabilities and incur higher absolute costs to support its expanded manufacturing and supply chain operations.
Net Loss
Net loss was $6.6 million in the first quarter of 2019 compared to a net loss of $5.7 million in the prior-year period. The expanded net loss was primarily the result of higher operating expenses, higher interest expense as well as an increase in other non-operating expenses, a majority of which were related to mark-to-market adjustments on outstanding warrants, partially offset by the increase in gross profit.seasonality.



Results of Operations
The following table sets forth selected items in our condensed consolidated statements of operations for the periods presented:
Three Months EndedSix Months Ended
(in thousands)July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net revenues$149,426 $113,338 $257,590 $210,412 
Cost of goods sold102,074 79,687 177,530 139,070 
Gross profit47,352 33,651 80,060 71,342 
Research and development expenses13,823 6,016 29,748 12,210 
Selling, general and administrative expenses48,286 34,292 87,240 61,607 
Restructuring expenses3,844 1,509 6,318 3,882 
Total operating expenses65,953 41,817 123,306 77,699 
Loss from operations$(18,601)$(8,166)$(43,246)$(6,357)
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  Three Months Ended
(in thousands) March 30,
2019		 March 31,
2018
Net revenues $40,206
 $12,776
Cost of goods sold 29,435
 10,719
Gross profit 10,771
 2,057
Research and development expenses 4,498
 1,605
Selling, general and administrative expenses 11,177
 5,737
Restructuring expenses 394
 294
Total operating expenses 16,069
 7,636
Loss from operations $(5,298) $(5,579)

The following table presents selected items in our condensed consolidated statements of operations as a percentage of net revenues for the respective periods presented:
Three Months EndedSix Months Ended
July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net revenues100.0 %100.0 %100.0 %100.0 %
Cost of goods sold68.3 70.3 68.9 66.1 
Gross profit31.7 29.7 31.1 33.9 
Research and development expenses9.3 5.3 11.5 5.8 
Selling, general and administrative expenses32.3 30.3 33.9 29.3 
Restructuring expenses2.6 1.3 2.5 1.8 
Total operating expenses44.2 36.9 47.9 36.9 
Loss from operations(12.5)%(7.2)%(16.8)%(3.0)%
  Three Months Ended
  March 30,
2019		 March 31,
2018
Net revenues 100.0 % 100.0 %
Cost of goods sold 73.2
 83.9
Gross profit 26.8
 16.1
Research and development expenses 11.2
 12.6
Selling, general and administrative expenses 27.8
 44.9
Restructuring expenses 1.0
 2.3
Total operating expenses 40.0
 59.8
Loss from operations (13.2)% (43.7)%



Three and Six Months Ended March 30, 2019July 3, 2021 Compared to Three and Six Months Ended March 31, 2018June 27, 2020
Net Revenues
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Net revenues:       
Fresh Platform$38,806
 $9,596
 $29,210
 304.4 %
Frozen Platform4,512
 4,748
 (236) (5.0)%
Less: Discounts(3,112) (1,568) (1,544) 98.5 %
Net revenues$40,206
 $12,776
 $27,430
 214.7 %
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Net revenues:       
Retail$19,579
 $9,288
 $10,291
 110.8%
Restaurant and Foodservice20,627
 3,488
 17,139
 491.4%
Net revenues$40,206
 $12,776
 $27,430
 214.7%
Net revenues increased by $27.4$36.1 million, or 214.7%31.8%, in the three months ended March 30, 2019July 3, 2021, as compared to the prior-year period primarily due to strong growthan increase in volume sold. Growth in net revenues was primarily due to increased foodservice channel sales volumes of products in our fresh platform across both ourreflecting ongoing recovery from the reduced demand levels brought on by the COVID-19 pandemic, increased average revenue per customer and contribution from new product introductions. Net revenues from retail channel sales increased primarily due to increased distribution outlets and our restaurant and foodservice channels, driven by expansion in the number ofhigher international retail and foodservice points of distribution, including new strategic customers, and greater demand from our existing customers,channel sales, partially offset by a decreaselower U.S. retail channel sales compared to the year-ago period, which benefited from consumer stockpiling behavior at the onset of the pandemic. Net revenues in the second quarter of 2021 also benefited from the quarter ending on July 3rd, which is later than the prior-year period, which ended on June 27th. The later ending of the second quarter resulted in more high sales volume days leading up to the July 4th holiday in the U.S. being captured in the second quarter of 2021, which may impact net revenues in the third quarter of 2021 negatively when compared to the prior-year period. In aggregate, net price per pound during the second quarter of 2021 remained approximately flat compared to the prior-year period.
The following table presents our net revenues by channel in the three months ended July 3, 2021 as compared to the prior-year period:
Three Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%
U.S.:
Retail$77,195 $90,040 $(12,845)(14.3)%
Foodservice23,961 6,486 17,475 269.4 %
U.S. net revenues101,156 96,526 4,630 4.8 %
International:
Retail28,544 9,572 18,972 198.2 %
Foodservice19,726 7,240 12,486 172.5 %
International net revenues48,270 16,812 31,458 187.1 %
Net revenues$149,426 $113,338 $36,088 31.8 %

Net revenues from U.S. retail channel sales in the three months ended July 3, 2021 decreased $12.8 million, or 14.3%, primarily due to decreases in sales of the Beyond Burger, Beyond Beef, Beyond Sausage
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and Beyond Beef Crumble, as compared to the three months ended June 27, 2020, which benefited from consumer stockpiling behavior brought on by the onset of COVID-19. Decreased sales in the aforementioned products were partially offset by increases in sales of Beyond Meatball and Beyond Breakfast Sausage, which were introduced during the third and second quarter of 2020, respectively. Our products were available at approximately 34,000 U.S. retail outlets as of June 2021.
Net revenues from U.S. foodservice channel sales in the three months ended July 3, 2021 increased $17.5 million, or 269.4%, from the frozen platform. We discontinued our frozen chicken strips product line duringthree months ended June 27, 2020, when the first quartersevere impact of 2019, causing a decline in frozen product revenues consistent with our shift to concentrate moreCOVID-19 on our fresh products platform.
Revenuesfoodservice customers was first recorded. Net revenues from U.S. foodservice channel sales of products in our fresh platform increased $29.2 million, or 304.4%, primarily due to increases in sales of The Beyond Burger and Beyond Sausage. Net revenues from retail sales increased $10.3 million, or 110.8%,all product categories, primarily due to increase in sales of Thethe Beyond Burger. Net revenues from sales through our restaurant and foodservice channel increased $17.1 million, or 491.4%, primarily due to increases in sales of The Beyond Burger, which was being served inOur products were available at approximately 12,000 restaurant and34,000 U.S. foodservice outlets as of April 22, 2019, and due to increasedJune 2021.
Net revenues from international retail channel sales of Beyond Sausage.


The following tables present volume of our products sold in pounds:
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Retail:       
Fresh Platform2,627
 860
 1,767
 205.5 %
Frozen Platform599
 761
 (162) (21.3)
Total3,226
 1,621
 1,605
 99.0 %
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Restaurant and Foodservice:       
Fresh Platform3,296
 477
 2,819
 591.0%
Frozen Platform316
 174
 142
 81.6
Total3,612
 651
 2,961
 454.8%
Cost of Goods Sold
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Cost of goods sold$29,435
 $10,719
 $18,716
 174.6%
Total cost of goods sold increased by $18.7 million, or 174.6%, in the three months ended March 30, 2019July 3, 2021 increased $19.0 million, or 198.2%, primarily due to the increase in sales of the Beyond Burger, Beyond Sausage and Beyond Beef. Our products were available at approximately 29,000 international retail outlets as of June 2021.
Net revenues from international foodservice channel sales in the three months ended July 3, 2021 increased $12.5 million, or 172.5%, recovering from a COVID-19-impacted prior period, primarily due to the increase in sales of the Beyond Burger. Our products were available at approximately 22,000 international foodservice outlets as of June 2021.
Net revenues increased by $47.2 million, or 22.4%, in the six months ended July 3, 2021, as compared to the prior-year period primarily due to an increase in volume sold. There were four additional shipping days in the six months ended July 3, 2021 compared to the six months ended June 27, 2020. Net revenues increased both in the retail channel and foodservice channel. Percentage change in foodservice channel net revenues was significantly higher reflecting ongoing recovery from the reduced demand levels of the prior-year period brought on by the COVID-19 pandemic, the higher number of shipping days, increased average revenue per customer and contribution from new product introductions, partially offset by lower net price per pound driven by our strategic investments in promotional activity intended to encourage greater consumer trial and adoption. Net revenues from retail channel sales increased primarily due to increased distribution outlets, higher international retail channel sales and additional number of shipping days compared to the year-ago period.
The following table presents our net revenues by channel in the six months ended July 3, 2021 as compared to the prior-year period:
Six Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%
U.S.:
Retail$141,021 $139,963 $1,058 0.8 %
Foodservice40,703 29,117 11,586 39.8 %
U.S. net revenues181,724 169,080 12,644 7.5 %
International:
Retail45,743 15,524 30,219 194.7 %
Foodservice30,123 25,808 4,315 16.7 %
International net revenues75,866 41,332 34,534 83.6 %
Net revenues$257,590 $210,412 $47,178 22.4 %
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Net revenues from U.S. retail channel sales in the six months ended July 3, 2021 increased $1.1 million, or 0.8%, as compared to the six months ended June 27, 2020, when the COVID-19-impacted panic buying was evident. The increase in U.S. retail channel net revenues was primarily due to increases in sales of Beyond Breakfast Sausage and Beyond Meatball, which were introduced during the third and second quarter of 2020, respectively, partially offset by the decrease in sales of the Beyond Burger, Beyond Beef and Beyond Beef Crumble.
Net revenues from U.S. foodservice channel sales in the six months ended July 3, 2021 increased $11.6 million, or 39.8%, from the six months ended June 27, 2020, when the severe impact of COVID-19 on our foodservice customers was first recorded, due to increases in sales of the Beyond Burger, Beyond Beef, Beyond Sausage and Beyond Breakfast Sausage.
Net revenues from international retail channel sales in the six months ended July 3, 2021 increased $30.2 million, or 194.7%, due to the increase in sales of all products, primarily the Beyond Burger, Beyond Sausage, Beyond Beef and Beyond Meatball.
Net revenues from international foodservice channel sales in the six months ended July 3, 2021 increased $4.3 million, or 16.7%, primarily due to increases in sales of the Beyond Burger and Beyond Beef Crumble, partially offset by a decrease in sales of Beyond Beef.
The following table presents consolidated volume of our products.products sold in pounds for the periods presented:
Three Months EndedChangeSix Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%July 3,
2021		June 27,
2020		Amount%
U.S.:
Retail13,834 15,211 (1,377)(9.1)%24,962 23,657 1,305 5.5 %
Foodservice4,002 1,366 2,636 193.0 %6,884 5,432 1,452 26.7 %
International:
Retail4,775 1,882 2,893 153.7 %7,734 2,710 5,024 185.4 %
Foodservice3,666 1,458 2,208 151.4 %5,669 4,770 899 18.8 %
Volume of products sold26,277 19,917 6,360 31.9 %45,249 36,569 8,680 23.7 %

Cost of Goods Sold
Three Months EndedChangeSix Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%July 3,
2021		June 27,
2020		Amount%
Cost of goods sold$102,074 $79,687 $22,387 28.1 %$177,530 $139,070 $38,460 27.7 %

Cost of goods sold increased by $22.4 million, or 28.1%, to $102.1 million, in the three months ended July 3, 2021 as compared to the prior-year period. Cost of goods sold as a percentage of net revenues in the three months ended July 3, 2021 decreased to 68.3% from 70.3% of net revenues in the prior-year period. Cost of goods sold in the three months ended June 27, 2020 included $5.9 million attributable to product repacking activities due to COVID-19 which were absent in the three months ended July 3, 2021. Excluding the product repacking activities attributable to COVID-19 in the prior-year period, cost of goods sold as a percentage of net revenues in the three months ended July 3, 2021 increased from 65.1% of net revenues in the prior-year period to 68.3% of net revenues in the three months ended July 3, 2021. The increase in cost of goods sold was primarily due to an increase in the volume of products sold, higher fixed overhead costs,
44

increased transportation costs, and higher depreciation and amortization expense, partially offset by lower direct materials cost.
Cost of goods sold increased by $38.5 million, or 27.7%, to $177.5 million, in the six months ended July 3, 2021 as compared to the prior-year period. As a percentage of net revenues, cost of goods sold in the six months ended July 3, 2021 increased to 68.9% from 66.1% of net revenues in the prior-year period. The increase in cost of goods sold was primarily due to an increase in the volume of products sold and higher overhead costs, higher transportation costs and higher depreciation and amortization expense, partially offset by lower direct materials cost. Cost of goods sold in the six months ended June 27, 2020 included $5.9 million associated with product repacking activities due to COVID-19 which were absent in the six months ended July 3, 2021.
Gross Profit and Gross Margin
Three Months EndedChangeSix Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%July 3,
2021		June 27,
2020		Amount%
Gross profit$47,352$33,651$13,70140.7%$80,060$71,342$8,71812.2%
Gross margin31.7%29.7%
200 bps
N/A31.1%33.9%(280) bpsN/A
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Gross profit$10,771
 $2,057
 $8,714
 423.6%
Gross margin26.8% 16.1% 10.7% N/A

Gross profit in the three months ended March 30, 2019July 3, 2021 was $10.8$47.4 million as compared to gross profit of $2.1$33.7 million in the prior-year period, an increase of $13.7 million. Gross margin in the three months ended March 31, 2018, an improvement of $8.7 million.July 3, 2021 increased to 31.7% from 29.7% in the prior-year period. Gross profit and gross margin in the prior-year period included $5.9 million in costs associated with product repacking activities due to COVID-19, which were absent in the three months ended July 3, 2021. The improvementincrease in gross profit was primarily due to the increase in net revenues and the absence of costs attributable to product repacking activities. The increase in gross margin was primarily due to the absence of COVID-19-related expenses and lower direct materials costs, partially offset by higher fixed overhead costs, increased transportation costs, and higher depreciation and amortization expense primarily attributable to incremental fixed assets.
Gross profit in the six months ended July 3, 2021 was $80.1 million as compared to gross profit of $71.3 million in the prior-year period, an increase of $8.7 million. Gross margin in the amountsix months ended July 3, 2021 declined to 31.1% from 33.9% in the prior-year period. Gross profit and gross margin in the prior-year period included $5.9 million in costs associated with product repacking activities due to COVID-19, which were absent in the six months ended July 3, 2021. The increase in gross profit was primarily due to higher net revenues and the absence of products sold, with resulting operating leverage, and improved production efficiencies.COVID-19-related expenses. The greater proportion of product revenues from our fresh platform also contributed to the improvementdecrease in gross margin was primarily due to a higher net selling price per poundproduction overhead costs, higher transportation costs, and higher depreciation and amortization expense primarily attributable to incremental fixed assets, partially offset by the absence of productslower direct materials cost and COVID-19-related expenses.
As disclosed in our fresh versus frozen platform. WeNote 2, Summary of Significant Accounting Policies—Shipping and Handling Costs, in the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report, we include outbound shipping and handling costs within SG&A expenses. As a result, our gross profit and gross margin may not be comparable to other entities that present all shipping and handling costs as a component of cost of goods sold.

45


Research and Development Expenses
Three Months EndedChangeSix Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%July 3,
2021		June 27,
2020		Amount%
Research and development expenses$13,823 $6,016 $7,807 129.8 %$29,748 $12,210 $17,538 143.6 %
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Research and development expenses$4,498
 $1,605
 $2,893
 180.2%

Research and development expenses increased $2.9$7.8 million, or 180.2%129.8%, in the three months ended March 30, 2019July 3, 2021, as compared to the prior-year period. Research and development expenses increased to 9.3% of net revenues in the three months ended July 3, 2021 from 5.3% of net revenues in the prior-year period primarily due to 86% highera 67% increase in headcount, higher scale-up expenses and higher depreciation and amortization expense.expense compared to the prior-year period.
Research and development expenses increased $17.5 million, or 143.6%, in the six months ended July 3, 2021, as compared to the prior-year period. Research and development expenses increased to 11.5% of net revenues in the six months ended July 3, 2021 from 5.8% of net revenues in the prior-year period primarily due to a 77% increase in headcount, higher scale-up expenses and higher depreciation and amortization expense compared to the prior-year period.
SG&A Expenses
Three Months EndedChangeSix Months EndedChange
(in thousands)July 3,
2021		June 27,
2020		Amount%July 3,
2021		June 27,
2020		Amount%
Selling, general and administrative expenses$48,286 $34,292 $13,994 40.8 %$87,240 $61,607 $25,633 41.6 %
 Three Months Ended Change
(in thousands)March 30,
2019		 March 31,
2018		 Amount Percentage
Selling, general and administrative expenses$11,177
 $5,737
 $5,440
 94.8%

