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What changed in Local Bounti Corporation/DE's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Local Bounti Corporation/DE's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+304 added−310 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-28)

Top changes in Local Bounti Corporation/DE's 2024 10-K

304 paragraphs added · 310 removed · 233 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

74 edited+22 added−21 removed114 unchanged
Biggest changeThe Company expects that, while increased regulation may require increasing investments in these areas, funding to support the adaptation of these efforts may also increase. 16 Please refer to Item 1A, Risk Factors , for further discussion regarding climate-related risks. Competition Local Bounti's competition includes greenhouse operators and other CEA operators such as vertical farming operators.
Biggest changePlease refer to Item 1A, Risk Factors , for further discussion regarding climate-related risks. Competition Local Bounti's competition includes greenhouse operators and other CEA operators such as vertical farming operators. Greenhouse operators grow crops within a sheltered structure on a horizontal plane, while vertical farming operators grow crops in vertically stacked layers indoors.
Key considerations include meeting known demand from key existing customers within the network, as well as optimizing freight routes to ensure that transportation is optimized to limit cost while enhancing customer service with consistent delivery schedules.
Key considerations include meeting known demand from key existing customers within the network, as well as optimizing freight routes to ensure that transportation is optimized to limit cost while enhancing customer service with consistent delivery schedules.
We are working to develop key partnerships with agricultural and equipment vendors to ensure efficient construction. As a result, we believe we can build, scale and commission a facility within 15 months of acquiring the underlying land, which we believe is significantly faster than our competitors.
We are working to develop key partnerships with agricultural and equipment vendors to ensure efficient construction. As a result, we believe we can build, scale and commission a facility within 15 months of acquiring the underlying land, which we believe is significantly faster than our competitors.
McCandless served as Associate General Counsel – Securities, Disclosure, and Corporate Governance for CenturyLink, Inc. (NYSE: CTL) and Qwest Communications International Inc. (NYSE: Q). Prior to joining Qwest, Ms. McCandless was an associate at the law firms of Hogan Lovells LLP and Cooley LLP.
McCandless served as Associate General Counsel – Securities, Disclosure, and Corporate Governance for CenturyLink, Inc. (NYSE: CTL) and Qwest Communications International Inc. (NYSE: Q). Prior to joining Qwest, Ms. McCandless was an associate at the law firms of Hogan Lovells LLP and Cooley LLP. Ms.
While population shifts and community health evolve, the Company is well-positioned to respond within existing systems and expand on continuity planning and community investment activities. • Regulatory: In the United States and globally, there is a growing amount of regulatory action in response to climate change. Recently, we have seen increased regulation relating to climate-smart investments and sustainability disclosures.
While population shifts and community health evolve, the Company is well-positioned to respond within existing systems and expand on continuity planning and community investment activities. • Regulatory: In the United States and globally, there is a growing amount of regulatory action in response to climate change. Recently, we have seen increased regulation relating to climate-smart investments and 16 sustainability disclosures.
Controlling the environmental conditions in both the 'Stack' and 'Flow' components of our growing system helps to ensure healthy, nutritious, consistent, and delicious products that are non-genetically modified organisms ("non-GMO"). We use 90% less water, 90% less land, and significantly less pesticides and herbicides than traditional outdoor agriculture operations.
Controlling the environmental conditions in both the 'Stack' and 'Flow' components of our growing system helps to ensure healthy, nutritious, and consistent products that are non-genetically modified organisms ("non-GMO"). We use 90% less water, 90% less land, and significantly less pesticides and herbicides than traditional outdoor agriculture operations.
We report on human capital metrics, including gender balance, racial and ethnic diversity in our workforce, employee engagement and professional development. We have supplier programs that integrate and emphasize sustainability in the procurement of goods and services. We have reported annually on GHG emissions since our first full year of commercial production.
We report on human capital metrics, including gender balance, racial and ethnic diversity in our workforce, employee engagement and professional development. We have supplier programs that integrate sustainability in the procurement of goods and services. We have reported annually on GHG emissions since our first full year of commercial production.
Paired with our geographically distributed production, we believe that our branding and SKU diversity will allow us to capture greater market share with customers and consumers who seek a diversity of leafy green produce and are oriented to locally produced, sustainable food.
Paired with our geographically distributed production, we believe that our branding and SKU diversity will allow us to capture greater market share with 6 customers and consumers who seek a diversity of leafy green produce and are oriented to locally produced, sustainable food.
Today, our primary products include living butter lettuce – for which we are a leading provider with an approximate 80% share of the CEA market within the Western U.S. – as well as packaged leafy greens and cress.
Our primary products include living butter lettuce – for which we are a leading provider with an approximate 80% share of the CEA market within the Western U.S. – as well as packaged leafy greens and cress.
We believe we are innovating within the living and loose-leaf lettuce and herbs produce category, and we intend to further establish our Local Bounti and Pete's branded line of products as synonymous with fresh, delicious, locally and sustainably grown food.
We believe we are innovating within the living and loose-leaf lettuce and herbs produce category, and we intend to further establish our Local Bounti branded line of products as synonymous with fresh, delicious, locally and sustainably grown food.
Our approach is to build or acquire geographically distributed production facilities so we can provide our customers with locally grown, lower pesticide and herbicide produce delivered at peak freshness on a year-round basis.
Our 13 approach is to build or acquire geographically distributed production facilities so we can provide our customers with locally grown, lower pesticide and herbicide produce delivered at peak freshness on a year-round basis.
We have performed product shelf-life tests which demonstrated that our loose-leaf lettuce lasts longer in the consumer's refrigerator (assuming purchased on the day of delivery to the purchase point) than one of our organic loose-leaf lettuce competitors.
We have performed product shelf-life tests 14 which demonstrated that our loose-leaf lettuce lasts longer in the consumer's refrigerator (assuming purchased on the day of delivery to the purchase point) than one of our organic loose-leaf lettuce competitors.
Grown with Fewer Pesticides and Herbicides. Local Bounti produce is grown with significantly less pesticides and herbicides than traditional field-grown produce, is non-GMO, and is certified with Harmonized Good Agricultural Practices under a Global Food Safety Initiative ("GFSI") benchmarked program. Cargill Relationship.
Local Bounti produce is grown with significantly less pesticides and herbicides than traditional field-grown produce, is non-GMO, and is certified with Harmonized Good Agricultural Practices under a Global Food Safety Initiative ("GFSI") benchmarked program. Cargill Relationship.
With a stable control of the plant environment, CEA can provide secure, high quality produce, year-round production of previously seasonal produce and higher production volume compared to 7 conventional farming on the same size land.
With a stable control of the plant environment, CEA can provide secure, high quality produce, year-round production of previously seasonal produce and higher production volume compared to conventional farming on the same size land.
Through our sustainability program, we monitor ESG metrics, including human capital elements. We continue to enhance the sustainability of our daily practices, reduce our GHG emissions, and provide an exceptional working environment for our employees across our operations.
Through our sustainability program, we monitor sustainability metrics, including human capital elements. We continue to enhance the sustainability of our daily practices, reduce our GHG emissions, and provide an exceptional working environment for our employees across our operations.
We actively engage with our stakeholders, internally and externally, to encourage input on the materiality of various ESG issues to Local Bounti and incorporate input into our strategic planning and sustainability reporting.
We actively engage with our stakeholders, internally and externally, to encourage input on the materiality of various sustainability issues to Local Bounti and incorporate input into our strategic planning and sustainability reporting.
Our goal is to maintain the Investors portion of our website as a portal through which investors can easily find or navigate to pertinent information about us, including: • Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC at SEC.gov. • Information on our business strategies, financial results, and metrics for investors. • Announcements of investor conferences, speeches, and events at which our executives talk about our product, service, and competitive strategies.
Our goal is to maintain the Investors portion of our website as a portal through which investors can easily find or navigate to pertinent information about us, including: • Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC at SEC.gov. • Information on our business strategies, financial results, and metrics for investors. • Announcements of investor conferences or other events at which our executives may talk about our product, service, and competitive strategies.
CEA growers employ various permutations of growing environments and growing methods to meet customer, operational and other metrics that are important determinants of the CEA operation. CEA can offer the food industry resiliency and dependability beyond what traditional agriculture can offer. CEA can produce a broad array of product consistently, year-round, and despite weather or other adverse growing conditions.
CEA growers employ various permutations of growing environments and growing methods to meet customer, operational and other metrics that are important determinants of the CEA operation. CEA can offer the food industry resiliency and dependability beyond what traditional agriculture can offer. CEA can produce a broad array of products consistently, year-round, despite weather or other adverse growing conditions.
We have entered into credit agreements with Cargill Financial, as described in Note 8, Debt , of the Consolidated Financial Statements included in Item 8.
We have entered into credit agreements with Cargill Financial, as described in Note 7, Debt , of the Consolidated Financial Statements included in Item 8.
This vertical nursery produces a stock of young plants to fill growing space in our controlled environment greenhouses, where young plant growth is accelerated when exposed to a specified set of conditions, including natural light, temperature, humidity, carbon dioxide, nutrients, pH balance and other key variables.
The vertical nursery produces a stock of young plants to fill growing space in our controlled environment greenhouses, where young plant growth is accelerated when exposed to a specified set of conditions, including natural light, temperature, humidity, carbon dioxide, nutrients, pH balance and other key variables.
Research reports attribute much of this shelf-life extension to the reduced bacteria, mildew and mold achieved using CEA production, as compared to traditionally grown products (even post-harvest washed). 14 ESG and Sustainability Conventional agriculture faces challenges due to climate change, population growth, and geopolitical shifts.
Research reports attribute much of this shelf-life extension to the reduced bacteria, mildew and mold achieved using CEA production, as compared to traditionally grown products (even post-harvest washed). Sustainability Conventional agriculture faces challenges due to climate change, population growth, and geopolitical shifts.
We plan to use substantial pre-engineered, pre-fabricated and standardized components when building our modular facilities in order to reduce execution risk for facilities where we build from the ground up. For pre-existing facilities like those acquired with the Pete's Acquisition, we plan to update facilities using our Stack & Flow Technology ® .
We plan to use substantial pre-engineered, pre-fabricated and standardized components when building our modular facilities in order to reduce execution risk for facilities where we build from the ground up. For pre-existing facilities like those acquired with the Pete's Acquisition, we may update facilities, where appropriate, using our Stack & Flow Technology ® .
While we believe our ESG goals align with our long-term growth strategy and financial and operational priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met. Environment: We are committed to minimizing our impact on the environment.
While we believe our sustainability goals align with our long-term growth strategy and financial and operational priorities, they are aspirational and may change, and there is no guarantee or promise that they will be met. Environment: We are committed to minimizing our impact on the environment.
Our trademarks are valuable assets that reinforce the distinctiveness of our brand to customers and shoppers. In February 2023, the USPTO granted a patent covering our Stack & Flow Technology. Local Bounti has several additional patents submitted to the USPTO relating to its operations and technology.
Our trademarks are valuable assets that reinforce the distinctiveness of our brand to customers and shoppers. In February 2024, the USPTO granted a patent covering our Stack & Flow Technology. Local Bounti has several additional patents submitted to the USPTO relating to its operations and technology.
The Nominating and Corporate Governance Committee periodically reviews our carbon and water data and provides oversite for climate-related risks and opportunities to operations. In 2023, the Company conducted a climate change scenario based approach to its work to identify and assess climate-related risks and opportunities.
The Nominating and Corporate Governance Committee periodically reviews our carbon and water data and provides oversight for climate-related risks and opportunities to operations. In 2023, the Company conducted a climate change scenario based approach to its work to identify and assess climate-related risks and opportunities.
We will continue to consider opportunities for community engagement in future site selection process as well. 15 Governance: Local Bounti sees ESG as a competitive advantage and strives to be fully supportive of these endeavors at all levels of the Company. This alignment and focus will aid us in steering our long-term corporate actions in the right direction.
We will continue to consider opportunities for community engagement in future site selection process as well. Governance: Local Bounti sees sustainability as a competitive advantage and strives to be fully supportive of these endeavors at all levels of the Company. This alignment and focus will aid us in steering our long-term corporate actions in the right direction.
We potentially compete with traditional greenhouse producers, as well as CEA companies using high technology greenhouses such as AppHarvest, Bright Farms, and Revol Greens. We also potentially compete against vertical farming operators, including AeroFarms, Bowery Farming, Gotham Greens, Little Leaf Farms, and Plenty.
We potentially compete with traditional greenhouse producers, as well as CEA companies using high technology greenhouses such as Bright Farms, Revol Greens, Gotham Greens, and Little Leaf Farms. We also potentially compete against vertical farming operators, including AeroFarms and Plenty.
The Nominating and Corporate Governance Committee of our Board of Directors is responsible for reviewing, evaluating, and making recommendations to the Board of Directors regarding our programs, policies and practices relating to ESG issues and impact to support the sustainable growth of our businesses .
The Nominating and Corporate Governance Committee of our Board of Directors is responsible for reviewing, evaluating, and making recommendations to the Board of Directors regarding our programs, policies and practices relating to sustainability issues and impact to support the sustainable growth of our businesses .
Valiasek served as Chief Financial Officer from January 2017 to June 2019 and Chief Business Officer from June 2019 to March 2021 at Amyris, a science and technology leader in the research, development and production of sustainable ingredients for the clean health and beauty and flavors and fragrances markets. Prior to Amyris, Ms.
She also served as Chief Financial Officer from January 2017 to June 2019 and Chief Business Officer from June 2019 to March 2021 at Amyris, a science and technology leader in the research, development and production of sustainable ingredients for the clean health and beauty and flavors and fragrances markets. Prior to Amyris, Ms.
In December 2022, our Board approved a new Environmental Policy, which documents our policies relating to the environment, including the following: • Water Stewardship: We are committed to monitoring, reducing, and reusing water resources. • Climate Protection: We are committed to being carbon neutral by 2050. • Sustainable Packaging: We are committed to using an average of 30% recycled content or responsibly sourced biobased content in consumer-facing packaging by the end of 2025. • Sustainable Sourcing: Our Board has approved a Supplier Code of Conduct, which address the standards of business conduct we expect from our suppliers.
Our Board of Directors (the "Board") has adopted an Environmental Policy, which documents our policies relating to the environment, including the following: • Water Stewardship: We are committed to monitoring, reducing, and reusing water resources. • Climate Protection: We are committed to being carbon neutral by 2050. • Sustainable Packaging: We are committed to using an average of 30% recycled content or responsibly sourced biobased content in consumer-facing packaging by the end of 2025. • Sustainable Sourcing: Our Board has approved a Supplier Code of Conduct, which address the standards of business conduct we expect from our suppliers.
