locl-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2026


☐			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						001-40125

LOCAL BOUNTI CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

83-3686055

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S Employer Identification No.)

490 Foley Lane

Hamilton,

59840

(Address of Principal Executive Offices, Including Zip Code)


			(800)			640-4016


(Registrant's Telephone Number, Including Area Code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value of $0.0001 per share

LOCL

New York Stock Exchange

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

☐

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 13(a) of the Exchange Act. ☐

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

The number of outstanding shares of Local Bounti Corporation’s common stock was 22,796,270 at May 11, 2026.

TABLE OF CONTENTS


			Page
Part I – FINANCIAL INFORMATION			5

Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025			5
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025			6
Unaudited Condensed Consolidated Statements of Stockholders' Deficit for the Three Months Ended March 31, 2026 and 2025			7
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025			8
Notes to Unaudited Condensed Consolidated Financial Statements			10

Item 2. Management 's Discussion and Analysis of Financial Condition and Results of Operations			22

Item 3. Quantitative and Qualitative Disclosures About Market Risk			29

Item 4. Controls and Procedures			29

Part II – OTHER INFORMATION			30

Item 1. Legal Proceedings			30

Item 1A. Risk Factors			30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30

Item 5. Other Information			30

Item 6. Exhibits			31

SIGNATURES			32

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the information incorporated herein by reference contain certain statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "anticipate," "believe," "continue," "estimate," "intend," "may," "plan," "project," "forecast," "seek," "should," "target," "will," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, without limitation, statements regarding our ability to raise capital in the future, future financial performance, business strategies including future acquisitions, expansion plans including construction of future facilities, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from results expressed or implied in this Quarterly Report on Form 10-Q. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements:

•Local Bounti’s ability to continue as a going concern and the risk that Local Bounti will fail to obtain additional necessary capital when needed on acceptable terms or at all;

•Local Bounti's ability to generate significant revenue;

•restrictions and covenants contained in Local Bounti's debt facility agreements with Cargill Financial Services International, Inc. ("Cargill Financial") and Local Bounti's ability to comply therewith;

•the risk that the concentrated ownership of our common stock will prevent other stockholders from influencing significant decisions;

•the risk that Local Bounti may never achieve or sustain profitability;

•the risk that Local Bounti could fail to effectively manage its future growth;

•Local Bounti's ability to complete the build out of its current or additional facilities in the future;

•Local Bounti's reliance on third parties for construction, the risk of delays relating to material delivery and supply chains, and fluctuating material prices;

•Local Bounti's ability to scale its operations and decrease its cost of goods sold over time;

•the potential for damage to or problems with Local Bounti's facilities;

•the impact that current or future acquisitions, investments or expansions of scope of existing relationships have on Local Bounti's business, financial condition, and results of operations;

•unknown liabilities that may be assumed in acquisitions;

•Local Bounti's ability to attract and retain qualified employees;

•Local Bounti's ability to develop and maintain its brand or brands;

•Local Bounti's ability to achieve its sustainability goals;

•Local Bounti's ability to maintain its company culture or focus on its vision as it grows;

•Local Bounti's ability to execute on its growth strategy;

•the risk of diseases and pests destroying crops;

•Local Bounti's ability to compete successfully in the highly competitive markets in which it operates;

•Local Bounti's ability to defend itself against intellectual property infringement claims or other litigation;

•Local Bounti's ability to effectively integrate the acquired operations of any CEA or similar operations which it acquires into its existing operations;

•changes in consumer preferences, perception, and spending habits in the food industry;

•the risk that seasonality may adversely impact Local Bounti's results of operations;

•Local Bounti's ability to repay, refinance, restructure, or extend its indebtedness as it comes due;

•Local Bounti's ability to comply with the continued listing requirements of the New York Stock Exchange ("NYSE") or timely cure any noncompliance thereof; and

•the other factors discussed in Item 1A, "Risk Factors" of the Company's most recent Annual Report on Form

10-K and any updates to those factors set forth in Local Bounti's subsequent Quarterly Reports on Form 10-Q

or Current Reports on Form 8-K.

