SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations,’’ ‘‘Risk Factors,’’ and our audited financial statements and the related notes thereto included
elsewhere in this report. Our historical results are not necessarily indicative of the results that may be expected in the future.
Statements of Operations Data:
(in thousands, except share and per share data)
Net revenues
Cost of goods sold
Gross profit (loss)
Research and development expenses
Selling, general and administrative expenses
Restructuring expenses(1)
Total operating expenses
Loss from operations
Other expense:
Interest expense
Remeasurement of warrant liability(2)
Other, net
Total other expense, net
Loss before taxes
Income tax expense
Net loss
Net loss per share available to common stockholders—basic
and diluted(3)(4)
Weighted average common shares outstanding—basic
and diluted(4)
Balance Sheet Data:
(in thousands)
Cash and cash equivalents(5)
Working capital(6)
Property, plant and equipment, net
Total assets
Total debt
Stock warrant liability(2)
Convertible preferred stock(7)
Stockholders’ equity (deficit)
Year Ended December 31,
2019
297,897 $
198,141
99,756
20,650
74,726
4,869
100,245
(489)
2018
87,934 $
70,360
17,574
9,587
34,461
1,515
45,563
(27,989)
2017
32,581 $
34,772
(2,191)
5,722
17,143
3,509
26,374
(28,565)
2016
16,182
22,494
(6,312)
5,782
12,672
—
18,454
(24,766)
(3,071)
(12,503)
3,629
(11,945)
(12,434)
9
(380)
—
—
(380)
(25,146)
3
(12,443) $ (29,886) $ (30,384) $ (25,149)
(1,002)
(385)
(427)
(1,814)
(30,379)
5
(1,128)
(1,120)
352
(1,896)
(29,885)
1
(0.29) $
(4.75) $
(5.57) $
(5.51)
$
$
$
42,274,777
6,287,172
5,457,629
4,566,757
As of December 31,
2018
$ 54,271
$ 77,659
$ 30,527
$ 133,749
$ 30,388
— $
1,918
— $ 199,540
$(121,750)
2019
$275,988
$355,897
$ 47,474
$451,923
$ 30,569
$
$
$384,090
2017
$ 39,035
$ 39,819
$ 14,118
$ 66,463
$ 4,915
$
550
$148,194
$ (95,913)
(1) Restructuring expenses include expenses related to the impairment write-off of long-lived assets and legal and other expenses
associated with a dispute with a co-manufacturer. See Note 3, Restructuring, to the Notes to Financial Statements, and Part I,
Item 3, Litigation, included elsewhere in this report.
(2) Reflects remeasurement of warrant liability in connection with IPO in the year ended December 31, 2019. See Note 6,
Debt—Stock Warrant Liability, to the Notes to Financial Statements included elsewhere in this report.
(3) See Note 11, Net Loss Per Share Available to Common Stockholders, to the Notes to Financial Statements included
(4)
elsewhere in this report, for an explanation of the method used to calculate net loss per share available to common
stockholders and the number of shares used in the computation of the per share amounts.
For the years ended December 31, 2018 and 2017, all common stock and per share amounts have been adjusted
retrospectively to reflect the 3-for-2 reverse stock split of our common stock on January 2, 2019. See Note 2, Summary of
Significant Accounting Policies—Reverse Stock Split, to the Notes to Financial Statements included elsewhere in this report.
(5) Reflects net proceeds received by the Company of approximately $252.4 million in connection with the IPO and approximately
$37.4 million in connection with the Secondary Offering in the year ended December 31, 2019. See Note 1, Introduction—
Initial Public Offering and—Secondary Public Offering, to the Notes to Financial Statements included elsewhere in this report.
(6) Working capital is defined as total current assets minus total current liabilities.
(7) Reflects automatic conversion of convertible preferred stock into common stock upon closing of IPO. See Note 7, Stockholders’
Equity (Deficit) and Convertible Preferred Stock, to the Notes to Financial Statements included elsewhere in this report.
To Our Stockholders
On May 2, 2019, Beyond Meat realized the
milestone of a successful Initial Public Offering.
Beneath this highly visible achievement, we
continued to build a strong foundation for future
growth through investments in innovation,
production, and market share initiatives while
generating record net revenues of $298M in
2019, an increase of 239% compared to 2018.
We are just getting started toward the global
opportunity to reshape a $1.4 trillion industry.
We started Beyond Meat in 2009 with a simple
observation. That you can understand meat both
in terms of its animal origin and its composition.
By focusing on the latter, the composition of
meat, and letting go of the former (i.e. insisting
that meat must come from a chicken, cow, or
pig), wide swaths of innovation become
possible, through which we believe we can
summon the Future of Protein™. More than a
decade later, we remain fascinated with what we
see as a unique 1 to 4 ratio: by applying a
singular focus on changing the source of the
meat at the center of our plates from animals to
plants1, we can be of service to human health,
climate change mitigation, natural resource
conservation, and animal welfare.
Momentum
2019 was a year of momentum for us, one in
which we saw the Beyond Meat brand converge,
and at times morph, with a broader movement
toward plant-based eating. We believe two
primary factors are driving this trend. One,
consumers are increasingly aware of the
benefits of plant-based eating, with universities,
institutions, non-governmental organizations,
and media awarding significant attention to the
health, environmental, and animal welfare
implications of dietary choices. Two, though we
are the first to acknowledge that we have miles
left to travel before we perfectly build meat from
plants, we are getting closer and with each
improvement in quality, we are making it easier
for consumers to integrate plant-based meat into
their diet.
Throughout 2019, as is our commitment, we
maintained an intense focus on delighting
consumers and customers alike, striving to
realize our brand promise of enabling people to
Eat What You Love™ while enjoying the
benefits of plant-based eating. The progress we
made is demonstrated by compelling metrics
and partnerships throughout the year.
In U.S. retail, Beyond Meat saw velocity
growth of 106%, grew 26 times faster than
the largest competitive brand in the
category, and saw an 830 basis point
increase in market share over 2018.2 We
were pleased to cap off the year by owning
all four of the best-selling SKUs in
plant-based meats over the 12-week period
ended December 29, 2019, even as
competitors entered the market.3
In foodservice, we announced new or
expanded relationships with quick-service
restaurant partners, including some of the
largest and most iconic brands in the
industry.
According to NPD data for the fourth quarter
of 2019, Beyond Meat was not only the
largest plant‑based meat brand in U.S.
foodservice, but also the fastest-growing
brand, with dollar sales up 180% year-over-
year, representing a growth rate almost two
times higher than the closest competitor.4
1 Namely sourcing the amino acids, lipids, trace minerals and
vitamins, and water comprising meat directly from plants
versus running plants and water through an animal.
2 SPINS data for total U.S. multi-outlet, natural and specialty
channels for the 52-week period ended December 29, 2019.