We believe that our leading technology and brand will enable licensing and franchising opportunities to other indoor agriculture operators, with minimal capital investment from us.
We believe that in time, our leading technology and brand will enable licensing and franchising opportunities to other indoor agriculture operators, with minimal capital investment from us.
For pre-existing facilities like those acquired with the Pete's Acquisition, we expect to update facilities using our Stack & Flow Technology ® . Our approach is to build geographically distributed production so we can provide customers with locally grown, lower pesticide and herbicide produce delivered at peak freshness on a year-round basis.
For pre-existing facilities like those acquired with the Pete's Acquisition, we may update facilities, where appropriate, using our Stack & Flow Technology ® . Our approach is to build geographically distributed production so we can provide customers with locally grown, lower pesticide and herbicide produce delivered at peak freshness on a year-round basis.
Archives of these events are also available. • Press releases on quarterly earnings, product and service announcements, legal developments, and international news. • Corporate governance information including our governance guidelines, committee charters, and code of conduct and ethics. • Other news and announcements that we may post from time to time that investors might find useful or interesting. • Opportunities to sign up for email alerts to have information pushed in real time.
Archives of these events are also available. • Press releases on quarterly earnings, product and service announcements, or other business updates. • Corporate governance information including our governance guidelines, committee charters, and code of business conduct and ethics. • Other news and announcements that we may post from time to time that investors might find useful or interesting. • Opportunities to sign up for email alerts to have information pushed in real time.
We plan to use 13 substantial pre-engineered, pre-fabricated and standardized components when building our modular facilities in order to reduce execution risk for facilities where we build from the ground up. For pre-existing facilities like those acquired with the Pete's Acquisition, we expect to update facilities using our patented Stack & Flow Technology ® .
We plan to use substantial pre-engineered, pre-fabricated and standardized components when building our modular facilities in order to reduce execution risk for facilities where we build from the ground up. For pre-existing facilities like those acquired with the Pete's Acquisition, we may update facilities, where appropriate, using our patented Stack & Flow Technology ® .
Our proprietary process is a hybrid, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our Stack & Flow Technology ® to give our greens exactly what they need at every step of their growth cycle.
Our proprietary process is a hybrid growing approach, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our Stack & Flow Technology ® to give our products exactly what they need at every step of their growth cycle.
Hurlbert is currently the Chairman of the Board at Clearas Water Recovery, a company utilizing patented, sustainable, and proprietary technology to solve high nutrient wastewater challenges in the municipal and industrial water markets. Mr. Hurlbert earned his B.S. in Finance from San Diego State University and his M.B.A. from California State University-Long Beach. Travis M. Joyner. Mr.
Hurlbert is currently the Chairman of the Board at Clearas Water Recovery, a company utilizing patented, sustainable, and proprietary technology to solve high nutrient wastewater challenges in the municipal and industrial water markets. Mr. Hurlbert earned his B.S. in Finance from San Diego State University and his M.B.A. from California State University-Long Beach. Kathleen Valiasek. Ms.
Company Overview Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused today on living and loose leaf lettuce. Founded in 2018, and headquartered in Hamilton, Montana, Local Bounti utilizes its patented Stack & Flow Technology ® to grow healthy food sustainably and affordably.
Company Overview Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused primarily on living and loose leaf lettuce, arugula, spinach, and basil. Founded in 2018, and headquartered in Hamilton, Montana, Local Bounti utilizes its patented Stack & Flow Technology ® to grow healthy food sustainably and affordably.
Our facilities have been purposely designed for rapid expansion, allowing us to potentially build and commission a facility within 15 months of land acquisition. For pre-existing facilities like those acquired with the Pete's Acquisition, we expect to update facilities using our patented Stack & Flow Technology ® , which would then benefit from the same baseline platform. Experienced management team.
Our facilities have been purposely designed for rapid expansion, allowing us to potentially build and commission a facility within 15 months of land acquisition. For pre-existing facilities like those acquired with the Pete's Acquisition, we may update facilities, where appropriate, using our patented Stack & Flow Technology ® , which would then benefit from the same baseline platform.
We intend to expand our sales channels where we can enhance our brand and maximize the efficiency of our distribution. We focus on the retail channel and complement our distribution with foodservice.
Continue to develop and diversify our sales channels and geographies . We intend to expand our sales channels where we can enhance our brand and maximize the efficiency of our distribution. We focus on the retail channel and complement our distribution with foodservice.
We also believe that local is the best kind of business, and we are committed to helping communities thrive for generations to come. We are committed to building empowered local teams. Together, we believe we are capable of extraordinary things.
We also believe that local is the best kind of business, and we are committed to helping communities thrive for generations to come. We are committed to building empowered local teams. Together, we believe we are capable of extraordinary achievements in sustainable agriculture.
Environment Control Variables We believe that we are well-positioned to redefine environmental, social and governance ("ESG") standards for indoor agriculture while delivering the freshest and highest quality produce to local communities with minimal carbon footprint. The key components to Local Bounti's strategy are set forth below. Unit economics focus with technology-driven approach.
We believe that we are well-positioned to redefine sustainability standards for indoor agriculture while delivering the freshest and highest quality produce to local communities with minimal carbon footprint. The key components to Local Bounti's strategy are set forth below. Unit economics focus with technology-driven approach.
Branded product with SKU diversity . Local Bounti products are currently sold at more than 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh.
Branded product with SKU diversity . Local Bounti products are currently sold at approximately 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, Brookshire's, H-E-B, Sprouts, and AmazonFresh.
We believe the protection of our patents, trademarks, copyrights and domain names are important to our success and we intend to aggressively protect our intellectual property rights. Employees and Human Capital Resources As of December 31, 2023, we had 301 full-time employees. This includes 186 non-exempt and 115 exempt employees.
We believe the protection of our patents, trademarks, copyrights and domain names are important to our success and we intend to aggressively protect our intellectual property rights. Employees and Human Capital Resources As of December 31, 2024, we had 333 full-time employees. This includes 214 non-exempt and 119 exempt employees.
Local Bounti products are currently sold at more than 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh.
Local Bounti products are currently sold at approximately 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, Brookshire's, H-E-B, Sprouts, and AmazonFresh.
At the end of 2023, Local Bounti offered 27 SKUs across living and loose leaf lettuce, organic and 11 conventional, cress and value add product lines, and intends to continue to expand its SKUs to meet customer demand.
At the end of 2024, Local Bounti offered 32 SKUs across living and loose leaf lettuce, spinach, arugula, basil, organic and conventional, cress and value add product lines, and intends to continue to expand 11 its SKUs to meet customer demand.
This transition will follow the capacity enhancements brought about by the completion of our Georgia facility and the commencement of operations at both Texas and Washington and is expected to help drive us toward our goal of achieving positive adjusted EBITDA in early 2025. Carpinteria Facility.
This transition follows the capacity enhancements brought about by the completion of the Georgia facility and the commencement of operations at both the Texas and Washington facilities and is expected to help drive toward our goal of achieving positive adjusted EBITDA. Carpinteria Facility.
Ms. 19 McCandless holds a J.D. from the University of Wisconsin Law School and a B.S. in Accounting from the University of Colorado at Boulder. Board of Directors Below is information about the members of our Board of Directors: Name Age Position Craig M. Hurlbert 61 Chief Executive Officer Travis M.
McCandless holds a J.D. from the University of Wisconsin Law School and a B.S. in Accounting from the University of Colorado at Boulder. Board of Directors Below is information about the members of our Board of Directors as of March 30, 2025: Name Age Position Craig M. Hurlbert 62 Co-Founder and Chief Executive Officer Travis M.
Joyner 41 Chief Technology Officer and Director Kathleen Valiasek 60 Chief Financial Officer Margaret McCandless 51 General Counsel and Corporate Secretary Craig M. Hurlbert. Mr. Hurlbert has served as our Chief Executive Officer since December 2023 and as a member of our Board since November 2021.
Hurlbert 62 Chief Executive Officer and Director Kathleen Valiasek 61 President and Chief Financial Officer Margaret McCandless 52 General Counsel and Corporate Secretary Craig M. Hurlbert. Mr. Hurlbert has served as our Chief Executive Officer since December 2023 and as a member of our Board since November 2021.
Users may automatically receive email alerts and other information about Local Bounti by signing up for email alerts under the Investors tab of our website. 18 Executive Officers Below is biographical information about our executive officers: Name Age Position Craig M. Hurlbert 61 Chief Executive Officer and Director Travis M.
Users may automatically receive email alerts and other information about Local Bounti by signing up for email alerts under the Investors tab of our website. 18 Executive Officers Below is biographical information about our executive officers as of March 30, 2025: Name Age Position Craig M.
Our stock keeping unit (“SKU”) assortment at the end of 2023 includes 27 6 SKUs across living and loose leaf lettuce, organic and conventional, cress and value add product lines.
Our stock keeping unit (“SKU”) assortment at the end of 2024 includes 32 SKUs across living and loose leaf lettuce, spinach, arugula, basil, organic and conventional, cress and value add product lines.
The first phase of this facility became operational in July 2022 and was further expanded in 2023. During the fourth quarter of 2023, we also implemented our patented Stack & Flow Technology ® at the Georgia facility, which doubled run-rate production. We regularly assess our pipeline of future farm locations to maximize our national distribution footprint.
The first phase of this facility became operational in July 2022 and was further expanded in 2023. During the fourth quarter of 2023, we also implemented our patented Stack & Flow Technology ® at the Georgia facility, which doubled run-rate production.
Business Summary Our differentiation is rooted in our focus on unit economics, and is compounded by our modular and locally distributed facility strategy, brand and product diversity, and a strong focus on sustainability. Our focus on unit economics defines our execution strategy, which underpins our value proposition and enhances value for all stakeholders as depicted in the diagram below.
Business Summary Our differentiation is rooted in our focus on unit economics, and is compounded by our modular and locally distributed facility strategy, brand and product diversity, and a strong focus on sustainability. Our focus on unit economics shapes our execution strategy, which supports our value proposition and increases value for all stakeholders.
According to publicly available research, the U.S. market for fruit and vegetables has an estimated total addressable market of $75 billion.
According to publicly available research in October 2024, the U.S. market for fruit and vegetables has an estimated total addressable market of greater than $100 billion.
Joyner 41 Chief Technology Officer Pamela Brewster 54 Principal at Orange Strategies LLC Jennifer Carr-Smith 52 President of JCS Advisory Services, LLC Edward C. Forst 63 Former Chairman and Partner of Lion Capital Mark J. Nelson 55 Former Chief Financial Officer and Treasurer of Beyond Meat, Inc. Matthew Nordby 44 Managing Partner of Flume Ventures 20
Joyner 42 Co-Founder Pamela Brewster 55 Principal at Orange Strategies LLC Jennifer Carr-Smith 53 President of JCS Advisory Services, LLC Edward C. Forst 64 Former Chairman and Partner of Lion Capital Mark J. Nelson 56 Former Chief Financial Officer and Treasurer of Beyond Meat, Inc. Matthew Nordby 45 Managing Partner of Flume Ventures 19
Our location selection analysis suggests that we will be able to build distributed, regional facilities that each serve multiple regional population centers, giving leverage to local production on a regional basis, including as we expand outside of the Western region of the United States.
Our location selection analysis suggests that we will be able to build distributed, regional facilities that each serve multiple regional population centers, giving leverage to local production on a regional basis.
Most of the companies have the major portions of their operations in Mexico and Canada, but all are either looking to develop, are developing, or have already developed U.S.-based high-tech greenhouses. These companies include Mastronardi Produce Ltd. and Pure Flavour.
Large-scale greenhouse operators have the largest market position and own and operate hundreds to thousands of acres of greenhouse. Most of the companies have the major portions of their operations in Mexico and Canada, but all are either looking to develop, are developing, or have already developed U.S.-based high-tech greenhouses. These companies include Mastronardi Produce Ltd. and Pure Flavor.
Key considerations include meeting known demand from key existing customers within the network, as well as optimizing freight routes to ensure that transportation is optimized to limit cost while enhancing customer service with consistent delivery schedules.
We regularly assess our pipeline of future farm locations to maximize our national distribution footprint. Key considerations include meeting known demand from key existing customers within the network, as well as optimizing freight routes to ensure that transportation is optimized to limit cost while enhancing customer service with consistent delivery schedules.
The value of local CEA facilities extends beyond our environmental goals. The short transport distances to our customers reduce food miles and transportation emissions. Delivering fresher and higher quality product reduces food waste in the supply chain and lowers consumer food waste. Additionally, we use significantly less pesticides, and currently use recycled polyethylene terephthalate ("rPET") for some of our packaging.
The value of local CEA facilities extends beyond our environmental goals. The short transport distances to our customers reduce food miles and transportation emissions. Delivering fresher and higher quality product reduces food waste in the supply chain and lowers consumer food waste.
We expect to transition in 2024 the majority of our Montana Facility from its current focus on research and development to a commercially oriented facility that is growing produce for sale to customers.
In the third quarter of 2024, we completed the transition of our Montana facility from a research and development focus to a commercially oriented focus growing produce for sale to customers.
The facility also includes a cold storage room for finished goods and a packaging room with processing equipment to transform freshly harvested produce into packaged goods that are ready for retail shelves. The Georgia site is laid out for potential future expansion. Development Pipeline. We regularly assess our pipeline of future farm locations to maximize our national distribution footprint.
The facility also includes a cold storage room for finished goods and a packaging room with processing equipment to transform freshly harvested produce into packaged goods that are ready for retail shelves. The Georgia site is laid out for potential future expansion. Washington Facility. Our Washington facility began operations in the second quarter of 2024.
We strive to hire locally and promote employees internally by investing in internal and community training programs. All full time Local Bounti employees receive benefits within their first month of work. To keep up with the evolving market, we survey all employees throughout the year regarding various aspects of their employment experience.
We strive to hire locally and promote employees internally by investing in internal and community training programs. All full time Local Bounti employees receive benefits within their first month of work.
Social – Community: We prioritize communities where our facilities are located and as a corporation are and will continue donating produce to our communities. These investments are supported by large on-going local purchases and significant employment.
To keep up with the evolving market, we survey all employees throughout the year regarding various aspects of their employment experience. 15 Social – Community: We prioritize communities where our facilities are located and as a corporation are and will continue donating produce to our communities. These investments are supported by large on-going local purchases and significant employment.