SG&A expenses increased by $5.4$14.0 million, or 94.8%40.8%, in the three months ended March 30, 2019 as comparedJuly 3, 2021 to 32.3% of net revenues in the three months ended July 3, 2021, from 30.3% of net revenues in the prior-year period. The increase in SG&A expenses was primarily due to $3.0$7.4 million in higher salaries and related expenses due to a 90% increase inresulting from higher headcount, $0.7$3.4 million in higher marketing serviceprograms-related expenses, $0.7 million in higher consulting and professional fees, $0.4 million in higher supply chain expenses, $0.3$1.7 million in higher outbound freight expenses, and $0.3costs, $0.8 million in higher broker commissions.share-based compensation expense, and $0.7 million in higher general insurance costs, partially offset by $1.5 million in lower product donations and $0.2 million in lower legal fees. The increase in share-based compensation expense in the three months ended July 3, 2021 was primarily due to the substantially higher staffing levels as compared to the prior-year period.
SG&A expenses increased $25.6 million, or 41.6%, in the six months ended July 3, 2021 to 33.9% of net revenues in the six months ended July 3, 2021, from 29.3% of net revenues in the prior-year period. The increase in SG&A expenses was primarily due to $15.9 million in higher salaries and related expenses resulting from higher headcount, $3.4 million in higher outbound freight costs, $3.2 million in higher marketing programs-related expenses, $2.6 million in higher share-based compensation expense, and $1.7 million in higher general insurance costs, partially offset by $2.7 million in lower product donations and $0.8 million in lower legal fees. The increase in share-based compensation expense in the six months ended July 3, 2021 was primarily due to substantially higher staffing levels as compared to the prior-year period.
Restructuring Expenses
As a result of the termination in May 2017 of an exclusive supply agreement with one of our co- manufacturers due to non-performance under the agreement, we recorded restructuring expenses of $0.4$3.8 million and $0.3$1.5 million in the three months ended March 30, 2019July 3, 2021 and March 31, 2018,June 27, 2020, respectively, and $6.3 million and $3.9 million in the six months ended July 3, 2021 and June 27, 2020, respectively. The
46

restructuring expenses were primarily related to legal and other expenses associated with the dispute. As of March 30, 2019July 3, 2021 and December 31, 2018,2020, there were no$2.6 million and $0.8 million, respectively, in accrued and unpaid liabilities associated with this contract termination, although werestructuring expenses. We continue to incur legal fees and other costs in connection with our ongoing efforts to resolve this dispute. See Note 3, Restructuring, and Note 10, Commitments and Contingencies to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in Part I, Item 1 of this report and Legal Proceedings in Part II, Item 1 of this report.
Income Tax ExpenseLoss from Operations
ForLoss from operations in the three months ended March 30, 2019July 3, 2021 was $18.6 million compared to $8.2 million in the prior-year period. The increase in loss from operations in the three months ended July 3, 2021 was primarily driven by growth in overall headcount levels primarily to support international growth and March 31, 2018 we recorded no income tax expenseincreased innovation capabilities, increased investments in marketing, increased production trial activities, higher restructuring expenses reflecting increased legal costs and higher freight costs included in our condensed statements of operations. No tax benefit was provided for losses incurred because those losses areselling expenses compared to the prior-year period, partially offset by a full valuation allowance.higher gross profit. In addition, loss from operations in the prior-year period included $7.5 million in expenses attributable to COVID-19 which were absent in the three months ended July 3, 2021.
SeasonalityLoss from operations in the six months ended July 3, 2021 was $43.2 million compared to $6.4 million in the prior-year period. The increase in loss from operations in the six months ended July 3, 2021 was primarily driven by growth in overall headcount levels primarily to support increased international growth and innovation capabilities, increased investments in marketing, increased production trial activities, higher share-based compensation expense and higher freight costs included in our selling expenses compared to the prior-year period, partially offset by higher gross profit. In addition, loss from operations in the prior-year period included $8.7 million in expenses attributable to COVID-19 which were absent in the six months ended July 3, 2021.
Generally, we expectTotal Other Expense, net
Total other expense, net in the three months ended July 3, 2021 of $0.8 million included approximately $1.0 million in interest expense from the amortization of convertible debt issuance costs, partially offset by $0.2 million in foreign currency transaction gains and $0.2 million in subsidies received from the Jiaxing Economic Development Zone Finance Bureau for our investment in BYND JX. Total other expense of $2.0 million in the prior-year period consisted of $1.5 million in loss on extinguishment of debt related to experience greater demand for certainour refinanced bank credit facility and $0.6 million in interest expense on our debt balances.
Total other expense, net in the six months ended July 3, 2021 of $3.0 million consisted primarily of $1.3 million in interest expense from the amortization of convertible debt issuance costs, $1.0 million in loss on extinguishment of debt associated with the termination of our productsbank credit facility, $0.1 million in foreign currency transaction losses and $0.3 million in interest expense associated with our bank credit facility, partially offset by $0.2 million in subsidies received from the Jiaxing Economic Development Zone Finance Bureau for our investment in BYND JX. Total other expense of $2.0 million in the prior-year period primarily included $1.5 million in loss on extinguishment of debt associated with our refinanced credit arrangements and $1.3 million in interest expense on our debt balances, partially offset by $0.8 million in interest income.
Net Loss
Net loss was $19.7 million and $46.9 million in the three and six months ended July 3, 2021, respectively, compared to net loss of $10.2 million and $8.4 million in the prior-year periods. Net loss during the summer grilling season. As our business continuesthree and six months ended July 3, 2021 was primarily due to grow, we expecthigher operating expenses discussed above compared to see additional seasonality effects, with revenue growth tending to be greater in the second and third quarters of the year.prior-year periods.




47

Non-GAAP Financial Measures
We use the following non-GAAP financial measures set forth below in assessing our operating performance and in our financial communications:communications. Management believes these non-GAAP financial measures provide useful additional information to investors about current trends in our operations and are useful for period-over-period comparisons of operations. In addition, management uses these non-GAAP financial measures to assess operating performance and for business planning purposes. Management also believes these measures are widely used by investors, securities analysts, rating agencies and other parties in evaluating companies in our industry as a measure of our operational performance. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.
“Adjusted EBITDA”EBITDA” is defined as net loss adjusted to exclude, when applicable, income tax expense, interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation expense, inventory losses from terminationexpenses attributable to COVID-19, and Other, net, including interest income, loss on extinguishment of an exclusive supply agreement with a co-manufacturer, costs of termination of an exclusive supply agreement with the same co-manufacturer,debt and expenses primarily associated with the conversion of our convertible notesforeign currency transaction gains and remeasurement of our preferred stock warrant liability and common stock warrant liability.losses.
“Adjusted EBITDA as a % of net revenues” revenues” is defined as Adjusted EBITDA divided by net revenues.
“Pro forma basic and diluted net loss per common share” is defined as net loss divided by weighted average common shares outstanding—basic and diluted, as adjusted to reflect the conversion of all outstanding shares of convertible preferred stock into shares of common stock on a one-for-one basis and the automatic conversion of all preferred stock warrants to common stock warrants upon closing of the IPO and subsequent exercise of all common stock warrants as if the IPO was completed as of the first day of the applicable period. We believe the presentation of Pro forma basic and diluted net loss per common share allows for comparability with our expected capital structure following the IPO.
We use Adjusted EBITDA and Adjusted EBITDA as a % of net revenues because they are important measures upon which our management assesses our operating performance. We use Adjusted EBITDA and Adjusted EBITDA as a % of net revenues as key performance measures because we believe these measures facilitate operating performance comparison from period-to-period by excluding potential differences primarily caused by the impact of restructuring, asset depreciation and amortization, non-cash share-based compensation and non-operational charges including the impact to cost of goods sold and SG&A expenses related to the termination of an exclusive co-manufacturing agreement, early extinguishment of convertible notes and remeasurement of warrant liability. Because Adjusted EBITDA and Adjusted EBITDA as a % of net revenues facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use those measures for our business planning purposes. In addition, we believe Adjusted EBITDA and Adjusted EBITDA as a % of net revenues are widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in our industry as a measure of our operational performance.
There are a number of limitations related to the use of Adjusted EBITDA and Adjusted EBITDA as a % of net revenues rather than net loss, which is thetheir most directly comparable GAAP measure. Some of these limitations are:
•Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future increasing our cash requirements;
•Adjusted EBITDA does not reflect interest expense, or the cash required to service our debt, which reduces cash available to us;
•Adjusted EBITDA does not reflect income tax payments that reduce cash available to us;
•Adjusted EBITDA does not reflect restructuring expenses that reduce cash available to us;
•Adjusted EBITDA does not reflect expenses attributable to COVID-19 that reduce cash available to us;
•Adjusted EBITDA does not reflect share-based compensation expensesexpense and therefore does not include all of our compensation costs;
•Adjusted EBITDA does not reflect otherOther, net, including interest income, (expense)loss on extinguishment of debt and foreign currency transaction gains and losses, that may increase or decrease cash available to us; and
•other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

48


These non-GAAP financial measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

The following table presents the reconciliation of Adjusted EBITDA to its most comparable GAAP measure, net loss, as reported (unaudited):
 Three Months EndedThree Months EndedSix Months Ended
(in thousands) March 30, 2019 March 31, 2018(in thousands)July 3,
2021		June 27,
2020		July 3,
2021		June 27,
2020
Net loss, as reported $(6,649) $(5,696)Net loss, as reported$(19,652)$(10,205)$(46,918)$(8,390)
Income tax expenseIncome tax expense2 16 50 15 
Interest expense 733
 47
Interest expense1,022 569 1,651 1,274 
Depreciation and amortization expense 1,905
 733
Depreciation and amortization expense4,881 3,272 9,207 5,855 
Restructuring expenses(1)
 394
 294
Restructuring expenses(1)
3,844 1,509 6,318 3,882 
Share-based compensation expense 855
 260
Share-based compensation expense7,863 7,586 15,239 13,535 
Other, net(2)
 618
 70
Expenses attributable to COVID-19(2)
Expenses attributable to COVID-19(2)
— 7,482 — 8,657 
Other, net(3)
Other, net(3)
(180)1,454 1,390 744 
Adjusted EBITDA $(2,144) $(4,292)Adjusted EBITDA$(2,220)$11,683 $(13,063)$25,572 
    
Net loss as a % of net revenues (16.5)% (44.6)%Net loss as a % of net revenues(13.2)%(9.0)%(18.2)%(4.0)%
Adjusted EBITDA as a % of net revenues (5.3)% (33.6)%Adjusted EBITDA as a % of net revenues(1.5)%10.3 %(5.1)%12.2 %
_____________
____________
(1)Primarily comprised of legal and other expenses associated with the dispute with a co-manufacturer with whom an exclusive supply agreement was terminated in May 2017.
(2)Comprised of $5.9 million in repacking costs attributable to COVID-19 and $1.6 million in product donation costs related to our COVID-19 relief campaign in the three months ended June 27, 2020, and $5.9 million in repacking costs attributable to COVID-19 and $2.8 million in product donation costs related to our COVID-19 relief campaign in the six months ended June 27, 2020.
(3)Includes expenses primarily$1.0 million in loss on extinguishment of debt associated with termination of the Company's credit facility in the six months ended July 3, 2021 and $1.5 million in loss on extinguishment of debt associated with the remeasurement of our preferred stock warrant liabilityCompany's refinanced credit arrangements in the three and common stock warrant liability.six months ended June 27, 2020.



Below we have provided a reconciliation of Pro forma basic and diluted net loss per common share to the most directly comparable financial measure, net loss per common share—basic and diluted, calculated and presented in accordance with GAAP, for each of the periods presented (unaudited):
  Three Months Ended
(in thousands, except share and per share data) March 30, 2019
 March 31, 2018
Pro forma basic and diluted net loss per common share:    
Numerator:    
Net loss, as reported $(6,649) $(5,696)
     
Denominator:    
Weighted average common shares outstanding—basic and diluted, as reported 6,974,301
 5,793,801
Add: Adjustment to reflect assumed conversion of convertible preferred stock 41,562,111
 39,474,156
Add: Adjustment to reflect potential conversion of preferred stock warrants to common stock warrants and subsequent exercise of all common stock warrants 220,769
 160,767
Weighted average common shares outstanding used in computing Pro forma basic and diluted net loss per common share 48,757,181
 45,428,724
     
Net loss per common share—basic and diluted, as reported $(0.95) $(0.98)
Effect of adjustments to weighted average common shares outstanding 0.81
 0.85
Adjusted basic and diluted net loss per common share $(0.14) $(0.13)
     
Liquidity and Capital Resources
Convertible Senior Notes
On March 5, 2021, we issued $1.0 billion aggregate principal amount of our 0% Convertible Senior Notes due 2027 (the “Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 12, 2021, the initial purchasers of the Convertible Notes exercised their option to purchase an additional $150.0 million aggregate principal amount of the Company’s 0% Convertible Senior Notes due 2027 (the “Additional Notes” and, together with the Convertible Notes, the “Notes”), and such Additional Notes were issued on March 16, 2021. The initial conversion price of the Notes is $206.00 per share of common stock, which represents a premium of approximately 47.5% over the closing price of our common stock on March 2, 2021. The Notes will mature on March 15, 2027, unless earlier repurchased, redeemed or converted. The Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of March 5, 2021, between the Company and U.S. Bank National Association, as trustee. We used $84.0 million of the net proceeds from the sale of the Notes to fund the cost of entering into capped call transactions. The net proceeds from the issuance of the Notes were approximately $1.0 billion, net of capped call transaction costs of $84.0 million and debt issuance costs totaling $23.6 million. See Note 7, Debt, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
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Revolving Credit Facility
On March 2, 2021, we terminated our secured revolving credit agreement, dated as of April 21, 2020 (the “Credit Agreement”), among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent, and in connection with such termination: (i) all borrowings outstanding under the Credit Agreement were repaid in full by the Company; and (ii) all liens and security interests under the Credit Agreement in favor of the lenders thereunder were released. See Note 7, Debt, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
Liquidity
Our primary cash needs are for operating expenses, working capital and capital expenditures to support the growth in our business. Prior to our IPO,
In March 2021, we financed our operations through private sales of equity securities and through sales of our products. Since our inception and through March 30, 2019, we raised a total of $199.5 million from the sale of convertible preferred stock, including through sales of convertible notes which were converted into preferred stock, net of costs associated with such financings. In connection with our IPO, we sold an aggregate of 11,068,750 shares of our common stock, including 1,443,750 shares pursuant to the underwriters’ over-allotment option, at an IPO price of $25.00 per share and received approximately $252.5issued $1,150.0 million in net proceeds. We have also entered into the credit facilities described below with Silicon Valley Bank (“SVB”).aggregate principal amount of Notes as discussed above.
As of March 30, 2019,July 3, 2021, we had $35.4$1,009.3 million in cash and cash equivalents. We believe that our cash and cash equivalents proceeds from our IPO,and cash flow from operating activities and available borrowings under our credit facilities will be sufficient to fund our working capital and meet our anticipated capital requirements for at least the next 12 months. Additionally, we may also raise funds by issuing debt or equity securities. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including the impact of the COVID-19 pandemic; the number and characteristics of any additional products or manufacturing processes we develop or acquire to serve new or existing markets; our investment in and build out of our campus headquarters; the expenses associated with our marketing initiatives; our investment in manufacturing and facilities to expand our manufacturing and production capacity; the costs required to fund domestic and international growth; the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes; any lawsuits related to our products or commenced against us, including the costs associated with our current litigation with a former co-manufacturer;co-manufacturer, and the shareholder derivative lawsuits putatively brought on our behalf; the expenses needed to attract and retain skilled personnel; the costs associated with being a public company; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patentintellectual property claims, including litigation costs and the outcome of such litigation; and the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.


Amended and Restated Loan and Security AgreementCash Flows
In June 2018, we refinanced our then existingthe six months ended July 3, 2021, approximately $96.2 million in aggregate expenditures to purchase inventory and property, plant and equipment and approximately $71.2 million in other cash outflows from operating, investing and financing activities were funded by net borrowings of $1,017.4 million, after repaying the entire balance of the revolving credit facility and term loan facility under a loan and security agreement with SVB (the “Amended LSA”). The Amended LSA includes a $6.0 million revolving credit facility (the “2018 Revolving Credit Facility”) and a term loan facility (the “2018 Term Loan Facility”) comprised of (i) a $10.0 million term loan advance at closing, (ii) a conditional $5.0 million term loan advance, if no event of default has occurred and is continuing through the borrowing date, and (iii) an additional conditional term loan advance of $5.0 million if no event of default has occurred and is continuing based upon a minimum level of gross profit for the trailing 12-month period. The 2018 Term Loan Facility has a floating interest rate that is equal to 4.0% above the prime rate, with interest payable monthly and principal amortizing commencing on January 1, 2020, and will mature in June 2022. Borrowings under the 2018 Revolving Credit Facility carry a variable annual interest rate of prime rate plus 0.75% to 1.25% with an additional 5% on the outstanding balances in the event of a default. The 2018 Revolving Credit Facility matures in June 2020.
The 2018 Term Loan Facility and the 2018 Revolving Credit Facility (collectively, the “SVB Credit Facilities”) contain customary negative covenants that limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or consolidate. The SVB Credit Facilities are secured by a blanket lien on all of our personal property assets. The SVB Credit Facilities also contain customary affirmative covenants, including delivery of audited financial statements. We were in compliance with the covenants in the SVB Credit Facilities as of March 30, 2019.
As of March 30, 2019 and December 31, 2018, we had $6.0 million and $20.0 million in borrowings on the 2018 Revolving Credit Facility and 2018 Term Loan Facility, respectively, and had no availability to borrow under either of these loan facilities. In the three months ended March 30, 2019 and March 30, 2018, we incurred $0.6 million and $18,400 in interest expense related to SVB credit facilities. The interest rates on the 2018 Revolving Credit Facility and the 2018 Term Loan Facility at March 30, 2019 were 6.25% and 9.50%, respectively.
Equipment Loan Facility
In September 2018, we entered into an Equipment Loan and Security Agreement with Structural Capital Investments II, LP (“Structural Capital”) and Ocean II PLO, LLC, as administrative and collateral agent, pursuant to which Structural Capital agreed to provide an equipment loan facility to us in the amount of $5.0 million for the purpose of purchasing equipment.
We are required to pay interest on any unpaid principal amounts at a per annum rate equal to 6.25% plus the greater of 4.75% or the prime rate then in effect. Interest on each advance made to us is due and payable on the first business day of each month. We must begin repaying the aggregate principal amount of all advances we have received in equal monthly installments beginning on June 30, 2019, which may be extended for six or 18 months depending on whether we achieve certain milestones. The unpaid balance of all advances will become due on May 1, 2022. We must also pay a final payment fee of 13% of the facility commitment amount on the maturity date and such other date as the advances become due and such fee will increase by 1% if certain milestones are achieved.
The equipment loan facility has a prepayment penalty of 2% during the first two years of the term and 1% thereafter. The facility contains customary negative covenants that limit our ability to, among other things, grant liens, repurchase stock, pay dividends, transfer assets and merge or consolidate. It is secured by all equipment purchased with cash borrowed under the facility and all of our accounts, money, books, records and any cash or noncash proceeds of the foregoing. The facility also contains customary affirmative covenants, including delivery of audited financial statements. We were in compliance with the covenants contained in the facility as of March 30, 2019.
We had $5.0 million in borrowings outstanding as of March 30, 2019 and December 31, 2018 under the equipment loan facility. The interest rate on the equipment loan facility at March 30, 2019 and December 31, 2018 was 11.75% and 11.5%, respectively. For the three months ended March 30, 2019 and March 31, 2018, we recorded $0.3 million and $0, respectively, in interest expense related to the equipment loan facility.