The forward-looking statements contained herein are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward- looking statements. These risks and uncertainties include, but are not limited to, the Risk Factors identified in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 27, 2026.

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements. The forward-looking statements made by us in this Quarterly Report on Form 10-Q speak only as of the date made. Local Bounti undertakes no obligation, other than as required by applicable law, to update or revise its forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

WEBSITE AND SOCIAL MEDIA DISCLOSURE

Investors and others should note that we routinely announce material information to investors and the marketplace using filings with the SEC, press releases, public conference calls, presentations, webcasts, and our website. We also intend to use certain social media channels as a means of disclosing information about Local Bounti and our products to our customers, investors and the public (e.g., @Local Bounti and #LocalBounti on X). While not all of the information that we post to our website or social media accounts is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others to sign up for and regularly follow our social media accounts. 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.

ADDITIONAL INFORMATION

Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to the "Company," "Local Bounti," "we," "us," "our" and similar terms refer to Local Bounti Corporation and its consolidated subsidiaries.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	March 31,		December 31,
	2026		2025
Assets
Current assets
Cash and cash equivalents	$	12,254	$	4,233
Restricted cash	6,517		6,486
Accounts receivable, net	2,865		2,203
Inventory, net	7,193		7,419
Prepaid expenses and other current assets	1,363		1,686
Total current assets	30,192		22,027
Property and equipment, net	353,436		357,427
Finance lease right-of-use assets, net	351		214
Operating lease right-of-use assets, net	39		47
Intangible assets, net	30,150		30,778

Total assets	$	414,168	$	410,493

Liabilities and stockholders' deficit
Current liabilities
Accounts payable	$	14,378	$	11,782
Accrued liabilities	3,596		3,653

Financing obligation	556		762
Operating lease liabilities	32		32
Finance lease liabilities	103		81
Total current liabilities	18,665		16,310
Long-term debt
Principal amount	328,000		312,250
Plus: Debt premium, net of amortization	170,309		172,368
Less: Debt discount, net of amortization	(7,501)		(1,498)

Long-term debt, net	490,808		483,120
Accrued interest, noncurrent	19,010		14,515
Financing obligation, noncurrent	51,381		51,342
Operating lease liabilities, noncurrent	17		25
Finance lease liabilities, noncurrent	271		155
Warrant liabilities	12,037		11,262
Total liabilities	592,189		576,729

Commitments and contingencies (Note 12)



Stockholders' deficit
Common stock, $0.0001 par value, 400,000,000 shares authorized, 22,751,295 and 22,223,800 issued and outstanding as of March 31, 2026 and December 31, 2025, respectively	2		2
Additional paid-in capital	352,304		351,371
Accumulated deficit	(530,327)		(517,609)
Total stockholders' deficit	(178,021)		(166,236)
Total liabilities and stockholders' deficit	$	414,168	$	410,493

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


	Three Months Ended March 31,
		2026		2025
Sales		$	13,337	$	11,605
Cost of goods sold(1)(2)		11,803		10,144
Gross profit		1,534		1,461
Operating expenses:
Research and development(1)(2)		5,715		6,977
Sales and marketing(1)		2,244		2,114
General and administrative(1)(2)		7,509		8,104
Total operating expenses		15,468		17,195
Loss from operations		(13,934)		(15,734)
Other income (expense):
Change in fair value of warrant liabilities		5,243		(3,510)
Interest expense, net		(4,034)		(18,838)
Other income, net		7		407
Net loss		(12,718)		(37,675)
Less: Deemed dividend to preferred stockholders		—		403
Net loss attributable to common stockholders		$	(12,718)	$	(38,078)

Net loss applicable to common stockholders per common share:
Basic and diluted		$	(0.53)	$	(4.32)
Weighted average common shares outstanding:
Basic and diluted		24,125,745		8,808,574

(1) Amounts include stock-based compensation as follows:


	Three Months Ended March 31,
		2026		2025
Cost of goods sold		$	21	$	11
Research and development		28		16
Sales and marketing		43		37
General and administrative		901		526
Total stock-based compensation expense, net of amounts capitalized		$	993	$	590

(2) Amounts include depreciation and amortization as follows:


	Three Months Ended March 31,
		2026		2025
Cost of goods sold		$	2,266	$	1,913
Research and development		2,358		2,686
General and administrative		1,005		1,281
Total depreciation and amortization		$	5,629	$	5,880

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2026 and 2025

(in thousands, except share data)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount
Balance, December 31, 2025	22,223,800	$	2	$	351,371	$	(517,609)	$	(166,236)
Vesting of restricted stock units, net	527,495	—		(99)		—		(99)
Stock-based compensation	—	—		1,032		—		1,032
Net loss	—	—		—		(12,718)		(12,718)
Balance, March 31, 2026	22,751,295	$	2	$	352,304	$	(530,327)	$	(178,021)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount
Balance, December 31, 2024	8,656,122	$	1	$	322,729	$	(423,230)	$	(100,500)
Issuance of common stock for PIPE Investment, net of issuance costs	1,771,586	—		3,477		—		3,477
Deemed dividend to Series A Preferred Stock	—	—		(403)		—		(403)
Vesting of restricted stock units, net	215,260	—		—		—		—
Stock-based compensation	—	—		647		—		647
Net loss	—	—		—		(37,675)		(37,675)
Balance, March 31, 2025	10,642,968	$	1	$	326,450	$	(460,905)	$	(134,454)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Three Months Ended March 31,
	2026		2025
Operating Activities:
Net loss	$	(12,718)	$	(37,675)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	5,001		4,988
Amortization	628		892
Stock-based compensation expense, net of amounts capitalized	993		590
Allowance for expected credit losses	—		(6)
Inventory allowance	(254)		(56)
Loss on disposal of property and equipment	76		14
Change in fair value of warrant liabilities	(5,243)		3,510
Paid-in-kind interest	—		15,293
Amortization of debt premium	(2,059)		—
Amortization of debt issuance costs	94		2,100
Interest expense on financing obligation	163		163

Changes in operating assets and liabilities:
Accounts receivable	(662)		(303)
Inventory	480		(287)
Prepaid expenses and other current assets	323		(207)
Other assets	—		(41)
Accounts payable	2,559		(276)
Operating lease liabilities	—		(1)
Finance lease liabilities	16		16
Accrued liabilities	4,533		1,733

Net cash used in operating activities	(6,070)		(9,553)

Investing Activities:
Purchases of property and equipment	(1,105)		(4,962)
Net cash used in investing activities	(1,105)		(4,962)

Financing Activities:

Proceeds from issuance of Series A preferred stock, net of issuance costs	—		21,457
Proceeds from issuance of common stock, net of issuance costs	—		3,543
Proceeds from issuance of debt	750		10,474
Proceeds from issuance of long-term debt, net of debt issuance costs	14,921		—
Payment of minimum employee taxes withheld upon net share settlement of restricted stock units	(99)		—
Principal payment on financing obligation	(330)		—
Principal payment on finance lease liabilities	(15)		(12)
Net cash provided by financing activities	15,227		35,462
Net change in cash and cash equivalents and restricted cash	8,052		20,947
Cash and cash equivalents and restricted cash at beginning of period	10,719		7,466
Cash and cash equivalents and restricted cash at end of period	$	18,771	$	28,413

Reconciliation of cash, cash equivalents, and restricted cash from the Unaudited Condensed Consolidated Balance Sheets to the Unaudited Condensed Consolidated Statements of Cash Flows


Cash and cash equivalents	$	12,254	$	18,008
Restricted cash	6,517		10,405
Total cash and cash equivalents and restricted cash as shown in the Unaudited Condensed Consolidated Statements of Cash Flows	$	18,771	$	28,413


Non-cash investing and financing activities:

Addition of finance lease obligations and right-of-use assets	$	152	$	—
Purchases of property and equipment included in accounts payable and accrued liabilities	$	58	$	1,788
Stock-based compensation capitalized to property and equipment, net	$	39	$	58
Accrued interest capitalized to debt	$	—	$	15,293
Transaction costs recorded to Preferred Stock included in accounts payable	$	—	$	469
Deemed dividend to preferred stockholders	$	—	$	403