When Local Bounti builds new facilities, it explores climate-smart programs that could be appropriate for the business. In addition, Local Bounti references independent international standards when developing sustainability disclosures.
When Local Bounti builds new facilities, it explores climate-smart programs that could be appropriate for the business. In addition, Local Bounti references independent international standards when developing sustainability disclosures. The Company expects that, while increased regulation may require increasing investments in these areas, funding to support the adaptation of these efforts may also increase.
However, weather and geography limit the ability for traditional agriculture methods to provide most geographies with sufficient locally grown food year-round, or at all.
We believe consumers are increasingly drawn to local and sustainably grown food due to the freshness of the product, the taste, and a sense of supporting the local economy and environment. However, weather and geography limit the ability for traditional agriculture methods to provide most geographies with sufficient locally grown food year-round, or at all.
Valiasek has served as our Chief Financial Officer since April 2021. Previously, Ms.
Valiasek has served as our President since June 2024 and our Chief Financial Officer since November 2021.
We have been able to expand distribution of our market-leading Grab & Go Salad Kits and are set to expand our baby leaf portfolio by introducing several high-velocity offerings including spinach, arugula, 50/50 blend and power greens by the third quarter of 2024.
We recently introduced new Grab & Go Salads and additions to our baby leaf portfolio with several high-velocity offerings, including Spinach, Arugula, and Basil. In addition, we introduced 50/50 blend and power greens in the third quarter of 2024.
We use flexible, modular facility designs to enable rapid expansion near major population centers. We regularly assess our pipeline of future farm locations to leverage our national distribution footprint.
For example, at our Texas and Washington facilities, we are observing yield rates that are 1.5 to 2.0 times better than CEA greenhouse industry performance. We use flexible, modular facility designs to enable rapid expansion near major population centers. We regularly assess our pipeline of future farm locations to leverage our national distribution footprint.
In early 2024, we will complete construction on two new facilities in Texas and Washington, bringing our total facility count to six. We now have distribution to over 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh.
We distribute our products to approximately 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, Brookshire's, H-E-B, Sprouts, and AmazonFresh.
Through the Pete's Acquisition, we significantly increased our growing footprint, now operating three additional greenhouse growing facilities, including two in California and one in Georgia, the latter of which became operational in July 2022 and was further expanded in 2023.
Through the Pete’s Acquisition, we significantly increased our growing footprint to include two then-existing facilities in California and one under-construction facility in Georgia. The Georgia facility initially became operational in July 2022 and was significantly expanded in 2023. In 2024 we completed construction of two new facilities in Washington and Texas, bringing our total facility count to six.
On April 4, 2022, Local Bounti acquired California-based complementary greenhouse farming company Hollandia Produce Group, Inc. and its subsidiaries (the "Pete's Acquisition"), which operate under the name Pete's ("Pete's").
Our first facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019 and reached full commercial operation by the second half of 2020. In 2022, we acquired California-based complementary greenhouse farming company Hollandia Produce Group, Inc. and its subsidiaries, which operated under the name Pete’s (the "Pete's Acquisition").
Item 1. Business Our Mission and Vision Our mission is to bring our farm to your kitchen. Our vision is to deliver the freshest, locally grown produce over the fewest food miles. We believe that happy plants make happy taste buds and we are committed to reimagining the standards of freshness.
We envision a future where transformative innovation and technology combine to enable us to locally grow produce with minimal food miles, ensuring the freshest and most sustainable offerings for communities everywhere. We believe that happy plants make happy taste buds, and we are committed to reimagining the standards of freshness.
At the end of 2023, we offered 27 SKUs across living and loose-leaf lettuce, under both organic and conventional growing methods. In addition, we also added multiple value add product lines to our SKU assortment, including two chef-inspired grab-and-go salad kits.
At the end of 2024, we offered 32 SKUs across living and loose leaf lettuce, spinach, arugula, basil, organic and conventional, cress and value add product lines. We expanded our product assortment in the third quarter of 2024 by introducing several high-velocity offerings, including Arugula, Spinach, Spring Mix & Spinach Blend, Power Crisp, and Basil.
With the Pete's Acquisition, we now have two existing operational facilities in California and a newly constructed facility in Georgia, allowing us to capture a greater portion of the U.S. TAM.
With the completion of our Texas and Washington facilities in 2024, Local Bounti now operates six facilities, spread across the Northwest, West, South and Southeastern United States, allowing us to capture a greater portion of the U.S. TAM.
Expanding Global Agriculture Crisis. The world is facing a rapidly expanding global agriculture crisis.
Additionally, consumer demands are pushing agricultural businesses to produce food in safer, more transparent, personalized, and sustainable ways. Expanding Global Agriculture Crisis. The world is facing a rapidly expanding global agriculture crisis.
Removed
Our first facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019 and reached full commercial operation by the second half of 2020. In 2021, we successfully completed the expansion of our Montana Facility, more than doubling our production capacity. The Montana Facility is currently used for commercial production, as well as research-and-development activities.
Added
Item 1. Business Our Mission and Vision Our mission is to revolutionize agriculture, ensuring accessibility to fresh, sustainable, locally grown produce to nourish communities everywhere for generations to come. Our vision is to reimagine freshness.
Removed
This transition will follow the capacity enhancements brought about by the completion of our Georgia facility and the commencement of operations at both Texas and Washington and is expected to help drive us toward our goal of achieving positive adjusted EBITDA in early 2025.
Added
We signed an offtake agreement with Sam's Club in October 2022 for our leafy greens production initially from our Georgia facility and now including both our Georgia and Texas facilities.
Removed
We have been able to expand distribution of our market-leading Grab & Go Salad Kits and are set to expand our baby leaf portfolio by introducing several high-velocity offerings including spinach, arugula, 50/50 blend and power greens by the third quarter of 2024 5 Local Bounti's founders are Craig M. Hurlbert and Travis M.
Added
The offtake agreement provides for the sale of defined minimum quantities of leafy greens from our Georgia and Texas facilities and runs through September 2028. 5 We intend to continue to increase our production capacity and expand our reach to new markets, new geographies, and new customers through building of new facilities, the expansion of existing facilities, or the acquisition of existing greenhouse facilities, which we would evaluate to update with our Stack & Flow Technology ® .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+21 added−22 removed274 unchanged
Biggest changeLocal Bounti's results of operations may be adversely affected if its assumptions change or if actual circumstances differ from those in its assumptions, which could cause the Company's results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of its common stock. 30 If Local Bounti fails to continue to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Local Bounti.
Biggest changeLocal Bounti's results of operations may be adversely affected if its assumptions change or if actual circumstances differ from those in its assumptions, which could cause the Company's results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of its common stock.
During the year ended December 31, 2021, we may have experienced changes in our share ownership as a result of the merger of Legacy Local Bounti into Leo Holdings III Corp in November 2021, which may limit the future use of our NOLs pursuant to Section 382 of the Code.
During the year ended December 31, 2021, we have experienced changes in our share ownership as a result of the merger of Legacy Local Bounti into Leo Holdings III Corp in November 2021, which may limit the future use of our NOLs pursuant to Section 382 of the Code.
These factors include: • actual or anticipated fluctuations in operating results; • failure to meet or exceed financial estimates and projections of the investment community or that Local Bounti provides to the public; • issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general; • announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • operating and share price performance of other companies in the industry or related markets; • the timing and magnitude of investments in the growth of the business; • actual or anticipated changes in laws and regulations; • additions or departures of key management or other personnel; • increased labor costs; • disputes or other developments related to intellectual property or other proprietary rights, including litigation; • the ability to market new and enhanced solutions on a timely basis; • sales of substantial amounts of common stock by Local Bounti's directors, executive officers or significant stockholders or the perception that such sales could occur; • changes in capital structure, including future issuances of securities or the incurrence of debt; and • general economic, political and market conditions.
These factors include: • actual or anticipated fluctuations in operating results; • failure to meet or exceed financial estimates and projections of the investment community or that Local Bounti provides to the public; • issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general; • announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • operating and share price performance of other companies in the industry or related markets; • the timing and magnitude of investments in the growth of the business; • actual or anticipated changes in laws and regulations; • additions or departures of key management or other personnel; • increased labor costs; • disputes or other developments related to our business, intellectual property or other proprietary rights, including litigation; • the ability to market new and enhanced solutions on a timely basis; • sales of substantial amounts of common stock by Local Bounti's directors, executive officers or significant stockholders or the perception that such sales could occur; • changes in capital structure, including future issuances of securities or the incurrence of debt; and • general economic, political and market conditions.
Local Bounti's after-tax profitability and financial results could be subject to volatility or be affected by numerous factors, including the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities, changes in the valuation of deferred tax assets and liabilities, if any, the expected timing and amount of the release of any tax valuation allowances, the tax 40 treatment of stock-based compensation, changes in the relative amount of earnings subject to tax in the various jurisdictions, the potential business expansion into, or otherwise becoming subject to tax in, additional jurisdictions, changes to existing intercompany structure (and any costs related thereto) and business operations, the extent of intercompany transactions and the extent to which taxing authorities in relevant jurisdictions respect those intercompany transactions, and the ability to structure business operations in an efficient and competitive manner.
Local Bounti's after-tax profitability and financial results could be subject to volatility or be affected by numerous factors, including the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities, changes in the valuation of deferred tax assets and liabilities, if any, the expected timing and amount of the release of any tax valuation allowances, the tax treatment of stock-based compensation, changes in the relative amount of earnings subject to tax in the various jurisdictions, the potential business expansion into, or otherwise becoming subject to tax in, additional jurisdictions, changes to existing intercompany structure (and any costs related thereto) and business operations, the extent of intercompany transactions and the extent to which taxing authorities in relevant jurisdictions respect those intercompany transactions, and the ability to structure business operations in an efficient and competitive manner.
We may be unable to integrate additional acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions. • Local Bounti depends on employing a skilled local labor force, and failure to attract and retain qualified employees could negatively impact its business, results of operations and financial condition. • If Local Bounti fails to develop and maintain its brand, its business could suffer. • Local Bounti's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which it competes achieves the forecasted growth, Local Bounti's business could fail to grow at similar rates, if at all. • If Local Bounti cannot maintain its company culture or focus on its vision as it grows, Local Bounti's business and competitive position may be harmed. • Local Bounti may be unable to successfully execute on its growth strategy. 21 • Local Bounti's operating costs to grow and sell its products may be higher than expected, which could impact its results and financial condition. • If Local Bounti's estimates or judgments relating to its critical accounting policies prove to be incorrect, its results of operations could be adversely affected. • If Local Bounti fails to continue to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Local Bounti. • Local Bounti's ability to use its net operating loss ("NOL") carryforwards to offset future taxable income may be subject to certain limitations. • Local Bounti faces risks inherent in the CEA business, including the risks of diseases and pests. • Local Bounti may not be able to compete successfully in the highly competitive natural food market. • Local Bounti's ability to generate and grow revenue is dependent on its ability to increase the yield in each of the anticipated product lines it intends to grow.
We may be unable to integrate additional acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions. • Local Bounti depends on employing a skilled local labor force, and failure to attract and retain qualified employees could negatively impact its business, results of operations and financial condition. • If Local Bounti fails to develop and maintain its brand, its business could suffer. • Local Bounti's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which it competes achieves the forecasted growth, Local Bounti's business could fail to grow at similar rates, if at all. • If Local Bounti cannot maintain its company culture or focus on its vision as it grows, Local Bounti's business and competitive position may be harmed. • Local Bounti may be unable to successfully execute on its growth strategy. 20 • Local Bounti's operating costs to grow and sell its products may be higher than expected, which could impact its results and financial condition. • If Local Bounti's estimates or judgments relating to its critical accounting policies prove to be incorrect, its results of operations could be adversely affected. • If Local Bounti fails to continue to maintain an effective system of internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in Local Bounti. • Local Bounti's ability to use its net operating loss ("NOL") carryforwards to offset future taxable income may be subject to certain limitations. • Local Bounti faces risks inherent in the CEA business, including the risks of diseases and pests. • Local Bounti may not be able to compete successfully in the highly competitive natural food market. • Local Bounti's ability to generate and grow revenue is dependent on its ability to increase the yield in each of the anticipated product lines it intends to grow.
Local Bounti's defense of intellectual property rights claims brought against it or its customers, suppliers and partners, with or without merit, could adversely affect Local Bounti's relationships with its customers, may deter future customers from purchasing its products, could be time-consuming, expensive to litigate or settle, divert management resources and attention and force Local Bounti to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all.
Local Bounti's defense of intellectual property rights claims brought against it or its customers, suppliers and partners, with or without merit, could adversely affect Local Bounti's relationships with its customers, may deter future customers from purchasing its products, could be time-consuming, expensive to litigate or settle, divert management 31 resources and attention and force Local Bounti to acquire intellectual property rights and licenses, which may involve substantial royalty or other payments and may not be available on acceptable terms or at all.
In this market, competition is based on, among other things, product quality and taste, brand recognition and loyalty, product variety, product packaging and package design, shelf space, reputation, price, advertising, promotion, and nutritional or growing-condition claims. 31 The produce industry generally does not work on long-term contracts and is dependent upon consistent sales targets to be successful.
In this market, competition is based on, among other things, product quality and taste, brand recognition and loyalty, product variety, product packaging and package design, shelf space, reputation, price, advertising, promotion, and nutritional or growing-condition claims. The produce industry generally does not work on long-term contracts and is dependent upon consistent sales targets to be successful.
The costs to procure such materials and services to build new or expanded facilities may fluctuate widely based on the impact of numerous factors beyond Local Bounti's control including, international, economic and political trends, foreign currency fluctuations, expectations of inflation, global or regional consumptive patterns, speculative activities and increased or improved production and distribution methods.
The costs to procure such materials and services to build new or expanded facilities may fluctuate widely based on the impact of numerous factors beyond Local Bounti's control including, international, economic and political trends, foreign currency fluctuations, expectations of inflation, global or regional consumptive patterns, speculative 23 activities and increased or improved production and distribution methods.
As a result, comparisons of 25 Local Bounti's sales and operating results between different periods may not necessarily be meaningful comparisons. If Local Bounti is unable to operate facilities to reliably achieve the target channel mix on average, there could be material adverse effects on its business, operational results, and financial performance. • Energy Interruption.
As a result, comparisons of Local Bounti's sales and operating results between different periods may not necessarily be meaningful comparisons. If Local Bounti is unable to operate facilities to reliably achieve the target channel mix on average, there could be material adverse effects on its business, operational results, and financial performance. • Energy Interruption.