3 SPINS data for total U.S. multi-outlet, natural and specialty
channels for the 12-week period ended December 29, 2019.
4 NPD data for the three months ended December 2019.
Represents ~80% of broadline distribution but excludes
direct delivery customers and Cash N Carry.
Collectively, across retail and foodservice,
we grew our distribution footprint in 2019
from approximately 30,000 outlets at the
time of our IPO to roughly 77,000 by
year-end and increased our international
reach to more than 65 countries worldwide.
A Big Prize and A Long View
With this type of phenomenal growth, it is
possible to lose sight of our actual vantage
point. As noted earlier, we are in fact in our
infancy, scratching only the surface of a protein
market that we believe will see significant
change in the coming decades. Our impressive
retail wins occurred with only six SKUs in the
marketplace. Moreover, our household
penetration was only 3.6%, while unaided brand
awareness registered at just 21%.5 In
foodservice, our U.S. distribution is only roughly
4% percent of the total number of domestic
restaurants. And finally, with regard to our
international distribution, we have only tested
the waters of the economies we are in and are
excited about this future growth channel.
Given our current position at the base of what
we see as a steep and long growth curve, we
can take no other view than that of the
long-term. This perspective runs throughout our
strategy, even if we risk disappointing those who
prefer to focus on short-term metrics. We
believe that this orientation should produce the
greatest amount of value for our stockholders
over the long-term and permeates our choices
across innovation, infrastructure, marketing, and
partnership development decisions. Our goal is
to be and remain the market leader, growing the
category and our business through confident,
forward-looking investments toward our future.
Innovation
We will continue to invest in innovation across
products, platforms, and long-term pricing goals.
In 2019, we further invested in the Beyond Meat
Rapid and Relentless Innovation (BMRRI)
Program at our innovation facility, the Manhattan
Beach Project. As the facility name suggests,6
the goal of BMRRI is to innovate with a sense of
urgency and investment commensurate with the
global economic opportunity and societal
challenges we are chasing.
We consider innovation broadly. In our products,
we seek to constantly close the gaps between
our plant-based meats and their animal protein
equivalent. In our technology platforms, we are
not dogmatic about a given approach. We
actively search for that which can carry us faster
toward a perfect build of meat from plants while
refusing GMO or artificial ingredients. And in
pricing, we set a goal to underprice animal
protein in at least one of our segments of beef,
pork, and poultry within the next four years. This
will require us to innovate across the supply
chain, our own production processes, and our
pricing systems with key customers.
Operations
We will continue to expand operations in the
U.S. and internationally while investing in people
and processes necessary to grow and operate a
global protein company. In 2019, we added new
co-manufacturing partners and significantly
increased capacity within our internal production
facilities in Columbia, Missouri. We stood up our
new Center for Commercialization to ensure that
even as we grow as an organization, we are
streamlining and quickening cross-functional
collaboration from product ideation to placement
on the shelf or menu. Internationally, through our
co-manufacturing partner Zandbergen, we broke
ground on a new facility in the Netherlands as
an initial production footprint in the European
Union, and opened operations with a new
co-manufacturing partner in Quebec, Canada.
On the ingredient front, we extended our supply
agreement with Roquette by three years, locking
in availability of greater volume, and qualified
two additional pea protein suppliers. As
consumers will notice, we are increasingly
integrating other proteins into our products
including mung bean, rice, and sunflower, and
remain committed to developing a full bench of
protein feedstocks. We believe this bench is
important with regard to functionality in product
development, consumer interest in diversity of
feedstocks, supply chain de-risking and
ultimately pricing power, among other factors.
Lastly, in operations, we expect to make
strategic investments in each of our growth
regions to have production within close proximity
of our customers and consumers, with an
emphasis on vertical integration of production to
drive cost reduction.
5 Based on January 2020 survey of 1,001 people.
6 We named our innovation center The Manhattan Beach
Project in reference to the Manhattan Project of the Second
World War. As with the Manhattan Project, it is our goal to
bring together the best and brightest scientists, engineers,
and managers, align them around a clear and compelling
goal, properly resource them, and deliver significant
innovation under tight deadlines.
Partnerships
We will continue to invest in our partnerships
with quick-service restaurants. Throughout the
partnerships we launched or expanded in 2019,
it is our goal to be the customers’ innovation
partner not for a year, or a single product line,
but for the long-term across their plant-based
meat objectives. This level of commitment to our
customers requires significant upfront
investment, an enthusiasm for collaborating
across our organization in service to their
consumer insights and product needs, and a
capabilities bandwidth to handle multiple,
complex projects for each customer. Making this
level of investment in a customer requires not
only confidence in the particular partner, but in
our own ability to continually innovate and
surpass competitors in servicing the needs of
the customer. We have this confidence and are
able to make bold investments now to support
long-term strategic partners who share our
passion for delighting the consumer.
Our Story, Ingredients, Process, and
Health
We will continue to invest in telling our story
about taking something consumers love—
meat—and through innovation, making it better.
As we did in 2019, we will tell the story of how
diet can play a powerful role in helping people to
be and perform at their best, to Go Beyond®
their own expectations, including stories of the
many professional athletes and celebrities who
have joined our company as investors and
advocates. And importantly, we will tell our story
around ingredients and process, decisions we’ve
made over the years in dialogue with the
consumer. While we ask our scientists and
engineers what can science do, we also ask the
consumer what should science do. And here’s
what they’ve told us: They’ve made it very clear
that they don't want GMOs in their food, they
don’t want artificial ingredients and they want
shorter, familiar ingredient lists. We agree with
this perspective, which informs our product
development guardrails, and believe that nature
has provided all that is needed to bypass the
animal and build meat directly from plants.
On process, as we have often said, we are
proud of the systems we employ to align plant
protein into a muscle structure. We have
received criticism, some of it funded by
incumbent industry groups, that our products are
“processed.” Our response is threefold. One, we
are reminded that the word “process” is in fact
neutral, and has the following definition: “a
series of actions or steps taken in order to
achieve a particular end.”7 Two, the main steps
in our underlying process—heating, cooling, and
pressure—are basic forces that shaped and
inform much of our natural world. Three, the
question is not whether our meat is processed or
not, but rather which process the consumer
prefers. We run plant material through heating,
cooling and pressure, along with other mixing
and forming steps, to produce a piece of meat.
This should be juxtaposed with the process of
feeding plant material to animals to form and
then harvest muscle as meat at an industrial
scale. Both involve a series of steps. It is up to
the consumer to decide which process they are
more comfortable with, and it has been our
policy that the consumer is welcome to come to
our facilities in Missouri to learn about our
process.