Cash Flows
The following table presents the major components of net cash flows fromused in and used inprovided by operating, investing and financing activities for the periods indicated.
 Three Months EndedSix Months Ended
(in thousands) March 31,
2019		 March 31,
2018		(in thousands)July 3,
2021		June 27,
2020
Cash used in:    
Cash (used in) provided by:Cash (used in) provided by:
Operating activities $(13,280) $(4,888)Operating activities$(120,445)$(44,335)
Investing activities $(4,993) $(3,732)Investing activities$(51,565)$(28,328)
Financing activities $(589) $(1,368)Financing activities$1,022,074 $19,176 
Net Cash Used in Operating Activities
In threethe six months ended March 30, 2019,July 3, 2021, we incurred a net loss of $6.6 million, which was the$46.9 million. The primary reason for net cash used in operating activities of $13.3$120.4 million was net cash outflows from changes in our operating assets and liabilities of $102.6 million. Net cash outflows from changes in operating assets and liabilities were primarily due to the increase in finished goods inventory, increase in accounts receivable balances and escrow payments related to the Campus Lease (see Note 10, Commitments and Contingencies, to the Notes to Unaudited
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Condensed Consolidated Financial Statements included elsewhere in this report). The cash outflows were partially offset by the increase in accrued expenses and other current liabilities. Net loss in the six months ended July 3, 2021 included $29.1 million in non-cash expenses primarily comprised of share-based compensation expense and depreciation and amortization expense.
In the six months ended June 27, 2020, we recorded a net loss of $8.4 million. The primary reason for net cash used in operating activities also included $10.2of $44.3 million was $58.3 million in net cash outflows from changes in our operating assets and liabilities, primarily due to increase in inventory to meet growth in anticipated sales and to accommodate longer lead times for international shipments and prepayments to one of our pea protein suppliers, partially offset by $3.6the increase in accounts payable. Net loss in the six months ended June 27, 2020 included $22.4 million in non-cash expenses primarily comprised of depreciation and amortization expense, share-based compensation expense and change in warrant liability.
In three months ended March 31, 2018, we incurred a net loss of $5.7 million, which was the primary reason for net cash used in operating activities of $4.9 million. Net cash used in operating activities also included $0.3 million in net cash outflows from changes in our operating assets and liabilities, partially offset by $1.1 million in non-cash expenses comprised of depreciation and amortization expense, share-based compensation expense, and change in warrant liability.expense.
Depreciation and amortization expense was $1.9$9.2 million and $0.7$5.9 million in threethe six months ended March 30, 2019July 3, 2021 and March 31, 2018,June 27, 2020, respectively. We anticipate our depreciation and amortization expense will be approximately $2.1 million per quarter in 2019 based on our existing fixed assets and anticipated capital expenditures as we expand our production capabilities to meet increased demand for our products.
Net Cash Used in Investing Activities
Net cash used in investing activities primarily relates to capital expenditures to support our growth and investment in property, plant and equipment.
In the threesix months ended March 30, 2019,July 3, 2021, net cash used in investing activities was $5.0$51.6 million and consisted of cash outflows for the purchases of property, plant and equipment, primarily for manufacturing facility improvementsdriven by continued investments in production equipment and manufacturing equipment, assets purchased for salefacilities related to co-manufacturersour capacity expansion initiatives and security deposits.international expansion.
In the threesix months ended March 31, 2018,June 27, 2020, net cash used in investing activities was $3.7$28.3 million and consisted of $26.0 million in cash outflows for the purchasepurchases of property, plant and equipment, primarily fordriven by growth in capital production equipment purchases related to our capacity expansion initiatives, international expansion, including the acquisition of a manufacturing facility improvementsin Europe located in Enschede, the Netherlands, and manufacturing equipment.
In 2019, we anticipate spending approximately $17.0$2.3 million in capital expenditures as we scale our production capacity, including expenditures for additional machinerycash outflows related to property, plant and equipment as well as investment facilities and expenditurespurchased for sale to replace normal wear and tearco-manufacturers which were sold by the end of machinery and equipment. the second quarter of 2020.
Net Cash Used inProvided by Financing Activities
In the threesix months ended March 30, 2019,July 3, 2021, net cash used inprovided by financing activities was $0.6$1,022.1 million primarily as a resultfrom the proceeds of $0.9the Notes of $1,066.1 million in payments of deferred offering costs associated with the IPO, partially offset by $0.4and $6.5 million in proceeds from stock option exercises.


exercises, partially offset by repayment of revolving credit facility of $25.0 million, debt issuance costs of $23.6 million associated with the Notes, $1.8 million in payments of minimum withholding taxes on net share settlement of equity awards and payments under finance lease obligations.
In the threesix months ended March 31, 2018,June 27, 2020, net cash used inprovided by financing activities was $1.4$19.2 million primarily asfrom proceeds from a result of $2.6 millionnet increase in repaymentsborrowings on our revolving credit linefacility and term loan,proceeds from stock option exercises, partially offset by debt issuance costs of $1.2 million associated with our new revolving credit facility, early debt extinguishment costs of $1.2 million associated with our refinanced credit arrangements, $1.2 million in payments of minimum withholding taxes on net proceeds from the issuanceshare settlement of our Series G preferred stock.equity awards, and payments under finance lease obligations.
As of March 30, 2019, we had borrowed the entire availability of $20.0 million under the 2018 Term Loan Facility and $6.0 million under the 2018 Revolving Credit Facility.
Contractual Obligations and Commitments
There have been no significant changes during the threesix months ended March 30, 2019July 3, 2021 to the contractual obligations disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in the Prospectus2020 10-K, other than the following:
Convertible Senior Notes
On March 5, 2021, we issued $1.0 billion aggregate principal amount of Convertible Notes and on March 16, 2021, we issued $150.0 million aggregate principal amount of Additional Notes. The proceeds from the issuance of the Notes were approximately $1.0 billion, net of capped call transaction costs of $84.0 million and debt issuance costs totaling $23.6 million. See Note 7, Debt, to the Notes to Unaudited Condensed
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Consolidated Financial Statements included elsewhere in this report.
Leases
Effective March 1, 2019,On January 14, 2021, we entered into a lease forLease (the “Campus Lease”) with HC Hornet Way, LLC, a Delaware limited liability company (the “Landlord”), to house our principal executiveheadquarters offices, lab and innovation space in El Segundo, California, for anCalifornia. The initial term of the Campus Lease is 12 years, with two renewal options, each for a period of five years. The
Under the terms of the Campus Lease, we will lease an aggregate lease amountof approximately 281,110 rentable square feet in a portion of a building located at 888 Douglas Street, El Segundo, California (the “Premises”), to be built out by Landlord and delivered to the Company in three phases over a 26 month period. Aggregate payments towards base rent for the five-yearPremises over the term of the lease will be approximately $159.3 million.
Although we are involved in the design of the tenant improvements of the Premises, we do not have title or possession of the assets during construction. In addition, we do not have the ability to control the leased Premises until each phase of the tenant improvements is $2.7complete. As of July 3, 2021, the tenant improvements associated with Phase 1-A had not been completed, and the underlying asset had not been delivered to us. Accordingly, there was no lease commencement during the quarter ended July 3, 2021. Therefore, we have not recognized an asset or a liability for the Campus Lease in our condensed consolidated balance sheet as of July 3, 2021. We contributed $26.6 million in payments to a construction escrow account during the second quarter of 2021. These payments are recorded in “Prepaid lease costs, non-current” in our condensed consolidated balance sheet as of July 3, 2021, which will ultimately be recorded as a component of a right-of-use asset upon lease commencement. We anticipate further contributions as the Landlord continues to build out the Premises and anticipate that Phase-1A will be completed and the lease commencement date will occur during the fourth quarter of 2021 or the first quarter of 2022.
Concurrent with the our execution of the Campus Lease, as a security deposit, we delivered to Landlord a letter of credit in the amount of $12.5 million which amount will decrease to: (i) $6.3 million on the fifth (5th) anniversary of the Rent Commencement Date; (ii) $3.1 million on the eighth (8th) anniversary of the Rent Commencement Date; and (iii) $0 in the event we receive certain credit ratings; provided we are not then in default of our obligations under the Campus Lease. Upon termination of the revolving credit facility, the letter of credit continued in effect, unsecured.
China Investment and Lease Agreement
On September 22, 2020, we and BYND JX entered into an investment agreement with the Administrative Committee (the “JX Committee”) of the Jiaxing Economic & Technological Development Zone (the “JXEDZ”) pursuant to which, among other things, BYND JX has agreed to make certain investments in the JXEDZ in two phases of development and we have agreed to guarantee certain repayment obligations of BYND JX under such agreement. See Note 2, Summary of Significant Accounting Policies, elsewhere in this report.
During Phase 1, we have agreed to invest $10.0 million in the JXEDZ through an intercompany investment in BYND JX and BYND JX has agreed to lease a facility in the JXEDZ for a minimum of two years. In connection with such agreement, BYND JX entered into a factory leasing contract as of September 10, 2020 with an affiliate of the JX Committee, pursuant to which BYND JX has agreed to lease and renovate a facility in the JXEDZ and lease it for a minimum of two years. Renovations in the leased facility were substantially completed and trial production began in the first quarter of 2021. In the second quarter of 2021, several commercial trials of certain of our manufacturing processes were completed. Full-scale end-to-end production is expected by the end of 2021. In the second quarter of 2021, we received $0.2 million in subsidies for our investment in BYND JX from the Jiaxing Economic Development Zone Finance Bureau. In the event that we and BYND JX determine, in our sole discretion, to proceed with the Phase 2 development in the JXEDZ, BYND JX has agreed in the first stage of Phase 2 to increase its registered capital by $30.0 million and to acquire the land use right to a state-owned land plot in the JXEDZ to conduct development and construction of a new production facility. Following the first stage of Phase 2, we and BYND JX may determine, in our sole discretion, to permit BYND JX to obtain a second state-owned land plot in the JXEDZ in order to construct an additional facility thereon. See Note 10, Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
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Purchase of Real Property
Subsequent to the quarter ended July 3, 2021, on July 15, 2021, we purchased 12.9 acres of real property in Columbia, Missouri containing approximately 142,317 square feet of office/warehouse space, from where we had been conducting warehousing activities under a lease, for cash consideration of $10.4 million, subject to adjustment for customary prorations, transfer taxes, escrow holdbacks and other adjustments. Transaction costs were not material. We have not completed our evaluation of the accounting for this transaction.
Investment in The PLANeT Partnership
On January 25, 2021, we entered into The PLANeT Partnership, LLC (“TPP”), a joint venture with PepsiCo, Inc., to develop, produce and market innovative snack and beverage products made from plant-based protein. We believe TPP will allow us to reach more consumers by entering new product categories and distribution channels, increasing accessibility to plant-based protein around the world. For the six months ended July 3, 2021, we recognized our share of the net losses in TPP in the amount of $0.6 million. The future minimum lease payments required under noncancelable lease obligations related to this lease are $2.6 million due through 2023 (approximately $0.5 million annually) and $0.1 million thereafter.No such amounts were recognized in the six months ended June 27, 2020.
Purchase Commitments
As of March 30, 2019, the CompanyJuly 3, 2021, we had committeda commitment to purchase pea protein inventory totaling $46.1$124.1 million,. approximately $44.9 million in the remainder of 2021 and $79.2 million in 2022. In addition, as of July 3, 2021, we had approximately $62.3 million in purchase order commitments for capital expenditures primarily to purchase machinery and equipment. Payments for these purchases will be due within twelve months from July 3, 2021. We intend to use cash from operations to fund these purchase commitments.

Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any holdings in variable interest entities.
Critical Accounting Policies
In preparing our financial statements in accordance with GAAP, we are required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs and expenses, and disclosure of contingent assets and liabilities that are reported in the financial statements and accompanying disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates and assumptions. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
There have been no material changes in our critical accounting policies during the threesix months ended March 30, 2019,July 3, 2021, as compared to those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the Prospectus and 2020 10-K other than as described in Note 2, Summary of Significant Accounting Policies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in Part I, Item 1 of this report.
Emerging Growth Company Status
WeEffective December 31, 2020, we lost our EGC status and are an “emerging growth company,”now categorized as defined ina Large Accelerated Filer based upon the JOBS Act,current market capitalization of the Company according to Rule 12b-2 of the Exchange Act. As a result, we must comply with all financial disclosure and we may take advantage of certain exemptions from various reportinggovernance requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day ofLarge Accelerated Filers.


the fiscal year following the fifth anniversary of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1.0 billion of non-convertible debt securities over a three-year period.
Recent Accounting Pronouncements
Please refer to Note 2,Summary of Significant Accounting Policies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in Part I, Item 1 of this report for a discussion of recently adopted accounting pronouncements and new accounting pronouncements that may impact us.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks in the ordinary course of our business. These risks primarily consist ofbusiness, including fluctuations in interest rates, raw material prices, foreign currency exchange fluctuations, and inflation as follows:
Interest Rate Risk
Our cash consists of amounts held by third-party financial institutions. In May 2019, upon closing of our IPO, we adopted anOur investment policy which has as its primary objective investment activities which preservespreserve principal without significantly increasing risk.
We are subject to interest rate riskOn March 2, 2021, we terminated our secured revolving credit agreement, dated as of April 21, 2020 (the “Credit Agreement”), among us, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent, and in connection with such termination: (i) all borrowings outstanding under the Credit Agreement were repaid in full by us; and (ii) all liens and security interests under the Credit Agreement in favor of the lenders thereunder were released. In the three and six months ended July 3, 2021, we incurred $0 and $0.3 million, respectively, in interest expense related to our SVB Credit Facilitiesbank credit facilities. Upon termination of the revolving credit facility, unamortized debt issuance costs of $1.0 million associated with the revolving credit facility were written off as “Loss on extinguishment of debt,” which is included in “Other, net” in our condensed consolidated statement of operations for the six months ended July 3, 2021.
On March 5, 2021, we issued $1.0 billion aggregate principal amount of Convertible Notes and our equipment loan facility.on March 16, 2021, we issued $150.0 million aggregate principal amount of Additional Notes. The proceeds from the issuance of the Notes were approximately $1.0 billion, net of capped call transaction costs of $84.0 million and debt issuance costs totaling $23.6 million. See “—LiquidityNote 7, Debt, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report. The Notes do not bear regular interest, and Capital Resources—Credit Facilities”the principal amount of the Notes do not accrete. However, special interest and “—Liquidity and Capital Resources—Equipment Loan Facility” above. Basedadditional interest may accrue on the average interestNotes at a rate on our SVB Credit Facilities and equipment loan facility duringper annum not exceeding 0.50% (subject to certain exceptions) upon the three months ended March 30, 2019 andoccurrence of certain events relating to the failure to file certain SEC reports or to remove certain restrictive legends from the Notes.
To the extent that borrowings were outstanding,we do not have any interest-bearing debt and no events triggering special interest and additional interest on the Notes have taken place as of July 3, 2021, we do not believe that a 1.0% change in the interest rate would have a material effect on our results of operations or financial condition.
Ingredient Risk
OurWe are exposed to risk related to the price and availability of our ingredients because our profitability is dependent on, among other things, our ability to anticipate and react to raw material and food costs. Currently, the main ingredient in our products is pea protein, which we sourceis sourced from Canadapeas grown in the United States, France and France.Canada. The prices of pea protein and other ingredients we use are subject to many factors beyond our control, such as the number and size of farms that grow Canadian and European yellow peas, the vagaries of these farming businesses, including poor harvests due to adverse weather conditions, natural disasters and pestilence, and changes in national and world economic conditions.conditions, including as a result of COVID-19. In addition, we purchase some ingredients and other materials offshore, and the price and availability of such ingredients and materials may be affected by political events or other conditions in these countries or tariffs or trade wars. As of March 30, 2019,
During the three and six months ended July 3, 2021, a hypothetical 10% increase or 10% decrease in the weighted-average cost of pea protein, our primary ingredient, would have resulted in an increase of approximately $0.4$1.3 million and $2.2 million, respectively, or a decrease of approximately $0.4$1.3 million and $2.2 million, respectively, to cost of goods sold. We are working to diversify our sources of supply and intend to enter into long-term contracts to better ensure stability of prices of our raw materials. As of July 3, 2021, we had a multi-year sales agreement with Roquette for the supply of pea protein which expires in December 2022. See Note 10, Commitments and Contingencies, to the Notes to Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.
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Foreign ExchangeCurrency Risk
Our revenues and costsWe are denominated in U.S. dollars and are not subjectexposed to foreign exchange risk. However, tocurrency risks that arise from normal business operations. These risks include the extent our sourcing strategy changes or we commence generating net revenues outsidetranslation of the United States that arelocal currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany loans with foreign subsidiaries and transactions denominated in currencies other than a location's functional currency. Our foreign entities use their local currency as the functional currency. For these entities, we translate net assets into U.S. dollar,dollars at period end exchange rates, while revenue and expense accounts are translated at average exchange rates prevailing during the periods being reported. Resulting currency translation adjustments are included in “Accumulated other comprehensive income” and foreign currency transaction gains and losses are included in “Other, net.” Transaction gains and losses on long-term intra-entity transactions are recorded as a component of “Other comprehensive income (loss).” Transactions denominated in a currency other than the reporting entity’s functional currency may give rise to transaction gains and losses that impact our results of operations could be impacted by changesoperations.
Unrealized translation losses, net of tax, reported as cumulative translation adjustments through “Other comprehensive income (loss)” were $(0.7) million for the six months ended July 3, 2021. Foreign currency transaction income (losses) included in “Other, net” were $0.2 million and $(0.1) million, respectively, in the three and six months ended July 3, 2021. Foreign currency transaction gains included in “Other, net” were $0.1 million in each of the three and six months ended and June 27, 2020. Sensitivity to foreign currency exchange rates.rates was not material as of July 3, 2021 and December 31, 2020.
Inflation Risk
We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.



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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 30, 2019July 3, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures 
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our companyCompany have been detected.