Further, Local Bounti may spend time and resources developing opportunities that may never materialize into new commercial business applications, or that may be developed at the expense of other appropriate commercial opportunities, which may ultimately have been a better selection for reasons such as revenue growth, profitability, market expansion, or other financial and strategic considerations.
Further, Local Bounti may spend time and resources developing opportunities that may never materialize into new commercial business applications, or that may be developed at the expense of other appropriate commercial opportunities, which may ultimately have been a better selection for reasons such as revenue growth, profitability, market expansion, or other financial and strategic considerations. New Facilities Expansion.
Any issues affecting Local Bounti's access to or relations with workers could negatively affect facility operations or financial condition. • Food Safety and Quality Assurance. Local Bounti is subject to food and safety standards set forth by its own internal practices and by regulatory authorities, including the USDA as Harmonized Good Agricultural Practices (GAP Plus+).
Any issues affecting Local Bounti's access to or relations with workers could negatively affect facility operations or financial condition. 24 • Food Safety and Quality Assurance. Local Bounti is subject to food and safety standards set forth by its own internal practices and by regulatory authorities, including the USDA as Harmonized Good Agricultural Practices (GAP Plus+).
Local Bounti packages its products in form factors consistent with comparable products in order to distribute and present on-shelf. If raw material costs increase, or if Local Bounti is unable to achieve its expected packaging materials costs for any reason, its financial performance could be adversely impacted. • Depreciation and Useful Life of Assets.
Local Bounti packages its products in form factors consistent with comparable products to distribute and present on-shelf. If raw material costs increase, or if Local Bounti is unable to achieve its expected packaging materials costs for any reason, its financial performance could be adversely impacted. • Depreciation and Useful Life of Assets.
Climate change could have a negative effect on the productivity of our growing facilities, which could have an adverse impact on our business and results of operations. The increasing concern over climate change 38 also may result in more regional, federal, or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases or climate change.
Climate change could have a negative effect on the productivity of our growing facilities, which could have an adverse impact on our business and results of operations. The increasing concern over climate change also may result in more regional, federal, or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases or climate change.
In addition, acquisitions, including the Pete's Acquisition, could present unforeseen integration obstacles or costs, may not enhance its business, and/or may involve risks that could adversely affect Local Bounti, including significant amounts of management time that may be diverted from operations in order to pursue and complete such transactions.
In addition, acquisitions, including the Pete's Acquisition, could present unforeseen integration obstacles or costs, may not enhance its business, and/or may involve risks that could adversely affect Local Bounti, including significant amounts of management time that may be diverted from operations to pursue and complete such transactions.
Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are "out-of-the-money," in which case you would lose any potential embedded value from a subsequent increase in the value of the common stock had your warrants remained outstanding.
Any such redemption 40 may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are "out-of-the-money," in which case you would lose any potential embedded value from a subsequent increase in the value of the common stock had your warrants remained outstanding.
Bad seed lots, low germination rates, and similar issues that affect growing also could result in Local Bounti's inability to achieve proper and consistent product yields or product quality, which could materially and adversely affect 32 performance, and more generally could negatively impact Local Bounti's business, financial condition and operating results.
Bad seed lots, low germination rates, and similar issues that affect growing also could result in Local Bounti's inability to achieve proper and consistent product yields or product quality, which could materially and adversely affect performance, and more generally could negatively impact Local Bounti's business, financial condition and operating results.
We cannot predict if investors will find the common stock less attractive because we will rely on these exemptions. If some investors find the common stock less attractive as a result, there may be a less active trading market for the common stock and our share price may be more volatile. Item 1B. Unresolved Staff Comments None.
We cannot predict if investors will find the common stock less attractive because we will rely on these exemptions. If some investors find the common stock less attractive as a result, there may be a less active trading market for the common stock and our share price may be more volatile. Item 1B. Unresolved Staff Comments None. 42
Moreover, volatile economic conditions may make it more likely that our suppliers and manufacturers may be unable to deliver supplies on time or at all, and there is no 24 guarantee that we will be able to locate alternative suppliers of comparable quality on time and at an acceptable price.
Moreover, volatile economic conditions may make it more likely that our suppliers and manufacturers may be unable to deliver supplies on time or at all, and there is no guarantee that we will be able to locate alternative suppliers of comparable quality on time and at an acceptable price.
Local Bounti's operating results and financial condition will be adversely affected if it fails to implement its growth strategy or if it invests resources in a growth strategy that ultimately proves unsuccessful. 29 Local Bounti's operating costs to grow and sell its products may be higher than expected, which could impact its results and financial condition.
Local Bounti's operating results and financial condition will be adversely affected if it fails to implement its growth strategy or if it invests resources in a growth strategy that ultimately proves unsuccessful. Local Bounti's operating costs to grow and sell its products may be higher than expected, which could impact its results and financial condition.
Local Bounti's failure to protect its trademark rights could prevent Local Bounti in the future from challenging third parties who use names and 33 logos similar to Local Bounti's trademarks, which may in turn cause consumer confusion or negatively affect consumers' perception of Local Bounti's brand and products.
Local Bounti's failure to protect its trademark rights could prevent Local Bounti in the future from challenging third parties who use names and logos similar to Local Bounti's trademarks, which may in turn cause consumer confusion or negatively affect consumers' perception of Local Bounti's brand and products.
The agreement provides that the terms of the 2021 warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding 2021 warrants to make any change that adversely 41 affects the interests of the registered holders of 2021 warrants.
The agreement provides that the terms of the 2021 warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding 2021 warrants to make any change that adversely affects the interests of the registered holders of 2021 warrants.
Any of the foregoing could have material adverse effects on Local Bounti's business, financial condition and results of operations. 26 Local Bounti may acquire additional greenhouses or other indoor farming operations, which may divert our management's attention and result in additional dilution to our stockholders.
Any of the foregoing could have material adverse effects on Local Bounti's business, financial condition and results of operations. Local Bounti may acquire additional greenhouses or other indoor farming operations, which may divert our management's attention and result in additional dilution to our stockholders.
Local Bounti may not be successful in identifying trends in consumer preferences and growing or developing products that respond to such trends in a timely manner. Local Bounti or its retail partners also may not be able to effectively promote Local Bounti products by marketing and advertising campaigns and gain market acceptance.
Local Bounti may not be successful in identifying trends in consumer preferences and growing or developing products that respond to such trends in a timely manner. Local Bounti or its retail partners also may not be able to effectively promote Local Bounti products by marketing and advertising campaigns and gain market 33 acceptance.
Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for stockholders to receive a premium for their shares of common stock, and could also affect the price that some investors are willing to pay for the common stock.
Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for 38 stockholders to receive a premium for their shares of common stock, and could also affect the price that some investors are willing to pay for the common stock.
From time to time, Local Bounti may be party to various claims and litigation proceedings. Local Bounti will 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, Local Bounti may establish 35 reserves, as appropriate.
From time to time, Local Bounti may be party to various claims and litigation proceedings. Local Bounti will 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, Local Bounti may establish reserves, as appropriate.
Such incidents could also expose Local Bounti 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 Local Bounti's existing or future insurance coverage or limits.
Such incidents could also expose Local Bounti to product 35 liability, negligence, or other lawsuits, including consumer class action lawsuits. Any claims brought against us may exceed or be outside the scope of Local Bounti's existing or future insurance coverage or limits.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been 39 instituted against these companies. This litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.
In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.
If current stockholders sell, or indicate an intent to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly and make it difficult for us to raise funds through securities offerings in the future.
If current stockholders sell, or 41 indicate an intent to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly and make it difficult for us to raise funds through securities offerings in the future.
If any 43 analyst who may cover Local Bounti were to cease their coverage or fail to regularly publish reports on Local Bounti, we could lose visibility in the financial markets, which could cause the stock price or trading volume of Local Bounti securities to decline.
If any analyst who may cover Local Bounti were to cease their coverage or fail to regularly publish reports on Local Bounti, we could lose visibility in the financial markets, which could cause the stock price or trading volume of Local Bounti securities to decline.
If the useful life turns out to be materially shorter than expected, the Company may need to invest additional capital to replace these assets, and the corresponding depreciation expense may be greater than expected which would affect the Company's profitability and financial condition generally.
If the useful life turns out to be materially shorter than expected, the Company may need to invest additional capital to replace these assets, and the corresponding depreciation expense may be greater than expected which would affect the Company's profitability and 28 financial condition generally.
In general, under Section 382, a corporation that undergoes an “ownership change,” as defined in the Code, is subject to limitations on its ability to utilize its pre-ownership change NOL carryforwards to offset future taxable income.
In general, under Section 382, a corporation 39 that undergoes an “ownership change,” as defined in the Code, is subject to limitations on its ability to utilize its pre-ownership change NOL carryforwards to offset future taxable income.
If we are unable to secure additional financing in the future, we will not be able to continue as a going concern. If additional financing is available, financing terms may lead to significant dilution of our stockholders’ equity.
If we are unable to secure additional financing in the future, we will not be able to continue as a going concern. If additional financing is available, financing terms may lead to significant dilution of our stockholders’ equity (deficit).
This could materially and adversely affect Local Bounti's business, prospects, financial condition and operating results. Risks Relating to Ownership of Our Securities The price of our securities may be volatile or may decline regardless of our operating performance.
This could materially and adversely affect Local Bounti's business, prospects, financial condition and operating results. 37 Risks Relating to Ownership of Our Securities The price of our securities may be volatile or may decline regardless of our operating performance.
If additional financing is available, financing terms may lead to significant dilution of our stockholders' equity. • Local Bounti currently relies on a limited number of facilities for its operations. • Local Bounti has been operating facilities at commercial capacity for less than four years, which makes it difficult to forecast future results of operations. • The build-out of new facilities and retrofitting of acquired facilities will require significant expenditures for capital improvements and operating expenses and may be subject to delays in construction and unexpected costs due to governmental approvals and permitting requirements, reliance on third parties for construction, delays relating to material delivery and supply chains, and fluctuating material prices. • Local Bounti has entered into agreements with Cargill Financial for term loan credit facilities.
If additional financing is available, financing terms may lead to significant dilution of our stockholders' equity (deficit). • Local Bounti currently relies on a limited number of facilities for its operations. • Local Bounti has been operating facilities at commercial capacity for less than five years, which makes it difficult to forecast future results of operations. • The build-out of new facilities and retrofitting of acquired facilities will require significant expenditures for capital improvements and operating expenses and may be subject to delays in construction and unexpected costs due to governmental approvals and permitting requirements, reliance on third parties for construction, delays relating to material delivery and supply chains, and fluctuating material prices. • Local Bounti has entered into agreements with Cargill Financial for term loan credit facilities.
Global supply chain interruptions may make it difficult for suppliers to ship their goods due to reduced capacity at distribution facilities and transportation networks, which may cause an increase in shipping costs.
Supply chain interruptions may make it difficult for suppliers to ship their goods due to reduced capacity at distribution facilities and transportation networks, which may cause an increase in shipping costs.
Refer to Note 8, Debt , of the Consolidated Financial Statements for more information about the credit facility. Risks Related to Local Bounti's Technology, Intellectual Property and Infrastructure Local Bounti may need to defend itself against intellectual property infringement claims, which may be time-consuming and could cause Local Bounti to incur substantial costs.
Refer to Note 7, Debt , of the Consolidated Financial Statements for more information about the credit facility. Risks Related to Local Bounti's Technology, Intellectual Property and Infrastructure Local Bounti may need to defend itself against intellectual property infringement claims, which may be time-consuming and could cause Local Bounti to incur substantial costs.
A general decline in the consumption of Local Bounti products could occur at any time as a result of change in consumer spending habits, including an unwillingness to pay a premium for products that are more sustainable or meet ESG objectives in a manner more in-line with consumer preferences. • Price Compression.
A general decline in the consumption of Local Bounti products could occur at any time as a result of change in consumer spending habits, including an unwillingness to pay a premium for products that are more sustainable or meet sustainability objectives in a manner more in-line with consumer preferences. • Price Compression.
Specific legislative and regulatory proposals discussed recently that may adversely impact Local Bounti include, but are not limited to, changes to existing trade agreements, import and export regulations, tariffs, travel restrictions, customs duties, income tax regulations and the federal tax code, public company reporting requirements, environmental regulations and antitrust enforcement.
Specific legislative and regulatory proposals discussed recently that may adversely impact Local Bounti include, but are not limited to, changes to existing trade agreements, import and export regulations, tariffs, customs duties, income tax regulations and the federal tax code, public company reporting requirements, environmental regulations and antitrust enforcement.
The Company may face pressure to increase wages in order to attract and retain appropriate staffing of its facilities. Increases to minimum wages or competitive wages may cause Local Bounti's labor costs to run higher than expected, which could negatively affect its financial performance and cash flows. • Packaging Materials.
The Company may face pressure to increase wages to attract and retain appropriate staffing of its facilities. Increases to minimum wages or competitive wages may cause Local Bounti's labor costs to run higher than expected, which could negatively affect its financial performance and cash flows. • Packaging Materials.
Local Bounti has been operating facilities at commercial capacity for less than four years, which makes it difficult to forecast future results of operations. The Montana Facility began commercial operations in the second half of 2020, marking the beginning of Local Bounti's first growing season.
Local Bounti has been operating facilities at commercial capacity for less than five years, which makes it difficult to forecast future results of operations. The Montana Facility began commercial operations in the second half of 2020, marking the beginning of Local Bounti's first growing season.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations and cash flows. 22 RISK FACTORS Investment in our stock involves a high degree of risk.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations and cash flows. 21 RISK FACTORS Investment in our stock involves a high degree of risk.
For these reasons, we may not be able to utilize a material portion of our reported NOLs as of December 31, 2023, even if we attain profitability, which could adversely affect our cash flows and results of operations.
For these reasons, we may not be able to utilize a material portion of our reported NOLs as of December 31, 2024, even if we attain profitability, which could adversely affect our cash flows and results of operations.
Periods of inflation or expectations of inflation could increase Local Bounti's costs of doing business, which is typically an expense recovered through increased product prices. Furthermore, Local Bounti's reliance on third parties to procure certain raw goods from supplier partners throughout the world exposes Local Bounti to risks including reduced control over product costs, product supply and delivery delays.
Periods of inflation or expectations of inflation could increase Local Bounti's costs of doing business, which is typically an expense recovered through increased product prices. Furthermore, Local Bounti's reliance on third parties to procure certain raw goods from supplier partners exposes Local Bounti to risks including reduced control over product costs, product supply and delivery delays.