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

LOCAL BOUNTI CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business Description

Description of the Business

Local Bounti Corporation ("Local Bounti" or the "Company") was founded in August 2018 and is headquartered in Hamilton, Montana. The Company produces sustainably grown produce, focused primarily on living lettuce, salad kits, and loose leaf lettuce. The Company is a controlled environment agriculture ("CEA") company that utilizes patented Stack & Flow Technology®, which is a hybrid of vertical and hydroponic greenhouse farming, to grow healthy food sustainably and affordably. Through the Company's CEA process, its goal is to produce environmentally sustainable products in a manner that will increase harvest efficiency, limit water usage, and reduce the carbon footprint of the production and distribution process.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the statements herein.

The Unaudited Condensed Consolidated Financial Statements do not include all of the disclosures required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited Consolidated Financial Statements of the Company for the year ended December 31, 2025 (the "Annual Financial Statements") as filed with the SEC. In the opinion of the Company, the accompanying Unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting of only normal recurring adjustments, necessary to fairly present its financial position as of March 31, 2026, its results of operations for the three months ended March 31, 2026 and 2025, its cash flows for the three months ended March 31, 2026 and 2025, and its stockholders' deficit for the three months ended March 31, 2026 and 2025. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year ending December 31, 2026 or any future period. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2025 was derived from the Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.

Liquidity

The Company has incurred losses and generated negative cash flows from operations since inception. As of March 31, 2026, the Company had an accumulated deficit of $530.3 million and cash, cash equivalents, and restricted cash of $18.8 million.

The Company’s operations and growth strategy require significant capital resources. Expected cash requirements over the next twelve months include operating expenses, capital expenditures, and debt service obligations, including the commencement of quarterly cash interest payments under the Cargill Financial Senior Facility beginning on April 1, 2027. Based on current interest rates, such quarterly interest payments are expected to approximate $1.5 million per quarter.

Management’s operating plan for the next twelve months contemplates continued growth in production volumes and revenues, improvements in operating performance and gross margins, and the pursuit of additional sources of liquidity and capital. These potential sources may include debt financings, equity issuances, amendments to existing financing arrangements, strategic commercial arrangements, including potential long-term customer supply or offtake agreements, and other financing or strategic transactions.

The Company’s ability to execute its operating plan and satisfy its liquidity needs will depend on a number of factors, including operating performance, market conditions, the timing and extent of revenue growth, and the availability of additional capital. There can be no assurance that the Company will be successful in achieving its operating plans or that additional financing or strategic transactions will be available on acceptable terms, or at all.

Recent Accounting Pronouncements

There have been no new accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2026 that are considered to be significant or potentially significant to the Company.

3. Inventory

Inventory, net consisted of the following:


	March 31,		December 31,
	2026		2025
	(in thousands)
Raw materials	$	2,756	$	2,686
Production	5,104		5,655
Finished goods	318		317
Inventory allowance	(985)		(1,239)
Total inventory, net	$	7,193	$	7,419

4. Property and Equipment

Property and equipment, net consisted of the following:


	March 31,		December 31,
	2026		2025
	(in thousands)
Machinery, equipment, and vehicles	$	120,654	$	119,440
Land	19,253		19,253
Buildings and leasehold improvements	262,199		262,058
Construction in progress	4,260		4,660
Less: Accumulated depreciation	(52,930)		(47,984)
Property and equipment, net	$	353,436	$	357,427

Depreciation expense related to property and equipment was approximately $5.0 million and $5.0 million for the three months ended March 31, 2026 and 2025, respectively.