Finally, a word on health. In 2019, we continued
to research and qualify new, plant-based inputs
that can deliver health advantages, and we are
raising the profile of our work in this area. First
and foremost, we will continue to articulate the
health advantages of our products, including
such wins as more protein, less saturated and
total fat, no cholesterol, and the absence of
carcinogenic and other cardiovascular concerns
that have been associated with certain animal
proteins.8 Second, we have joined and will be
active with Partnership for a Healthier America,
an organization founded to bring lasting
systemic changes that increase healthy choices
in the food supply. Third, we are creating an
advisory board of leading experts in health and
medicine to ensure that we have access to the
latest thinking and peer-reviewed research on
health, nutrition, and ingredients. These
initiatives will not only inform our research and
development but will also help the consumer
better understand the health benefits of our
product lines.
7 As defined by Lexico, powered by Oxford; see
www.lexico.com.
8 For example, at a national QSR, the Beyond Breakfast
Sausage™ has more protein and iron, 44% less saturated
fat, 50% less total fat, and 37% less sodium than the chain’s
existing pork breakfast sausage, whereas compared to
80/20 ground beef, the Beyond Burger® has more protein
and iron and 35% less saturated fat.
Forward-Looking Statements
This stockholder letter contains forward-looking statements
within the meaning of the federal securities laws that involve
risks and uncertainties concerning Beyond Meat, Inc.’s
business, products, and financial results. We have based
these forward-looking statements largely on our current
opinions, expectations, beliefs, plans, objectives,
assumptions and projections about future events and
financial trends affecting the operating results and financial
condition of our business. Forward-looking statements
should not be read as a guarantee of future performance or
results, and will not necessarily be accurate indications of
the times at, or by, which such performance or results will be
achieved. Forward-looking statements are based on
information available at the time those statements are made
and/or management’s good faith belief as of that time with
respect to future events, and are subject to risks and
uncertainties that could cause actual performance or results
to differ materially from those expressed in or suggested by
the forward-looking statements. Important factors that could
cause such difference include the risks discussed in Part I,
Item 1A, “Risk Factors,” included in our 2019 Form 10-K,
and those discussed in other documents we file from time to
time with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date of this
stockholder letter. You should not put undue reliance on any
forward-looking statements. We assume no obligation to
publicly update or revise any forward-looking statements
because of new information, future events, changes in
assumptions or otherwise, except to the extent required by
applicable laws. If we update one or more forward-looking
statements, no inference should be drawn that we will make
additional updates with respect to those or other
forward-looking statements.
Moving Forward in 2020
We believe that 2019 and our successful IPO
served as an important launching pad for our
growth ambitions and trajectory. We are
confident that our products and approach
resonate with a changing consumer, and see
our opportunity as expansive within a growing
global market for protein.
To capitalize on our position in 2020, we intend
to: (a) continue to recruit and retain what we
believe to be the most talented and hardest
working scientists, engineers, and managers,
and keep them oriented toward our true north of
building meat directly from plants; (b) push
ourselves to make obsolete our current
products, replacing them with new and better
iterations while innovating on technology
platforms and commercialization processes;
(c) strengthen our production network here in
the United States and abroad, including in the
European Union and Asia; (d) invest and
engage with existing and new partnerships
across channels; (e) develop and press our
supply chains for growth, including a focus on
diversity of suppliers and feedstocks; and
(f) along with our team of Go Beyond® athlete
and celebrity investors and advocates, connect
with, listen to, celebrate, and hopefully delight
the consumer.
As we prepare this letter, the COVID-19
pandemic is tragically impacting lives around the
world. We are joining in the global response to
this crisis, and have made a Feed A Million+
pledge. Together with our Go Beyond®
community, we are donating Beyond Meat
products to food banks, hospitals, and
community centers, among others. Our hope is
that these donations will make at least a small
contribution to well-being during this challenge,
and we are grateful for the selfless efforts of all
first responders, healthcare professionals,
volunteers, and others who are fighting on the
frontlines.
As we look back on 2019, we at Beyond Meat
are thankful for the position we are in today, for
the tremendous potential of this enterprise, and
most importantly, for our consumers and
customers, teammates, and stockholders for
their belief in our vision and support of our work.
Sincerely,
Ethan Brown
Founder, President & Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
OR
□ 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: 001-38879
BEYOND MEAT, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
26-4087597
(I.R.S. Employer
Identification No.)
119 Standard Street
El Segundo, CA 90245
(Address, including zip code, of principal executive offices)
(866) 756-4112
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.0001 par value
Trading Symbol(s)
BYND
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes □ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes □ No ☒
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 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
Non-accelerated filer
□
☒
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-2 of the Exchange Act). Yes □ No ☒
As of June 28, 2019, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the
closing sales price of the registrant’s common stock as reported on the Nasdaq Global Select Market on such date, was $7.2 billion.
As of March 18, 2020, the registrant had 61,845,096 shares of common stock, $0.0001 par value per share, outstanding.
Portions of the registrant’s definitive proxy statement relating to its 2020 Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days after the end of the fiscal year ended December 31, 2019 are incorporated herein by reference in Part III where
indicated.