In addition, Local Bounti may experience unexpected delays in building its facilities for a variety of reasons, including limited labor due to any pandemics or other public health crises or other factors, unexpected construction problems or supply chain disruptions, all of which could harm Local Bounti's business, financial condition and results of operation.
In addition, Local Bounti may experience unexpected delays in future building or expansions of facilities for a variety of reasons, including limited labor due to any pandemics or other public health crises or other factors, unexpected construction problems or supply chain disruptions, all of which could harm Local Bounti's business, financial condition and results of operation.
The new and acquired facilities are much larger than our initial Montana Facility. Local Bounti may encounter unexpected challenges as it operates larger facilities, which could cause it to be unable to operate larger facilities reliably. The inability to operate larger facilities would have a material negative impact on Local Bounti's business and financial condition. • Channel Mix.
Our newer facilities are much larger than our initial Montana Facility. Local Bounti may encounter unexpected challenges as it operates larger facilities, which could cause it to be unable to operate larger facilities reliably. The inability to operate larger facilities would have a material negative impact on Local Bounti's business and financial condition. • Channel Mix.
If we are unable to meet certain conditions precedent, we may not be able to draw down funds available under the facilities, which could materially and adversely affect our business and operations.
If we are unable to meet certain conditions precedent, we may not be able to draw down funds available under the facility, which could materially and adversely affect our business and operations.
Additionally, if there is an occurrence of an uncured event of default, Cargill Financial has the right to foreclose on all of the Company's and its subsidiaries' assets, and securities in the Company could be rendered worthless. Local Bounti's credit facilities with Cargill Financial are secured by all of the Company's and its subsidiaries' assets, including their intellectual property.
Additionally, if there is an occurrence of an uncured event of default, Cargill Financial has the right to foreclose on all of the Company's and its subsidiaries' assets, and securities in the Company could be rendered worthless. Local Bounti's credit facility with Cargill Financial is secured by all of the Company's and its subsidiaries' assets, including their intellectual property.
Our Certificate of Incorporation and Bylaws afford certain rights and powers to the Board that could contribute to the delay or prevention of an acquisition that it deems undesirable.
Our Certificate of Incorporation and Amended and Restated Bylaws afford certain rights and powers to the Board that could contribute to the delay or prevention of an acquisition that it deems undesirable.
If Local Bounti is unable to attain reliable performance of its facilities, there could be severe adverse impact on its business. Local Bounti faces risks including, but not limited to, the following: • Production Scale. In early 2024, we will complete construction on two new facilities in Texas and Washington, bringing our total facility count to six.
If Local Bounti is unable to attain reliable performance of its facilities, there could be severe adverse impact on its business. Local Bounti faces risks including, but not limited to, the following: • Production Scale. In 2024, we completed construction on two new facilities in Texas and Washington, bringing our total facility count to six.
Failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations. Local Bounti currently relies on a limited number of facilities for its operations. In early 2024, Local Bounti will complete construction on two new facilities in Texas and Washington, bringing its total facility count to six.
Failure to raise capital as and when needed could have significant negative consequences for our business, financial condition and results of consolidated operations. Local Bounti currently relies on a limited number of facilities for its operations. In 2024, Local Bounti completed construction on two new facilities in Texas and Washington, bringing its total facility count to six.
Political issues and considerations could have a significant effect on Local Bounti's business. There is uncertainty with respect to, among other things, legislation, regulation and government policy at the federal, state and local levels.
Political issues and considerations, including potential tariffs, could have a significant effect on Local Bounti's business. There is uncertainty with respect to, among other things, legislation, regulation and government policy at the federal, state and local levels.
Furthermore, any instances of product contamination or regulatory noncompliance, whether or not caused by Local Bounti's actions, could compel Local Bounti, its suppliers, distributors or customers, depending on the circumstances, to conduct a recall in accordance with Food and Drug Administration regulations, and comparable state laws.
Furthermore, any instances of product contamination or regulatory noncompliance, whether or not caused by Local Bounti's actions, could compel Local Bounti, its suppliers, distributors or customers, depending on the circumstances, to conduct a recall in accordance with FDA regulations, and comparable state laws.
Although Local Bounti believes its tax estimates are reasonable, if the IRS or any other taxing authority disagrees with the positions taken on its tax returns, Local Bounti could have additional tax liability, including interest and penalties.
Although Local Bounti believes its tax estimates are reasonable, if the Internal Revenue Service (“IRS”) or any other taxing authority disagrees with the positions taken on its tax returns, Local Bounti could have additional tax liability, including interest and penalties.
Food and Drug Administration regulations require companies like Local Bounti to analyze, prepare, and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm.
FDA regulations require companies like Local Bounti to analyze, prepare, and implement mitigation strategies specifically to address tampering designed to inflict widespread public health harm.
New Facilities Expansion. The Company's strategy to develop new and expanded CEA facilities has required and will continue to require substantial time and resources. Local Bounti expects to make significant investments to identify attractive markets, select and control sites, perform engineering design and local permitting, and construct and commission new facilities.
The Company's strategy to develop new and expanded CEA facilities has required substantial time and resources. Local Bounti may make significant investments to identify attractive markets, select and control sites, perform engineering design and local permitting, and construct and commission new facilities.
The CEA business is extremely capital-intensive and Local Bounti expects to expend significant resources to complete the build-out of its facilities, scale its production capacity, and invest in its technology platform, capabilities, and new products.
The CEA business is extremely capital-intensive and Local Bounti expects to expend significant resources to scale its production capacity and invest in its technology platform, capabilities, and new products.
Any changes in the political issues and 36 considerations may have a negative impact on Local Bounti's business, its financial condition and results of operations could be adversely affected.
Any changes in the political issues and considerations may have a negative impact on Local Bounti's business, its financial condition and results of operations could be adversely affected. Changes in global trade policy could adversely affect our business.
Risks Related to Local Bounti's Term Loan Facility Local Bounti has entered into agreements with Cargill Financial for term loan credit facilities. The credit facilities are secured by all of the Company's and its subsidiaries' assets, including their intellectual property.
Risks Related to Local Bounti's Term Loan Facility Local Bounti has entered into an agreement with Cargill Financial for a term loan credit facility. The credit facility is secured by all of the Company's and its subsidiaries' assets, including their intellectual property.
These facilities require sizeable, useable space for agricultural production, including site-specific requirements such as sufficient access to, reliability of, and cost of utilities and other infrastructure; the ability to obtain the appropriate permits and approvals; adequate local labor availability; road access for input supply and distribution of output for sale; and other requirements. 28 Local Bounti depends on third party contractors to help build its facilities.
These facilities require sizeable, useable space for agricultural production, including site-specific requirements such as sufficient access to, reliability of, and cost of utilities and other infrastructure; the ability to obtain the appropriate permits and approvals; adequate local labor availability; road access for input supply and distribution of output for sale; and other requirements.
Local Bounti expects to expend substantial resources as it: • operates its existing facilities; • completes the construction of other facilities for which building has commenced or is expected to commence in the near term; • identifies and invests in future growth opportunities, including expansion into new markets, development of new facilities, introduction of new products, and commercialization of new crops; • invests in creating and protecting intellectual property; and • incurs additional general administration expenses, including increased finance, legal and accounting expenses, associated with growing operations.
Local Bounti expects to expend substantial resources as it: • operates its existing facilities; • identifies and invests in future growth opportunities, including expansion into new markets, development of new or expanded facilities, introduction of new products, and commercialization of new crops; • invests in creating and protecting intellectual property; and • incurs additional general administration expenses, including increased finance, legal and accounting expenses, associated with growing operations.
As of December 31, 2023, we had approximately $382.9 million of federal and state NOL carryforwards available to reduce future taxable income.
As of December 31, 2024, we had approximately $595.6 million of federal and state NOL carryforwards available to reduce future taxable income.
In the future, Local Bounti may pursue new markets, new crops, and new product categories, by leveraging its technology platform to target what the Company may see as opportunities to expand its addressable market.
In the future, Local Bounti may pursue new markets, new crops, and new product categories, by leveraging its technology platform to target what the Company may see as opportunities to expand its addressable market. For example, Local Bounti has recently expanded into selling salad kits.
Risks Related to the Natural Food Market Local Bounti faces risks inherent in the CEA business, including the risks of diseases and pests. Local Bounti is subject to the risks inherent in an agricultural business, such as insects, plant diseases and similar agricultural risks, which may include crop losses, for which Local Bounti may not be insured.
Local Bounti is subject to the risks inherent in an agricultural business, such as insects, plant diseases and similar agricultural risks, which may include crop losses, for which Local Bounti may not be insured.
Acquisitions, including the Pete's Acquisition, or business relationships may result in unforeseen operating difficulties and expenditures.
Acquisitions or business relationships may result in unforeseen operating difficulties and expenditures.
Local Bounti may be unsuccessful in identifying available future sites that support its planned growth strategy, and even if identified, Local Bounti may not be able to lease or purchase the land for any number of reasons.
These delays and increased costs could adversely affect Local Bounti's financial results. 27 Local Bounti may be unsuccessful in identifying available future sites that support its planned growth strategy, and even if identified, Local Bounti may not be able to lease or purchase the land for any number of reasons.
The existence of a public health crises, such as a resurgence of COVID-19 or its variants, may result in a wide variety of impacts to Local Bounti, including market turmoil, labor shortages, supply or distribution disruptions, or lower or more volatile customer or consumer demand. Any of these impacts could negatively impact Local Bounti's business, financial condition, and cash flows.
The existence of a public health crises, such as a resurgence of COVID-19 or its variants, may 29 result in a wide variety of impacts to Local Bounti, including market turmoil, labor shortages, supply or distribution disruptions, or lower or more volatile customer or consumer demand.
If we are unable to meet the continued listing requirements of the NYSE, including, among other things, (i) the requirement of maintaining a minimum average closing price of $1.00 per share over a consecutive 30-trading-day period and (ii) the requirement of maintaining an average market capitalization of not less than $50 million over a 30-trading-day period with, at the same time, stockholders’ equity not less than $50 million, we would fall below compliance standards and risk having our common stock delisted.
If we are unable to meet other continued listing requirements of the NYSE, including, among other things, the requirement of maintaining a minimum average closing price of $1.00 per share over a consecutive 30-trading-day period, we would fall below compliance standards and risk having our common stock delisted.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP. In the past, we have identified material weaknesses in our internal control over financial reporting.
Brand value is also based on perceptions of subjective qualities, such as appearance and taste, and any incident that erodes the loyalty of Local Bounti's consumers, including changes to product appearance, taste or packaging, could significantly reduce the value of Local Bounti's brand and significantly damage its business. 37 Local Bounti also has no control over its products once a third-party distributor takes possession of them.
Brand value is also based on perceptions of subjective qualities, such as appearance and taste, and any incident that erodes the loyalty of Local Bounti's consumers, including changes to product appearance, taste or packaging, could significantly reduce the value of Local Bounti's brand and significantly damage its business.
Such weather events could cause damage or destruction to all or part of Local Bounti's facilities, could interrupt the supply of labor or other inputs necessary to operate the facility, and could affect the customers or distribution channels. In connection with the impact of unpredictable natural disasters, Local Bounti could experience significant delays in or stoppage of production.
Such weather events could cause damage or destruction to all or part of Local Bounti's facilities, could interrupt the supply of labor or other inputs necessary to operate the facility, and could affect the customers or distribution channels.
Any widespread safety or quality issues of loose leaf lettuce or other fresh vegetables and herbs—even if not involving Local Bounti—could adversely affect consumer confidence in and demand for such loose leaf lettuce.
For example, manufacturers and regulatory authorities have issued recalls of loose-leaf lettuce in the past due to issues such as salmonella contamination. Any widespread safety or quality issues of loose-leaf lettuce or other fresh vegetables and herbs—even if not involving Local Bounti—could adversely affect consumer confidence in and demand for such loose leaf lettuce.
Distributors or consumers may store Local Bounti products under conditions and for periods of time inconsistent with the USDA, the FDA, and other governmental guidelines, which may adversely affect the quality and safety of Local Bounti's products.
Local Bounti also has no control over its products once a third-party distributor takes possession of them. Distributors or consumers may store Local Bounti products under conditions and for periods of time inconsistent with the USDA, the FDA, and other governmental guidelines, which may adversely affect the quality and safety of Local Bounti's products.
Local Bounti's operations are subject to regulation by the USDA, the FDA and other federal, state and local regulation, and while Local Bounti intends to comply with all such applicable regulations, there is no assurance that Local Bounti will be in compliance with all such regulations.
Issues regarding the safety of any of Local Bounti's products, regardless of the cause, may harm its brand, reputation and operating results. 36 Local Bounti's operations are subject to regulation by the USDA, the FDA and other federal, state and local regulation, and while Local Bounti intends to comply with all such applicable regulations, there is no assurance that Local Bounti will be in compliance with all such regulations.
Local Bounti's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which it competes achieves the forecasted growth, Local Bounti's business could fail to grow at similar rates, if at all.
If Local Bounti does not achieve and maintain favorable perception of its brand, Local Bounti's business, financial condition and results of operations could be adversely affected. 26 Local Bounti's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which it competes achieves the forecasted growth, Local Bounti's business could fail to grow at similar rates, if at all.
Local Bounti and its suppliers are subject to a variety of laws and regulations. These laws and regulations apply to many aspects of Local Bounti's business, including the production, packaging, labeling, distribution, advertising, sale, quality, and safety of its products, as well as the health and safety of its employees and the protection of the environment.
These laws and regulations apply to many aspects of Local Bounti's business, including the production, packaging, labeling, distribution, advertising, sale, quality, and safety of its products, as well as the health and safety of its employees and the protection of the environment. 34 Local Bounti is subject to regulation by various government agencies, including the USDA, FDA, FTC, OSHA, and EPA, as well as various state and local agencies.
In addition, efforts by labor unions to organize Local Bounti's employees could divert management attention away from regular day-to-day operations and increase its operating expenses. Labor unions may make attempts to organize Local Bounti's non-unionized employees.
In addition, efforts by labor unions to organize Local Bounti's employees could divert management attention away from regular day-to-day operations and increase its operating expenses. Labor unions may make attempts to organize Local Bounti's non-unionized employees. Local Bounti cannot predict whether groups of employees, if any, may seek union representation in the future or the outcome of any collective bargaining.
Local Bounti's financial condition and operating results will be adversely affected if it fails to implement its growth strategy or if Local Bounti invests resources in a growth strategy that ultimately proves unsuccessful.
