Local Bounti Corporation/DELOCL
Local Bounti Corporation/DE Fair Value Disclosure
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:
December 31, 2025 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Money market funds | $ | 10,531 | $ | — | $ | — | ||||||||||||||
Liabilities: | ||||||||||||||||||||
U.S. Bounti Warrant | $ | — | $ | — | $ | 1,166 | ||||||||||||||
Cargill Amended Warrants | $ | — | $ | — | $ | 10,096 | ||||||||||||||
December 31, 2024 | ||||||||||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||
Recurring fair value measurements | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Money market funds | $ | 7,448 | $ | — | $ | — | ||||||||||||||
Liabilities: | ||||||||||||||||||||
Cargill Amended Warrants | $ | — | $ | — | $ | 6,403 | ||||||||||||||
The fair value of the Company's money market funds is determined using quoted market prices in active markets for identical assets.
Cargill Financial Common Stock Purchase Warrant Amendment
In connection with the Eleventh Amendment, the Company entered into amendments for existing warrants held by Cargill Financial (the "Cargill Warrant Amendments") to amend (i) the Common Stock Purchase Warrant, dated March 28, 2023 (the "Cargill Base Warrant") and (ii) the Warrants to Purchase Common Stock, each issued November 21, 2021 (the "Cargill 2021 Warrants" and, together with the Base Warrant, the "Cargill Original Warrants"; the Cargill Original Warrants as amended, the "Cargill Amended Warrants") to (a) amend the exercise price for the Cargill Original Warrants from $6.50 to $4.00 per share of common stock, (b) extend the expiration date to eight years from the closing of the Eleventh Amendment, and (c) amend and restate the Cargill 2021 Warrants to be on the same form as the Cargill Base Warrant. The Cargill Original Warrants were issued by the Company to Cargill Financial to purchase up to an aggregate of 5,408,145 shares of common stock and the aggregate number of shares is the same for the Cargill Amended Warrants. The change in the per share exercise price did not affect the classification of the Cargill Original Warrants. Therefore, the change in fair value of the Cargill Original Warrants will continue to be remeasured each quarter until the instrument is settled or expires with changes in fair value recorded in "Change in fair value of warrant liabilities" in the Consolidated Statements of Operations.
The fair value of the liability of the Cargill Amended Warrants is determined using a Black-Scholes model. The following table presents changes in the Level 3 fair value measurement for the warrant liability on a recurring basis (in thousands):
Balance as of December 31, 2023 | $ | 7,214 | |||
(811) | |||||
Balance as of December 31, 2024 | $ | 6,403 | |||
Fair value measurement adjustments recognized through change in fair value of warrant liability | 3,693 | ||||
Balance as of December 31, 2025 | $ | 10,096 | |||
The key inputs into the Black-Scholes model used to determine the fair value of the liability of the Cargill Amended Warrants were as follows at their measurement dates:
| December 31, 2025 | December 31, 2024 | ||||||||||
Input | |||||||||||
Share price | $ | 2.14 | $ | 2.07 | |||||||
Risk-free interest rate | 3.9% | 4.4% | |||||||||
Volatility | 119% | 122% | |||||||||
Exercise price | $ | 4.00 | $ | 6.50 | |||||||
Warrant life (years) | 7.3 | 3.2 | |||||||||
Dividend yield | —% | —% | |||||||||
U.S. Bounti Warrant
The U.S. Bounti Warrant entitles the holder to purchase up to 550,000 shares of the Company’s common stock at an exercise price of $0.125 per share, subject to adjustment upon the occurrence of certain events such as stock dividends, stock splits, or other corporate actions. The U.S. Bounti Warrant is exercisable beginning on the date of issuance and expires on August 1, 2035. The Company concluded that the U.S. Bounti Warrant should be classified as a derivative liability pursuant to ASC 815, as the instrument fails the indexation and equity classification guidance. As such, the U.S. Bounti Warrant will be initially measured at fair value. The change in fair value will be remeasured each quarter until the instrument is settled or expires with changes in fair value recorded in "Change in fair value of warrant liability" in the Consolidated Statements of Operations.
The fair value of the liability of the U.S. Bounti Warrant is determined using a Black-Scholes model. The following table presents changes in the Level 3 fair value measurement for the warrant liability on a recurring basis (in thousands):
Balance as of August 1, 2025 (initial measurement) | $ | 1,502 | |||
(336) | |||||
Balance as of December 31, 2025 | $ | 1,166 | |||
The key inputs into the Black-Scholes model used to determine the fair value of the liability of the U.S. Bounti Warrant were as follows at their measurement dates:
| December 31, 2025 | August 1, 2025 (initial measurement) | ||||||||||
Input | |||||||||||
Share price | $ | 2.14 | $ | 2.73 | |||||||
Risk-free interest rate | 4.2% | 4.2% | |||||||||
Volatility | 119% | 123% | |||||||||
Exercise price | 0.125 | $ | 0.125 | ||||||||
Warrant life (years) | 9.6 | 10.0 | |||||||||
Dividend yield | —% | —% | |||||||||
As of December 31, 2025 and 2024, the carrying value of the Company's cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses approximated their respective fair values due to their short-term maturities. Therefore, no unrealized gains or losses were recorded during the periods presented. There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 30, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.