DOCUMENTS INCORPORATED BY REFERENCE
[THIS PAGE INTENTIONALLY LEFT BLANK]
Note Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the federal securities laws. We have
based these forward-looking statements largely on our current opinions, expectations, beliefs, plans, objectives,
assumptions and projections about future events and financial trends affecting the operating results and
financial condition of our business. Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the times at, or by, which such
performance or results will be achieved. Forward-looking statements are based on information available at the
time those statements are made and/or management’s good faith belief as of that time with respect to future
events, and are subject to risks and uncertainties that could cause actual performance or results to differ
materially from those expressed in or suggested by the forward-looking statements. Important factors that could
cause such differences include, but are not limited to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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•
estimates of our expenses, future revenues, capital expenditures, capital requirements and our needs for
additional financing;
our ability to effectively manage our growth;
the impact of adverse and uncertain economic conditions in the U.S. and international markets;
the effects of global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as
the recent coronavirus (COVID-19) pandemic, including on our supply chain, the demand for our
products, our ability to expand and produce in new geographic markets or the timing of such expansion
efforts, and on overall economic conditions and consumer confidence and spending levels;
our estimates of the size of our market opportunities;
our ability to effectively expand our manufacturing and production capacity;
our ability to accurately forecast demand for our products and manage our inventory;
our ability to successfully enter new geographic markets, manage our international expansion and comply
with any applicable laws and regulations;
the effects of increased competition from our market competitors and new market entrants;
the success of our marketing initiatives and the ability to grow brand awareness, maintain, protect and
enhance our brand, attract and retain new customers and grow our market share;
our ability to attract, maintain and effectively expand our relationships with key strategic restaurant and
foodservice partners;
our ability to attract and retain our suppliers, distributors, co-manufacturers and customers;
our ability to procure sufficient high quality, raw materials to manufacture our products;
the availability of pea protein that meets our standards;
our ability to diversify the protein sources used for our products;
the volatility associated with ingredient and packaging costs;
real or perceived quality or health issues with our products or other issues that adversely affect our brand
and reputation;
changes in the tastes and preferences of our consumers;
our ability to accurately predict consumer taste preferences, trends and demand and successfully
introduce and commercialize new products and improve existing products, including in new geographic
markets;
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significant disruption in, or breach in security of our information technology systems and resultant
interruptions in service and any related impact on our reputation;
the attraction and retention of qualified employees and key personnel and our ability to maintain our
corporate culture as we continue to grow;
the effects of natural or man-made catastrophic events particularly involving our or any of our co-
manufacturers’ manufacturing facilities or our suppliers’ facilities;
the impact of marketing campaigns aimed at generating negative publicity regarding our products, brand
and the plant-based industry category;
the effectiveness of our internal controls;
changes in laws and government regulation affecting our business, including the U.S. Food and Drug
Administration (“FDA”) and the U.S. Federal Trade Commission (“FTC”) governmental regulation, and
state, local and foreign regulation;
changes in laws, regulations or policies of governmental agencies or regulators relating to the labeling of
our products, including, in the United States, new federal or state legislation affecting plant-based meat
that could impact how we name our products or our brand name;
the financial condition of, and our relationships with our suppliers, co-manufacturers, distributors,
retailers, and restaurant and foodservice customers, and their future decisions regarding their
relationships with us;
the ability of our suppliers and co-manufacturers to comply with food safety, environmental or other laws
or regulations;
seasonality;
the sufficiency of our cash and cash equivalents to meet our liquidity needs and service our indebtedness;
economic conditions and the impact on consumer spending;
outcomes of legal or administrative proceedings;
our, our suppliers’ and our co-manufacturers’ ability to protect our proprietary technology, intellectual
property and trade secrets adequately; and
the risks discussed in Part I, Item 1A, “Risk Factors,” included elsewhere herein, and those discussed in
other documents we file from time to time with the Securities and Exchange Commission (“SEC”).
In some cases, you can identify forward-looking statements by the use of words such as “believe,” “may,”
“will,” “will continue,” “could,” “will likely result,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “predict,”
“project,” “expect,” “potential” and variations of these terms and similar expressions, or the negative of these
terms or similar expressions. These forward-looking statements are based on our current expectations and
assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially
from those anticipated or implied in the forward-looking statements.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the
date of this report. You should not put undue reliance on any forward-looking statements. We assume no
obligation to publicly update or revise any forward-looking statements because of new information, future
events, changes in assumptions or otherwise, except to the extent required by applicable laws. If we update
one or more forward-looking statements, no inference should be drawn that we will make additional updates
with respect to those or other forward-looking statements.
ii
TABLE OF CONTENTS
Page
Part I
Item 1. Business ............................................................................................................................
Item 1A. Risk Factors ....................................................................................................................
Item 1B. Unresolved Staff Comments ...........................................................................................
Item 2. Properties ..........................................................................................................................
Item 3. Legal Proceedings .............................................................................................................
Item 4. Mine Safety Disclosures ....................................................................................................
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ...................................................................................................
Item 6. Selected Financial Data .....................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations ..................................................................................................................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...........................................
Item 8. Financial Statements and Supplementary Data ................................................................
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure ..................................................................................................................................
Item 9A. Controls and Procedures ................................................................................................
Item 9B. Other Information ............................................................................................................
Part III
Item 10. Directors, Executive Officers and Corporate Governance ...............................................
Item 11. Executive Compensation .................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ...................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence ................
Item 14. Principal Accounting Fees and Services ..........................................................................
Part IV
Item 15. Exhibits, Financial Statement Schedules .........................................................................
Item 16. Form 10-K Summary .......................................................................................................
Signatures .....................................................................................................................................
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PART I
ITEM 1. BUSINESS.
Overview
Beyond Meat, Inc., a Delaware corporation (including its subsidiaries unless the context otherwise requires,
“Beyond Meat,” “we,” “us,” “our” or the “Company”), is one of the fastest growing food companies in the United
States, offering a portfolio of revolutionary plant-based meats. We build meat directly from plants, an innovation
that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based
meat products while enjoying the nutritional and environmental benefits of eating our plant-based meat
products. Our brand commitment, “Eat What You Love,” represents a strong belief that by eating our plant-
based meats, consumers can enjoy more, not less, of their favorite meals, and by doing so, help to address
concerns related to human health, climate change, resource conservation and animal welfare. The success of
our breakthrough innovation model and products has allowed us to appeal to a broad range of consumers,
including those who typically eat animal-based meats, positioning us to compete directly in the $1.4 trillion
global meat industry.
To capture this broad market opportunity, we have developed three core plant-based product platforms that
align with the largest meat categories globally: beef, pork and poultry. The primary components of animal-based
meat—amino acids, lipids, carbohydrates, trace minerals, and water—are not exclusive to animals and are
plentiful in plants. We create our plant-based products using proprietary scientific processes that determine the
architecture of the animal-based meat we are seeking to replicate and then we assemble it using plant-derived
amino acids, lipids, carbohydrates, trace minerals and water. We are focused on continuously improving our
products so that they are, to the human sensory system, indistinguishable from their animal-based counterparts.
Our flagship product is the Beyond Burger, the world’s first 100% plant-based burger merchandised in the
meat case of grocery stores in the United States. The Beyond Burger is designed to look, cook and taste like a
traditional beef burger. We also sell a range of other plant-based meat products, including Beyond Sausage,
Beyond Beef, Beyond Breakfast Sausage, and Beyond Beef Crumbles, as well as Beyond Fried Chicken and
Beyond Meatball, which are currently sold to certain quick service restaurant (“QSR”) partners. All of our
products are antibiotic-free, hormone-free, GMO-free and are certified Kosher and Halal, and all of our products
other than Beyond Fried Chicken and Beyond Meatball are gluten-free. As of December 31, 2019, our products
were available in approximately 77,000 retail and restaurant and foodservice outlets in more than 65 countries,
across mainstream grocery, mass merchandiser, club and convenience store, and natural retailer channels,
direct to consumer, and various food-away-from-home channels, including restaurants, foodservice outlets and
schools. We enjoy a strong base of well-known retail and foodservice customers that we expect will continue to
grow.
Research, development and innovation are core elements of our business strategy, and we believe they
represent a critical competitive advantage for us. Through our Beyond Meat Rapid and Relentless Innovation
Program, our team of scientists and engineers focuses on making continuous improvements to our existing
product formulations and developing new products across our plant-based beef, pork and poultry platforms. Our
state-of-the-art Manhattan Beach Project Innovation Center in El Segundo, California brings together leading
scientists from chemistry, biology, material science, food science, and biophysics disciplines who work together
with process engineers and culinary specialists to pursue our vision of perfectly building plant-based meat.