Local Bounti's financial condition and operating results will be adversely affected if it fails to implement its growth strategy or if Local Bounti invests resources in a growth strategy that ultimately proves unsuccessful. 30 Local Bounti's ability to generate and grow revenue is dependent on its ability to increase the yield in each of the anticipated product lines it intends to grow.
The Local Bounti brand is recognized for creating clean, nutritious, locally-grown and high-quality products, which Local Bounti believes to be differentiated and enabled by its technology platform. Local Bounti's success depends, in part, on its ability to maintain and grow the value of the Local Bounti brand.
If Local Bounti fails to develop and maintain its brand, its business could suffer. The Local Bounti brand is recognized for creating clean, nutritious, locally grown and high-quality products, which Local Bounti believes to be differentiated and enabled by its technology platform.
If Local Bounti fails to maintain its company culture or mission, its business and competitive position may be harmed. Local Bounti may be unable to successfully execute on its growth strategy. Local Bounti may not be successful in implementing its growth strategy, which includes the development of new commercial facilities and the expansion of its product lines and technological capabilities.
If Local Bounti fails to maintain its company culture or mission, its business and competitive position may be harmed. Local Bounti may be unable to successfully execute on its growth strategy.
If Local Bounti is unable to develop and operate facilities at a larger scale than initial facilities, its business, financial condition and results of operations could be adversely affected. Expansion of Loose Leaf Lettuce Product Portfolio. Local Bounti expects to continue to develop and commercialize new varieties of loose leaf lettuce as a source of revenue growth.
If Local Bounti is unable to develop and operate facilities at a larger scale than initial facilities, its business, financial condition and results of operations could be adversely affected. Local Bounti may not be able to implement its growth strategy successfully.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur processes around cybersecurity risk management and strategy are led by our Chief Information Officer ("CIO"), who reports directly to our Chief Executive Officer. Our CIO meets with the Audit Committee of our Board as part of the governance process described above.
Biggest changeOur CIO meets with the Audit Committee of our Board as part of the governance process described above. This individual has prior work experience in various roles involving managing information security and risk management, developing cybersecurity strategies, and implementing cybersecurity programs.
Our Cybersecurity Incident Response Plan ("IRP") coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to detect, analyze, validate, investigate 44 contain, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
Our Cybersecurity Incident Response Plan ("IRP") coordinates the activities we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to detect, analyze, validate, investigate, contain, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
We have implemented several cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage any material risks. Our process for identifying and assessing material risks from cybersecurity threats operates alongside our broader overall risk management process.
To aid in our efforts to assess, identify, and manage any material risks, we have implemented several cybersecurity processes, technologies, and controls. Our process for identifying and assessing material risks from cybersecurity threats operates within our broader overall risk management program.
We also have business processes to provide for the availability of critical data and systems, maintain regulatory compliance, identify and manage our risks from cybersecurity threats, and protect against, detect, and respond to cybersecurity incidents.
In addition, we also have business processes to provide for critical data and systems availability, maintain regulatory compliance, identify and manage our risks from cybersecurity threats, and protect against, detect, and respond to cybersecurity incidents.
The Audit Committee regularly receives an overview from management of our cybersecurity activities. Material cybersecurity threat risks may also be considered during separate Board discussions of important matters such as enterprise risk management, budgeting, and other relevant matters.
The Audit Committee regularly receives an overview of our cybersecurity activities from management. Material cybersecurity threat risks may also be considered during separate Board discussions of important matters such as enterprise risk management, budgeting, and other relevant matters. Our cybersecurity risk management and strategy processes are led by our CIO, who reports directly to our President and Chief Financial Officer.
As part of our overall risk management process, our Vice President of Internal Audit collaborates with subject matter specialists throughout the Company, as necessary, to gather insights for identifying and assessing material risks throughout the Company, including cybersecurity threat risks. In addition, we have a cybersecurity specific risk assessment process, which helps identify our cybersecurity threat risks.
As part of this program, our Chief Information Officer ("CIO") and Vice President of Internal Audit collaborate with subject matter specialists throughout the Company, as necessary, to gather insights for identifying and assessing material risks throughout the Company, including cybersecurity threat risks.
This individual has prior work experience in various roles involving managing information security and risk management, developing cybersecurity strategy, and implementing cybersecurity programs. The IT subject matter experts meet quarterly to review the cybersecurity framework provided by National Institute of Standards and Technology and evaluate current cybersecurity processes and procedures.
The IT subject matter experts meet quarterly to review the cybersecurity framework provided by the National Institute of Standards and Technology and evaluate current cybersecurity processes and procedures.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate our operations.
Biggest changeWe believe our facilities are adequate and suitable for our current needs. If necessary, suitable additional or alternative space will be available to accommodate our operations. 43
The table below sets forth certain information regarding these properties as of December 31, 2023: Facility Type/Use Location Owned/Leased* Size (sq. ft.) Montana Production Facility Hamilton, MT Leased 93,544 Vacant Land for Future Production Facility Hamilton, MT Owned 874,685 Carpinteria Production Facility Carpinteria, CA Leased 558,000 Oxnard Production Facility Oxnard, CA Leased 663,000 Georgia Production Facility Byron, GA Owned 347,269 Texas Production Facility Mount Pleasant, TX Owned 459,158 Washington Production Facility Pasco, WA Owned 244,101 Corporate Offices Hamilton, MT Leased 4,454 _____________________ *Owned facilities are subject to a first-priority lien under the Credit Agreements with Cargill Financial.
The table below sets forth certain information regarding these properties as of December 31, 2024: Facility Type/Use Location Owned/Leased* Size (sq. ft.) Montana Production Facility Hamilton, MT Leased 93,544 Vacant Land for Future Production Facility Hamilton, MT Owned 874,685 Carpinteria Production Facility Carpinteria, CA Leased 558,000 Oxnard Production Facility Oxnard, CA Leased 663,000 Georgia Production Facility Byron, GA Owned 347,269 Texas Production Facility Mount Pleasant, TX Owned 459,158 Washington Production Facility Pasco, WA Owned 244,101 _____________________ *Owned facilities are subject to a first-priority lien under the Credit Agreements with Cargill Financial.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and 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. Item 4. Mine Safety Disclosures Not applicable. 45 PART II
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and 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. Item 4. Mine Safety Disclosures Not applicable. 44 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the period covered by this Annual Report on Form 10-K that were not previously reported in a Current Report on Form 8-K.
Biggest changeRecent Sales of Unregistered Securities There were no unregistered sales of our equity securities during the period covered by this Annual Report on Form 10-K that were not previously reported in a Current Report on Form 8-K. Item 6. Reserved 45
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE under the trading symbol of "LOCL." Holders of Common Stock As of December 31, 2023, there were 39 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the NYSE under the trading symbol "LOCL." Holders of Common Stock As of December 31, 2024, there were 42 holders of record of our common stock.
Removed
Share Repurchase Program On October 29, 2023, our Board of Directors authorized a new common stock repurchase program that allows us to repurchase up to $1.0 million in shares of our common stock. This new program commenced immediately.
Removed
Under the repurchase program, we may purchase shares of common stock from time to time through a variety of methods, which may include but are not limited to open market purchases, the implementation of a 10b5-1 plan, privately negotiated transactions and/or any other available methods in accordance with Securities and Exchange Commission and other applicable legal requirements.
Removed
The repurchase program will remain in effect until the amount authorized has been fully repurchased or until we suspend or terminate the program with an outside date of December 31, 2024. As of December 31, 2023, the approximate aggregate dollar value of shares that may yet be purchased under the repurchase program is $1.0 million.
Removed
There were no repurchases made during the three months ended December 31, 2023. Item 6. Reserved 46

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs a result of the unobservable inputs that were used to determine the expected volatility of the March 2023 Cargill Warrant, the fair value measurement of these warrants reflected a Level 3 measurement within the fair value measurement hierarchy. 49 Results of Operations Year Ended December 31, 2023 compared to Year Ended December 31, 2022 The following table sets forth our historical operating results for the periods indicated: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Sales $ 27,557 $ 19,474 8,083 42% Cost of goods sold (1)(2)(3) 25,341 17,259 8,082 47% Gross profit 2,216 2,215 1 —% Operating expenses: Research and development (2)(3) 16,086 14,059 2,027 14% Selling, general and administrative (2)(3) 64,559 82,682 (18,123) (22)% Goodwill impairment 38,481 — 38,481 100% Total operating expenses 119,126 96,741 22,385 23% Loss from operations (116,910) (94,526) (22,384) 24% Other income (expense): Change in fair value of warrant liability 18,483 — 18,483 100% Interest expense, net (25,745) (16,734) (9,011) 54% Other income 157 189 (32) (17)% Net loss $ (124,015) $ (111,071) (12,944) 12% (1) Amounts include the impact for non-cash increase in cost of goods sold attributable to the fair value basis adjustment to inventory in connection with the Pete's Acquisition as follows: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Cost of goods sold $ — $ 1,042 (1,042) (100)% Total business combination fair value basis adjustment to inventory $ — $ 1,042 (1,042) (100)% (2) Amounts include stock-based compensation as follows: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Cost of goods sold $ 123 $ 104 19 18% Research and development 1,464 2,057 (593) (29)% Selling, general and administrative 14,687 37,005 (22,318) (60)% Total stock-based compensation expense, net of amounts capitalized $ 16,274 $ 39,166 (22,892) (58)% (3) Amounts include depreciation and amortization as follows: Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Cost of goods sold $ 3,513 $ 2,957 556 19% Research and development 2,505 1,304 1,201 92% Selling, general and administrative 7,114 6,166 948 15% Total depreciation and amortization $ 13,132 $ 10,427 2,705 26% 50 The following sections discuss and analyze the changes in the significant line items in our Consolidated Statements of Operations for the comparative periods in the table above.
Biggest changeNo goodwill remained on the Consolidated Balance Sheets as of December 31, 2024 and 2023. 49 Results of Operations Year Ended December 31, 2024 compared to Year Ended December 31, 2023 The following table sets forth our historical operating results for the periods indicated: Year Ended December 31, 2024 2023 $ Change % Change (in thousands) Sales $ 38,138 $ 27,557 10,581 38% Cost of goods sold (1)(2) 34,048 25,341 8,707 34% Gross profit 4,090 2,216 1,874 85% Operating expenses: Research and development (1)(2) 22,287 16,086 6,201 39% Selling, general and administrative (1)(2) 40,771 64,559 (23,788) (37)% Goodwill impairment — 38,481 (38,481) 100% Total operating expenses 63,058 119,126 (56,068) (47)% Loss from operations (58,968) (116,910) 57,942 (50)% Other income (expense): Change in fair value of warrant liability 811 18,483 (17,672) 100% Interest expense, net (58,923) (25,745) (33,178) 129% Other (expense) income, net (2,822) 157 (2,979) (1897)% Net loss $ (119,902) $ (124,015) 4,113 (3)% (1) Amounts include stock-based compensation as follows: Year Ended December 31, 2024 2023 $ Change % Change (in thousands) Cost of goods sold $ 73 $ 123 (50) (41)% Research and development 274 1,464 (1,190) (81)% Selling, general and administrative 3,001 14,687 (11,686) (80)% Total stock-based compensation expense, net of amounts capitalized $ 3,348 $ 16,274 (12,926) (79)% (2) Amounts include depreciation and amortization as follows: Year Ended December 31, 2024 2023 $ Change % Change (in thousands) Cost of goods sold $ 6,137 $ 3,513 2,624 75% Research and development 7,631 2,505 5,126 205% Selling, general and administrative 5,103 7,114 (2,011) (28)% Total depreciation and amortization $ 18,871 $ 13,132 5,739 44% The following sections discuss and analyze the changes in the significant line items in our Consolidated Statements of Operations for the comparative periods in the table above.
Net Cash Used In Investing Activities Net cash used in investing activities was $162.3 million for the year ended December 31, 2023, due primarily to purchases of equipment and other items for the Washington, Georgia, and Texas facilities.
Net cash used in investing activities was $162.3 million for the year ended December 31, 2023, due primarily to purchases of equipment and other items for the Washington, Georgia, and Texas facilities.
Net Cash Provided By Financing Activities Net cash provided by financing activities was $187.4 million for the year ended December 31, 2023, comprised of $152.6 million of proceeds from the issuance of debt and $35.0 million of proceeds from the sale and leaseback transaction for the California Facilities.
Net cash provided by financing activities was $187.4 million for the year ended December 31, 2023, comprised of $152.6 million of proceeds from the issuance of debt and $35.0 million of proceeds from the sale and leaseback transaction for the California Facilities.
Controlling the environmental conditions in both the 'Stack' and 'Flow' components of our growing system helps to ensure healthy, nutritious, consistent, and delicious products that are non-genetically modified organisms ("non-GMO"). We use 90% less water, 90% less land, and significantly less pesticides and herbicides than traditional outdoor agriculture operations.
Controlling the environmental conditions in both the 'Stack' and 'Flow' components of our growing system helps to ensure healthy, nutritious, and consistent products that are non-genetically modified organisms ("non-GMO"). We use 90% less water, 90% less land, and significantly less pesticides and herbicides than traditional outdoor agriculture operations.
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. 54 Recent Accounting Pronouncements For more information about recent accounting pronouncements, see Note 2, in our Notes to Consolidated Financial Statements included in "Part II, Item 8.
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. Recent Accounting Pronouncements For more information about recent accounting pronouncements, see Note 2 in our Notes to Consolidated Financial Statements included in "Part II, Item 8.
Today, our primary products include living butter lettuce – for which we are a leading provider with an approximate 80% share of the CEA market within the Western U.S. – as well as packaged leafy greens and cress.
Our primary products include living butter lettuce – for which we are a leading provider with an approximate 80% share of the CEA market within the Western U.S. – as well as packaged leafy greens and cress.
Certain of our accounting estimates are particularly important to our financial position and results of operations and require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates.
Certain of our accounting estimates are particularly important to our financial position and results of operations and require us to make complex and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates.
Our proprietary process is a hybrid, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our Stack & Flow Technology ® to give our products exactly what they need at every step of their growth cycle.
Our proprietary process is a hybrid growing approach, utilizing vertical farming in early plant growth, followed by greenhouse farming for final grow out. We designed our Stack & Flow Technology ® to give our products exactly what they need at every step of their growth cycle.
