apph-20210331

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, 2021


☐			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			82-5042965
(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) ☐

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 May 7, 2021, were 100,253,268.

Table of Contents

APPHARVEST, INC AND SUBSIDIARIES

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			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			25
Item 4. Controls and Procedures			26

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			28
Item 1A. Risk Factors			28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			51
Item 3. Defaults Upon Senior Securities			52
Item 4. Mine Safety Disclosures			52
Item 5. Other Information			52
Item 6. Exhibits			53

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands except per share amounts)


	March 31, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	297,660	$	21,909
Accounts receivable, net	1,182		—
Inventories, net	4,903		3,387

Prepaid expenses and other current assets	3,531		481
Total current assets	307,276		25,777
Operating lease right-of-use assets, net	1,703		1,307
Property and equipment, net	190,962		152,645

Other assets, net	7,481		1,188
Total non-current assets	200,146		155,140
Total assets	$	507,422	$	180,917
Liabilities and stockholders’ equity
Current Liabilities:
Accounts payable	$	23,070	$	1,342
Accrued expenses	8,204		5,184
Current portion of lease liabilities with a related party	—		59,217
Current portion of lease liabilities	300		166
Current portion of financing obligation with a related party	—		58,795

Note payable with a related party	—		30,000
Other current liabilities	832		77
Total current liabilities	32,406		154,781
Lease liabilities, net of current portion	1,850		1,370
Deferred income tax liabilities	1,769
Private Warrant liabilities	29,920		—
Other liabilities	227		—
Total non-current liabilities	33,766		1,370
Total liabilities	66,172		156,151
Commitments and contingencies (Note 12)
Stockholders’ equity
Preferred stock, par value $0.0001, 10,000 shares authorized, 0 issued and outstanding, as of March 31, 2021 and December 31, 2020, respectively	—		—



Common stock, par value $0.0001, 750,000 shares authorized, 97,925 and 44,461 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	10		4
Additional paid-in capital	491,552		45,890
Accumulated deficit	(49,643)		(21,128)
Accumulated other comprehensive loss	(669)		—
Total stockholders’ equity	441,250		24,766
Total liabilities and stockholders’ equity	$	507,422	$	180,917

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (Unaudited)

(In thousands except per share amounts)


	Three Months Ended March 31,
	2021		2020
Net sales	$	2,299	$	—
Cost of goods sold	6,836		—
	(4,537)		—
Operating expenses:
Selling, general and administrative expenses	31,489		980

Total operating expenses	31,489		980
Loss from operations	(36,026)		(980)
Other income (expense):
Development fee income from a related party	—		134

Interest expense from related parties	(658)		(2)
Change in fair value of Private Warrants	9,826		—
Other	356		30
Loss before income taxes	(26,502)		(818)
Income tax expense	(2,013)		—
Net loss	(28,515)		(818)

Other comprehensive loss:
Net unrealized loss on cash flow hedges, net of tax	(669)		—
Comprehensive loss	$	(29,184)	$	(818)

Net loss per common share:
Basic and diluted	$	(0.35)	$	(0.02)

Weighted average common shares outstanding:
Basic and diluted	80,729		32,858

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

APPHARVEST, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(In thousands)


	Redeemable Convertible Preferred Stock										Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
	Series A			Series A-1			Series B			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount		Shares					Amount
Balance, December 31, 2019	2,770	$	5,203	392	$	992	1,483	$	6,063	9,677			$	1		$	497		$	(3,680)		$	(3,182)
Retroactive application of recapitalization	(2,770)	(5,203)		(392)	(992)		(1,483)	(6,063)		21,123		2			12,256			—			12,258
Adjusted balance, December 31, 2019	—	—		—	—		—	—		30,800		3			12,753			(3,680)			9,076
Issuance of preferred shares, net	—	—		—	—		—	—		2,470		—			4,880			—			4,880
Stock-based compensation	—	—		—	—		—	—		—		—			19			—			19
Net loss	—	—		—	—		—