We continue to experience strong sales growth over prior periods. Net revenues increased to $297.9 million
in 2019 from $87.9 million in 2018 and $32.6 million in 2017, representing a 202% compound annual growth
rate. The Beyond Burger accounted for approximately 64%, 70% and 48% of our gross revenues in 2019, 2018
and 2017, respectively. We believe that sales of the Beyond Burger will continue to constitute a significant
portion of our revenues, income and cash flow for the foreseeable future. In 2019, gross revenues from the
Beyond Burger, all Beyond Sausage flavors, Beyond Beef and Beyond Beef Crumbles were approximately
64%, 23%, 8% and 5%, respectively, compared to approximately 70%,12%, 0% and 9%, respectively, in 2018.
We have generated losses since inception. Net loss in 2019, 2018, and 2017 was $12.4 million, $29.9 million,
and $30.4 million, respectively, as we invested in innovation and growth of our business. Going forward, we
intend to continue to invest in innovation, supply chain capabilities, manufacturing and marketing initiatives as
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we believe the demand for our products will continue to accelerate across both retail and restaurant and
foodservice channels as well as internationally.
Our Mission
We are a mission-driven business with long-standing core values. We strive to operate in an honest,
socially responsible and environmentally sustainable manner and are committed to help solve the major health
and global environmental issues which we believe are caused by an animal-based protein diet and existing
meat industry practices. We believe our authentic and long-standing commitment to these causes better
positions us to build loyalty and trust with current consumers and helps attract new ones. Our corporate culture
embodies these values and, as a result, we enjoy a highly motivated and skilled work force committed to our
mission and our enterprise.
The Beyond Meat Strategic Difference
•
Unique Approach to the Product
We employ a revolutionary and unique approach to create our products, with a goal of delivering the same
satisfying taste, aroma and texture as the animal-based meats we seek to replicate. In our Manhattan Beach
Project Innovation Center, our scientists and engineers work to continuously improve our products to replicate
the sensory experience of animal-based meat. Through our investment in innovation, we have grown our
portfolio to include new products including Beyond Beef, Beyond Breakfast Sausage, Beyond Fried Chicken
and Beyond Meatball. In 2019, we also introduced a new version of the flagship Beyond Burger, designed to
have a meatier taste and texture. Each product is designed to not only closely replicate the taste and sensory
experience of its animal protein equivalent, but to also provide the nutritional and environmental benefits of
plant-based meat.
We start by analyzing the composition and design of relevant animal-based meats at the molecular and
structural level. The primary components, other than water, comprising animal-based meats are amino acids,
lipids, carbohydrates, and trace minerals, which are not exclusive to animals and are present in abundance in
plants. The amino acids that form the proteins which represent the muscle of animal-based meat can be
sourced from plants. We use proteins primarily extracted from yellow peas, as well as mung beans, fava beans,
brown rice and other plant stock, through a physical process to separate protein and fiber. We then apply
heating, cooling and pressure at rapid and varied intervals to weave the protein into a fibrous structure to create
woven protein. Once we have the woven protein, we then add the remaining ingredients, such as water, lipids,
carbohydrates, flavor, color, trace minerals, and vitamins.
We operate approximately 90,000 square feet of production space in two facilities in Columbia, Missouri
where we produce our woven protein. This woven protein is then converted according to our formulas and
specifications into a packaged product by our network of co-manufacturers. Our proprietary blends of flavor
systems and binding systems are also assembled in our facilities in Columbia, Missouri and shipped to our co-
manufacturers.
This capital efficient production model allows us to scale more quickly to service the rapidly increasing
demand for our products. We plan to expand our own internal production facilities domestically and abroad to
produce our woven proteins, blends of flavor systems and binding systems, and potentially convert our woven
proteins into packaged products, while forming additional strategic relationships with co-manufacturers.
•
Unique Approach to the Market
Our breakthrough product innovations have enabled a paradigm shift in both marketing and target audience
—tapping into the enthusiastic pull from mainstream consumers for delicious and satisfying, yet better-for-you
plant-based meats. This approach is summed up in our brand promise—“Eat What You Love.” When we
launched our flagship Beyond Burger in 2016, we approached the marketplace in an unprecedented way.
Instead of marketing and merchandising the Beyond Burger to vegans and vegetarians, we requested that the
product be sold in the meat case at grocery retailers where meat-loving consumers are accustomed to shopping
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for center-of-plate proteins. We believe merchandising in the meat case in the retail channel has helped drive
greater brand awareness with our end consumers.
Reflecting the strength and value of the Beyond Meat brand to its partners, many of our restaurant and
foodservice customers choose to prominently feature our brand name on their menu and within item
descriptions, in addition to displaying Beyond Meat branded signage throughout the venue. We believe that we
have established our brand as one with “halo” benefits to our partners as evidenced by the speed of adoption
by strategic partners. Our foodservice business not only functions as a form of paid trial for our products,
helping to drive additional retail demand, but also creates even greater brand awareness for Beyond Meat
through the on-menu and in-store publicity we receive.
•
Unique Approach to Our Brand
Our mission is to create nutritious plant-based meats that taste delicious and deliver a consumer
experience that is indistinguishable from that provided by animal-based meats. We believe our brand
commitment, “Eat What You Love,” encourages consumers to eat more, not less, of the traditional dishes they
enjoy by using our products, while feeling great about the health, sustainability, and animal welfare benefits
associated with consuming plant-based protein. Our approach of bringing to market the best innovations each
year is a strategy that engages the consumer and provides feedback from which we iterate and improve. This
approach is one of the reasons we worked for and obtained Non-GMO Project Verified certification for all of our
current U.S. retail products.
Our brand awareness has been driven by strong social marketing. Consumers and the media are
enthusiastic about the concept of authentically meaty tasting plant-based proteins. The viral nature of our
marketing and brand-building has been enhanced by both the network of brand ambassadors we have
developed throughout the United States and abroad, and our strong following by celebrities from the worlds of
sports and entertainment who help promote the benefits of a plant-based diet and the Beyond Meat brand.
We launched the GO BEYOND marketing campaign in February 2019, which seeks to mobilize our
ambassadors to help raise brand awareness and make our products aspirational. We are focused on scaling
the GO BEYOND campaign to new levels globally, using celebrity activation to welcome consumers to the
brand, define the category and remain its leader.