5. Accrued Liabilities

Accrued liabilities consisted of the following:


	March 31,		December 31,
	2026		2025
	(in thousands)
Interest	$	1,806	$	1,613
Construction	12		109
Payroll	983		642
Production	371		272
Professional services	407		239
Other	17		778
Total accrued liabilities	$	3,596	$	3,653

6. Debt

Debt consisted of the following:


	March 31,		December 31,
	2026		2025
	(in thousands)
Senior Facility	$	302,750	$	302,000
Debt premium, net of amortization	170,309		172,368
Convertible note	17,749		8,752




Total long-term debt, net	$	490,808	$	483,120

U.S. Bounti, LLC Convertible Notes and Warrants

2025 Convertible Note and Warrants

On August 1, 2025, the Company entered into a Convertible Note and Warrant Purchase Agreement with U.S. Bounti, LLC, providing for the issuance of (i) a convertible note with an initial principal balance of $10.0 million (the "2025 Note") and (ii) a common stock purchase warrant (the "2025 U.S. Bounti Warrant") pursuant to which U.S. Bounti, LLC has the right to purchase and acquire 550,000 shares of the Company's common stock at an exercise price of $0.125 per share.

The 2025 Note bears interest at a rate of 6.0% per year, commencing on August 1, 2025 with a maturity date of August 1, 2030. Interest will accrue semi-annually on each June 30 and December 31, commencing December 31, 2025 (each, a "2025 Note PIK Interest Payment Due Date"), and will be payable semi-annually in arrears on each 2025 Note PIK Interest Payment Due Date by automatically increasing the principal amount of the 2025 Note by the amount of such interest (with such increased amount thereafter accruing interest as well) on each 2025 Note PIK Interest Payment Due Date ("2025 Note PIK Interest"). From time to time after August 1, 2028, interest may be payable quarterly in arrears in cash on each March 31, June 30, September 30 and December 31, commencing December 31, 2028 (each, a "2025 Note Cash Interest Payment Due Date"), in each case, in an amount equal to interest accrued during the quarter ending on such 2025 Note Cash Interest Payment Due Date, so long as certain conditions are met, including receipt of the prior written approval of Cargill Financial, as sole lender under the Senior Facility, if the senior obligations thereunder have not been paid in full, as further set forth in the 2025 Note.

During the term of the 2025 Note, the 2025 Note will be convertible into shares of the Company's common stock from time to time at the option of U.S. Bounti, LLC, upon delivery on one or more occasions of a written notice to the Company electing to convert all or any portion of the 2025 Note Obligations Amount (as defined in the 2025 Note). The initial conversion price of the Note is $2.50 per share of the Company's common stock (the "2025 Note Conversion Price"). The 2025 Note Conversion Price is subject to adjustment for stock splits, dividends or distributions, recapitalizations or similar transactions. On August 1, 2029, 50% of the 2025 Note Obligations Amount will automatically convert into shares of the Company's common stock at the 2025 Note Conversion Price. The remaining 50% of the 2025 Note Obligations Amount will automatically convert into shares of the Company's common stock at the 2025 Note Conversion Price on the maturity date of the 2025 Note. Notwithstanding the foregoing, however, 50% of the 2025 Note Obligations Amount may be payable in cash on August 1, 2029, with the remaining 50% of the 2025 Note Obligations Amount repaid in cash on the maturity date of the 2025 Note, so long as certain conditions are met as set forth in the 2025 Note, including receipt of the prior written approval of Cargill Financial, as sole lender under the Senior Facility, if the senior obligations thereunder have not been paid in full. Conversion of the full initial principal amount of the 2025 Note would result in the issuance of 4,000,000 shares of common stock if converted at $2.50 per share, which amount is subject to increase by any 2025 Note PIK Interest that is added to the outstanding principal under the terms of the 2025 Note. The 2025 Note is subordinated to obligations under the Company’s Senior Facility. The Company evaluated the conversion feature embedded in the 2025 Note and determined that bifurcation is not required. Although the conversion feature meets the definition of a derivative, it qualifies for the derivative scope exception because it is convertible into a fixed number of shares at a fixed conversion price and meets the other indexation guidance under ASC 815-40-15, and the conversion option is not precluded from equity classification. Accordingly, the conversion feature has not been separately accounted for as a derivative.

On October 14, 2025, the Company’s stockholders approved, for purposes of complying with the rules of the NYSE, (i) the issuance of up to 5,131,871 shares of the Company's common stock upon the conversion of the 2025 Note, and (ii) the issuance of up to 550,000 shares of the Company's common stock underlying the 2025 U.S. Bounti Warrant.

