Local Bounti Corporation: Form 10-Q for the period ended Jun 30, 2026

The following discussion should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements, including the Notes to those statements, included elsewhere in this Quarterly Report on Form 10-Q, and the section entitled "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q. As discussed in more detail in the section entitled "Cautionary Note Regarding Forward-Looking Statements," this discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements.

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. 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. 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.

Company Overview

Local Bounti is a controlled environment agriculture ("CEA") company that produces sustainably grown produce, focused primarily 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. 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. Our goal is to grow in an environmentally sustainable manner that not only increases harvest efficiency and enhances unit economics, but also limits water usage and reduces the carbon footprint of the production and distribution process. 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.

Our first facility in Hamilton, Montana (the "Montana Facility") commenced construction in 2019, reached commercial operation by the second half of 2020, and now acts as a corporate headquarters without active commercial operations. The Company is currently evaluating the future commercial use of its Montana facility. Management is exploring various utilization options, including supporting capacity needs within the Company’s existing network as well as potential third-party commercial arrangements. 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"). 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 significantly expanded in 2023. In 2024, we completed construction of two new facilities in Washington and Texas.

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, and H-E-B. 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 leafy greens consist of ready-to-eat blends, value add salad kits, and specialty greens like arugula.

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. 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.

Product Development

Following discussions with a major retailer in the second quarter of 2026, we are relaunching our Single Serve Salad Kit line and agreed with a retailer to a pilot launch throughout the Mid-Atlantic region in approximately 400 stores in the fall of 2026. We expect that a successful launch will be a driver for continued growth of this product line in the future.

Our other core lines continued to build on recent momentum: the family-sized Romano Caesar Salad Kit, following a 75% increase in baseline velocity in the fourth quarter of 2025, launched in an additional distribution center in May 2026, which quickly reached similar velocities achieved by the rest of its distribution network. In addition, we continue to pursue growth in our arugula offering, an area where we see a notable supply gap versus conventional arugula, following successful 2025 launches at our Washington and Texas facilities.

Distribution

Retailers, customers, and consumers are paying closer attention than ever to the safety and traceability of fresh product – and to where and how it is grown. Conversations that used to center on cost and availability now also focus on traceability, water sourcing, and environmental control – all questions our controlled-environment model was built to solve for. This shift does not create demand overnight, but we expect the shift to drive long-term growth as retailers, and ultimately consumers, increasingly choose product based on where and how it is grown and the brand behind it.

We currently service approximately 13,000 retail doors and continue to build on our base of blue-chip retail relationships. We have seen successful distribution growth over the past two quarters, including:

• In the first quarter of 2026, a six-SKU rollout covering more than 250 Harris Teeter stores.
• In the first quarter of 2026, a new large regional retailer operating approximately 160 retail stores.
• In the first and second quarter of 2026, we were awarded bids extending supply arrangements with multiple national retail accounts, spanning key product lines including baby leaf lettuce and organic butter lettuce.
• In July 2026, we launched a new retail partner in the Mid-South region featuring five SKUs across approximately 66 retail stores.
• In August 2026, we launched a new retail partner in the Rocky Mountain region featuring four SKUs across approximately 110 stores, with shipments beginning early in the month.

Together, these wins reflect the strength of our relationships with blue-chip retail partners and their continued confidence in our ability to deliver consistent, high-quality products over the long term.

Commercial Facilities Update

Yield Enhancement

We continue to advance our yield improvement and cost reduction initiatives across our facility network. Tower upgrades were completed at our Georgia, Texas, and Washington facilities during the fourth quarter of 2025, which resulted in enhanced production efficiency and an increase in run-rate yield capacity to reach our highest historical yields and its yields remain at this improved run-rate capacity today.

As mentioned last quarter, we are also making investments in our California facilities to improve operational efficiency. These selective investments are on track and are still expected to deliver as much as a 20% improvement to yields, while simultaneously improving facility operational efficiency and strengthening our position in the living butterhead lettuce market. Across all facilities, we continue to make tangible progress on the cost side of the business. For example, more efficient seeding practices have lowered seed costs by approximately 20% year-over-year, and we expect to continue garnering cost savings across procurement, maintenance, labor efficiency, and freight management across our network.

Capacity Expansion Project

Plans remain in place to build additional capacity across our network of facilities enabled with our patented Stack & Flow Technology. The 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. 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.

Factors Affecting Our Financial Condition and Results of Operations

We have expended, and we expect to continue to expend, substantial resources as we:

• 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; and
• Invest in sales and marketing efforts to increase brand awareness, engage customers, and drive sales of our products

Results of Operations

Three and Six Months Ended June 30, 2026 compared to the Three and Six Months Ended June 30, 2025

The following table sets forth our historical operating results for the periods indicated:

(in thousands)

(in thousands)

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

(in thousands)

(in thousands)

(2) Amounts include depreciation and amortization as follows:

The following sections discuss and analyze the changes in the significant line items in our Unaudited Condensed Consolidated Statements of Operations for the comparative periods in the table above.