Our Industry and Market Opportunity
We operate in the large and global meat industry, which is comprised of fresh and packaged animal-based
meats for human consumption. According to data from Fitch Solutions Macro Research, the meat industry is the
largest category in food and in 2017 generated estimated sales across retail and foodservice channels of
approximately $270 billion in the United States and approximately $1.4 trillion globally. We believe our revenue
growth will allow us to capture an increased share of the broader U.S. meat category, supported by a number of
key drivers, including the authentic comparability and sensory experience of our products to their animal-based
meat equivalents, continued mainstream acceptance of our products with the traditional animal-based meat
consumer, heightened consumer awareness of the role that food and nutrition, particularly plant-based foods,
play in long-term health and wellness, and growing concerns related to the negative environmental and animal-
welfare impacts of animal-based meat consumption. As a market leader in the plant-based meats category, we
believe we are well-positioned to capture and drive a significant amount of this category growth.
Our Competitive Strengths
We believe that the following strengths position us to generate significant growth and pursue our objective
to become a leader in the global meat category.
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• Dedicated Focus on Innovation
We invest significant resources in our innovation capabilities to develop plant-based meat alternatives to
popular animal-based meat products. Our innovation team, comprised of approximately 104 scientists,
engineers, researchers, technicians and chefs, as of December 31, 2019, has delivered several unique plant-
based meat breakthroughs, as well as continuous improvements to existing products. We are able to leverage
what we learn about taste, texture, aroma and appearance across our plant-based beef, pork and poultry
platforms and apply this knowledge to each of our product offerings. In our Manhattan Beach Project Innovation
Center, we have a strong pipeline of products in development, and can more rapidly transition our research
from benchtop to scaled production. As our knowledge and expertise deepens, our pace of innovation is
accelerating, allowing for reduced time between new product launches. We expect this faster pace of product
introductions and meaningful enhancements to existing products to continue as we innovate within our core
plant-based platforms of beef, pork and poultry.
• Brand Mission Aligned with Consumer Trends
We believe our brand is uniquely positioned to capitalize on growing consumer interest in great-tasting,
nutritious, convenient, higher protein content and plant-based foods. We have also tapped into growing public
awareness of major issues connected to animal protein, including human health, climate change, resource
conservation and animal welfare. Simply put, our products aim to enable consumers to “Eat What You Love”
without the downsides of conventional animal protein.
We have built a powerful brand with broad demographic appeal and a passionate consumer base. Our
brand awareness is driven by strong social marketing. Our audience continues to grow from the attention
generated by our large following of celebrities, influencers and brand ambassadors who identify with our
mission.
• Product Portfolio Generates Significant Demand Across Channels
Rapidly growing sales of our products by both our retail and restaurant and foodservice partners have
helped us foster strong relationships in a relatively short period of time. We provide our retailers with exciting
new products in the meat case, where innovation rarely occurs. Many of our retail customers have experienced
increasing levels of velocity of our products, measured by units sold per month per store, as well as repeat
purchases.
Our restaurant and foodservice customers are excited by the opportunity to differentiate their menu offering
and attract new customers by partnering with Beyond Meat, and are seeking new ways to further promote our
product, for example through mass media advertising campaigns inclusive of TV, radio, out of home and digital
channels. We believe our customers’ choice to feature Beyond Meat demonstrates the marketing power of our
brand and overall consumer excitement for our product. This type of demand for our products has been a
driving force in building strong ties with customers who have been continually impressed by the impact our
brand can make on their business.
• Experienced and Passionate Executive Management Team
We are led by a proven and experienced executive management team. Prior to founding Beyond Meat,
Ethan Brown, our President and Chief Executive Officer, spent over a decade in the clean energy industry
working for hydrogen fuel cell leader, Ballard Power Systems, rising from an entry level manager to reporting
directly to the Chief Executive Officer. Mr. Brown’s significant experience in clean tech, coupled with a natural
appreciation for animal agriculture, led him to start a plant-based food company. Our management team plays
an integral role in Beyond Meat’s success by instilling a culture committed to innovation, customer satisfaction
and growth. Over time, we have grown our executive management team with carefully selected individuals who
possess substantial industry experience and share our core values. The other members of our executive
management team have an average of 21 years of industry experience, including at both consumer packaged
goods companies and high growth businesses. We believe this blend of talent gives us tremendous insights
and capabilities to create demand and fulfill it in a scalable, profitable and sustainable way.
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Our Growth Strategy
•
Pursue Top-line Growth Across our Distribution Channels
We believe there is a significant opportunity to continue to expand Beyond Meat beyond our retail and
restaurant and foodservice footprint of approximately 77,000 outlets in more than 65 countries worldwide as of
December 31, 2019. In addition to further growth within retail, we are selling more of our product in restaurants
and other foodservice locations and developing and expanding relationships with international partners. We
believe increased distribution will lead more consumers to purchase our products and increase the overall size
of the plant-based protein category as more consumers shift their diets away from animal-based proteins.
We have developed a strategy to pursue growth within the following distribution channels:
• Retail: We have a significant opportunity to grow our sales within U.S. retail by focusing on increasing
sales at our existing outlets, as well as increasing sales of new products. We also expect to grow our U.S. retail
distribution by establishing commercial relationships with new customers. In March 2019, we introduced Beyond
Beef, which is designed to have the meaty taste and texture and replicate the versatility of ground beef. In May
2019, we began selling the Beyond Burger in retail stores across Canada. In June 2019, we introduced the new
Beyond Burger and Beyond Beef at retailers across the U.S. As of December 31, 2019, our products were
available in approximately 28,000 retail outlets in the United States and Canada.
• Restaurant and Foodservice: We plan to continue to expand our network of restaurant and foodservice
partners, including large full service restaurant (“FSR”) and QSR customers in the United States and abroad,
with increased penetration across this channel reflecting a desire by restaurant and foodservice establishments
to add plant-based products to their menus and to highlight these offerings. As of December 31, 2019, our
products were available in approximately 36,000 restaurant and foodservice outlets in the United States and
Canada.
• International: We believe there is significant demand for our products globally in retail and restaurant and
foodservice channels and expect to increase production for those regions in 2020. As of December 31, 2019,
our products were available in approximately 13,000 international retail and restaurant and foodservice outlets
(excluding Canada). We have established and seek to establish additional relationships with distributors across
channels globally.
•
Invest in Infrastructure and Capabilities
We are committed to prioritizing investment in our infrastructure and capabilities in order to support our
strategic expansion plans. As a fast-growing company, we are making significant investments in hiring the best
people, maximizing our supply chain capabilities, investing in innovation, sales and marketing, and optimizing
our systems in order to establish a sustainable market-leading position for the long-term future.
We have plans to unlock additional capacity both domestically and internationally. In 2019, we entered into
relationships with additional co-manufacturers to significantly increase our production capacity. In response to
growing international demand for our products, in 2019 we commenced co-manufacturing in Canada, and also
expanded our partnership with one of our distributors to co-manufacture our innovative plant-based meats at a
new co-manufacturing facility built by our distributor in the Netherlands, construction of which was completed in
the first quarter of 2020.