In connection with the Sixth Amendment, we issued Cargill Financial 5.4 million warrants with a per share exercise price of $13.00 per share (both number of warrants and per share exercise price adjusted for the June 15, 2023 Reverse Stock Split (as defined in Note 12, Stockholders' Equity , to our Consolidated Financial Statements)) and a 5-year term that expires on March 28, 2028 (the "March 2023 Cargill Warrant").
In connection with the Sixth Amendment, we issued Cargill Financial 5.4 million warrants with a per share exercise price of $13.00 per share (both number of warrants and per share exercise price adjusted for the June 15, 2023 Reverse Stock Split (as defined in Note 11, Stockholders' Equity (Deficit) , to our Consolidated Financial Statements)) and a 5-year term that expires on March 28, 2028 (the "March 2023 Cargill Warrant").
We utilize a Black-Scholes option pricing model ("Black-Scholes model") to estimate the fair value of the March 2023 Cargill Warrant at each reporting date. The application of the Black-Scholes model utilizes significant assumptions, and estimates in determining an appropriate risk-free interest rate, volatility, term, dividend yield, discount due to exercise restrictions, and the fair value of common stock.
We utilize a Black-Scholes option pricing model ("Black-Scholes model") to estimate the fair value of the March 2023 Cargill Warrant at each reporting date. The application of the Black-Scholes model utilizes significant assumptions and estimates to determine an appropriate risk-free interest rate, volatility, term, dividend yield, discount due to exercise restrictions, and the fair value of common stock.
As a result, the March 2023 Cargill Warrant is accounted for at fair value until settled through exercise or expiration and is classified as a derivative warrant liability in the Consolidated Balance Sheet at December 31, 2023 in accordance with ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity .
As a result, the March 2023 Cargill Warrant is accounted for at fair value until settled through exercise or expiration and is classified as a derivative warrant liability in the Consolidated Balance Sheets at December 31, 2024 and 2023, in accordance with ASC Topic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity .
Financing Obligations We have two financing obligations related to failed sale leaseback transactions for the California Facilities and the Montana Facility (see Note 9, Financing Obligations , to the Consolidated Financial Statements for additional detail on these transactions).
Financing Obligations We have two financing obligations related to failed sale leaseback transactions for the California Facilities and the Montana Facility (see Note 8, Financing Obligations , to the Consolidated Financial Statements for additional detail on these transactions).
Selling, General, and Administrative Expenses Selling, general, and administrative expenses consist of employee compensation, including salaries, benefits, and stock-based compensation for our executive, legal, finance, information technology, human resources and sales and marketing teams, expenses for third-party professional services, Pete's Acquisition related integration costs, insurance, marketing, advertising, computer hardware and software, and amortization of intangible assets, among others.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses consist of employee compensation, including salaries, benefits, and stock-based compensation for our executive, legal, finance, information technology, human resources and sales and marketing teams, expenses for third-party professional services, insurance, marketing, advertising, computer hardware and software, and amortization of intangible assets, among others.
Subsequent to the amendments described in Note 8, Debt , of the Consolidated Financial Statements, Cargill Financial may in its discretion provide advances under the Facilities of up to $280.0 million (plus interest and fees paid in kind), including capital to fund construction at the Company’s facilities in Georgia, Texas, and Washington, subject to certain conditions.
Subsequent to the amendments described in Note 7, Debt , of the Consolidated Financial Statements, Cargill Financial may, at its discretion, provide advances under the Facilities of up to $393.7 million (plus interest and fees paid in kind), including capital to fund construction at the Company’s facilities in Georgia, Texas, and Washington, subject to certain conditions.
Company Overview Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused today on living and loose leaf lettuce. Founded in 2018, and headquartered in Hamilton, Montana, Local Bounti utilizes its patented Stack & Flow Technology ® to grow healthy food sustainably and affordably.
Company Overview Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused primarily on living and loose leaf lettuce, arugula, spinach, and basil. Founded in 2018 and headquartered in Hamilton, Montana, Local Bounti utilizes its patented Stack & Flow Technology ® to grow healthy food sustainably and affordably.
After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, we determined that the carrying amount of our single reporting unit exceeded the fair value of the reporting unit, resulting in a goodwill impairment of $38.5 million for the year ended December 31, 2023. We did not record any impairment expense for the year ended December 31, 2022.
After performing the quantitative impairment test in accordance with ASC 350-20-35-3C, we determined that the carrying amount of our single reporting unit exceeded the fair value of the reporting unit, resulting in a goodwill impairment of $38.5 million for the year ended December 31, 2023.
The amendment amended the exercise price of the March 2023 Cargill Warrant from $13.00 to $6.50 per share of common stock (refer to Note 18, Subsequent Events , of the Consolidated Financial Statements for more information about the amendment to the March 2023 Cargill Warrant).
The amendment amended the exercise price of the March 2023 Cargill Warrant from $13.00 to $6.50 per share of common stock (refer to Note 7, Debt , of the Consolidated Financial Statements for more information about the amendment to the March 2023 Cargill Warrant).
Currently, our primary sources of liquidity and capital resources are cash on hand, cash flows generated from the sale of our products, and the Facilities (as defined below) with Cargill Financial.
Currently, our primary sources of liquidity and capital resources are cash on hand, cash flows generated from the sale of our products, and the credit facilities with Cargill Financial.
We also believe that local is the best kind of business, and we are committed to helping communities thrive for generations to come. We are committed to building empowered local teams. Together, we believe we are capable of extraordinary things.
We also believe that local is the best kind of business, and we are committed to helping communities thrive for generations to come. We are committed to building empowered local teams. Together, we believe we are capable of extraordinary achievements in sustainable agriculture.
We capitalize interest costs on borrowings during the construction period of major construction projects as part of the cost of the constructed assets. Interest expense, net increased by $9.0 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
We capitalize interest costs on borrowings during the construction period of major construction projects as part of the cost of the constructed assets. Interest expense, net increased by $33.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The decrease in fair value of the warrant liability is primarily due to the significant decrease in our closing stock price at December 31, 2023 compared to the closing stock price on the warrant issuance date.
The decrease in fair value of the warrant liability is due to the decrease in our closing stock price on December 31, 2024, compared to the closing stock price on December 31, 2023.
Factors Affecting Our Financial Condition and Results of Operations We have expended, and we expect to continue to expend, substantial resources as we: • complete construction and commissioning of new and expanded facilities; • standardize operating and manufacturing processes across our facilities; • identify and invest in future growth opportunities, including new product lines; • invest in product innovation and development; 48 • invest in sales and marketing efforts to increase brand awareness, engage customers and drive sales of our products; and • incur additional general administration expenses, including increased expenses associated with growing operations.
Factors Affecting Our Financial Condition and Results of Operations We have expended, and we expect to continue to expend, substantial resources as we: • Complete construction and commissioning of new and expanded facilities; • Standardize operating and manufacturing processes across our facilities, including increased expenses associated with growing operations; • Identify and invest in future growth opportunities, including new product lines; • Invest in product innovation and development; • Invest in sales and marketing efforts to increase brand awareness, engage customers, and drive sales of our products; and • Incur additional general administration expenses 47 Critical Accounting Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S.
We conduct an ongoing build-versus-buy analysis whenever we decide to build a new facility or acquire an existing facility. We also continue to explore expanding our product offerings to new varieties of fresh greens, herbs, berries, and other produce. Additionally, we evaluate commercial opportunities as part of these expansion efforts on an ongoing basis.
We conduct an ongoing build-versus-buy analysis whenever we decide to build a new facility or acquire an existing facility. We also continue to explore expanding our product offerings to new varieties of fresh greens, herbs, berries, and other produce.
We also had accrued interest of $9.8 million as of December 31, 2023. These debt agreements contain various financial and non-financial covenants and certain restrictions on our business, which include restrictions on additional indebtedness, minimum liquidity and other financial covenants, and material adverse effects, that could cause us to be at risk of default.
These debt agreements contain various financial and non-financial covenants and certain restrictions on our business, which include restrictions on additional indebtedness, minimum liquidity and other financial covenants, and material adverse effects that could cause us to be at risk of default.
Our critical accounting policies that involve significant estimates and judgments of management include the following: Goodwill We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired, and liabilities assumed be recorded at the date of acquisition at their respective fair values.
Goodwill We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired, and liabilities assumed be recorded at the date of acquisition at their respective fair values.
The change in fair value of the warrant is remeasured each quarter until the instrument is settled or expires with changes in fair value recorded in "Change in fair value of warrant liability" in the Consolidated Statements of Operations.
The change in fair value of the warrant is remeasured each quarter until the instrument is settled or expires with changes in fair value recorded in "Change in fair value of warrant liability" in the Consolidated Statements of Operations. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment.
As of December 31, 2023, a total of $48.1 million and $269.4 million was outstanding on the Subordinated Facility and the Senior Facility, respectively. The Subordinated Facility and the Senior Facility are included in "Long-term debt" on the Consolidated Balance Sheet.
As of December 31, 2024, a total of $54.6 million and $413.4 million was outstanding on the Subordinated Facility and the Senior Facility, respectively. The Subordinated Facility and the Senior Facility are included in "Long-term debt, net of debt issuance costs" and "Short-term debt" on the Consolidated Balance Sheet.
We expect that, over time, cost of goods sold will decrease as a percentage of sales, as a result of scaling our business.
As we scale our business, we expect the cost of goods sold to decrease over time as a percentage of sales.
At December 31, 2023, our principal and estimated interest payment obligations for the Senior Facility and the Subordinated Facility are as follows (1) : (in thousands) 2024 $ 32,521 2025 67,176 2026 75,114 2027 75,114 2028 283,945 Total $ 533,870 _____________________ (1) Interest is calculated based on a 12.5% interest rate for the Subordinated Facility and a 13.86% interest rate for the Senior Facility effective as of January 1, 2024.
At December 31, 2024, our principal and estimated interest payment obligations for the Senior Facility and the Subordinated Facility are as follows (1) : (in thousands) 2025 $ 68,026 2026 90,701 2027 90,701 2028 472,248 Total $ 721,676 _____________________ (1) Interest is calculated based on a 12.5% interest rate for the Subordinated Facility and a 12.8% interest rate for the Senior Facility effective as of January 1, 2025.
Net cash used in operating activities was $48.8 million for the year ended December 31, 2022 due to a net loss of $111.1 million, partially offset by non-cash activities of $39.2 million in stock-based compensation expense, net of amounts capitalized, $5.4 million in depreciation expense, $5.0 million in amortization expense, $3.0 million in amortization of debt issuance costs, $2.6 million in loss on disposal of property and equipment, and $5.4 million net increase of cash from changes in assets and liabilities.
This was partially offset by non-cash activities of $50.3 million in paid-in-kind interest, $15.3 million in depreciation expense, $8.4 million in amortization of debt issuance costs, $3.6 million in amortization expense, $3.3 million in stock-based compensation expense, net of amounts capitalized, $1.7 million in loss on disposal of property and equipment, and a $8.8 million net increase of cash from changes in assets and liabilities.
Interest Expense, net Interest expense consists primarily of contractual interest and amortization of debt issuance costs, net of interest capitalized for construction assets, related to the loans with Cargill Financial and also interest recognized per the terms of our financing obligation related to the Montana Facility and the California Facilities.
The period-end close stock price is a key input to the Black-Scholes model we use to measure and estimate the fair value of the warrant at the end of each reporting period. 51 Interest Expense, net Interest expense consists primarily of contractual interest and amortization of debt issuance costs, net of interest capitalized for construction assets, related to the loans with Cargill Financial, and also interest recognized per the terms of our financing obligation related to the Montana Facility and the California Facilities.
Goodwill Impairment During the year ended December 31, 2023, we recognized a goodwill impairment of $38.5 million. There was no goodwill impairment recognized during the year ended December 31, 2022. See "Critical Accounting Estimates" above for more information about our goodwill impairment assessment.
Goodwill Impairment During the year ended December 31, 2023, we recognized a goodwill impairment of $38.5 million. There was no goodwill impairment recognized during the year ended December 31, 2024.
Additional cash used in investing activities related to $56.0 million of purchases of equipment and other items for the Washington, Georgia, and Texas facilities.
Net Cash Used In Investing Activities Net cash used in investing activities was $82.5 million for the year ended December 31, 2024, due primarily to purchases of equipment and other items for the Washington, Georgia, and Texas facilities.
Cost of Goods Sold Cost of goods sold consists primarily of costs related to growing produce at our greenhouse facilities, including labor costs, which include wages, salaries, benefits, and stock-based compensation, seeds, soil, nutrients and other input supplies, packaging materials, depreciation, utilities and other manufacturing overhead.
The increase was due to increased production and growth in sales from our facility in Georgia and sales from our new facilities in Texas and Washington, which began shipping and selling products in the second quarter of 2024 . 50 Cost of Goods Sold Cost of goods sold is the direct cost of growing produce for sale at our greenhouse facilities, including labor costs, which consists of wages, salaries, benefits, and stock-based compensation, seeds, soil, nutrients and other input supplies, packaging materials, depreciation, utilities, and other manufacturing overhead.
In 2022, we acquired California-based complementary greenhouse farming company Hollandia Produce Group, Inc. and its subsidiaries, which operated under the name Pete's. Through the Pete's Acquisition, we significantly increased our growing footprint to include two then-existing facilities in California and one under-construction facility in Georgia. The Georgia facility became operational in July 2022 and was further expanded in 2023.
Through the Pete's Acquisition, we significantly increased our growing footprint to include two then-existing facilities in California and one under-construction facility in Georgia. The Georgia facility initially became operational in July 2022 and was significantly expanded in 2023. In 2024, we completed construction on two new facilities in Washington and Texas, bringing our total facility count to six.
We have been able to expand distribution of our market-leading Grab & Go Salad Kits and are set to expand our baby leaf portfolio by introducing several high-velocity offerings including spinach, arugula, 50/50 blend and power greens by the third quarter of 2024.
We recently introduced new Grab & Go Salads and additions to our baby leaf portfolio with several high-velocity offerings, including Spinach, Arugula, and Basil. In addition, we introduced 50/50 blend and power greens in the third quarter of 2024.
At December 31, 2023, we had an accumulated deficit of $303.3 million and cash and cash equivalents and restricted cash of $16.9 million. As of December 31, 2023, the principal amount due under our credit facilities with Cargill Financial totaled $317.5 million, none of which is classified as current.
As of December 31, 2024, the principal amount due under our credit facilities with Cargill Financial totaled $467.9 million, of which $20.2 million is classified as current. We also had accrued interest of $15.3 million as of December 31, 2024.