The Company determined that the 2025 U.S. Bounti Warrant requires liability classification under Accounting Standards Codification ("ASC") 815 and will be remeasured at fair value each reporting period, with changes recognized in earnings. Due to certain provisions that could result in the issuance of additional shares upon settlement, the warrant instrument did not meet the fixed-for-fixed criteria necessary for the instrument to be classified and recorded within equity. As a result, the warrant is accounted for at fair value until settled through exercise or expiration and is classified as a derivative liability in the Condensed Consolidated Balance Sheets at March 31, 2026, and December 31, 2025. The 2025 U.S. Bounti Warrant's initial fair value of $1.5 million was recorded as a debt discount to the $10.0 million 2025 Note, and will be amortized to interest expense over the 5-year term of the 2025 Note using the effective interest method. See Note 7, Fair Value Measurements, for a discussion of the method used to determine the fair value of the 2025 U.S. Bounti Warrant.

2026 Convertible Note and Warrants

On March 13, 2026, the Company entered into a Convertible Note and Warrant Purchase Agreement with U.S. Bounti, LLC, providing for the issuance of (i) a convertible note with an initial principal balance of $15.0 million (the "2026 Note") and (ii) a common stock purchase warrant (the "2026 U.S. Bounti Warrant") pursuant to which U.S. Bounti, LLC has the right to purchase and acquire 5,500,000 shares of the Company's common stock at an exercise price of $0.125 per share.

The 2026 Note bears interest at a rate of 7.0% per year, commencing on March 13, 2026 with a maturity date of March 13, 2031. Interest will accrue semi-annually on each June 30 and December 31, commencing December 31, 2026 (each, a "2026 Note PIK Interest Payment Due Date"), and will be payable semi-annually in arrears on each 2026 Note PIK Interest Payment Due Date by automatically increasing the principal amount of the 2026 Note by the amount of such interest (with such increased amount thereafter accruing interest as well) on each 2026 Note PIK Interest Payment Due Date ("2026 Note PIK Interest"). From time to time after March 13, 2029, interest may be payable quarterly in arrears in cash on each March 31, June 30, September 30 and December 31, commencing December 31, 2029 (each, a "2026 Note Cash Interest Payment Due Date"), in each case, in an amount equal to interest accrued during the quarter ending on such 2026 Note Cash Interest Payment Due Date, so long as certain conditions are met, including receipt of the prior written approval of Cargill Financial, as sole lender under the Senior Facility, if the senior obligations thereunder have not been paid in full, as further set forth in the 2026 Note.

During the term of the 2026 Note, the 2026 Note will be convertible into shares of the Company's common stock from time to time at the option of U.S. Bounti, LLC, upon delivery on one or more occasions of a written notice to the Company electing to convert all or any portion of the 2026 Note Obligations Amount (as defined in the 2026 Note). The initial conversion price of the 2026 Note is $2.50 per share of the Company's common stock (the "2026 Note Conversion Price"). The 2026 Note Conversion Price is subject to adjustment for stock splits, dividends or distributions, recapitalizations or similar transactions. On March 13, 2030, 50% of the 2026 Note Obligations Amount will automatically convert into shares of the Company's common stock at the 2026 Note Conversion Price. The remaining 50% of the 2026 Note Obligations Amount will automatically convert into shares of the Company's common stock at the 2026 Note Conversion Price on the maturity date of the 2026 Note. Notwithstanding the foregoing, however, 50% of the 2026 Note Obligations Amount may be payable in cash on March 13, 2030, with the remaining 50% of the 2026 Note Obligations Amount repaid in cash on the maturity date of the 2026 Note, so long as certain conditions are met as set forth in the 2026 Note, including receipt of the prior written approval of Cargill Financial, as sole lender under the Senior Facility, if the senior obligations thereunder have not been paid in full.

Conversion of the full initial principal amount of the 2026 Note would result in the issuance of 6,000,000 shares of common stock if converted at $2.50 per share, which amount is subject to increase by any 2026 Note PIK Interest that is added to the outstanding principal under the terms of the 2026 Note. The 2026 Note is subordinated to obligations under the Company’s Senior Facility. The Company evaluated the conversion feature embedded in the 2026 Note and determined that bifurcation is not required. Although the conversion feature meets the definition of a derivative, it qualifies for the derivative scope exception because it is convertible into a fixed number of shares at a fixed conversion price and meets the other indexation guidance under ASC 815-40-15, and the conversion option is not precluded from equity classification. Accordingly, the conversion feature has not been separately accounted for as a derivative.