Sales

We derive our revenue from the sale of produce grown at our five facilities. Sales increased by $1.7 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 and sales increased by $3.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was due to increased production and growth in sales from our facilities in Georgia, Texas and Washington.

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. As we scale our business, we expect the cost of goods sold to decrease over time as a percentage of sales.

Cost of goods sold increased by $2.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 and increased by $3.8 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase was due to production ramp-up at our facilities in Georgia, Texas and Washington.

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. Our research and development efforts focus on enhancing each facility’s indoor environmental controls, growing recipes, and refining Stack & Flow Technology processes, all aimed at meeting facility design and production yield specifications. 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 arugula and berries.

Research and development costs decreased by $1.9 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 and decreased by $3.2 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease was primarily attributable to the maturation of our production, harvesting, and post-harvest packaging initiatives. As testing and refinement of our commercial-scale Stack & Flow Technology and related production processes at the Washington, Texas, and Georgia facilities progressed toward operational deployment, associated development activities declined.

Sales and Marketing

Sales and marketing expenses consist of employee compensation, including salaries, benefits, and stock-based compensation for our sales and marketing teams, transportation and delivery costs, marketing, and advertising, among others.

Sales and marketing costs increased by $0.5 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase is driven primarily by an increase of $0.4 million in transportation and delivery costs as a result of increased shipments of produce driven by an increase in sales. The remaining difference is due to individually immaterial differences.

Sales and marketing costs increased by $0.6 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase is driven primarily by an increase of $0.4 million in transportation and delivery costs as a result of increased shipments of produce driven by an increase in sales. The remaining difference is due to individually immaterial differences.

General and Administrative

General and administrative expenses consist of employee compensation, including salaries, benefits, and stock-based compensation for our executive, legal, finance, information technology, and human resources teams, expenses for third-party professional services, insurance, computer hardware and software, and amortization of intangible assets, among others.

General and administrative expenses decreased by $0.5 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by a decrease of $0.3 million in salaries, benefits, and payroll-related expenses, a decrease of $0.9 million in stock-based compensation, and a decrease of $0.3 million in depreciation and amortization. This decrease was partially offset by an increase of $0.7 million in professional fees and an increase of $0.3 million in property tax. The remaining difference is due to individually immaterial differences.

General and administrative expenses decreased by $1.1 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by a decrease of $1.4 million in salaries, benefits, and payroll-related expenses, a decrease of $1.3 million in depreciation and amortization, a decrease of $0.5 million in stock-based compensation, and a decrease in insurance of $0.2 million. This decrease was partially offset by an increase of $1.5 million in professional fees and an increase of $0.3 million in property tax. The remaining difference is due to individually immaterial differences.

Change in Fair Value of Warrant Liabilities

The change in fair value of warrant liabilities reflects mark-to-market adjustments related to our outstanding warrants, including the Cargill Amended Warrants, the 2025 U.S. Bounti Warrant, and the 2026 U.S. Bounti Warrant issued in connection with our convertible note financing.

During the comparative periods, fluctuations in fair value were driven primarily by (i) amendments to the Cargill Amended Warrants, including reductions in exercise price and extensions of contractual lives pursuant to the Eleventh Amendment to our credit agreement, (ii) the issuance of the 2026 U.S. Bounti Warrant and the 2025 U.S. Bounti Warrant, and (iii) changes in key valuation inputs, most notably our stock price at each reporting date. As a result of these factors, the Company recognized a net loss of $1.4 million and a net gain of $3.9 million for the three and six months ended June 30, 2026, respectively, compared to a net loss of $1.5 million and a net loss of $5.0 million for the three and six months ended June 30, 2025, respectively.

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, interest recognized per the terms of our financing obligation related to the Montana Facility and the California Facilities, and the interest on the U.S. Bounti, LLC convertible notes. 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 decreased by $0.1 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025 and decreased by $14.9 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease for the six months ended June 30, 2026, compared to the six months ended June 30, 2025 is primarily due to a decrease in the principal amount outstanding under the Senior Facility as well as a reduction in the overall interest rate as a result of the Eleventh Amendment.

Liquidity and Capital Resources

We have incurred losses and generated negative cash flows from operations since our inception. At June 30, 2026, we had an accumulated deficit of $550.1 million and cash and cash equivalents and restricted cash of $10.1 million.