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Part II. Other Information
ITEM 1. LEGAL PROCEEDINGS.
We are subject to various legal proceedings and claims that arise in the ordinary course of our business. The Company establishes an accrued liability for legal matters when those matters present loss contingencies that are both probable and estimable. Although the outcome of these and other claims cannot be predicted with certainty, management is not currently able to estimate the reasonable possible amount of loss or range of loss and does not believe that it is probable that the ultimate resolution of the current matters will have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the final results of any current or future proceeding cannot be predicted with certainty, and until there is final resolution on any such matter that we may be required to accrue for, we may be exposed to loss in excess of the amount accrued. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. 
For a description of our material pending legal proceedings, please see Note 10, Commitments and Contingencies, of the Notes to Unaudited Consolidated Financial Statements included elsewhere in this report.
ITEM 1A. RISK FACTORS.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors" in our 2020 Form 10-K, as updated and supplemented below and in our subsequent filings. These risks could materially harm our business, operating results and financial condition. Additional factors and uncertainties not currently known to us or that we currently consider immaterial also may materially adversely affect our business, financial condition or future results.
Risks Related to Our Business
The COVID-19 pandemic has had, and we expect will continue to have, a material adverse impact on our business, results of operations, financial condition and cash flows.
The global spread and unprecedented impact of COVID-19 continues to create significant volatility, uncertainty and economic disruption. COVID-19 has led governments and other authorities around the world to implement significant measures intended to control the spread of the virus, including social distancing measures, business closures or restrictions on operations, quarantines and travel bans. While some of these restrictions were lifted or eased in many jurisdictions as the rates of COVID-19 infections have decreased or stabilized and various COVID-19 vaccines are being distributed, a resurgence of COVID-19 and the rising impact of various COVID-19 variants in some markets has slowed, halted or reversed the reopening process altogether.
Even if not required by governments and other authorities, companies are continuing to take various safety precautions, such as requiring employees to work remotely, imposing travel restrictions, reducing operating hours, imposing operating restrictions and temporarily closing businesses. These continuing restrictions, and future prevention and mitigation measures, imposed by governments and companies, are likely to continue to have an adverse impact on global economic conditions and consumer confidence and spending (including as a result of lower discretionary income due to unemployment or reduced or limited work as a result of measures taken in response to the pandemic), which has had, and is expected to continue to have, a material adverse impact on the demand for our products, particularly in our foodservice channel, and could materially adversely affect the supply of our products. Sustained market turmoil and business disruption due to COVID-19 have negatively impacted and are expected to continue to negatively impact our business, results of operations, financial condition and cash flows.
Impact of COVID-19 on our foodservice channel
COVID-19 has impacted business operations and customer and consumer demand in our foodservice channel as restaurants and other foodservice locations have been required to temporarily close or restrict indoor dining to limit the spread of COVID-19. Although certain of these restrictions were lifted pursuant to multi-step reopening plans and exceptions to allow for carry-out and delivery have enabled certain of our customers to continue to generate business, we experienced a significant deterioration in sales to foodservice customers in
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2020. For the year ended December 31, 2020, foodservice channel net revenues were $106.2 million compared to $153.1 million in the prior year. For the first half of 2021, foodservice channel net revenues were $70.8 million compared to $54.9 million in the prior-year period, a 29% increase. Although our foodservice channel net revenues showed recovery in the second quarter of 2021 from the severely depressed levels seen in the second quarter of the prior year, there is uncertainty related to the COVID-19 infection rates, as well as the reimplementation of safety measures in certain jurisdictions, and potential impact on customer demand levels. We expect to also continue to be impacted by decreased customer and consumer demand as a result of event cancellations and social distancing, government-imposed restrictions on public gatherings and businesses, shelter-in place orders and temporary restaurant and retail store closures and operating restrictions. Closures or scaled back operations have also resulted in delays in tests or launches of our products among our foodservice customers.
Impact of COVID-19 on our retail channel
While we initially experienced an increase in retail demand during the second quarter of 2020 as consumers shifted toward more at-home consumption, the level of retail demand meaningfully slowed during the third and fourth quarters of 2020. For example, for the three months ended June 27, 2020, we generated retail channel net revenues of $99.6 million, compared to $70.0 million in the three months ended September 26, 2020, and $75.1 million in the three months ended December 31, 2020. For the first half of 2021, retail channel net revenues were $186.8 million compared to $155.5 million in the prior-year period, a 20.1% increase. As the rates of infections of COVID-19 and its variants continue to increase in numerous regions of the world, the continuing impact of COVID-19 remains highly uncertain. It is, therefore, difficult to predict retail demand levels going forward, including as a result of foodservice establishments opening and potentially offsetting retail demand. Additionally, we could suffer product inventory losses or markdowns and lost revenue in the event of the loss or a shutdown of a major supplier, co-manufacturer or distributor, disruption of our distribution network, or decreased consumer confidence and spending. We also have been providing heavier discounting on some of our products in response to COVID-19. Although these actions are intended to build brand awareness and increase consumer trials of our products, they have and are likely to continue to have a negative impact on our gross profit and gross margin.
Impact of COVID-19 on our suppliers, co-manufacturers and distributors
We source ingredients from multiple suppliers around the world. Currently, the principal ingredient in most of our products is pea protein. In 2020, we scaled back our production in response to COVID-19 and to reduce our existing finished goods and work in process inventory levels, and saw an increase in our pea protein stocks. However, in light of the expected shelf life of our pea protein raw materials, we do not believe there is a risk of inventory obsolescence of these raw materials at this time. The impact of COVID-19 on any of our suppliers, co-manufacturers, distributors or transportation or logistics providers, including problems with their respective businesses, finances, labor matters (including illness or absenteeism in workforce), ability to import raw materials, product quality issues, costs, production, insurance and reputation, may negatively affect the price and availability of our ingredients and/or packaging materials and impact our supply chain. In addition, if the disruptions caused by COVID-19 continue or there are additional resurgences of COVID-19 or COVID-19 variants, our ability to meet the demands of our customers may be materially impacted.
Impact of COVID-19 on our manufacturing operations and workforce
We have implemented and continue to practice a series of physical distancing and hygienic practices at our manufacturing and other facilities. If we are forced to make further modifications, scale back hours of production or close these facilities in response to the pandemic, we expect our business, results of operations, financial condition and cash flows would be materially adversely affected. Our office-based employee population is currently provided a flexible schedule of working in the office or from home depending on job responsibilities, which may exacerbate certain risks to our business, including cybersecurity attacks and risk of phishing due to an increase in connections to the Beyond Meat network from devices located outside of the corporate firewall. In the event that an employee tests positive for COVID-19, we may have to temporarily close one or more of our facilities for cleaning and/or quarantine one or more employees, which could negatively impact our financial results.
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Impact of COVID-19 on our international expansion and access to capital
Part of our growth strategy includes increasing the number of international customers and expanding into additional geographies. For example, in the second quarter of 2021, our manufacturing facility in Europe located in Enschede, the Netherlands, completed commercial trial runs for dry blend production and began commercial trial runs for our extruded product which is expected to be completed by the end of the third quarter of 2021. Also in the second quarter of 2021, several commercial trials of certain of our manufacturing processes were completed in our new end-to-end manufacturing facility in the Jiaxing Economic & Technological Development Zone near Shanghai and full-scale end-to-end production is expected by the end of 2021. The timing and success of our ongoing international expansion efforts may be negatively impacted by COVID-19, which could impede our anticipated growth.
We may be subject to special COVID-19 related requirements, restrictions and testing, including those applicable to cold-chain food distribution, when our products or ingredients are imported into or circulated through Mainland China. If we do not comply and/or our product tests positive for coronavirus that can negatively impact our ability to import or distribute our product and may result in recalls, administrative fines and civil liability, particularly if the problem results in sickness or injury.
Additionally, COVID-19 has created significant disruptions in the credit and financial markets, which could adversely affect our ability to access capital on favorable terms or at all.
The extent of COVID-19’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic (including any additional resurgences), rising impact of COVID-19 variants, the wide distribution and public acceptance of the various COVID-19 vaccines and their efficacy against COVID-19 and its variants, and the level of social and economic restrictions imposed in the United States and abroad in an effort to curb the spread of the virus, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. Furthermore, the uncertainty created by COVID-19 significantly increases the difficulty in forecasting operating results and strategic planning. As a result, it is not currently possible to ascertain the ultimate impact of COVID-19 on our business, results of operations, financial condition or liquidity. However, COVID-19 has had and may continue to have a material adverse impact on our business, results of operations, financial condition and cash flows and may adversely impact the trading price of our common stock. While the ultimate health and economic impact of COVID-19 continues to be highly uncertain, we acknowledge that our business operations and results of operations, including our net revenues, gross profit, gross margin, earnings and cash flows, could be adversely impacted through 2021 and likely into 2022. Future events and effects related to the COVID-19 pandemic cannot be determined with precision and actual results could significantly differ from estimates or forecasts. The impact of COVID-19 may also heighten other risks discussed in this report.
Risks Related to Our Indebtedness
Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our obligations under our Notes.
As of April 3, 2021, we had approximately $1.2 billion of consolidated indebtedness and other liabilities. We may also incur additional indebtedness to meet future financing needs. Our indebtedness could have significant negative consequences for our security holders and our business, results of operations and financial condition by, among other things:
•increasing our vulnerability to adverse economic and industry conditions;
•limiting our ability to obtain additional financing;
•requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes;
•limiting our flexibility to plan for, or react to, changes in our business;
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•diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Notes; and
•placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our current or future indebtedness, including the Notes, as applicable, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our current or future indebtedness, including the Notes, and our cash needs may increase in the future. In addition, any future indebtedness that we may incur may contain financial and other restrictive covenants that limit our ability to operate our business, raise capital or make payments under our other indebtedness. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
We may be unable to raise the funds necessary to repurchase the Notes for cash following a fundamental change, or to pay the cash amounts due upon conversion, and our future indebtedness may limit our ability to repurchase the Notes or pay cash upon their conversion.
Holders of the Notes may, subject to a limited exception, require us to repurchase their Notes following a “Fundamental Change” (as defined in the Indenture) at a cash repurchase price generally equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special and additional interest, if any. In addition, all conversions of Notes will be settled partially or entirely in cash. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Notes or pay the cash amounts due upon conversion. In addition, applicable law, regulatory authorities and the agreements governing our future indebtedness may restrict our ability to repurchase the Notes or pay the cash amounts due upon conversion. Our failure to repurchase the Notes or to pay the cash amounts due upon conversion when required will constitute a default under the Indenture. A default under the Indenture or the Fundamental Change itself could also lead to a default under agreements governing our future indebtedness, which may result in that indebtedness becoming immediately payable in full. If the repayment of such future indebtedness were to be accelerated after any applicable notice or grace periods, then we may not have sufficient funds to repay that indebtedness and repurchase the Notes or make cash payments upon their conversion.
The accounting method for the Notes could adversely affect our reported financial condition and results.
Our Notes do not bear regular interest, and the principal amount of the Notes do not accrete. However, special interest and additional interest may accrue on the Notes at a rate per annum not exceeding 0.50% (subject to certain exceptions) upon the occurrence of certain events relating to the failure to file certain SEC reports or to remove certain restrictive legends from the Notes. The accounting method for reflecting the Notes on our balance sheet may adversely affect our reported earnings and financial condition. If any of the conditions to the convertibility of the Notes is satisfied or the Notes become due within one year, then we may be required under applicable accounting standards to reclassify the liability carrying value of the Notes as a current, rather than a long-term, liability. This reclassification could be required even if no noteholders convert their Notes and could materially reduce our reported working capital.
We early adopted ASU 2020-06 to account for our Notes which eliminates the treasury stock method for convertible instruments that can be settled in whole or in part with equity and instead requires the application of the more dilutive of the “if-converted” method or the two-class method. Under the if-converted method, diluted earnings per share would generally be calculated assuming that all the conversion premium or spread were converted at the beginning of the reporting period, unless the result would be anti-dilutive. The conversion premium or spread would have a dilutive impact on net income per share when the average market price of the Company’s common stock for a given period exceeds the conversion price.
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The capped call transactions may affect the value of the Notes and our common stock.
In connection with the Notes, we entered into privately negotiated capped call transactions with the option counterparties. The capped call transactions will cover, subject to customary adjustments, the number of shares of common stock that underlie the Notes. The capped call transactions are expected generally to reduce potential dilution to our common stock upon conversion of the Notes or at our election (subject to certain conditions) offset any cash payments we are required to make in excess of the aggregate principal amount of the converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap.
We have been advised that, in connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates purchased shares of our common stock and/or entered into various derivative transactions with respect to our common stock.
In addition, we have been advised that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so on each exercise date of the capped call transactions, and in connection with any early termination event in respect of the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of our common stock.
Provisions in the indenture governing the Convertible Notes could delay or prevent an otherwise beneficial takeover of us.
Certain provisions in the Convertible Notes and the indenture governing the Convertible Notes could make a third party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a fundamental change, then noteholders will have the right to require us to repurchase their Convertible Notes for cash. In addition, if a takeover constitutes a Make-Whole Fundamental Change (as defined in the Indenture), then we may be required to temporarily increase the conversion rate. In either case, and in other cases, our obligations under the Convertible Notes and the indenture governing the Convertible Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that holders of our common stock or Convertible Notes may view as favorable.
Risks Related to Regulatory and Legal Compliance Matters, Litigation and Legal Proceedings
Our operations are subject to FDA governmental regulation and other foreign, federal, state and local regulation, and there is no assurance that we will be in compliance with all regulations.
Our operations are subject to extensive regulation by the FDA, and other foreign, federal, state and local authorities. Specifically, for products manufactured or sold in the United States we are subject to the requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, packaging, labeling and safety of food. Under this program, the FDA requires that facilities that manufacture food products comply with a range of requirements, including hazard analysis and preventive controls regulations, current good manufacturing practices, or cGMPs, and supplier verification requirements. Comparable regulations apply in foreign jurisdictions such as the European Union, the United Kingdom and China. Our processing and manufacturing facilities, including those of our co-manufacturers, are subject to periodic inspection by foreign, federal, state and local authorities. We do not control the manufacturing processes of, and rely upon, our co-manufacturers for compliance with cGMPs for the manufacturing of our products by our co-manufacturers. If we or our co-manufacturers cannot successfully manufacture products that conform to our specifications and the strict regulatory requirements of the FDA or other non-U.S. regulators, we or they may be subject to adverse inspectional findings or enforcement actions, which could materially impact our ability to market our products, could result in our inability to manufacture our products or our co-manufacturers’ inability to continue manufacturing for us, or could result in a recall of our product that has already been distributed. In addition, we rely upon our co-manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable state, local or foreign regulatory authority
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determines that we or these co-manufacturers have not complied with the applicable regulatory requirements, our business may be materially impacted.
We seek to comply with applicable regulations through a combination of employing internal experience and expert personnel to ensure quality-assurance compliance (i.e., assuring that our products are not adulterated or misbranded) and contracting with third-party laboratories that conduct analyses of products to ensure compliance with nutrition labeling requirements and to identify any potential contaminants before distribution. Failure by us or our co-manufacturers to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our or our co-manufacturers’ operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, restrictions or prohibitions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs resulting in a material effect on our operating results and business.
We are subject to international regulations that could adversely affect our business and results of operations.
We are subject to extensive regulations internationally where we manufacture, distribute and/or sell our products. Our products are subject to numerous food safety and other laws and regulations relating to the sourcing, manufacturing, composition and ingredients, storing, labeling, marketing, advertising and distribution of these products. For example, in early 2018, we received an inquiry from Canadian officials about the labeling and composition of products that we export to Canada. We responded promptly to that inquiry, identifying minor formulation changes that we made under Canadian regulations. If regulators determine that the labeling and/or composition of any of our products is not in compliance with foreign law or regulations, or if we or our co-manufacturers otherwise fail to comply with applicable laws and regulations in foreign jurisdictions where we operate and market products, we could be subject to civil remedies or penalties, such as fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of the products, or refusals to permit the import or export of products, as well as potential criminal sanctions. The consequences of a labeling violation in China can lead not only to fines from administrative authorities but also to multiple individual consumer lawsuits for nominal damages in the hundreds of dollars each, which can be costly to defend. In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results. For example, China may introduce new Food Labeling Supervision Measures that could increase restrictions and require changes to our labels. In addition, with our expanding international operations, we could be adversely affected by violations of the FCPA, and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with these anti-bribery laws, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees, contractors or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, cash flows and financial condition.
Any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the FDA or U.S. Department of Agriculture, or USDA, state regulators or similar foreign regulatory authorities that relate to the use of the word “meat” or other similar words in connection with plant-based protein products could adversely affect our business, prospects, results of operations or financial condition.
The FDA and the USDA, state regulators or similar foreign regulatory authorities, such as Health Canada or the CFIA, or authorities of the UK, the EU or the EU member states, or China, including the State Administration for Market Regulation, could take action to impact our ability to use the term “meat” or similar words (such as “beef”, “burger” or “sausage”) to describe or advertise our products. In addition, a food may be deemed misbranded if its labeling is false or misleading in any particular way, and the FDA, CFIA, EU member state authorities or other regulators could interpret the use of the term “meat” or any similar phrase(s) to describe our plant-based protein products as false or misleading or likely to create an erroneous impression regarding their composition.
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For example, in 2018, the state of Missouri passed a law prohibiting any person engaged in advertising, offering for sale, or sale of food products from misrepresenting a product as meat that is not derived from harvested production livestock or poultry. The state of Missouri Department of Agriculture has clarified its interpretation that products which include prominent disclosure that the product is “made from plants,” or comparable disclosure such as through the use of the phrase “plant-based,” are not misrepresented under the Missouri law. Additional states, including Mississippi, Louisiana, and Oklahoma, have subsequently passed similar laws, and legislation that would impose additional requirements on plant-based meat products is currently pending in a number of other states. The United States Congress recently considered (but did not pass) federal legislation, called the Real MEAT Act, that could require changes to our product labeling and marketing, including identifying products as “imitation” meat products, and that would give USDA certain oversight over the labeling of plant-based meat products. If similar bills gain traction and ultimately become law, we could be required to identify our products as “imitation” in our product labels. Further, the USDA has received a petition from the cattle industry requesting that USDA exclude products not derived from the tissue or flesh of animals that have been harvested in the traditional manner from being labeled and marketed as “meat,” and exclude products not derived from cattle born, raised and harvested in the traditional manner from being labeled and marketed as “beef.” The USDA has not yet responded substantively to this petition but has indicated that the petition is being considered as a petition for a policy change under the USDA’s regulations. We do not believe that USDA has the statutory authority to regulate plant-based products under the current legislative framework. Canadian Food and Drug Regulations also provide requirements for “simulated meat” products, including requirements around composition and naming.
In Europe, the Agriculture Committee of the European Parliament proposed in May 2019 to reserve the use of “meat” and meat-related terms and names for products that are manufactured from the edible parts of animals. In October 2020, the European Parliament rejected the adoption of this provision. In the absence of European Union legislation, Member States remain free to establish national restrictions on meat-related names. In June 2020, France adopted a prohibition on using names to indicate foodstuffs of animal origin to describe, market, or promote foodstuffs containing vegetable proteins. An implementing decree will likely be entered into force by January 2022, to define, for example, the sanctions in case of non-compliance. We do not believe that the new French bill complies with the laws of the European Union, in particular the principle of free movement of goods. We also note that this prohibition has not been appropriately notified to the European Commission, and that as a result the prohibition is in principle non-enforceable. We understand that the French government intends to rectify this non-notification in the near future so as to ensure its enforceability. Should EU member state regulatory authorities take action with respect to the use of the term “meat” or similar terms, such that we are unable to use those terms with respect to our plant-based products, we could be subject to enforcement action or recall of our products marketed with these terms, we may be required to modify our marketing strategy, or required to identify our products as “imitation” in our product labels, and our business, prospects, results of operations or financial condition could be adversely affected. Competitors may also try to bring legal action against us. In late September 2020, three meat trade associations announced that they had initiated a lawsuit against a French plant-based meat company for unfair competition and violating the prohibition on meaty names of June 2020. To the best of our knowledge, the lawsuit has not been filed yet. In October 2020, a French trade association representing the cattle industry sent a cease-and-desist letter to one of our contract manufacturers alleging that the use of “meat” and meat-related terms is misleading the French consumer. As of August 7, 2021, we continued to be actively engaged in negotiations to settle this dispute. Nonetheless, despite our best efforts, these disputes could result in litigation before the French courts, which could be costly and disruptive to our ability to market in these countries.
Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business.
From time to time, we may be party to various claims and litigation proceedings. We evaluate these claims and litigation proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates.
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Don Lee Farms
On May 25, 2017, Don Lee Farms, a division of Goodman Food Products, Inc., filed a complaint against us in the Superior Court of the State of California for the County of Los Angeles asserting claims for breach of contract, misappropriation of trade secrets, unfair competition under the California Business and Professions Code, money owed and due, declaratory relief and injunctive relief, each arising out of our decision to terminate an exclusive supply agreement between us and Don Lee Farms. We denydenied all of these claims and filed counterclaims on July 27, 2017, alleging breach of contract, unfair competition under the California Business and Professions Code and conversion. In October 2018, Don Lee Farmsthe former co-manufacturer filed an amended complaint that added ProPortion Foods, LLC (oneone of Beyond Meat’sour then current contract manufacturers)manufacturers as a defendant, principally for claims arising from ProPortion’sthe then current contract manufacturer’s alleged use of Don Lee Farms’the former co-manufacturer’s alleged trade secrets, and for replacing Don Lee Farmsthe former co-manufacturer as Beyond Meat’s co-manufacturer. ProPortionone of our co-manufacturers. The then current contract manufacturer filed an answer denying all of Don Lee Farms’ claims and a cross-complaint against Beyond Meatus asserting claims of total and partial equitable indemnity, contribution, and repayment. On March 11, 2019, Don Lee Farms filed a second amended complaint to add claims of fraud and negligent misrepresentation against us. On May 30, 2019, the judge denied our motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to proceed. On June 19, 2019, we filed an answer denying Don Lee Farms' claims.
On January 24, 2020, a writ judge granted Don Lee Farms a right to attach in the amount of $628,689 on the grounds that Don Lee Farms had established a “probable validity” of its claim that Beyond Meat owes Don Lee Farms money for a small batch of unpaid invoices. This determination was not made by the trial judge. The trial judge has yet to determine the legitimacy or merits of Don Lee Farms’ claims.
On January 27, 2020, Don Lee Farms filed a third amended complaint to add three individual defendants, all of whom are our current or former employees, including Mark Nelson, the Company’s former Chief Financial Officer and Treasurer, to Don Lee Farms’ existing fraud claims alleging that those individuals were involved in the alleged fraudulent misrepresentations. On June 23, 2020, the judge denied Beyond Meat and the individual defendants’ motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to proceed. On July 6, 2020, we and the individual defendants filed an answer denying all of Don Lee Farms’ claims, including denying all allegations of fraud and negligent misrepresentation.
On August 11, 2020, we filed an amended cross-complaint against Don Lee Farms, its parent Goodman Food Products, Inc. and its owners and employees, Donald, Daniel, and Brandon Goodman. Among other claims, the amended cross-complaint alleges that Don Lee Farms defrauded Beyond Meat, misappropriated its trade secrets, and infringed its trademarks.
On January 28, 2021, Don Lee Farms filed a motion for summary adjudication on its breach of contract and money owed claims and on Beyond Meat’s breach of contract claims. On February 18, 2021, Don Lee Farms and Donald, Daniel and Brandon Goodman filed a motion for summary adjudication on Beyond Meat’s fraud, negligent misrepresentation, and conversion claims.
On February 16, 2021, the Court entered an order consolidating this action with an action that Don Lee Farms filed against CLW Foods, LLC, a current Beyond Meat contract manufacturer. On February 22, 2021, CLW Foods, LLC requested a continuance of the trial date, which the Court granted.
On March 19, 2021, Don Lee Farms requested the dismissal, without prejudice, of Don Lee Farm’s claims against our former contract manufacturer, ProPortion Foods, LLC and current contract manufacturer CLW Foods, LLC. On, March 23, 2021, ProPortion Foods, LLC requested that its claims against us be dismissed without prejudice. On March 26, 2021, the Court granted Don Lee Farms’ request to dismiss its claims against ProPortion Foods, LLC and CLW Foods, LLC; and granted ProPortion Foods, LLC request to dismiss its claims against us.
On May 7, 2021, the Court ruled on Don Lee Farms’ motions for summary adjudication. The Court granted Don Lee Farms’ motion for summary adjudication on its breach of contract and money owed claims, and Beyond Meat’s negligent misrepresentation and conversion claims. The Court denied Don Lee Farms’ motion for summary adjudication on Beyond Meat’s breach of contract and fraud claims, allowing Beyond Meat’s claims to proceed to trial.
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On June 11, 2021, former Beyond Meat employees Mark Nelson and Tony Miller, and current employee, Jessica Quetsch (collectively, the “individual defendants”), filed a motion for summary judgment on DLF’s fraud claim asserted against them. The individual defendants’ summary judgment hearing is currently scheduled for August 25, 2021. On June 11, 2021, we filed a motion for summary adjudication on DLF’s fraud and negligent misrepresentation claims, misappropriation of trade secret claim, and unfair competition claim under the California Business and Professions Code. The Company’s summary adjudication hearing is currently scheduled for August 27, 2021.
The previous trial date, June 14, 2021, was continued. Trial is currently set for May 18, 2020.September 27, 2021.
Don Lee Farms is seeking from Beyond Meat and ProPortionthe individual defendants unspecified compensatory and punitive damages, declaratory and injunctive relief, including the prohibition of Beyond Meat’s use or disclosure of the alleged trade secrets, and attorneys’ fees and costs. We are seeking from Don Lee Farms monetary damages, restitution of monies paid to Don Lee Farms, and attorney’s fees and costs. ProPortion is seeking indemnity, contribution, or repayment from usinjunctive relief, including the prohibition of any or all damages that ProPortion may be found liable to Don Lee Farms,Farms’ use or disclosure of Beyond Meat’s trade secrets and attorney’sthe prohibition of Don Lee Farms’ infringing use of Beyond Meat’s trademarks, and attorneys’ fees and costs.
We believe we were justified in terminating the supply agreement with Don Lee Farms, that we did not misappropriate theirDon Lee Farms’ alleged trade secrets, that we are not liable for the fraud or negligent misrepresentation alleged in the proposed secondthird amended complaint, and that Don Lee Farms is liable for the conduct alleged in our amended cross-complaint. Conversely, as alleged in our amended cross-complaint, we believe Don Lee Farms misappropriated our trade secrets, defrauded us, and that we are not liable to ProPortion for any indemnity, contribution, or repayment, including for any damages or attorney’s fees and costs. ultimately has infringed our trademarks.
We are currently in the process of litigating this matter and intend to vigorously defend ourselves and our current and former employees against the claims and to prosecute our own claims. We cannot assure you that Don Lee Farms or ProPortion will not prevail in all or some of their claims against us or the individual defendants, or that we will prevail in some or all of our claims against Don Lee Farms. For example, if Don Lee Farms succeeds in the lawsuit, we could be required to pay damages, including but not limited to contract damages reasonably calculated at what we would have paid Don Lee Farms to produce our products through 2019, the end of the contract term, and Don Lee Farms could also claim some ownership in the intellectual property associated with the production of certain of our products or in the products themselves, and thus claim a stake in the value we have derived and will derive from the use of that intellectual property after we terminated our supply agreement with Don Lee Farms. Based on our current knowledge, we have determined that the amount of any material loss or range of any losses that is reasonably possible to result from this lawsuit is not estimable.