We are continually reviewing opportunities to increase and/or leverage manufacturing capacity across our
network, identifying opportunities to increase overall equipment effectiveness, and identifying opportunities to
leverage our co-manufacturers for new products to give us flexibility. We are also investing in new technology to
drive higher yield and/or flexibility to better adjust our capacity to our customer demands.
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• Expand Our Product Offerings
The successes of our products have confirmed our belief that there is significant demand for additional
plant-based meat products. We intend to strengthen our product offerings by improving the formulations for our
existing portfolio of products and by creating new products that expand the portfolio. We are continually refining
our products to improve their taste, texture, aroma and appearance. In addition, we are committed to increasing
our investment in research and development to continue to innovate within our core plant-based platforms of
beef, pork and poultry to create exciting new product lines and improve the formulations for our existing portfolio
of products. New product launches in the last twelve months include Beyond Beef, Beyond Breakfast Sausage,
a new version of the Beyond Burger, designed to have a meatier taste and texture, as well as Beyond Fried
Chicken and Beyond Meatball, which are currently sold to certain QSR partners.
• Continue to Grow Our Brand
We intend to continue to develop our brand and increase awareness of Beyond Meat. We plan on
highlighting our “GO BEYOND” message and the global benefits that come with eating our products. We also
plan to continue to create relevant content with our network of celebrities, influencers and brand ambassadors,
who have successfully built significant brand awareness for us by supporting our mission and products and
incorporating Beyond Meat into their daily lifestyle. We also intend to expand our field marketing efforts to
sample products directly with consumers in stores and at relevant events.
Our Products
We sell a range of products across the three core plant-based platforms of beef, pork and poultry. They are
offered in ready-to-cook formats (generally merchandised at retail in the meat case), which we refer to as our
“fresh” platform, and ready-to-heat formats (merchandised at retail in the freezer), which we refer to as our
“frozen” platform. Though the original line of Beyond Meat products were ready-to-heat, our ready-to-cook
offerings, such as the Beyond Burger and Beyond Sausage, have been the chief drivers of our growth. All of our
products are free of GMOs and, other than Beyond Fried Chicken and Beyond Meatball, are 100% free of
gluten. All of our products are also lower in saturated fats than their animal-based equivalents. We are focused
on making them nutritionally dense, with minimal negative attributes.
• Ready-to-cook (“Fresh”)
Beyond Burger: The Beyond Burger, our flagship product, was our first product merchandised in the meat
case of grocery stores in the United States. The Beyond Burger is designed to look, cook and taste like
traditional ground beef. It is made from a blend of pea, mung bean and rice proteins. The Beyond Burger’s
primary source of protein comes from peas, providing 20 grams of protein, has no soy, gluten or GMOs and is
certified Kosher and Halal.
Beyond Beef: Beyond Beef is designed to have the meaty taste and texture of ground beef and replicate the
versatility of ground beef. It has 25% less saturated fat than 80/20 beef or six grams per four-ounce serving.
Like animal-based ground beef, Beyond Beef can be used in a variety of dishes, such as tacos and meatballs. It
is made from a blend of pea, mung bean and rice proteins, has no soy, gluten or GMOs and is certified Kosher
and Halal.
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Beyond Sausage: Beyond Sausage is a ready-to-cook sausage designed to look, cook and taste like a pork
sausage. Beyond Sausage is made from a blend of pea, fava bean and rice proteins. Beyond Sausage’s
primary source of protein comes from peas, providing 16 grams of protein and three grams of fiber per serving,
has no soy, gluten or GMOs and is certified Kosher and Halal. Beyond Sausage currently comes in three flavors
across foodservice: Brat Original, Hot Italian and Sweet Italian. It currently comes in two flavors across retail:
Brat Original and Hot Italian, with Sweet Italian scheduled to launch in March 2020.
Beyond Breakfast Sausage: Beyond Breakfast Sausage is designed to replicate a classic breakfast
sausage patty. Beyond Breakfast Sausage is made from a blend of pea, mung bean and rice proteins,
seasoned with notes of sage and black pepper. It provides 10 grams of plant-based protein per serving, has no
soy, gluten or GMOs and is certified Kosher and Halal. Beyond Breakfast Sausage was available in our
restaurant and foodservice channel as of December 31, 2019, and is expected to be launched in U.S. retail in
the first quarter of 2020.
Beyond Fried Chicken: Beyond Fried Chicken is a plant-based chicken made with simple, non-GMO
ingredients and soy protein, designed to deliver on the taste and texture of whole muscle chicken. It has 6
grams of protein per serving. Beyond Fried Chicken is currently available at certain KFC locations.
Beyond Meatball: The Beyond Meatball integrates our plant-based protein blend made from peas, brown
rice and mung beans in a breadcrumb mixture. The Beyond Meatball has 3 grams of protein per serving, is
made with simple, non-GMO ingredients, and is certified Kosher and Halal.
•
Ready-to-heat (“Frozen”)
Beyond Beef Crumbles. Beyond Beef Crumbles are ready-to-heat products designed to look and satisfy like
minced or ground beef. Beyond Beef Crumbles’ primary source of protein comes from peas, providing
approximately 14 grams of protein and one gram of fiber per serving, has no soy, gluten or GMOs and is
certified Kosher and Halal. Beyond Beef Crumbles currently come in two flavors for retail: Beefy and Feisty. The
four flavors available for foodservice are Plain, Beefy, Feisty and Italian Sausage.
Customers and Distributors
•
Retail and Restaurant and Foodservice
Since the success of the Beyond Burger, we have created a strong presence at leading food retailers
across the United States. As of December 31, 2019, our products were available in approximately 28,000 retail
outlets in the United States and Canada. Net revenues from sales through our retail channel in 2019 increased
$94.0 million, or 185.2%, as compared to the prior year.
As of December 31, 2019, our products were available in approximately 36,000 restaurant and foodservice
outlets in the United States and Canada. We continue to expand our partnerships with restaurant and
foodservice customers, including large FSR and QSR customers in the United States and abroad. Our products
are also available in prominent entertainment and hospitality vendors and sports venues. Net revenues from
sales through our restaurant and foodservice channel in 2019 increased $115.9 million, or 312.0%, as
compared to the prior year.
We sell to a variety of customers in the retail and restaurant and foodservice channels throughout the
United States and internationally primarily through distributors who purchase, store, sell, and deliver our
products. Because such distributors function in an intermediary role, we do not consider them to be direct
customers. In addition, we sell directly to customers in the retail and restaurant and foodservice channels who
handle their own distribution.
