lfcr-20231126

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 Fiscal Quarter Ended November 26, 2023, or


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

For the Transition period for _________ to _________.

Commission file number: 000-27446

LIFECORE BIOMEDICAL, INC.

(Exact name of registrant as specified in its charter)


Delaware			94-3025618
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


3515 Lyman Boulevard
Chaska,	Minnesota	55318
(Address of principal executive offices)		(Zip Code)

(952) 368-4300

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	LFCR	The NASDAQ Global Select Market

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 an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Emerging Growth Company

☐

Non Accelerated Filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, there were 30,869,738 shares of common stock outstanding.

Table of Contents

LIFECORE BIOMEDICAL, INC.

FORM 10-Q

For the Fiscal Quarter Ended November 26, 2023

INDEX


			Page




Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	a)	Condensed Consolidated Balance Sheets as of November 26, 2023 and May 28, 2023	1

	b)	Condensed Consolidated Statements of Operations for the Three and Six Months Ended November 26, 2023 and November 27, 2022	2

	c)	Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ (Deficit) Equity for the Three and Six Months Ended November 26, 2023 and November 27, 2022	3

	d)	Condensed Consolidated Statements of Cash Flows for the Six Months Ended November 26, 2023 and November 27, 2022	4

	e)	Notes to the Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29

Item 4.	Controls and Procedures		29

Part II.	Other Information		31

Item 1.	Legal Proceedings		31

Item 1A.	Risk Factors		31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 3.	Defaults Upon Senior Securities		31

Item 4.	Mine Safety Disclosures		31

Item 5.	Other Information		31

Item 6.	Exhibits		31

	Signatures		32

Table of Contents

LIFECORE BIOMEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	November 26, 2023		May 28, 2023
	(unaudited)
ASSETS
Current Assets:
Cash	$	3,221	$	19,091
Accounts receivable, less allowance for credit losses	19,431		19,907
Accounts receivable, related party	10,771		9,117
Inventories, net	41,446		40,841
Prepaid expenses and other current assets	1,845		4,919

Total Current Assets	76,714		93,875


Property and equipment, net	142,913		134,390
Operating lease right-of-use assets	4,036		4,282
Goodwill	13,881		13,881
Intangible assets	4,200		4,200

Other long-term assets	4,072		2,917

Total Assets	$	245,816	$	253,545

LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	19,023	$	22,097
Accrued compensation	3,354		4,145
Other accrued liabilities	7,657		7,142
Current portion of lease liabilities	1,193		1,270
Deferred revenues	973		552
Deferred revenues, related party	7,281		3,503

Current portion of long-term debt, net, related party	773		580

Total Current Liabilities	40,254		39,289

Long-term debt, less current portion, net, related party	92,085		84,256
Revolving credit facility	16,878		16,809
Debt derivative liability, related party	44,000		64,900
Long-term lease liabilities, less current portion	9,334		9,709
Deferred taxes, net	416		380
Deferred revenues, less current portion, related party	321		2,940
Other non-current liabilities	183		174

Total Liabilities	203,471		218,457

Commitments and Contingencies, see Note 1

Convertible Preferred Stock, $0.001 par value; 2,000 shares authorized; 41 and 39 shares issued and outstanding at November 26, 2023 and May 28, 2023, respectively	40,924		39,318

Stockholders’ Deficit:
Common Stock, $0.001 par value; 50,000 shares authorized; 30,459 and 30,322 shares issued and outstanding at November 26, 2023 and May 28, 2023, respectively	30		30
Additional paid-in capital	176,463		174,276
Accumulated deficit	(175,072)		(178,536)

Total Stockholders’ Deficit	1,421		(4,230)
Total Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit	$	245,816	$	253,545

See accompanying notes to the condensed consolidated financial statements.

-1-

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LIFECORE BIOMEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended				Six Months Ended
	November 26, 2023		November 27, 2022		November 26, 2023		November 27, 2022
Revenues	$	20,522	$	21,864	$	37,475	$	45,587
Revenues, related party	9,628		—		17,197		—
Total Revenues	30,150		21,864		54,672		45,587
Cost of goods sold	20,193		16,185		41,987		33,929
Gross profit	9,957		5,679		12,685		11,658

Operating costs and expenses:
Research and development	2,098		2,177		4,244		4,388
Selling, general and administrative	9,185		8,291		18,391		16,395

Gain on sale of divested business	—		—		—		(2,108)

Restructuring costs	157		563		147		1,610
Total operating costs and expenses	11,440		11,031		22,782		20,285
Operating loss	(1,483)		(5,352)		(10,097)		(8,627)



Interest expense, net	(832)		(3,608)		(1,625)		(6,839)
Interest expense, related party	(3,241)		—		(6,385)		—
Change in fair value of debt derivative liability, related party	20,700		—		20,900		—
Other income (expense), net	(967)		(237)		(1,138)		(434)
Net income (loss) from continuing operations before income taxes	14,177		(9,197)		1,655		(15,900)
Provision for income tax benefit (expense)	65		(4)		(23)		(8)
Net income (loss) from continuing operations	14,242		(9,201)		1,632		(15,908)

Discontinued operations:
Income (loss) from discontinued operations	$	—	$	(3,605)	$	1,850	$	(7,864)
Income tax (expense) benefit	(24)		—		(18)		—
Income (loss) from discontinued operations, net of tax	(24)		(3,605)		1,832		(7,864)
Net income (loss)	$	14,218	$	(12,806)	$	3,464	$	(23,772)

Basic net income (loss) per share:
Income (loss) from continuing operations	$	0.47	$	(0.31)	$	0.05	$	(0.54)
Income (loss) from discontinued operations	—		(0.12)		0.06		(0.26)
Total basic net income (loss) per share	$	0.47	$	(0.43)	$	0.11	$	(0.80)

Diluted net income (loss) per share:
Income (loss) from continuing operations	$	0.39	$	(0.31)	$	0.05	$	(0.54)
Income (loss) from discontinued operations	—		(0.12)		0.05		(0.26)
Total diluted net income (loss) per share	$	0.39	$	(0.43)	$	0.10	$	(0.80)

Shares used in per share computation:
Basic	30,458		29,634		30,431		29,605
Diluted	36,419		29,634		36,398		29,605

Other comprehensive income (loss), net of tax:
Net income (loss)	$	14,218	$	(12,806)	$	3,464	$	(23,772)
Net unrealized gain on interest rate swaps (net of tax effect of $16)	—		286		—		586
Total comprehensive income (loss)	$	14,218	$	(12,520)	$	3,464	$	(23,186)

See accompanying notes to the condensed consolidated financial statements.

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LIFECORE BIOMEDICAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

(Unaudited) (In thousands)


Three and Six Months Ended November 26, 2023
	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity

	Shares	Amount		Shares	Amount
Balance at May 28, 2023	39	$	39,318	30,322	$	30	$	174,276	$	(178,536)	$	—	$	(4,230)
Issuance of stock under stock plans, net of shares withheld	—	—		134	—		724		—		—		724
Convertible Preferred Stock paid-in-kind (“PIK”) dividend	1	748		—	—		(748)		—		—		(748)
Accretion of Convertible Preferred Stock	—	48		—	—		(48)		—				(48)
Taxes paid by Company for employee stock plans	—	—		—	—		(45)		—		—

SEC Form 10-Q filed by Lifecore Biomedical Inc.