Securities Related Litigation

ITEM 1A. RISK FACTORS
An investment in sharesOn January 30, 2020, Larry Tran, a purported shareholder of our common stock involvesBeyond Meat, filed a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this report, before deciding whether to purchase, hold or sell shares of our common stock. The occurrence of any of the following risks could harm our business, results of operations, financial condition and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time.
Risks Related to Our Business, Our Brand, Our Products and Our Industry
We have a history of losses, and we may be unable to achieve or sustain profitability.
We have experienced net losses in every period since our inception. In the three months ended March 30, 2019, we incurred a net loss of $6.6 million. In the years ended December 31, 2016, 2017 and 2018 we incurred net losses of $25.1 million, $30.4 million and $29.9 million, respectively. We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future as we continue to invest to increase our customer base, supplier network and co-manufacturing partners, expand our marketing channels, invest in our distribution and manufacturing facilities, hire additional employees and enhance our technology and production capabilities. Our expansion efforts may prove more expensive than we anticipate, and we may not succeed in increasing our revenues and margins sufficiently to offset the anticipated higher expenses. We incur significant expenses in developing our innovative products, building out our manufacturing facilities, obtaining and storing ingredients and other products and marketing the products we offer. In addition, many of our expenses, including the costs associated with our existing and any future manufacturing facilities, are fixed. Accordingly, we may not be able to achieve or sustain profitability, and we may incur significant losses for the foreseeable future.
If we fail to effectively expand our manufacturing and production capacity, our business and operating results and our brand reputation could be harmed.
If we do not have sufficient capacity to meet our customers’ demands and to satisfy increased demand, we will need to expand our operations, supply and manufacturing capabilities. However, there is risk in our ability to effectively scale production processes and effectively manage our supply chain requirements. We must accurately forecast demand for our products in order to ensure we have adequate available manufacturing capacity. Our forecasts are based on multiple assumptions which may cause our estimates to be inaccurate and affect our ability to obtain adequate manufacturing capacity (whether our own manufacturing capacity or co-manufacturing capacity) in order to meet the demand for our products, which could prevent us from meeting increased customer demand and harm our brand and our business and in some cases may result in fines we must pay customers or distributors if we are unable to fulfill orders placed by them in a timely manner or at all.
However, if we overestimate our demand and overbuild our capacity, we may have significantly underutilized assets and may experience reduced margins. If we do not accurately align our manufacturing capabilities with demand, if we experience disruptions or delays in our supply chain, or if we cannot obtain raw materials of sufficient quantity and quality at reasonable prices and in a timely manner, our business, financial condition and results of operations may be materially adversely affected.
Because we rely on a limited number of third-party suppliers, we may not be able to obtain raw materials on a timely basis or in sufficient quantities to produce our products or meet the demand for our products.
We rely on a limited number of vendors to supply us with raw materials. Our financial performance depends in large part on our ability to arrange for the purchase of raw materials in sufficient quantities at competitive prices. We are not assured of continued supply or pricing of raw materials. Any of our suppliers could discontinue or seek to alter their relationship with us.
We currently have two suppliers for the pea protein used in our fresh products. We have in the past experienced interruptions in the supply of pea protein from one supplier that resulted in delays in delivery to us. We could experience similar delays in the future from either or both suppliers. Any disruption in the supply of pea


protein from these suppliers would have a material adverse effect on our business if we cannot replace these suppliers in a timely manner or at all. For more information regarding contract terms, see the section of the Prospectus captioned “Business—Supply Agreements.”
In addition, our pea protein suppliers manufacture their products at a limited number of facilities. A natural disaster, fire, power interruption, work stoppage or other calamity affecting any of these facilities, or any interruption in their operations, could negatively impact our ability to obtain required quantities of pea protein in a timely manner, or at all, which could materially reduce our net product sales and have a material adverse effect on our business and financial condition.
Events that adversely affect our suppliers of pea protein and other raw material could impair our ability to obtain raw material inventory in the quantities that we desire. Such events include problems with our suppliers’ businesses, finances, labor relations, ability to import raw materials, costs, production, insurance and reputation, as well as natural disasters, fires or other catastrophic occurrences. We continuously seek alternative sources of protein to use in our products, but we may not be successful in diversifying the raw materials we use in our products.
If we need to replace an existing supplier, there can be no assurance that supplies of raw materials will be available when required on acceptable terms, or at all, or that a new supplier would allocate sufficient capacity to us in order to meet our requirements, fill our orders in a timely manner or meet our strict quality standards. If we are unable to manage our supply chain effectively and ensure that our products are available to meet consumer demand, our operating costs could increase and our profit margins could decrease.
Our future business, results of operations and financial condition may be adversely affected by reduced or limited availability of pea protein that meets our standards.
Our ability to ensure a continuing supply of ingredients at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow certain crops such as Canadian and European yellow peas, the vagaries of these farming businesses (including poor harvests impacting the quality of the peas grown), changes in national and world economic conditions and our ability to forecast our ingredient requirements. The high quality ingredients used in many of our products are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes, hurricanes and pestilence. Adverse weather conditions and natural disasters can lower crop yields and reduce crop size and quality, which in turn could reduce the available supply of, or increase the price of, quality ingredients. In addition, we purchase some ingredients offshore, and the availability of such ingredients may be affected by events in other countries, including France and Canada. We also compete with other food producers in the procurement of ingredients, and this competition may increase in the future if consumer demand for plant-based protein products increases. If supplies of quality ingredients are reduced or there is greater demand for such ingredients from us and others, we may not be able to obtain sufficient supply that meets our strict quality standards on favorable terms, or at all, which could impact our ability to supply products to distributors and retailers and may adversely affect our business, results of operations and financial condition.
We use a limited number of distributors for the substantial majority of our sales, and if we experience the loss of one or more distributors and cannot replace them in a timely manner, our results of operations may be adversely affected.
Many retailers purchase our products through food distributors which purchase, store, sell, and deliver our products to retailers. In the three months ended March 30, 2019, our largest distributors in terms of their respective percentage of our gross revenues included the following: United Natural Foods, Inc. (“UNFI”), 21%; and DOT Foods, Inc. (“DOT”), 21%. In 2017, our largest distributors in terms of their respective percentage of our gross revenues included the following: UNFI, 38%; KeHE Distributors, LLC, or KeHE, 10%; and DOT, 10%. In 2018, our largest distributors in terms of their respective percentage of our gross revenues included the following: UNFI, 32%; DOT, 21%; and Sysco Merchandising and Supply Chain Services, Inc., 13%. We expect that most of our sales will be made through a core number of distributors for the foreseeable future. Since these distributors act as intermediaries between us and the retail grocers or restaurants and foodservice providers, we do not have


short-term or long-term commitments or minimum purchase volumes in our contracts with them that ensure future sales of our products. If we lose one or more of our significant distributors and cannot replace the distributor in a timely manner or at all, our business, results of operation and financial condition may be materially adversely affected.
Consolidation of customers or the loss of a significant customer could negatively impact our sales and profitability.
Supermarkets in North America and the European Union, continue to consolidate. This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, all of which could negatively impact our business. The consolidation of retail customers also increases the risk that a significant adverse impact on their business could have a corresponding material adverse impact on our business.
The loss of any large customer, the reduction of purchasing levels or the cancellation of any business from a large customer for an extended length of time could negatively impact our sales and profitability.
Furthermore, as retailers consolidate, they may reduce the number of branded products they offer in order to accommodate private label products and generate more competitive terms from branded suppliers. Consequently, our financial results may fluctuate significantly from period to period based on the actions of one or more significant retailers. A retailer may take actions that affect us for reasons that we cannot always anticipate or control, such as their financial condition, changes in their business strategy or operations, the introduction of competing products or the perceived quality of our products. Despite operating in different channels, our retailers sometimes compete for the same consumers. Because of actual or perceived conflicts resulting from this competition, retailers may take actions that negatively affect us.
We do not currently have any written contracts with our co-manufacturers in the United States. Loss of one or more of our co-manufacturers or our failure to timely identify and establish relationships with new co-manufacturers could harm our business and impede our growth.
A significant amount of our revenue is derived from products manufactured at manufacturing facilities owned and operated by our co-manufacturers. We do not currently have written manufacturing contracts with our co-manufacturersputative securities class action lawsuit in the United States including CLW Foods LLCDistrict Court for the Central District of California against Beyond Meat and FPL Food LLC that co-manufacturetwo of our top selling products. Becauseexecutive officers, our President and CEO, Ethan Brown, and our former Chief Financial Officer and Treasurer, Mark Nelson. As noted in previous filings, the Tran securities class action was dismissed with prejudice on October 27, 2020, except for the class allegations of absent putative class members, which were dismissed without prejudice.
On March 16, 2020, Eric Weiner, a purported shareholder of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively on behalf of the absence of such contracts, any of such co-manufacturers could seek to alter or terminate its relationship with us at any time, leaving us with periods during which we have limited or no ability to manufacture our products. If we need to replace a co-manufacturer, there can be no assurance that additional capacity will be available when required on acceptable terms, or at all.
An interruption in, or the loss of operations at, one or moreCompany, against two of our co-manufacturing facilities, which may be caused by work stoppages, disease outbreaks or pandemics, acts of war, terrorism, fire, earthquakes, flooding or other natural disasters at one or more of these facilities, could delay, postpone or reduce production of some ofexecutive officers, our products, which could have a material adverse effect onPresident and CEO, Ethan Brown, and our business, results of operationsformer Chief Financial Officer and financial condition until such time as such interruption is resolved or an alternate source of production is secured.
We believe there are a limited number of competent, high-quality co-manufacturers in the industry that meet our strict qualityTreasurer, Mark Nelson, and control standards, and as we seek to obtain additional or alternative co-manufacturing arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. Therefore, the loss of one or more co-manufacturers, any disruption or delay at a co-manufacturer or any failure to identify and engage co-manufacturers for new products and product extensions could delay, postpone or reduce production of our products, which could have a material adverse effect on our business, results of operations and financial condition.