As of June 30, 2026, the principal amount due under our credit facility with Cargill Financial totaled $302.8 million, none of which is classified as current. In addition, the Company has outstanding convertible notes with an initial principal of $25.0 million to U.S. Bounti, LLC, none of which is classified as current. Subsequent to June 30, 2026, the Company issued an additional convertible note to U.S. Bounti, LLC with an initial principal balance of $12.5 million, together with a warrant to purchase 1,000,000 shares of the Company's common stock, which provided $12.5 million of gross proceeds. See Note 13, Subsequent Events, to the Unaudited Condensed Consolidated Financial Statements for further information. The debt agreements with Cargill Financial 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. A failure to comply with the covenants and other provisions of these debt instruments, including any failure to make payments when required, would generally result in events of default under such instruments, which could result in the acceleration of a substantial portion of such indebtedness.

In August 2026, in connection with the issuance of the August 2026 Note, the Company entered into a letter agreement with Cargill Financial pursuant to which Cargill Financial waived an event of default arising from noncompliance with the minimum liquidity covenant, amended the minimum liquidity covenant to require minimum liquidity of $3.5 million through March 31, 2027 and $2.0 million thereafter, and permitted the Company, at its election and subject to certain conditions, to pay interest accrued during the quarters ending March 31, 2027 and June 30, 2027 in kind rather than in cash, as further described in Note 13, Subsequent Events.

The CEA business is capital-intensive. Currently, our primary sources of liquidity and capital resources are cash on hand, cash flows generated from the sale of our products, and proceeds from the August 2026 convertible note financing. Cash expenditures over the next 12 months are expected to include general operating costs for employee wages and related benefits, outside services for legal, accounting, IT infrastructure, and costs associated with growing, harvesting, and selling our products, such as the purchase of seeds, soil, nutrients, and other growing supplies, shipping and fulfillment costs, and facility maintenance costs. In addition, interest on the first $100 million principal balance of the Cargill Senior Facility (as discussed further in the Cargill Loans section below) is scheduled to become payable in cash quarterly beginning April 1, 2027; however, pursuant to the August 2026 letter agreement with Cargill Financial, the Company may elect, so long as no default or event of default has occurred and is continuing, to pay interest accrued during the quarters ending March 31, 2027 and June 30, 2027 in kind. If the Company makes this election for both quarters, the first required quarterly cash interest payment would occur on October 1, 2027, with respect to interest accrued during the quarter ending September 30, 2027. The quarterly cash interest payments are estimated to be approximately $1.5 million each quarter through January 2, 2030, based on the current three-month SOFR rate plus the applicable margin.

We also believe additional cash can be secured through other debt, equity financings, or sale leaseback financing, if necessary. However, there can be no assurance that equity or debt financing will be available to us should we need it or, if available, that the terms will be satisfactory to us and not dilutive to existing shareholders. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in Item 1A, Risk Factors, of the Company's most recent Annual Report on Form 10-K. Our failure to raise capital as and when needed could have significant negative consequences for our business, financial condition, and results of consolidated operations.

Cargill Loans

As of June 30, 2026, a total of $302.8 million of principal was outstanding on the Senior Facility. The Senior Facility is included in "Long-term debt, net" on the Unaudited Condensed Consolidated Balance Sheets. The Eleventh Amendment, as described in Note 6, Debt, to the Unaudited Condensed Consolidated Financial Statements, resulted in a lower principal balance and a reduced interest rate. In addition, a debt premium recorded in connection with the amendment 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.

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; provided that, pursuant to the August 2026 letter agreement with Cargill Financial described in Note 13, Subsequent Events, interest accrued during the quarters ending March 31, 2027 and June 30, 2027 may, at the Company's election and so long as no default or event of default has occurred and is continuing, be paid in kind. 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. As the Company expects to elect to pay interest accrued during the quarters ending March 31, 2027 and June 30, 2027 in kind pursuant to the August 2026 letter agreement, no cash interest payments are expected to be due within the next twelve months, and accrued interest has been classified within “Accrued interest, noncurrent” on the Unaudited Condensed Consolidated Balance Sheets.

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 end. Additionally, beginning in the fourth quarter of 2027, 50% of the free cash flow (as defined in the Eleventh Amendment) 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.

U.S. Bounti, LLC Convertible Notes

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 warrant to purchase 550,000 shares of the Company’s common stock at an exercise price of $0.125 per share. The 2025 Note has a maturity date of August 1, 2030 and bears interest at a rate of 6.0% per year, with interest added to the outstanding principal balance semi-annually through the end of 2028.

On March 13, 2026, the Company entered into an additional 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 warrant to purchase 5,500,000 shares of the Company’s common stock at an exercise price of $0.125 per share. The 2026 Note has a maturity date of March 13, 2031 and bears interest at a rate of 7.0% per year, with interest added to the outstanding principal balance semi-annually.