The Company determined that the 2026 U.S. Bounti Warrant requires liability classification under ASC 815 and will be remeasured at fair value each reporting period, with changes recognized in earnings. Due to certain provisions that could result in the issuance of additional shares upon settlement, the warrant instrument did not meet the fixed-for-fixed criteria necessary for the instrument to be classified and recorded within equity. As a result, the warrant is accounted for at fair value until settled through exercise or expiration and is classified as a derivative liability in the Condensed Consolidated Balance Sheets at March 31, 2026, and December 31, 2025. The 2026 U.S. Bounti Warrant’s initial fair value of $6.0 million was recorded as a debt discount to the $15.0 million 2026 Note, and will be amortized to interest expense over the 5-year term of the 2026 Note using the effective interest method. See Note 7, Fair Value Measurements, for a discussion of the method used to determine the fair value of the 2026 U.S. Bounti Warrant.

Cargill Senior Facility

Agreements with Cargill Financial

On September 3, 2021, Local Bounti Operating Company LLC and certain subsidiaries entered into a multiple-advance term loan credit agreement (the "Senior Credit Agreement" and "Senior Facility") and a subordinated credit agreement (the "Subordinated Credit Agreement" and "Subordinated Facility" and, together with the Senior Credit Agreement, the "Original Credit Agreements") with Cargill Financial.

As further described below, Local Bounti Operating Company LLC and certain subsidiaries entered into subsequent amendments to the Original Credit Agreements (as so amended, collectively referred to as the "Amended Credit Agreements"). Significant amendments to the Original Credit Agreements are further described below.

Eleventh Amendment to the Senior Credit Agreement

On March 31, 2025, the Company, along with certain of its subsidiaries, entered into the Eleventh Amendment with Cargill Financial to further amend the Original Credit Agreements ("Amended Senior Credit Agreement"). Pursuant to the Eleventh Amendment, (i) $139.0 million of loans outstanding under the Senior Facility, together with all accrued and unpaid interest was cancelled, and (ii) $58.0 million of loans outstanding under the Subordinated Credit Agreement, together with all accrued and unpaid interest, was cancelled, constituting all of the loans and interest outstanding under the Subordinated Credit Agreement. In accordance with the Eleventh Amendment, the aggregate principal amount of loans outstanding under the Senior Facility subsequent to the Eleventh Amendment was $312.0 million. Additionally, in connection with the Eleventh Amendment, the per share exercise price of the Original Warrants (as defined below in Note 7, Fair Value Measurements), was amended from $6.50 to $4.00 per share with an amended expiration date of March 31, 2033.

The Company concluded the Eleventh Amendment met the definition of a troubled debt restructuring as the Company was experiencing financial difficulties and the creditor granted a concession as a result of the reduction of principal, cancellation of accrued interest, modification of interest rates, and the extension of the maturity date under the Original Credit Agreements. Therefore, no gain was recognized on the cancellation of debt. Instead, $181.7 million of cancelled principal and $15.4 million of accrued interest, net of $29.0 million of unamortized debt discount remaining under the original Senior Facility, was recorded as a debt premium (representing the excess of the $480.0 million carrying amount of the Senior Facility and the Subordinated Facility prior to the restructuring over the new $312.0 million principal amount of the Senior Facility subsequent to the Eleventh Amendment) that is amortized as a reduction to interest expense over the 10-year term of the Amended Senior Credit Agreement using the effective interest method.

Twelfth Amendment to the Senior Credit Agreement

In connection with the issuance of the 2025 Note with U.S. Bounti and the U.S. Bounti Warrant (each as defined below), on August 1, 2025, the Company also entered into a Twelfth Amendment to its Senior Credit Agreement with Cargill Financial, pursuant to which $10.0 million of outstanding loans under the Senior Facility were cancelled and discharged. Following the amendment, the aggregate principal amount of loans outstanding under the Senior Facility is $302.0 million.