We may not be able to compete successfully in our highly competitive market.
We operate in a highly competitive market. Numerous brands and products compete for limited retailer shelf space, foodservice and restaurant customers and consumers. In our market, competition is based on, among other things, product quality and taste, brand recognition and loyalty, product variety, interesting or unique product names, product packaging and package design, shelf space, reputation, price, advertising, promotion and nutritional claims.
We compete with conventional animal-protein companies such as Cargill, Hormel, JBS, Tyson and WH Group (including its Smithfield division), who may have substantially greater financial and other resources than us and whose animal-based products are well-accepted in the marketplace today. They may also have lower operational costs, and as a result may be able to offer conventional animal meat to customers at lower costs than plant-based meat. This could cause us to lower our prices, resulting in lower profitability or, in the alternative, cause us to lose market share if we fail to lower prices.
We also compete with other food brands that develop and sell plant-based protein products, including, but not limited to, Boca Foods, Field Roast Grain Meat Co., Gardein, Impossible Foods, Lightlife, Morningstar Farms and Tofurky, and with companies which may be more innovative, have more resources and be able to bring new products to market faster and to more quickly exploit and serve niche markets such as lab-grown or “clean meat.” We compete with these competitors for foodservice and restaurant customers, retailer shelf space and consumers.
Generally, the food industry is dominated by multinational corporations with substantially greater resources and operations than us. We cannot be certain that we will successfully compete with larger competitors that have greater financial, sales and technical resources. Conventional food companies may acquire our competitors or launch their own plant-based protein products, and they may be able to use their resources and scale to respond to competitive pressures and changes in consumer preferences by introducing new products, reducing prices or increasing promotional activities, among other things. Retailers also market competitive products under their own private labels, which are generally sold at lower prices and compete with some of our products. Similarly, retailers could change the merchandising of our products and we may be unable to retain the placement of our products in meat cases to effectively compete with animal-protein products. Competitive pressures or other factors could cause us to lose market share, which may require us to lower prices, increase marketing and advertising expenditures, or increase the use of discounting or promotional campaigns, each of which would adversely affectthe Company’s directors, including one former director, who signed our marginsinitial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and could result in a decrease in our operating results21D of the Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and profitability. See “Business—Competition” in the Prospectus.
We may require additional financing to achieve our goals,claims of unjust enrichment and a failure to obtain this necessary capital when needed on acceptable terms, or atwaste of corporate assets, all may force us to delay, limit, reduce or terminate our product manufacturing and development, and other operations.
Since our inception, substantially all of our resources have been dedicated to the development of our three core plant-based product platforms of beef, pork and poultry, including purchases of property, plant and equipment, principally to support the development and production of The Beyond Burger, the build-out and equipping of our Manhattan Beach Project Innovation Center, and manufacturing facility improvements and purchases of manufacturing equipment. We believe that we will continue to expend substantial resources for the foreseeable future as we expand into additional markets we may choose to pursue. These expenditures are expected to include costs associated with research and development, manufacturing and supply, as well as marketing and selling existing and new products. In addition, other unanticipated costs may arise.
As of March 30, 2019, we had cash and cash equivalents of $35.4 million, prior to giving effect to the net proceeds from our IPO of $252.5 million. Our operating plan may change because of factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our


business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our future capital requirements depend on many factors, including:
the number and characteristics of any additional products or manufacturing processes we develop or acquire to serve new or existing markets;
the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes;
any lawsuits relatedrelating to our products or commenced against us, including the costs associated with our currentongoing litigation with a former co-manufacturer;
the expenses needed to attract and retain skilled personnel;
the costs associated with being a public company;
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and
the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to:
delay, limit, reduce or terminate our manufacturing, research and development activities; or
delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to generate revenue and achieve profitability.
Our brand and reputation may be diminished due to real or perceived quality or health issues with our products, which could have an adverse effect on our business, reputation, operating results and financial condition.
We believe our consumers rely on us to provide them with high-quality plant-based protein products. Therefore, real or perceived quality or food safety concerns or failures to comply with applicable food regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as incidents involving our competitors), could cause negative publicity and reduced confidence in our company, brand or products, which could in turn harm our reputation and sales, and could materially adversely affect our business, financial condition and operating results. Although we believe we have a rigorous quality control process, there can be no assurance that our products will always comply with the standards set for our products. For example, although we strive to keep our products free of pathogenic organisms, they may not be easily detected and cross-contamination can occur. In addition, in 2017, before our products were shipped to distributors or customers, we discovered, through our quality control process, that certain of our products manufactured by a former co-manufacturer were contaminated with salmonella. There is no assurance that this health risk will always be preempted by our quality control processes.
We have no control over our products once purchased by consumers. Accordingly, consumers may prepare our products in a manner that is inconsistent with our directions or store our products for long periods of time, which may adversely affect the quality and safety of our products. If consumers do not perceive our products to be safe or of high quality, then the value of our brand would be diminished, and our business, results of operations and financial condition would be adversely affected.
Any loss of confidence on the part of consumers in the ingredients used in our products or in the safety and quality of our products would be difficult and costly to overcome. Any such adverse effect could be exacerbated by our position in the market as a purveyor of high-quality plant-based protein products and may significantly reduce


our brand value. Issues regarding the safety of any of our products, regardless of the cause, may have a substantial and adverse effect on our brand, reputation and operating results.
The growing use of social and digital media by us, our consumers and third parties increases the speed and extent that information or misinformation and opinions can be shared. Negative publicity about us, our brands or our products on social or digital media could seriously damage our brands and reputation. If we do not maintain the favorable perception of our brands, our sales and profits could be negatively impacted.
Food safety and food-borne illness incidents or advertising or product mislabeling may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings.
Selling food for human consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents caused by products we sell, or involving our suppliers, could result in the discontinuance of sales of these products or our relationships with such suppliers, or otherwise result in increased operating costs, regulatory enforcement actions or harm to our reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid from our cash reserves, which would reduce our capital resources.
The occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers, our distributors or our customers, depending on the circumstances, to conduct a recall in accordance with U.S. Food and Drug Administration (“FDA”) regulations, and comparable state laws. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential negative impact on our ability to attract new customers due to negative consumer experiences or because of an adverse impact on our brand and reputation. The costs of a recall could exceed or be outside the scope of our existing or future insurance policy coverage or limits.
In addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering, and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and pathological organisms into consumer products as well as product substitution. Recently issued FDA regulations will require companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of product tampering, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially adversely affect our business, financial condition and operating results.
Sales of The Beyond Burger contribute a significant portion of our revenue. A reduction in sales of The Beyond Burger would have an adverse effect on our financial condition.
The Beyond Burger accounted for approximately 48% and 70% of our gross revenues in 2017 and 2018, respectively. The Beyond Burger is our flagship product and has been the focal point of our development and marketing efforts, and we believe that sales of The Beyond Burger will continue to constitute a significant portion of our revenues, income and cash flow for the foreseeable future. We cannot be certain that we will be able to continue to expand production and distribution of The Beyond Burger, or that customer demand for our other existing and future products will expand to allow such products to represent a larger percentage of our revenue than they do currently. Accordingly, any factor adversely affecting sales of The Beyond Burger could have a material adverse effect on our business, financial condition and results of operations.


The primary components of all of our products are manufactured in our two Columbia, Missouri facilities and any damage or disruption at these facilities may harm our business. Moreover, Columbia, Missouri has a tight labor market and we may be unable to hire and retain employees at these facilities.
A significant portion of our operations are located in our two Columbia, Missouri facilities. A natural disaster, fire, power interruption, work stoppage or other calamity at one or both of these facilities would significantly disrupt our ability to deliver our products and operate our business. If any material amount of our machinery or inventory were damaged, we would be unable to meet our contractual obligations and cannot predict when, if at all, we could replace or repair such machinery, which could materially adversely affect our business, financial condition and operating results.
Our plans for addressing our rapid growth include expanding operations at our Columbia, Missouri facilities and/or seeking an alternative or additional facility. In this tight labor market, we may be unable to hire and retain skilled employees, which will severely hamper our expansion plans, product development and manufacturing efforts. As of March 2019, the Columbia area had an unemployment rate of 2.4%. As a result of this tight labor market, we currently rely on temporary workers in addition to full-time employees, and in the future, we may be unable to attract and retain employees with the skills we require, which could impact our ability to expand our operations.
We may not successfully ramp up operations at our new Columbia, Missouri facility or this facility may not operate in accordance with our expectations.
In June 2018, we commenced manufacturing operations in our new Columbia, Missouri facility and expect to add more production capacity through 2021. Any substantial delay in bringing this facility up to full production on our current schedule may hinder our ability to produce all of the product needed to meet orders and/or achieve our expected financial performance. Opening this facility has required, and will continue to require, additional capital expenditures and the efforts and attention of our management and other personnel, which has and will continue to divert resources from our existing business or operations. In addition, we will need to hire and retain more skilled employees to operate the expanded facility in this tight labor market. Even if our new Columbia, Missouri facility is brought up to full production according to our current schedule, it may not provide us with all of the operational and financial benefits we expect to receive.
Our Columbia, Missouri facilities and the manufacturing equipment we use to produce our products is costly to replace or repair and may require substantial lead-time to do so. For example, our estimate of throughput or our extrusion capacity may be impacted by disruption from extruder lead-in time, calibration, maintenance and unexpected delays. In addition, our ability to procure new extruders may face more lengthy lead times than is typical. We may also not be able to find suitable alternatives with co-manufacturers to replace the output from such equipment on a timely basis and at a reasonable cost. In the future, we may also experience plant shutdowns or periods of reduced production because of regulatory issues, equipment failure or delays in raw material deliveries. Any such disruption or unanticipated event may cause significant interruptions or delays in our business and the reduction or loss of inventory may render us unable to fulfill customer orders in a timely manner, or at all. We have property and business disruption insurance in place for our Columbia, Missouri facilities; however, such insurance coverage may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all.
Failure to introduce new products or successfully improve existing products may adversely affect our ability to continue to grow.
A key element of our growth strategy depends on our ability to develop and market new products and improvements to our existing products that meet our standards for quality and appeal to consumer preferences. The success of our innovation and product development efforts is affected by our ability to anticipate changes in consumer preferences, the technical capability of our innovation staff in developing and testing product prototypes, including complying with applicable governmental regulations, and the success of our management and sales and marketing teams in introducing and marketing new products. Our innovation staff are continuously testing alternative plant-based proteins to the proteins we currently use in our products, as they seek to find


additional protein options to our current ingredients that are more easily sourced, and which retain and build upon the quality and appeal of our current product offerings. Failure to develop and market new products that appeal to consumers may lead to a decrease in our growth, sales and profitability.
Additionally, the development and introduction of new products requires substantial research, development and marketing expenditures, which we may be unable to recoup if the new products do not gain widespread market acceptance. If we are unsuccessful in meeting our objectives with respect to new or improved products, our business could be harmed.
If we fail to cost-effectively acquire new customers or retain our existing customers, or if we fail to derive revenue from our existing customers consistent with our historical performance, our business could be materially adversely affected.
Our success, and our ability to increase revenue and operate profitably, depends in part on our ability to cost-effectively acquire new customers, to retain existing customers, and to keep existing customers engaged so that they continue to purchase products from us. If we are unable to cost-effectively acquire new customers, retain our existing customers or keep existing customers engaged, our business, financial condition and operating results would be materially adversely affected. Further, if customers do not perceive our product offerings to be of sufficient value and quality, or if we fail to offer new and relevant product offerings, we may not be able to attract or retain customers or engage existing customers so that they continue to purchase products from us. We may lose loyal customers to our competitors if we are unable to meet customers’ orders in a timely manner.
If we fail to manage our future growth effectively, our business could be materially adversely affected.
We have grown rapidly since inception and anticipate further growth. For example, our net revenues increased from $16.2 million at December 31, 2016 to $32.6 million at December 31, 2017 to $87.9 million at December 31, 2018. Net revenues in the three months ended March 30, 2019 were $40.2 million. The number of our full-time employees increased from 142 (which included 44 contract employees) at December 31, 2016, to 184 (which included 52 contract employees) at December 31, 2017 and to 383 (which included 104 contract employees) at March 30, 2019. This growth has placed significant demands on our management, financial, operational, technological and other resources. The anticipated growth and expansion of our business and our product offerings will place significant demands on our management and operations teams and require significant additional resources to meet our needs, which may not be available in a cost-effective manner, or at all. If we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy customer requirements or maintain high-quality product offerings, any of which could harm our business, brand, results of operations and financial condition.
We face intense competition in our market from our competitors, including manufacturers of animal-based meat products and other brands that produce plant-based protein products, and potential competitors and may lack sufficient financial or other resources to compete successfully.
Our future success depends, in large part, on our ability to implement our growth strategy of expanding supply and distribution, improving placement of our products, attracting new consumers to our brand and introducing new products and product extensions. Our ability to implement this growth strategy depends, among other things, on our ability to:
manage relationships with various suppliers, co-manufacturers, distributors, customers and other third parties, and expend time and effort to integrate new suppliers, co-manufacturers and customers into our fulfillment operations;
continue to compete in the retail channel and the restaurant and foodservice channel;
secure placement in the meat case for our products;
increase our brand recognition;
expand and maintain brand loyalty; and


develop new product lines and extensions.
We may not be able to implement our growth strategy successfully. Our sales and operating results will be adversely affected if we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful.
We may face difficulties as we expand our operations into countries in which we have no prior operating experience.
We intend to continue to expand our global footprint in order to enter into new markets. This may involve expanding into countries other than those in which we currently operate. It may also involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems. In addition, it may be difficult for us to understand and accurately predict taste preferences and purchasing habits of consumers in these new geographic markets. It is costly to establish, develop and maintain international operations and develop and promote our brands in international markets. As we expand our business into new countries, we may encounter regulatory, legal, personnel, technological and other difficulties that increase our expenses and/or delay our ability to become profitable in such countries, which may have a material adverse effect on our business and brand.
We are or will be subject to international regulations that could adversely affect our business and results of operations.
We are or will be subject to extensive regulations internationally where we manufacture, distribute and/or sell our products. Our products are subject to numerous food safety and other laws and regulations relating to the sourcing, manufacturing, storing, labeling, marketing, advertising and distribution of these products. For example, in early 2018, we received an inquiry from Canadian officials about the labeling and composition of products that we export to Canada. We responded promptly to that inquiry, identifying minor formulation changes that we made under Canadian regulations and have not heard more from regulators in Canada. We have continued to export to Canada without further inquiry from Canadian officials. However, if regulators determine that the labeling and/or composition of any of our products is not in compliance with Canadian law or regulations, or if we or our co-manufacturers otherwise fail to comply with applicable laws and regulations in Canada or other jurisdictions, we could be subject to civil remedies or penalties, such as fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of the products, or refusals to permit the import or export of products, as well as potential criminal sanctions. In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results.
In addition, with our expanding international operations, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business. While our policies mandate compliance with these anti-bribery laws, our internal control policies and procedures may not protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, cash flows and financial condition.
Ingredient and packaging costs are volatile and may rise significantly, which may negatively impact the profitability of our business.
We purchase large quantities of raw materials, including ingredients derived from Canadian and European yellow peas, mung beans, sunflower seeds, rice, canola oil and coconut oil. In addition, we purchase and use significant quantities of cardboard, film and plastic to package our products. Costs of ingredients and packaging are volatile and can fluctuate due to conditions that are difficult to predict, including global competition for resources, weather conditions, consumer demand and changes in governmental trade and agricultural programs. Volatility in the prices of raw materials and other supplies we purchase could increase our cost of sales and reduce our profitability. Moreover, we may not be able to implement price increases for our products to cover any


increased costs, and any price increases we do implement may result in lower sales volumes. If we are not successful in managing our ingredient and packaging costs, if we are unable to increase our prices to cover increased costs or if such price increases reduce our sales volumes, then such increases in costs will adversely affect our business, results of operations and financial condition.
If we fail to develop and maintain our brand, our business could suffer.
We have developed a strong and trusted brand that has contributed significantly to the success of our business, and we believe our continued success depends on our ability to maintain and grow the value of the Beyond Meat brand. Maintaining, promoting and positioning our brand and reputation will depend on, among other factors, the success of our plant-based product offerings, food safety, quality assurance, marketing and merchandising efforts and our ability to provide a consistent, high-quality customer experience. Any negative publicity, regardless of its accuracy, could materially adversely affect our business. Brand value is based on perceptions of subjective qualities, and any incident that erodes the loyalty of our customers, suppliers or co-manufacturers, including adverse publicity or a governmental investigation or litigation, could significantly reduce the value of our brand and significantly damage our business.
Consumer preferences for our products are difficult to predict and may change, and, if we are unable to respond quickly to new trends, our business may be adversely affected.
Our business is focused on the development, manufacture, marketing and distribution of a line of branded plant-based protein products as alternatives to meat-based protein products. Consumer demand could change based on a number of possible factors, including dietary habits and nutritional values, concerns regarding the health effects of ingredients and shifts in preference for various product attributes. If consumer demand for our products decreased, our business and financial condition would suffer. In addition, sales of plant-based protein or meat-alternative products are subject to evolving consumer preferences that we may not be able to accurately predict or respond to. Consumer trends that we believe favor sales of our products could change based on a number of possible factors, including a shift in preference from plant-based protein to animal-based protein products, economic factors and social trends. A significant shift in consumer demand away from our products could reduce our sales or our market share and the prestige of our brand, which would harm our business and financial condition.
Our revenues and earnings may fluctuate as a result of our promotional activities.
We routinely offer sales discounts and promotions through various programs to customers and consumers which may occasionally result in reduced margins. These programs include rebates, temporary on shelf price reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. We anticipate that, at times, these promotional activities may adversely impact our net revenues and results of operations.
Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business.
From time to time, we may be party to various claims and litigation proceedings. We evaluate these claims and litigation proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from our assessments and estimates.
For example, on May 25, 2017, following our termination of our supply agreement with Don Lee Farms, related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 16, 2020, and the Tran securities case brought against us.
On March 18, 2020, Kimberly Brink and Melvyn Klein, purported shareholders of Beyond Meat, filed a co-manufacturer,shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively on behalf of the Company, against two of the Company’s executive officers, our President and CEO, Ethan Brown, and our former Chief Financial Officer and Treasurer, Mark Nelson, and each of our directors, including
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one former director, who signed our initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust enrichment and waste of corporate assets, all relating to our ongoing litigation with Don Lee Farms, filed a lawsuit against us in California state court claiming that we wrongfully terminated the parties’ contract and that we misappropriated their trade secrets principallyrelated actions taken by sharing with subsequent co-manufacturers the processes for manufacturing our products—processes which they claim to have developed. On July 27, 2017 we filed a cross-complaint, alleging that Don Lee Farms (1) breached the supply agreement, including by failing to provide saleable product, as certain of our products manufactured by Don Lee