Sales We derive our revenue from the sale of produce grown at our facilities. In response to realized cost inflation, we have implemented contractually allowable price increases which we anticipate to benefit from in future years. Sales increased by $8.1 million to $27.6 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Sales We derive our revenue from the sale of produce grown at our six facilities. Sales increased by $10.6 million to $38.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Derivatives On March 28, 2023, Local Bounti Operating Company LLC, the Company and certain subsidiaries entered into a Sixth Amendment to the Original Credit Agreements (the "Sixth Amendment") with Cargill Financial.
Our actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policies that involve significant estimates and judgments of management include the following: Derivatives On March 28, 2023, Local Bounti Operating Company LLC, the Company and certain subsidiaries entered into a Sixth Amendment to the Original Credit Agreements (the "Sixth Amendment") with Cargill Financial.
Research and Development Research and development expenses consist primarily of costs related to research and development of our production, harvesting, and post-harvest packaging methods, techniques, and processes, as well as production surplus costs related to the development and testing of our production processes.
Research and Development Research and development expenses primarily consist of costs associated with the ongoing development, improvement, testing, alteration, and refinement of our product offerings, production lines, manufacturing processes, growing techniques, and post-harvest packaging methods.
Critical Accounting Estimates Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. Our significant accounting estimates are more fully described in Note 2, Summary of Significant Accounting Policies , to our Consolidated Financial Statements.
GAAP. Our significant accounting estimates are more fully described in Note 2, Summary of Significant Accounting Policies , to our Consolidated Financial Statements.
The increase is primarily due to an increase in the principal amount outstanding on the Senior Facility as well as a variable rate increase on the Senior Facility period over period, which increased interest expense by $8.0 million over the prior year period.
The increase is primarily due to a significant increase in the principal amount outstanding on the Senior Facility, which increased interest expense by $31.6 million over the prior year period. Also contributing to the net increase was $1.5 million of incremental interest expense for the financing obligations related to the California Facilities.
In early 2024, we will complete construction on two new facilities in Texas and Washington, bringing our total facility count to six. We now have distribution to over 13,000 retail locations across 35 U.S. sta tes , primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, and AmazonFresh.
We distribute our products to approximately 13,000 retail locations across 35 U.S. states, primarily through direct relationships with blue-chip retail customers, including Albertsons, Sam's Club, Kroger, Target, Walmart, Whole Foods, Brookshire's, H-E-B, Sprouts, and AmazonFresh.
During the 12 months ended December 31, 2023 and 2022, we capitalized $14.9 million and $1.7 million of interest, respectively. Liquidity and Capital Resources We have incurred losses and generated negative cash flows from operations since our inception.
Liquidity and Capital Resources We have incurred losses and generated negative cash flows from operations since our inception. At December 31, 2024, we had an accumulated deficit of $423.2 million and cash and cash equivalents and restricted cash of $7.5 million.
The locations and degree of expansion will be announced at a future date, but construction is currently anticipated to begin late in the second quarter of 2024. The planned expansions are designed to provide additional capacity and allow for our growing product assortment to meet existing demand from our direct relationships with blue-chip retailers and distributors.
Capacity Expansion Project Update Plans remain in place to build additional capacity across our network of facilities enabled with our patented Stack & Flow Technology ® . The planned expansions are designed to provide additional capacity and allow for our growing product assortment to meet existing demand from our direct relationships with blue-chip retailers and distributors.
Our research and development efforts are focused on the development of our processes utilizing our facilities, increasing production yields, developing new leafy green SKUs and value-added products such as grab-and-go salads, and exploring new crops, including spinach, arugula, and berries.
Additionally, we also focus on the development of new leafy green product offerings, value-added products such as Grab & Go Salads, and new crops, including spinach, arugula, basil, and berries. Research and development activities are conducted at the facilities in Montana, Texas, Washington, California, and Georgia.
The overall decrease in selling, general and administrative expenses was partially offset by an increase of $2.2 million in loss on disposals charges for construction-in-progress assets, an increase of $1.7 million in professional, legal, accounting, and consulting fees, an increase of $0.9 million in amortization of intangible assets acquired as part 51 of the Pete's Acquisition, and an increase of $2.0 million in salaries, wages, and benefits due to increased headcount from Company growth and the Pete's Acquisition.
Additional decreases as compared to the prior year period were a $3.9 million decrease in salaries, benefits, and payroll-related expenses, $3.6 million decrease in legal, accounting, and professional consulting costs, and a $2.9 million decrease in loss on disposals charges primarily for construction-in-progress assets, which was partially offset by an increase of $1.0 million in insurance, and an increase of $0.9 million in transportation and delivery costs.
Cost of goods sold increased by $8.1 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, due primarily to the Pete's Acquisition at the beginning of April 2022 and also due to increased production volume related to facility expansions driven by increased demand for our products and an increase in the cost of labor, utilities, and production supplies.
Cost of goods sold increased by $8.7 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, due primarily to production ramp-up at our new Texas and Washington facilities and increased production at our Georgia facilities.
There were no repurchases made during the three months ended December 31, 2023. 53 Cash Flow Analysis A summary of our cash flows from operating, investing and financing activities is presented in the following table: Year Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (33,157) $ (48,808) Net cash used in investing activities (162,265) (172,385) Net cash provided by financing activities 187,379 145,054 Cash and cash equivalents and restricted cash at beginning of year 24,938 101,077 Cash and cash equivalents and restricted cash at end of year $ 16,895 $ 24,938 Net Cash Used In Operating Activities Net cash used in operating activities was $33.2 million for the year ended December 31, 2023, primarily due to a net loss of $124.0 million, which included a non-cash gain of $18.5 million related to change in fair value of warrant liability.
The following table summarizes future aggregate financing obligation payments by fiscal year for both the California Facilities and the Montana Facility: Financing Obligation (in thousands) 2025 $ 5,024 2026 5,158 2027 5,296 2028 5,439 2029 5,584 Thereafter 115,949 Total financing obligation payments 142,450 Cash Flow Analysis A summary of our cash flows from operating, investing, and financing activities is presented in the following table: Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (27,061) $ (33,157) Net cash used in investing activities (82,454) (162,265) Net cash provided by financing activities 100,086 187,379 Cash and cash equivalents and restricted cash at beginning of year 16,895 24,938 Cash and cash equivalents and restricted cash at end of year $ 7,466 $ 16,895 53 Net Cash Used In Operating Activities Net cash used in operating activities was $27.1 million for the year ended December 31, 2024, primarily due to a net loss of $119.9 million.
Selling, general, and administrative expenses decreased by $18.1 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily driven by a $22.3 million decrease in stock-based compensation and a $4.0 million decrease in transaction costs due primarily to the Pete's Acquisition in the prior year.
Selling, general, and administrative expenses decreased by $23.8 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily driven by a $12.9 million decrease in stock-based compensation that was a result of prior year awards that were issued at a higher fair value that fully vested and were expensed in prior periods, as compared to the fair value of awards being expensed in the current period.
We also incurred costs for research and development of our production, harvesting, and post-harvest packaging methods, techniques, and processes, as well as production surplus costs related to the development and testing of our production processes.
The increase is driven primarily by the additional development of our production, harvesting, and post-harvest packaging techniques and processes, including production surplus costs, related to the development and testing of our commercial-scale Stack & Flow Technology ® and production processes at the Washington and Texas facilities.
Our Mission and Vision Our mission is to bring our farm to your kitchen. Our vision is to deliver the freshest, locally grown produce over the fewest food miles. We believe that happy plants make happy taste buds and we are committed to reimagining the standards of freshness.
We envision a future where transformative innovation and technology combine to enable us to grow produce locally with minimal food miles, ensuring the freshest and most sustainable offerings for communities everywhere. We believe that happy plants make happy taste buds, and we are committed to reimagining the standards of freshness.
Research and development costs increased by $2.0 million for the year ended December 31, 2023, compared to the year ended December 31, 2022. The increase was due to increased investment in personnel, materials, supplies, and facility capacity usage for research and development purposes as we continue to expand our product offering and refine our growing process.
Research and development costs increased by $6.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Any significant adjustments to the unobservable inputs would have a direct impact on the fair value of the warrant liability.
Any significant adjustments to the unobservable inputs would directly impact the fair value of the warrant liability. As a result of the unobservable inputs that were used to determine the expected volatility of the March 2023 Cargill Warrant, the fair value measurement of these warrants reflected a Level 3 measurement within the fair value measurement hierarchy.
Net cash provided by financing activities was $145.1 million for the year ended December 31, 2022, representing $124.6 million in proceeds from the issuance of debt and $23.3 million in proceeds from Private Placement financing (refer to Note 12, Stockholders' Equity , of the Consolidated Financial Statements for more information about the Private Placement), which was partially offset by $2.3 million payment of debt issuance costs.
Net Cash Provided By Financing Activities Net cash provided by financing activities was $100.1 million for the year ended December 31, 2024, comprised primarily of $100.1 million of net proceeds from the issuance of debt.
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Our first facility in Hamilton, Montana commenced construction in 2019 and reached full commercial operation by the second half of 2020. In 2021, we successfully completed the expansion of our Montana Facility, more than doubling our production capacity. The Montana Facility is currently used for commercial production, as well as research-and-development activities.
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Our Mission and Vision Our mission is to revolutionize agriculture, ensuring accessibility to fresh, sustainable, locally grown produce to nourish communities everywhere for generations to come. Our vision is to reimagine freshness.
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In October 2022, we signed a five-year offtake agreement with Sam's Club for our leafy greens production starting at our greenhouse facility in Georgia. 47 Commercial Facility Expansion Update Byron, Georgia Facility Expands Throughput In December 2023, we successfully doubled our run-rate production out of the Georgia facility due to our implementation of our Stack & Flow Technology ® in the fourth quarter of 2023.
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Our first facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019 and reached commercial operation by the second half of 2020. In 2022, we acquired California-based complementary greenhouse farming company Hollandia Produce Group, Inc. and its subsidiaries, which operated under the name Pete's.
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Since then, we have experienced additional throughput in the facility as a result of ongoing yield increases that have increased production by an additional 50%, which equates to production that is approximately three-times that of a year ago. With the facility now fully scaled, we are focused on satisfying existing demand from retailers across the southeastern U.S.
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We signed an offtake agreement with Sam's Club in October 2022 for our leafy greens production, initially from our Georgia facility and now including both our Georgia and Texas facilities. The offtake agreement provides for the sale of defined minimum quantities of leafy greens from our Georgia and Texas facilities and runs through September 2028.
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Mount Pleasant, Texas & Pasco, Washington Facilities Complete, Commissioning Underway We commenced operations and seeding at both our Texas and Washington facilities in late January and expect to begin shipping out of both facilities to customers in the second quarter of 2024. The Texas facility fortifies our distribution in markets across Texas, Oklahoma, Louisiana, Mississippi, Arkansas, Kansas, and Missouri.
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Additionally, we evaluate commercial opportunities as part of these expansion efforts on an ongoing basis. 46 Commercial Facilities Update Texas Facility Product Mix Transition Progress We continue to make significant progress at our six-acre Texas facility.
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The Washington facility bolsters our distribution capabilities in the Pacific Northwest to serve our expanding retail customer base. Intent to Expand Capacity at Existing Facilities in 2024 Plans are underway to build additional capacity across our network of facilities enabled with Stack & Flow Technology ® .
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In response to evolving customer demands, we strategically reconfigured three acres of the facility—originally designed for head lettuce production—to create a flexible growing environment capable of producing both head lettuce and cut products based on customer preferences. This purposeful design approach highlights our commitment to adaptability and customer-centric operations.
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Next Facility to be Opened in the Midwest We are planning our next high-tech Stack & Flow CEA facility to be built in the Midwestern U.S.
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While this reconfiguration temporarily impacted the full utilization of the facility in the second half of 2024 and first quarter of 2025, we are now in the final stages of completing this work and expect to begin commercial production in this section starting in the second quarter of 2025.
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The region is in close proximity to existing, customers' distribution networks and will support growing retail demand for our products and will improve service to retail partners throughout the Midwest and also provide improved access to the Northeast.
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The purpose-built automated harvesting equipment for the configuration will be installed early third quarter 2025, replacing the temporary harvester we will use during the second quarter of 2025. The purpose-built harvester is expected to drive significant operational efficiencies and margin improvement.
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We expect to name the future location following completion of negotiations and are targeting construction to begin in the third quarter of 2024. This future facility is expected to comprise a six acre greenhouse that is supported by multiple Stack zones.
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The timing and scope of these projects, including plans to expand into the Midwest, remain under review pending ongoing discussions with retailers to optimize those facilities for specific products in support of retail commitments and strategies to expand distribution.
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Hamilton, Montana Facility to Transition from R&D to Commercial Production We expect to transition in 2024 the majority of our Montana Facility from its current focus on research and development to a commercially oriented facility that is growing produce for sale to customers.
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Product Development & Distribution We expanded our high-value specialty greens distribution in the fourth quarter of 2024, bringing products like Arugula and Power Crisp to several Pacific Northwest retailers.
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This transition will follow the capacity enhancements brought about by the completion of our Georgia facility and the commencement of operations at both Texas and Washington and is expected to help drive us toward our goal of achieving positive adjusted EBITDA in early 2025.
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We also expanded our Texas-grown Arugula offering with Brookshire's in approximately 80 stores in the first quarter of 2025 and began distributing Organic Living Butter Lettuce from California to HEB, strategically leveraging regional production to align with specific customer needs.
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Recent Developments In the second quarter of 2024, we expect to close four previously disclosed Conditional Commitment Letters ("CCLs") from a commercial finance lender executed in the second half of 2023.
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Additionally, we started shipping living Basil to an existing large retail customer across approximately 60 stores and secured distribution with several other wholesalers for their Basil products. We further strengthened our distribution network by establishing a new partnership with a prominent Midwest wholesaler and significantly expanded our relationship with Walmart, now serving 191 stores with premium baby leaf varieties.
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Together, the CCLs provide for total financing of approximately $228 million to fund our 2024 facility expansions, our new greenfield facility in the Midwest, and to repay certain existing construction financing which will lower our cost of capital. The funding expected pursuant to the CCLs is subject to the completion of definitive documents and the satisfaction of customary closing conditions.
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We also secured an additional commitment to serve 13 Walmart distribution centers with our Conventional Living Butter Lettuce, with shipments commencing in the second quarter from both our California and Texas facilities. Building on our Grab-and-Go Salad Kit rollout in 2024, we have evolved this offering to better serve retail partners and consumer trends.
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Our actual results may differ from these estimates under different assumptions or conditions.

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