The Company concluded the Twelfth Amendment met the definition of a troubled debt restructuring as the Company was experiencing financial difficulties and the creditor granted a concession as a result of the reduction of principal. Therefore, no gain was recognized on the cancellation of debt. Instead, $10.0 million of cancelled principal was recorded as a debt premium that will be amortized as a reduction to interest expense over the 10-year term of the Amended Senior Credit Agreement using the effective interest method.

General Provisions of the Senior Facility

Pursuant to the Eleventh Amendment, interest on the Senior Facility will accrue at three-month SOFR plus 2.0%. On April 1, 2031, the interest rate will increase to three-month SOFR plus 6.0%. From January 1, 2027 to December 31, 2029, interest will accrue on $100 million of the Senior Facility and will be due and payable in cash starting the first business day after the close of each calendar quarter, beginning with the quarter commencing April 1, 2027, and continuing through December 31, 2029. Interest accruing on the outstanding principal balance of the Senior Facility in excess of $100 million will, at the Company’s option, either be paid in cash or paid in kind, beginning with the quarter commencing April 1, 2027, and continuing through December 31, 2029.

From January 1, 2030 to March 31, 2031, interest will accrue on up to $200 million of the Senior Facility and will be due and payable in cash starting the first business day after the close of each calendar quarter, beginning with the quarter commencing April 1, 2030, and continuing through March 31, 2031. Interest accruing on the outstanding principal balance of the Senior Facility in excess of $200 million will, at the Company's option, either be paid in cash or paid-in-kind, beginning with the quarter commencing April 1, 2027, and continuing through March 31, 2031.

At all times after April 1, 2031, interest shall be payable only in cash on the first business day after each calendar quarter ends. Additionally, beginning in the fourth quarter of 2027, 50% of the free cash flow generated in the preceding quarter must be used for principal repayment on a quarterly basis. The maturity date of the Senior Facility subsequent to the Eleventh Amendment is December 31, 2035.

The Amended Senior Credit Agreement includes affirmative and negative covenants and events of default, and other requirements and restrictions. The financial covenants under the Amended Senior Credit Agreement, as modified in connection with the 2026 Note and related consent from Cargill Financial, consist of the following:

•Minimum Consolidated Interest Coverage Ratio: Beginning June 30, 2027, the Company must maintain a Consolidated Interest Coverage Ratio of at least 1.00 to 1.00, increasing to 1.25 to 1.00 on June 30, 2028, and thereafter.

•Minimum Liquidity: The Company is required to maintain minimum liquidity of $3.5 million through September 30, 2026 and $2.0 million thereafter.

•Minimum EBITDA: The Company must achieve minimum Consolidated Adjusted EBITDA of $0 for the quarter ending March 31, 2027; $3.0 million for each of the quarters ending December 31, 2027 and March 31, 2028; and $7.0 million for the twelve-month period ending March 31, 2028. Adjusted EBITDA is a non-GAAP financial measure defined as net loss before the impact of interest expense, depreciation, and amortization, and adjusted to exclude stock-based compensation expense, change in fair value of warrant liabilities, and certain other non-core items.

•Current Ratio: Starting June 30, 2027, the Company must maintain a minimum current ratio covenant of at least 1.00 to 1.00, increasing to 1.20 to 1.00 beginning June 30, 2028, and thereafter.

7. Fair Value Measurements

The following table sets forth, by level within the fair value hierarchy, the accounting of the Company’s financial assets and liabilities at fair value on a recurring basis according to the valuation techniques the Company uses to determine their fair value:


	March 31, 2026
	Level 1		Level 2		Level 3
	(in thousands)
Recurring fair value measurements
Assets:
Money market funds	$	18,759	$	—	$	—

Liabilities:
2025 U.S. Bounti Warrant	$	—	$	—	$	628
2026 U.S. Bounti Warrant	$	—	$	—	$	6,292
Cargill Amended Warrants	$	—	$	—	$	5,117

SEC Form 10-Q filed by Local Bounti Corporation