Farms were contaminated with salmonella and other foreign objects, and that Don Lee Farms did not take appropriate actions to address these issues; (2) engaged in unfair competition in violation of California’s Unfair Competition Law; and (3) unlawfully converted certain Beyond Meat property, including certain piecesand the named individuals during the period of equipment. In October 2018, Don Lee Farms filed an amended complaint that added ProPortion Foods, LLC (one of Beyond Meat’s current contract manufacturers) as a defendant, principally for claims arising from ProPortion’s alleged use of Don Lee Farms’ alleged trade secrets,May 2, 2019 to March 18, 2020, and for replacing Don Lee Farms as Beyond Meat’s co-manufacturer. ProPortion filed an answer denying all of Don Lee Farms’ claims and a cross-complaintthe Tran securities case brought against Beyond Meat.
On April 1, 2020, the United States District Court for the Central District of California entered an order consolidating the Weiner action and the Brink action for all purposes and designated the consolidated case Inre: Beyond Meat, asserting claimsInc. Derivative Litigation (the “California Derivative Action”). On April 13, 2020, the Court entered an order appointing co-lead counsel for the California Derivative Action. On June 23, 2020, the Court entered an order approving a Joint Stipulation Regarding Stay of totalActions. Under the terms of the stay approval order, all proceedings in the California Derivative Action are stayed until (1) the Tran securities class action is dismissed, with prejudice, and partial equitable indemnity, contribution, and repayment. On March 11, 2019, Don Lee Farms filed a second amended complaint to add claims of fraud and negligent misrepresentation against us. On May 30, 2019, the judge denied ourall appeals related thereto have been exhausted; or (2) any motion to dismiss the fraudTran securities class action is denied in whole or in part. As noted in previous filings, the Tran securities class action was dismissed with prejudice on October 27, 2020, except for the class allegations of absent putative class members, which were dismissed without prejudice. On April 20, 2021, the parties filed a joint stipulation regarding briefing schedule, and negligent misrepresentationthe Court entered a schedule on April 21, 2021.
On May 24, 2021, the plaintiffs in the California Derivative Action filed a First Amended Complaint (“FAC”). The FAC names the same defendants named in the originally-filed consolidated complaint and adds four additional defendants, including ProPortion Foods, LLC (“ProPortion”) and CLW Foods, LLC (“CLW”). The FAC asserts claims allowing the claims to proceed. Trial is currently set for May 18, 2020.
Don Lee Farms is seeking from us and ProPortion unspecified compensatory and punitive damages, declaratory and injunctive relief, including the prohibition of our use or disclosureunder Section 14(a) of the alleged trade secrets,Exchange Act, claims of breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control and attorneys’ feesgross mismanagement against the individual defendants, and costs. We are seeking from Don Lee Farms monetary damages, restitutionaiding and abetting claims against CLW and ProPortion. All of monies paidthese claims relate to our dealings with and ongoing litigation with Don Lee Farms, and attorneys’ feesrelated actions taken by us and costs. ProPortionthe named individuals during the period of April 2016 to the present. On July 2, 2021, the Court entered a Joint Stipulation Regarding Extension of Briefing Schedule so that the parties may attempt to reach resolution of the lawsuit. A status report is seeking indemnity, contribution, or repayment from usdue to the Court on October 1, 2021, and defendants’ responsive pleading to the FAC is due by October 15, 2021. Defendants believe the claims are without merit and intend to vigorously defend all claims asserted. We are unable to estimate potential losses, if any, related to this lawsuit.
On May 27, 2020, Kevin Chew, a purported shareholder of any or all damages that ProPortion may be found liableBeyond Meat, filed a shareholder derivative lawsuit in the United States District Court of the District of Delaware, putatively on behalf of Beyond Meat, against two of our executive officers, our President and CEO, Ethan Brown, and our former Chief Financial Officer and Treasurer, Mark Nelson, and each of our directors, including one former director, who signed our initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act and claims of breaches of fiduciary duty, relating to Don Lee Farms, and attorney’s fees and costs. We believe we were justified in terminating the supply agreementour ongoing litigation with Don Lee Farms, that we did not misappropriate their alleged trade secrets, that we are not liable forrelated actions taken by Beyond Meat and the fraud or negligent misrepresentation allegednamed individuals during the period of May 2, 2019 to May 27, 2020. On June 16, 2020, the Court entered an order staying all proceedings in the proposed second amended complaint, that Don Lee Farmsderivative action until (1) the Tran securities class action is liable fordismissed, with prejudice, and all appeals related thereto have been exhausted; or (2) any motion to dismiss the conduct allegedTran securities class action is denied in our cross-complaint,whole or in part. On June 17, 2020, the Court entered an order administratively closing the derivative case based on the stay order. On July 29, 2021, the Court entered a Joint Stipulation to Continue the Stay of the Action, staying the case until the resolution of the California Derivative Action. Defendants believe the claims are without merit and that we are not liable to ProPortion for any indemnity, contribution, or repayment, including for any damages or attorney’s fees and costs.
We intend to vigorously defend ourselvesall claims asserted. We are unable to estimate potential losses, if any, related to this lawsuit.
On June 17, 2020, James Janolek, a purported shareholder of Beyond Meat, filed a shareholder derivative lawsuit in the United States District Court of the District of Delaware, putatively on behalf of the Company, against two of our executive officers, our President and CEO, Ethan Brown, and our former Chief Financial Officer and Treasurer, Mark Nelson, and each of our directors, including one former director, who signed our initial public offering registration statement. The lawsuit asserts claims under Sections 14(a) and 20(a) of the Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and prosecuteclaims of unjust enrichment and waste of corporate assets, all relating to our own. However, we cannot assure you thatongoing litigation with Don Lee Farms, or ProPortion will not prevail inrelated actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to June 17, 2020. On July 10, 2020, the Court entered an order staying all or some of their claims against us, or that we will prevail in some or all of our claims against Don Lee Farms. For example, if Don Lee Farms succeedsproceedings in the lawsuit, we could be requiredderivative action until (1) the Tran securities class action is dismissed, with prejudice, and all appeals related thereto have been exhausted; or (2) any motion to pay damages, including but not limited to contract damages reasonably calculated at what we would have paid Don Lee Farms to produce our products through 2019,dismiss the end of the contract term, and Don Lee Farms could also claim some ownershipTran securities class action is denied in the intellectual property associated with the production of certain of our productswhole or in part. On July 10, 2020, the
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Court entered an order administratively closing the products themselves,derivative case based on the stay order. On November 9, 2020, Plaintiff filed a Notice of Voluntary Dismissal without prejudice and thus claim a stake in the value we have derived and will derive from the use of that intellectual property after we terminated our supply agreement with Don Lee Farms. As another example, we also could be requiredwithout costs or attorney fees to pay attorney’s fees and costs incurred by Don Lee Farms or ProPortion.either party.
Even when not merited, the defense of these lawsuits may divert our management’s attention, and we may incur significant expenses in defending these lawsuits. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial position, cash flows or results of operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.
Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to self-insured retentions, various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery.
Legal claims, government investigations or other regulatory enforcement actions could subject us to civil and criminal penalties.
We operate in a highly regulated environment with constantly evolving legal and regulatory frameworks. Consequently, we are subject to heightened risk of legal claims, government investigations or other regulatory enforcement actions. Although we have implemented policies and procedures designed to ensure compliance with existing laws and regulations, there can be no assurance that our employees, temporary workers, contractors


or agents will not violate our policies and procedures. Moreover, a failure to maintain effective control processes could lead to violations, unintentional or otherwise, of laws and regulations. Legal claims, government investigations or regulatory enforcement actions arising out of our failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminal penalties that could materially and adversely affect our product sales, reputation, financial condition and operating results. In addition, the costs and other effects of defending potential and pending litigation and administrative actions against us may be difficult to determine and could adversely affect our financial condition and operating results.
Failure by our transportation providers to deliver our products on time, or at all, could result in lost sales.
We currently rely upon third-party transportation providers for a significant portion of our product shipments. Our utilization of delivery services for shipments is subject to risks, including increases in fuel prices, which would increase our shipping costs, and employee strikes and inclement weather, which may impact the ability of providers to provide delivery services that adequately meet our shipping needs. We periodically change shipping companies, and we could face logistical difficulties that could adversely affect deliveries. In addition, we could incur costs and expend resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those we receive from the third-party transportation providers that we currently use, which in turn would increase our costs and thereby adversely affect our operating results.
Our revenue growth rate and financial performance in recent periods may not be indicative of future performance and such revenue growth rate may slow over time.
We have grown rapidly over the last several years, and therefore, our recent revenue growth rate and financial performance should not be considered indicative of our future performance. From 2017 to 2018, our net revenue growth rate was 170%. In the quarters ended March 30, 2019 and March 31, 2018, our net revenue growth rate was 215%. You should not rely on our revenue for any previous quarterly or annual period as any indication of our revenue or revenue growth rate in future periods. As we grow our business, our revenue growth rates will slow in future periods due to a number of reasons, which may include increasing competition, market saturation, slowing demand for our offerings, increasing regulatory costs and challenges, and our failure to capitalize on growth opportunities.
Fluctuations in our results of operations for our second and third quarters may impact, and may have a disproportionate effect on our overall financial condition and results of operations.
Our business is subject to seasonal fluctuations that may have a disproportionate effect on our results of operations. Historically, we have realized a higher portion of our net revenues, net income and operating cash flows in our second and third quarters due to weather and related increase in outdoor activities such as barbecues. Any factors that harm our second and third quarters operating results, including disruptions in our supply chain, adverse weather or unfavorable economic conditions, may have a disproportionate effect on our results of operations for the entire year.
Historical quarter-to-quarter and period-over-period comparisons of our sales and operating results are not necessarily indicative of future quarter-to-quarter and period-over-period results. You should not rely on the results of a single quarter or period as an indication of our annual results or our future performance.
Failure to retain our senior management may adversely affect our operations.
Our success is substantially dependent on the continued service of certain members of our senior management, including Ethan Brown, our Chief Executive Officer. These executives have been primarily responsible for determining the strategic direction of our business and for executing our growth strategy and are integral to our brand, culture and the reputation we enjoy with suppliers, co-manufacturers, distributors, customers and consumers. The loss of the services of any of these executives could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could be viewed in a negative light by investors and analysts, which may cause the price of our common stock to decline. We do not currently carry key-person life insurance for our senior executives.


If we are unable to attract, train and retain employees, we may not be able to grow or successfully operate our business.
Our success depends in part upon our ability to attract, train and retain a sufficient number of employees who understand and appreciate our culture and can represent our brand effectively and establish credibility with our business partners and consumers. If we are unable to hire and retain employees capable of meeting our business needs and expectations, our business and brand image may be impaired. Any failure to meet our staffing needs or any material increase in turnover rates of our employees may adversely affect our business, results of operations and financial condition.
Our employees are employed by a professional employer organization.
We contract with a professional employer organization, or PEO, that administers our human resources, payroll and employee benefits functions. Although we recruit and select our personnel, each of our employees is also an employee of record of the PEO. As a result, our personnel are compensated through the PEO, receive their W-2s from the PEO and are governed by the personnel policies created by the PEO. This relationship permits management to focus on operations and profitability rather than human resource administration, but this relationship also exposes us to some risks. Among other risks, if the PEO fails to adequately withhold or pay employer taxes or to comply with other laws, such as the Fair Labor Standards Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act or state and federal anti-discrimination laws, each of which is outside of our control, we would be liable for such violations, and indemnification provisions with the PEO, if applicable, may not be sufficient to insulate us from those liabilities. Court and administrative proceedings related to these matters could distract management from our business and cause us to incur significant expense. If we were held liable for violations by the PEO, such amounts may adversely affect our profitability and could negatively affect our business and results of operations.
We rely on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm our ability to effectively operate our business.
We are dependent on various information technology systems, including, but not limited to, networks, applications and outsourced services in connection with the operation of our business. A failure of our information technology systems to perform as we anticipate could disrupt our business and result in transaction errors, processing inefficiencies and loss of sales, causing our business to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, viruses and security breaches. Any such damage or interruption could have a material adverse effect on our business.
A cybersecurity incident or other technology disruptions could negatively impact our business and our relationships with customers.
We use computers in substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities to connect with our employees, suppliers, co-manufacturers, distributors, customers and consumers. Such uses give rise to cybersecurity risks, including security breaches, espionage, system disruption, theft and inadvertent release of information. Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ and suppliers’ information, private information about employees and financial and strategic information about us and our business partners. Further, as we pursue a strategy to grow through acquisitions and to pursue new initiatives that improve our operations and cost structure, we will also be expanding and improving our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks. Additionally, while we have implemented measures to prevent security breaches and cyber incidents, our preventative measures and incident response efforts may not be entirely effective. The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand


damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage all of which could have a material adverse effect on our business, financial condition or results of operations.
Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition.
Adverse and uncertain economic conditions may impact distributor, retailer, foodservice and consumer demand for our products. In addition, our ability to manage normal commercial relationships with our suppliers, co-manufacturers, distributors, retailers, foodservice consumers and creditors may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns. In particular, consumers may reduce the amount of plant-based food products that they purchase where there are conventional animal-based protein offerings, which generally have lower retail prices. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive. Distributors and retailers may become more conservative in response to these conditions and seek to reduce their inventories. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing distributors, retailer and foodservice customers, our ability to attract new consumers, the financial condition of our consumers and our ability to provide products that appeal to consumers at the right price. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.
A major earthquake, tsunami, tornado or other natural disaster could seriously disrupt our entire business.
Our corporate offices and research and development functions are located in El Segundo, California, and our industrial manufacturing facilities are located in Columbia, Missouri. The impact of a major earthquake or tsunami, or both, or other natural disasters in the Los Angeles area, or a tornado or other natural disaster in the Columbia area, on our facilities and overall operations is difficult to predict, but such a natural disaster could seriously disrupt our entire business. Our insurance may not adequately cover our losses and expenses in the event of such a natural disaster. As a result, natural disasters, such as a major earthquake, tsunami or tornado in the Los Angeles or Columbia areas or in areas where our co-manufacturers are located, could lead to substantial losses.
Climate change may negatively affect our business and operations.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. If such climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as Canadian and European yellow peas, mung beans, sunflowers, rice, canola oil and coconut oil. Due to climate change, we may also be subjected to decreased availability of water, deteriorated quality of water or less favorable pricing for water, which could adversely impact our manufacturing and distribution operations.
Regulatory Risks
Our operations are subject to FDA governmental regulation and state regulation, and there is no assurance that we will be in compliance with all regulations.
Our operations are subject to extensive regulation by the FDA, and other federal, state and local authorities. Specifically, we are subject to the requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, packaging, labeling and safety of food. Under this program the FDA requires that facilities that manufacture food products comply with a range of requirements, including hazard analysis and preventative controls regulations, current good manufacturing practices, or cGMPs, and supplier verification requirements. Our processing facilities, including those of our co-manufacturers, are subject to periodic inspection by federal, state and local authorities. We do not control the manufacturing processes of, and rely upon, our co-manufacturers for compliance with cGMPs for the manufacturing of our products that is conducted by our co-manufacturers. If we or our co-manufacturers cannot successfully manufacture products that conform to our specifications and the strict regulatory requirements of the FDA or others, we or they may be


subject to adverse inspectional findings or enforcement actions, which could materially impact our ability to market our products, could result in our co-manufacturers’ inability to continue manufacturing for us, or could result in a recall of our product that has already been distributed. In addition, we rely upon our co-manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority determines that we or these co-manufacturers have not complied with the applicable regulatory requirements, our business may be materially impacted.
We seek to comply with applicable regulations through a combination of employing internal experience and expert personnel to ensure quality-assurance compliance (i.e., assuring that our products are not adulterated or misbranded) and contracting with third-party laboratories that conduct analyses of products to ensure compliance with nutrition labeling requirements and to identify any potential contaminants before distribution. Failure by us or our co-manufacturers to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our or our co-manufacturers’ operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs resulting in a material effect on our operating results and business. See “Business—Government Regulation” in the Prospectus.
Changes in existing laws or regulations, or the adoption of new laws or regulations may increase our costs and otherwise adversely affect our business, results of operations and financial condition.
The manufacture and marketing of food products is highly regulated. We, our suppliers and co-manufacturers are subject to a variety of laws and regulations. These laws and regulations apply to many aspects of our business, including the manufacture, packaging, labeling, distribution, advertising, sale, quality and safety of our products, as well as the health and safety of our employees and the protection of the environment.
In the United States, we are subject to regulation by various government agencies, including the FDA, Federal Trade Commission, or FTC, Occupational Safety and Health Administration and the Environmental Protection Agency, as well as various state and local agencies. We are also regulated outside the United States by various international regulatory bodies. In addition, we are subject to certain standards, such as Global Food Safety Initiative, or GFSI, standards and review by voluntary organizations, such as the Council of Better Business Bureaus’ National Advertising Division. We could incur costs, including fines, penalties and third-party claims, because of any violations of, or liabilities under, such requirements, including any competitor or consumer challenges relating to compliance with such requirements. For example, in connection with the marketing and advertisement of our products, we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.
The regulatory environment in which we operate could change significantly and adversely in the future. Any change in manufacturing, labeling or packaging requirements for our products may lead to an increase in costs or interruptions in production, either of which could adversely affect our operations and financial condition. New or revised government laws and regulations could result in additional compliance costs and, in the event of non-compliance, civil remedies, including fines, injunctions, withdrawals, recalls or seizures and confiscations, as well as potential criminal sanctions, any of which may adversely affect our business, results of operations and financial condition. In particular, recent federal, state and foreign attention to the naming of plant-based meat products could result in standards or requirements that mandate changes to our current labeling.
Any changes in applicable laws, regulations or policies of the FDA or U.S. Department of Agriculture, or USDA, state regulators or similar foreign regulatory authorities that relate to the use of the word “meat” in connection with plant-based protein products could adversely affect our business, prospects, results of operations or financial condition.
The FDA and the USDA, state regulators or similar foreign regulatory authorities could take action to impact our ability to use the term “meat” or similar words (such as “beef”) to describe our products. For example, the state of Missouri recently passed a law prohibiting any person engaged in advertising, offering for sale, or sale of food products from misrepresenting a product as meat that is not derived from harvested production livestock or


poultry. While the state of Missouri Department of Agriculture clarified its interpretation that products which include prominent disclosure that the product is “made from plants,” or comparable disclosure such as through the use of the phrase “plant-based,” are not misrepresented under the Missouri law, other regulators could always take a different position.
In addition, a food may be deemed misbranded if its labeling is false or misleading in any particular way, and the FDA or other regulators could interpret the use of the term “meat” or any similar phrase(s) to describe our plant-based protein products as false or misleading. Recently, the FDA announced that it will reexamine its enforcement of the standard of identity for milk, the official definition of which involves “lacteal secretion,” which may result in the restriction of the use of the term “milk” to only those products that are animal-based (we note there is no comparable FDA standard of identity for “meat” or other terms that we use to label our products). The USDA has also received a petition from industry requesting that the USDA exclude products not derived from the tissue or flesh of animals that have been harvested in the traditional manner from being labeled and marketed as “meat,” and exclude products not derived from cattle born, raised and harvested in the traditional manner from being labeled and marketed as “beef.” The USDA has not yet responded substantively to this petition, but has indicated that the petition is being considered as a petition for a policy change under the USDA’s regulations. We do not believe that USDA has the statutory authority to regulate plant-based products under the current legislative framework. However, should regulatory authorities take action with respect to the use of the term “meat” or similar terms, such that we are unable to use those terms with respect to our plant-based products, we could be subject to enforcement action or recall of our products marketed with these terms, we may be required to modify our marketing strategy, and our business, prospects, results of operations or financial condition could be adversely affected.
Failure by our suppliers of raw materials or co-manufacturers to comply with food safety, environmental or other laws and regulations, or with the specifications and requirements of our products, may disrupt our supply of products and adversely affect our business.
If our suppliers or co-manufacturers fail to comply with food safety, environmental or other laws and regulations, or face allegations of non-compliance, their operations may be disrupted. Additionally, our co-manufacturers are required to maintain the quality of our products and to comply with our product specifications. In the event of actual or alleged non-compliance, we might be forced to find an alternative supplier or co-manufacturer and we may be subject to lawsuits related to such non-compliance by our suppliers and co-manufacturers. As a result, our supply of raw materials or finished inventory could be disrupted or our costs could increase, which would adversely affect our business, results of operations and financial condition. The failure of any co-manufacturer to produce products that conform to our standards could adversely affect our reputation in the marketplace and result in product recalls, product liability claims and economic loss. For example, some of our co-manufacturers also process products with textured vegetable protein, a GMO product, and while we require them to process our products in separate designated quarters in their facilities, cross-contamination may occur and result in genetically modified organisms in our supply chain. Additionally, actions we may take to mitigate the impact of any disruption or potential disruption in our supply of raw materials or finished inventory, including increasing inventory in anticipation of a potential supply or production interruption, may adversely affect our business, results of operations and financial condition.
Risks Related to Our Intellectual Property
We may not be able to protect our proprietary technology adequately, which may impact our commercial success.
Our commercial success depends in part on our ability to protect our intellectual property and proprietary technologies. We rely on a combination of patent protection, where appropriate and available, copyrights, trade secrets and trademarks laws, as well as confidentiality and other contractual restrictions to protect our proprietary technology. However, these legal means afford only limited protection and may not adequately protect our proprietary technology or permit us to gain or keep any competitive advantage. As of March 30, 2019, we had one issued U.S. patent and 21 pending patent applications, including eight in the United States and 13 international patent applications.


