apph-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

FORM 10-Q

_____________________________________________


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

For the quarterly period ended March 31, 2022


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

For the transition period from to

Commission file number 001-39288

AppHarvest, Inc.

_____________________________________________

(Exact name of registrant as specified in its charter)


Delaware			84-5042965
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

500 Appalachian Way

Morehead, KY 40351

(606) 653-6100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	APPH	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	APPHW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-2 of the Exchange Act)

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Total shares of common stock, par value $0.0001, outstanding at April 29, 2022, were 101,735,238.

Table of Contents

APPHARVEST, INC

TABLE OF CONTENTS


			Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Statements of Stockholders’ Equity			3
Condensed Consolidated Statements of Cash Flows			4
Notes to Condensed Consolidated Financial Statements			5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures About Market Risk			21
Item 4. Controls and Procedures			21

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 3. Defaults Upon Senior Securities			48
Item 4. Mine Safety Disclosures			48
Item 5. Other Information			49
Item 6. Exhibits			50

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

APPHARVEST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands except per share amounts)


	March 31, 2022		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	97,645	$	150,755
Restricted cash	37,130		25,556
Accounts receivable, net	1,882		1,575
Inventories, net	5,076		4,998

Prepaid expenses and other current assets	4,000		5,613
Total current assets	145,733		188,497
Operating lease right-of-use assets, net	4,425		5,010
Property and equipment, net	387,603		343,913



Other assets, net	25,819		16,644
Total non-current assets	417,847		365,567
Total assets	$	563,580	$	554,064
Liabilities and stockholders’ equity
Current Liabilities:
Accounts payable	$	14,126	$	8,553
Accrued expenses	15,876		15,794

Current portion of lease liabilities	724		751

Current portion of long-term debt	39,032		28,020


Other current liabilities	56		119
Total current liabilities	69,814		53,237
Long-term debt, net of current portion	117,542		102,637
Lease liabilities, net of current portion	4,579		4,938
Deferred income tax liabilities	2,309		2,418
Private Warrant liabilities	1,610		1,385
Other liabilities	139		1,809
Total non-current liabilities	126,179		113,187
Total liabilities	195,993		166,424
Commitments and contingencies (Note 11)
Stockholders’ equity
Preferred stock, par value $0.0001, 10,000 shares authorized, 0 issued and outstanding, as of March 31, 2022 and December 31, 2021	—		—



Common stock, par value $0.0001, 750,000 shares authorized, 101,550 and 101,136 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	10		10
Additional paid-in capital	583,117		576,895
Accumulated deficit	(217,949)		(187,314)
Accumulated other comprehensive income (loss)	2,409		(1,951)
Total stockholders’ equity	367,587		387,640
Total liabilities and stockholders’ equity	$	563,580	$	554,064

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (Unaudited)

(In thousands except per share amounts)


	Three Months Ended March 31,
		2022		2021
Net sales		$	5,164	$	2,299
Cost of goods sold		13,554		6,836
		(8,390)		(4,537)
Operating expenses:
Selling, general and administrative expenses		21,039		31,489


Total operating expenses		21,039		31,489
Loss from operations		(29,429)		(36,026)
Other income (expense):


Interest expense from related parties		—		(658)

Change in fair value of Private Warrants		(1,329)		9,826
Other		14		356
Loss before income taxes		(30,744)		(26,502)
Income tax benefit (expense)		109		(2,013)
Net loss		(30,635)		(28,515)

Other comprehensive income (loss):
Net unrealized gains (losses) on derivatives contracts, net of tax		4,360		(669)
Comprehensive loss		$	(26,275)	$	(29,184)

Net loss per common share:
Basic and diluted		$	(0.30)	$	(0.35)

Weighted average common shares outstanding:
Basic and diluted		101,321		80,729

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


				Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
December 31, 2020	9,750	$	1	$	686	$	(21,128)	—		(20,441)
Retroactive application of recapitalization	34,711	3		45,204		—		—		45,207
Adjusted balance, December 31, 2020	44,461	4		45,890		(21,128)		—		24,766
Business Combination and PIPE financing	53,361	6		433,521		—		—		433,527
Conversion of Private Warrants	—	—		5,819		—		—		5,819
Stock option exercise	103	—		35		—		—		35
Stock-based compensation	—	—		6,287		—		—		6,287
Net loss	—	—		—		(28,515)		—		(28,515)
Other comprehensive income (loss)	—	—		—		—		(669)		(669)
March 31, 2021	97,925	$	10	$	491,552	$	(49,643)	$	(669)	$	441,250


				Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
December 31, 2021	101,136	$	10	$	576,895	$	(187,314)	$	(1,951)	$	387,640

Conversion of Private Warrants	—	—		1,104		—		—		1,104
Stock option exercise	—	—		36		—		—		36

Vesting of restricted stock units	414	—		(953)		—		—		(953)
Stock-based compensation	—	—		6,035		—		—		6,035
Net loss	—	—		—		(30,635)		—		(30,635)
Other comprehensive income (loss)	—	—		—		—		4,360		4,360
March 31, 2022	101,550	$	10	$	583,117	$	(217,949)	$	2,409	$	367,587

SEC Form 10-Q filed by AppHarvest Inc.