The 2025 Note and the 2026 Note are each convertible into shares of the Company’s common stock at an initial conversion price of $2.50 per share. Conversion of the full initial principal amounts of the 2025 Note and 2026 Note would result in the issuance of approximately 4.0 million and 6.0 million shares of the Company’s common stock, respectively, in each case subject to increase for any accrued payment-in-kind interest. Each of the 2025 Note and 2026 Note includes automatic conversion features, pursuant to which 50% of the outstanding principal balance converts into shares of common stock on the fourth anniversary of issuance, with the remaining balance converting at maturity, unless certain conditions are met that permit repayment in cash. Both notes are subordinated to obligations under the Company’s Senior Facility.

From time to time after August 1, 2028 for the 2025 Note and March 13, 2029 for the 2026 Note, interest may be payable quarterly in arrears in cash, subject to certain conditions. As no interest payments are required within the next twelve months under either the 2025 Note or the 2026 Note, accrued interest has been classified within “Accrued interest, noncurrent” on the Unaudited Condensed Consolidated Balance Sheets.

Financing Obligations

We have three financing obligations related to sale leaseback transactions that did not qualify for sales treatment of the underlying assets. The following table summarizes future aggregate financing obligation payments by fiscal year:

(in thousands)

Cash Flow Analysis

A summary of our cash flows from operating, investing, and financing activities is presented in the following table:

(in thousands)

Net Cash Used In Operating Activities

Net cash used in operating activities was $13.4 million for the six months ended June 30, 2026 due to a net loss of $32.5 million, a non-cash gain of $3.9 million related to change in fair value of warrant liabilities, and $4.1 million in amortization of debt premium. This was partially offset by non-cash activities of $11.2 million in depreciation and amortization expense, $2.0 million in stock-based compensation expense, net of amounts capitalized, $0.3 million in amortization of debt issuance costs, and $13.1 million net increase of cash from changes in operating assets and liabilities.

Net cash used in operating activities was $18.3 million for the six months ended June 30, 2025 due to a net loss of $59.3 million. This was partially offset by non-cash activities of $15.3 million in paid-in-kind interest, a non-cash loss of $5.0 million related to change in fair value of warrant liability, $10.0 million in depreciation expense, $2.9 million in stock-based compensation expense, net of amounts capitalized, $1.8 million in amortization expense, and $2.1 million in amortization of debt issuance costs.

Net Cash Used In Investing Activities

Net cash used in investing activities was $2.2 million for the six months ended June 30, 2026, due primarily to purchases of construction materials and services, equipment, and other items for the Washington and Texas facilities.

Net cash used in investing activities was $10.9 million for the six months ended June 30, 2025, due primarily to purchases of construction materials and services, equipment, and other items for the Washington and Texas facilities.

Net Cash Provided By Financing Activities

Net cash provided by financing activities was $15.0 million for the six months ended June 30, 2026, primarily driven by $14.9 million of proceeds from the issuance of the U.S. Bounti, LLC convertible note.

Net cash provided by financing activities was $34.9 million for the six months ended June 30, 2025, comprised of $21.4 million of proceeds from the issuance of Series A Preferred Stock, $10.5 million of proceeds from the issuance of debt, and $3.5 million from the issuance of common stock.

Critical Accounting Policies and Estimates

There have been no changes to the Company’s critical accounting policies and estimates from those described under "Critical Accounting Policies and Estimates" in the Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

For more information about recent accounting pronouncements, see Note 2 of the Unaudited Condensed Consolidated Financial Statements, which is incorporated into this Item 2 by reference thereto.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are not required to provide the information under this item.

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has evaluated our disclosure controls and procedures, as such term is defined under Exchange Act Rule 13a-15(e) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material updates to our risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2025, other than as set forth below:

Although our products have not been implicated in the recent Cyclospora outbreak, negative customer and consumer reactions to the outbreak could have a material adverse effect on our results of operations and financial condition.

Since May 2026, the Centers for Disease Control and Prevention, the U.S. Food and Drug Administration, and public health officials in several states have been investigating a multistate outbreak of Cyclospora infections linked to iceberg lettuce. In July 2026, a large lettuce producer initiated a recall of iceberg lettuce sourced from an outdoor growing facility in central Mexico. Cyclospora is a microscopic parasite that can cause gastrointestinal illness in humans and is often associated with water used to irrigate or wash produce grown outdoors.

Local Bounti’s products have not been affected by the current outbreak or related recalls. However, public concern over the outbreak has generated widespread apprehension regarding the consumption of lettuce and other produce, and many customers and consumers have responded by shifting away from purchasing lettuce, regardless of whether it is grown outdoors or indoors or subject to the current recalls. This shift in purchasing behavior, whether or not directly related to our products, could have a material adverse effect on our results of operations and financial condition.