We cannot offer any assurances about which, if any, patents will issue from these applications, the breadth of any such patents, or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or, if applicable in the future, licensed to us could deprive us of rights necessary for the successful commercialization of products that we may develop. Since patent applications in the United States and most other countries are confidential for a period of time after filing (in most cases 18 months after the filing of the priority application), we cannot be certain that we were the first to file on the technologies covered in several of the patent applications related to our technologies or products. Furthermore, a derivation proceeding can be provoked by a third party, or instituted by the U.S. Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.
Patent law can be highly uncertain and involve complex legal and factual questions for which important principles remain unresolved. In the United States and in many international jurisdictions, policy regarding the breadth of claims allowed in patents can be inconsistent and/or unclear. The U.S. Supreme Court and the Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, international courts and governments have made, and will continue to make, changes in how the patent laws in their respective countries are interpreted. We cannot predict future changes in the interpretation of patent laws by U.S. and international judicial bodies or changes to patent laws that might be enacted into law by U.S. and international legislative bodies.
Moreover, in the United States, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted in September 2011, brought significant changes to the U.S. patent system, including a change from a “first to invent” system to a “first to file” system. Other changes in the Leahy-Smith Act affect the way patent applications are prosecuted, redefine prior art and may affect patent litigation. The USPTO developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act became effective on March 16, 2013. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, which could have a material adverse effect on our business and financial condition.
We may not be able to protect our intellectual property adequately, which may harm the value of our brand.
We believe that our intellectual property has substantial value and has contributed significantly to the success of our business. Our trademarks, including The Beyond Burger, Beyond Beef, Beyond Chicken, Beyond Meat, Beyond Sausage, Beyond Breakfast Sausage, The Cookout Classic, The Future of Protein and The Future of Protein Beyond Meat, are valuable assets that reinforce our brand and consumers’ favorable perception of our products. We also rely on unpatented proprietary expertise, recipes and formulations and other trade secrets and copyright protection to develop and maintain our competitive position. Our continued success depends, to a significant degree, upon our ability to protect and preserve our intellectual property, including our trademarks, trade dress, trade secrets and copyrights. We rely on confidentiality agreements and trademark, trade secret and copyright law to protect our intellectual property rights.
Our confidentiality agreements with our employees and certain of our consultants, contract employees, suppliers and independent contractors, including some of our co-manufacturers who use our formulations to manufacture our products, generally require that all information made known to them be kept strictly confidential. Nevertheless, trade secrets are difficult to protect. Although we attempt to protect our trade secrets, our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not provide an adequate remedy in the event of unauthorized disclosure of such information. In addition, others may independently discover our trade secrets, in which case we would not be able to assert trade secret rights against such parties. Further, some of our formulations have been developed by or with our suppliers and co-manufacturers. As a result, we may not be able to prevent others from using similar formulations.
We cannot assure you that the steps we have taken to protect our intellectual property rights are adequate, that our intellectual property rights can be successfully defended and asserted in the future or that third parties will


not infringe upon or misappropriate any such rights. In addition, our trademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rights could prevent us in the future from challenging third parties who use names and logos similar to our trademarks, which may in turn cause consumer confusion or negatively affect consumers’ perception of our brand and products. In addition, if we do not keep our trade secrets confidential, others may produce products with our recipes or formulations. Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject us to liabilities, force us to cease use of certain trademarks or other intellectual property or force us to enter into licenses with others. Any one of these occurrences may have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Being a Public Company
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. We are in the process of upgrading our information technology systems and implementing additional financial and management controls, reporting systems and procedures in order to keep up with the requirements of being a reporting company under the Exchange Act. Additionally, the rapid growth of our operations and the IPO have created a need for additional resources within the accounting and finance functions due to the increasing need to produce timely financial information and to ensure the level of segregation of duties customary for a U.S. public company. We have hired additional resources in the accounting and finance function and continue to reassess the sufficiency of finance personnel in response to these increasing demands and expectations.
If we cease to be an “emerging growth company” as defined in the JOBS Act, commencing with our second annual report on Form 10-K that we will file after becoming a public reporting company, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10‑K filing for that year, as required by Section 404 of the Sarbanes Oxley Act. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404. We cannot be certain that the actions we will be taking to improve our internal controls over financial reporting will be sufficient, or that we will be able to implement our planned processes and procedures in a timely manner.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and


forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
For as long as we continue to be an emerging growth company, we also intend to take advantage of certain other 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
The requirements of being a public company will require us to incur increased costs and may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act which requires, among other things, that we file with the SEC annual, quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as related rules adopted by the SEC and the Nasdaq Global Select Market, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the SEC adopted rules and regulations related to corporate governance and executive compensation, such as “say on pay” and proxy access. Emerging growth companies are permitted to implement many of these requirements over a longer period and up to five years following the completion of its initial public offering. We intend to take advantage of this legislation for as long as we are permitted to do so. Once we become required to implement these requirements, we will incur additional compliance-related expenses. Additionally, the SEC and other regulators have continued to adopt new rules and regulations and make additional changes to existing regulations that require our compliance. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business. We expect the rules and regulations applicable to public companies to continue to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial


condition and results of operations. The increased costs will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business. Furthermore, these rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.
Risks Related to Ownership of Our Common Stock
An active trading market may not develop or be sustained following our IPO.
You may not be able to sell your shares quickly or at a recently reported market price if trading in our common stock does not remain active. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.
Our share price has been and may continue to be volatile, and you could lose all or part of your investment.
The market price of our common stock following our IPO has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to many factors discussed in this “Risk Factors” section, including:
actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results;
announcements of innovations by us or our competitors;
overall conditions in our industry and the markets in which we operate;
market conditions or trends in the packaged food sales industry or in the economy as a whole;
addition or loss of significant customers or other developments with respect to significant customers;
adverse developments concerning our manufacturers or suppliers;
changes in laws or regulations applicable to our products;
our ability to effectively manage our growth;
actual or anticipated changes in our growth rate relative to our competitors;
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
additions or departures of key personnel;
competition from existing products or new products that may emerge;
issuance of new or updated research or reports about us or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;
our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;
fluctuations in the valuation of companies perceived by investors to be comparable to us;


disputes or other developments related to proprietary rights, including patents, and our ability to obtain intellectual property protection for our products;
litigation matters;
announcement or expectation of additional financing efforts;
our cash position;
sales of our common stock by us or our stockholders;
share price and volume fluctuations attributable to inconsistent trading volume levels of our common stock;
the expiration of contractual lock-up agreements with our executive officers, directors and stockholders;
changes in accounting practices;
ineffectiveness of our internal controls;
general economic, market and political conditions; and
other events or factors, many of which are beyond our control.
Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes, tariffs or international currency fluctuations, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
Future sales of our common stock in the public market could cause our share price to fall.
Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. As of May 31, 2019, we had outstanding 60,122,797 shares of common stock, of which 49,054,047 shares are currently restricted as a result of lock-up and/or market standoff agreements and will become eligible for sale on October 29, 2019, subject in some cases to the volume limitations applicable to affiliates. Sales of stock by these stockholders could have a material adverse effect on the trading price of our common stock.
We have registered on Form S-8 under the Securities Act an aggregate of 10,752,818 shares of common stock subject to outstanding stock options and unvested restricted stock and shares of common stock reserved for issuance under our 2018 Plan and 2018 Employee Stock Purchase Plan. As a consequence, these shares can be freely sold in the public market upon issuance and vesting, subject to volume limitations applicable to affiliates, the lock-up and/or market stand-off agreements described above and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants.
If securities or industry analysts issue an adverse or misleading opinion regarding our business or do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts does not initiate coverage over us, ceases coverage of our company or fails to publish reports on us regularly, we could lose visibility in the


financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model or our stock performance, or if our operating results fail to meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline.
We have never paid dividends on our capital stock and we do not intend to pay dividends for the foreseeable future. Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases.
We have never declared or paid any dividends on our common stock and do not intend to pay any dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the operation of our business and for general corporate purposes. Accordingly, investors should rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
Our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could delay or prevent a change in control of our company. These provisions could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
providing for a classified board of directors with staggered, three-year terms;
authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control;
prohibiting cumulative voting in the election of directors;
providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;
prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors;
prohibiting stockholder action by written consent;
limiting the persons who may call special meetings of stockholders; and
requiring advance notification of stockholder nominations and proposals.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, the provisions of Section 203 of the Delaware General Corporate Law, or the DGCL, govern us. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of our board of directors.
These and other provisions in our amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.


Insiders have substantial control over us and will be able to influence corporate matters.
Our directors and executive officers and their affiliates and significant stockholders beneficially own, in the aggregate, approximately 28% of our outstanding capital stock as of May 31, 2019. As a result, these stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for:
any derivative action or proceeding brought on our behalf;
any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our directors, officers, employees or agents or our stockholders;
any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws; and
any action asserting a claim against us that is governed by the internal-affairs doctrine;
provided, that with respect to any derivative action or proceeding brought on our behalf to enforce any liability or duty created by the Exchange Act or the rules and regulations thereunder, the exclusive forum will be the federal district courts of the United States of America. Our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. For example, the Court of Chancery of the State of Delaware recently determined that the exclusive forum provision of federal district courts of the United States of America for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable. However, this decision may be reviewed and ultimately overturned by the Delaware Supreme Court. If the Court of Chancery’s decision were to be overturned, we would enforce the federal district court exclusive forum provision in our amended and restated certificate of incorporation.
Our ability to utilize our federal net operating loss and tax credit carryforwards may be limited under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code.
The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period. If we have experienced an ownership change at any time since our incorporation, we may already be subject to limitations on our ability to utilize our existing net operating losses and other tax attributes to offset taxable income. In addition, future changes in our stock ownership, which may be outside of our control, may trigger an ownership change and, consequently, Section 382 and 383 limitations. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. As a result, if we earn net taxable income,


our ability to use our pre-change net operating loss carryforwards and other tax attributes to offset such taxable income may be subject to limitations, which could potentially result in increased future income tax liability to us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Unregistered Sales of Equity SecuritiesNone.
During the quarter ended March 30, 2019, we issued and sold an aggregate of 169,583 shares of our common stock to current and former employees and consultants at a weighted average exercise price of $2.16 per share pursuant to exercises of options granted under our 2011 Equity Incentive Plan for aggregate cash consideration of $0.4 million. 
The stock options and the common stock issuable upon the exercise of such options were issued under the 2011 Equity Incentive Plan in reliance on the exemption provided by Rule 701 promulgated under the Securities Act. Each of the recipients of securities in these transactions had adequate access, through employment, business or other relationships, to information about us.
Use of Proceeds from our Initial Public Offering of Common Stock
On May 1, 2019, our registration statement on Form S-1 (File No. 333-228453) was declared effective by the SEC for our initial public offering. At the closing of the offering on May 6, 2019, we sold 11,068,750 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,443,750 additional shares, at an initial public offering price of $25.00 per share and received gross proceeds of $276.7 million, which resulted in net proceeds to us of approximately $252.5 million, after deducting underwriting discounts and commissions of $19.4 million and estimated offering expenses of approximately $4.8 million. None of the expenses associated with the initial public offering were paid to directors, officers, persons owning ten percent or more of any class of equity securities, or to their associates, or to our affiliates. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Jefferies LLC and William Blair & Company, L.L.C. acted as underwriters for the offering. Because the closing of our initial public offering occurred on May 6, 2019, as of March 30, 2019, we had not yet received the net proceeds from the sale of shares of common stock in our initial public offering and therefore had used none of the proceeds as of March 30, 2019.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.

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ITEM 6. EXHIBITS.
EXHIBIT INDEX
Exhibit No. Exhibit Description Incorporated by Reference Filed Herewith
    Form Date Number  
3.1 
Restated Certificate of Incorporation.
       X
3.2 
Amended and Restated Bylaws.
       X
4.1 
Form of Common Stock Certificate.
 S-1/A 3/27/2019 4.1  
4.2 
Amended and Restated Investors’ Rights Agreement, dated as of October 5, 2018, by and among the Registrant and the other parties thereto.
 S-1 11/16/2018 4.2  
10.1 
Standard Industrial/Commercial Single-Tenant Lease, dated as of January 18, 2017, by and between Smoky Hollow Industries, LLC and Registrant with attachments thereto.
 S-1 11/16/2018 10.1  
10.2 
Lease, dated March 13, 2014, as amended, by and between Sara Maguire LeMone as Trustee of the Sara Maguire LeMone Revocable Trust dated February 6, 2004 and Registrant and amendment thereto dated November 1, 2017.
 S-1 11/16/2018 10.2  
10.3 
Lease, dated October 12, 2017, by and between LeMone Family Limited Partnership, LLLP and Registrant as amended by the Lease Amendment dated April 18, 2018.
 S-1 11/16/2018 10.3  
10.4 
Amended and Restated Loan and Security Agreement (Revolving Line), dated as of June 27, 2018, by and between Silicon Valley Bank and Registrant.
 S-1 11/16/2018 10.4  
10.5 
Loan and Security Agreement (Term Loan), dated June 27, 2018, by and between Silicon Valley Bank and Registrant.
 S-1 11/16/2018 10.5  
10.6 
First Amendment to Loan and Security Agreement (Term Loan), dated September 27, 2018, by and between Silicon Valley Bank and Registrant.
 S-1 11/16/2018 10.6  
10.7 
Intellectual Property Security Agreement, dated June 27, 2018, by and between Silicon Valley Bank and Registrant (Revolving Line).
 S-1 11/16/2018 10.7  
10.8 
Intellectual Property Security Agreement, dated June 27, 2018, by and between Silicon Valley Bank and Registrant (Term Loan).
 S-1 11/16/2018 10.8  
10.9 
Equipment Loan and Security Agreement, dated September 19, 2018, by and between Ocean II PLO, LLC and Registrant.
 S-1 11/16/2018 10.9  
10.10 
Supply Agreement, dated December 28, 2018, by and between Roquette America, Inc. and Registrant.+
 S-1/A 4/15/2019 10.10  
10.11 
Form of Indemnification Agreement with directors and executive officers.*
 S-1/A 1/9/2019 10.11  
10.12 
2011 Equity Incentive Plan, amended as of April 3, 2019, and related forms of stock award agreements.*
 S-1/A 4/15/2019 10.12  


EXHIBIT INDEX
Exhibit No.Exhibit DescriptionIncorporated by ReferenceFiled Herewith
FormDateNumber
3.1 10-Q6/12/20193.1
3.2 10-Q6/12/20193.2
4.1 S-1/A3/27/20194.1
4.2 S-111/16/20184.2
4.38-K3/05/20214.1
4.48-K3/05/20214.2
10.1X
10.2*8-K6/10/202110.1
10.3*8-K7/8/202110.1
31.1X
31.2X
32.1**X
32.2**X
101 The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended July 3, 2021 formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Stockholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.X
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EXHIBIT INDEX
Exhibit No. Exhibit Description Incorporated by Reference Filed Herewith
    Form Date Number  
10.13 
2018 Equity Incentive Plan, and related forms of stock award agreements.*
 S-1/A 1/9/2019 10.13  
10.14 
2018 Employee Stock Purchase Plan.*
 S-1/A 1/9/2019 10.14  
10.15 
Executive Incentive Bonus Plan.*
 S-1 11/16/2018 10.15  
10.16 
Form of Executive Change in Control Severance Agreement.*
 S-1 11/16/2018 10.16  
10.17 
Option Amendment Letter, dated May 11, 2017, by and between Mark J. Nelson and Registrant.*
 S-1 11/16/2018 10.17  
10.18 
Advisor Agreement, dated February 26, 2016, by and between Bernhard van Lengerich and Registrant, as amended on September 5, 2017.*
 S-1 11/16/2018 10.18  
10.19 
Second Amended & Restated Consulting Agreement, dated April 8, 2019, by and between Seth Goldman and Registrant.*
 S-1/A 4/15/2019 10.19  
10.20 
Employment Agreement by and between Registrant and Ethan Brown.*
 S-1/A 1/9/2019 10.20  
10.21 
Master Supply Agreement, dated as of December 21, 2018, between Registrant and PURIS Proteins, LLC.+
 S-1/A 4/15/2019 10.21  
10.22 
Standard Industrial/Commercial Single-Tenant Lease - Net, dated as of February 11, 2019, between GSOB, LLC and Registrant, with attachments thereto.
 S-1/A 4/15/2019 10.22  
10.23 
Amended and restated agreement, dated as of January 18, 2019, between Registrant and Chuck Muth.*
 S-1/A 3/27/2019 10.23  
10.24 
Offer Letter dated, dated April 29, 2017, by and between Registrant and Mark J. Nelson.*
 S-1 11/16/2018 10.20  
10.25 
Offer Letter dated April 29, 2019 with Teri L. Witteman.*
 8-K 5/20/2019 10.25  
31.1  
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       X
31.2  
Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       X
32.1**  
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       X
32.2**  
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       X
  101.INS XBRL Report Instance Document       X
  101.SCH XBRL Taxonomy Extension Schema Document       X
  101.CAL XBRL Taxonomy Calculation Linkbase Document       X



EXHIBIT INDEX
Exhibit No.Exhibit DescriptionIncorporated by ReferenceFiled Herewith
FormDateNumber
  101.LAB104 Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Label Linkbase Documentand contained in Exhibit 101)
X
  101.PREXBRL Presentation Linkbase DocumentX _________________
  101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
 _________________
+ Certain portions of this document that constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10).
* Indicates management contract or compensatory plan or arrangement.
** This certification is deemed furnished, and not filed, for purpose of section 18 ofwith the Securities and Exchange Act or otherwise subjectCommission and is not to the liability of that section, nor shall it be deemed incorporated by reference into any filing of Beyond Meat, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act.Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BEYOND MEAT, INC.
Date:June 12, 2019By:/s/ Ethan Brown
Ethan Brown
President and Chief Executive Officer
(Principal Executive Officer)

Date:June
Date:August 12, 20192021By:/s/ Ethan Brown
Ethan Brown
President and Chief Executive Officer
(Principal Executive Officer)

Date:August 12, 2021By:/s/ Mark J. NelsonPhilip E. Hardin
Mark J. NelsonPhilip E. Hardin
Chief Financial Officer, and Treasurer
(Principal Financial and Accounting Officer)





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