For 2019, our largest distributors in terms of their respective percentage of our gross revenues included the
following: DOT Foods, Inc. (“DOT”), 17% and United Natural Foods, Inc. (“UNFI”), 16%. For 2018, our largest
distributors in terms of their respective percentage of our gross revenues included the following: UNFI, 32%;
DOT, 21%; and Sysco Merchandising and Supply Chain Services, Inc., 13%. For 2017, our largest distributors
in terms of their respective percentage of our gross revenues included the following: UNFI, 38%; KeHE
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Distributors, LLC, 10%; and DOT, 10%. No other distributor or customer accounted for more than 10% of our
gross revenues in 2019, 2018 or 2017.
•
International
We distribute our products internationally, using distributors. Our international net revenues (which exclude
revenues from Canada) are included in our retail and restaurant and foodservice channels and were
approximately 16%, 8% and 1%, respectively, of our net revenues in 2019, 2018 and 2017.
Our Supply Chain
• Sourcing and Suppliers
The principal ingredients used to manufacture our products include pea protein and our plant-based flavors.
We procure the raw materials for our woven protein from a number of different suppliers. Although most of the
raw materials we require are typically readily available from multiple sources, we currently have three suppliers
for the pea protein used in our fresh products and one supplier for the pea protein used in our Beyond Beef
Crumbles.
•
Supply Agreements
Our one-year pea protein supply agreement with Roquette America, Inc., expired on December 31, 2019
and was replaced by a multi-year sales agreement with Roquette Frères (“Roquette”) pursuant to which
Roquette will provide the Company with plant-based protein. The agreement expires on December 31, 2022;
however it can be terminated after 18 months under certain circumstances. This agreement increases the
amount of plant-based protein to be supplied by Roquette in each of 2020, 2021 and 2022 compared to the
amount supplied 2019. The total annual amount purchased each year by us must be at least the minimum
amount specified in the agreement, which totals in the aggregate $154.1 million over the term of the agreement.
See Note 12, Subsequent Events, to the Notes to Financial Statements included elsewhere in this report.
We also have a three-year supply agreement with PURIS Proteins, LLC, or Puris, (the “Puris Agreement”)
under which we may purchase domestically sourced pea protein. The Puris Agreement expires on December
31, 2021. We obtain protein under the Puris Agreement on a purchase order basis. We have the right to cancel
purchase orders if we provide timely written notice; however, the total amount purchased in each year must be
at least either the minimum volume specified for that year in the agreement or an amount based on a formula.
We also have the right to be indemnified by Puris and must indemnify Puris in certain circumstances.
We continually seek additional sources of pea protein and other plant-based protein for our products that
meet our criteria.
Flavors consist of product flavors that have been developed by our innovation team in collaboration with our
supply partners exclusively for us. The formulas are then produced by our suppliers for use in our products.
Ingredients in our flavors are qualified through trials to ensure manufacturability. Upon receipt of the ingredients,
we receive Certificates of Analysis from our suppliers in our quality control process to confirm that our rigorous
standards have been met. Flavors are extensively tested prior to introduction to ensure finished product
attributes such as taste, texture, aroma and appearance are not negatively impacted.
We have multi-year supply agreements with two of our suppliers of pea protein for our fresh products, but
do not have long-term supply agreements with most of our other suppliers. However, we secure our supplies on
a purchase order basis. As most of the raw materials we use in our flavors are readily available in the market
from many suppliers, we believe that we can within a reasonable period of time make satisfactory alternative
arrangements in the event of an interruption of supply from our vendors.
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Manufacturing
Our manufacturing process is diagrammed below.
First, a dry blend containing our plant protein is combined within our manufacturing facility. The dry blend
then enters our extruder, where both water and steam are added. We then use a combination of heating,
cooling and variations of pressure to weave together the proteins. The formed woven protein is then cut into
smaller pieces to expedite the freezing process and assist in the final manufacturing process. The frozen woven
protein is used as the basis of all our products. Next, our co-manufacturers further process the frozen woven
protein by combining flavorings and other ingredients, after which the co-manufacturer prepares the final
packaged product that is then shipped to distributors or direct to customers. In order to sustain the quality of our
products, we have implemented a “define, measure, analyze, improve and control,” or DMAIC, approach to
improve, optimize and stabilize our processes and design.
We depend on co-manufacturers for the manufacturing of all of our products. Our co-manufacturers are
currently in various locations throughout the United States, and, in 2019, we commenced co-manufacturing in
Canada and also expanded our partnership with one of our distributors to co-manufacture our innovative plant-
based meats at a new co-manufacturing facility built by our distributor in the Netherlands, construction of which
was completed in the first quarter of 2020. We continue to explore establishing relationships with additional co-
manufacturers as the business grows to take advantage of more competitive pricing and availability of our
products.
Quality Control
In-process quality checks are performed throughout the manufacturing process, including temperature,
physical dimensions and weight. We provide specific instructions to customers and consumers for storing and
cooking our products. All products are transported and stored frozen. Frozen products such as the Beyond Beef
Crumbles are intended to be prepared from their frozen state, with cooking instructions enclosed on all
packaging.
Retail products sold in the meat case as part of our “fresh” platform, such as the Beyond Burger, Beyond
Sausage and Beyond Beef, are shipped to the customer frozen. The customer is provided instructions on
‘slacking,’ which is typically done by moving frozen food to a refrigerator to allow it to slowly and safely thaw
before cooking. For this step, retailers must apply a “use by date” sticker to the packaging prior to sale.
Distribution
From our co-manufacturing facilities, products are transferred by third-party logistics providers to cold
storage facilities or are directly shipped to the customer. International shipments are also handled by third-party
logistics providers and in some instance are organized directly by the customer.
At present, we do not utilize internal software to track loads but we leverage the logistics systems of our
transportation partners to manage our supply chain through retail distribution.
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Order Fulfillment
Our customer service and logistics functions are responsible for customer-facing activities, order
management, customer logistics, 3PL leadership and intra-company distribution. We utilize NetSuite (ERP), MS
Applications and Cloud interface platforms for these processes. Customer orders are principally transmitted via
electronic data interface, or EDI, but may be processed manually if necessary. Orders are accepted in NetSuite,
reviewed for accuracy and fulfillment plans are developed. When fulfillment plans are ready, orders are
downloaded and emailed to our transportation partners for tendering. Metrics for the Customer Service and
Logistics team include order fill, on-time shipping, customer scorecards as needed and cost leadership. We
have agreements with third-party service providers for all of our shipping needs.
Sales and Marketing and Consumer Outreach
• Sales
As of December 31, 2019, our 33-person sales and commercial team is organized into three divisions,
retail, foodservice and international. The sales team has an extensive range of experience from leading natural
food, meat and plant-based protein companies. They work in close coordination with a national network of
broker and distributor sales teams that gives us access to accounts across the United States, Canada and
internationally.
• Field Marketing Representatives
We have an active field marketing team that samples our products directly with consumers in stores and at
relevant events. Our Beyond Meat food trucks support consumer sampling, content creation, as well as media,
influencer and customer activation. In 2019, we executed approximately 2,000 such events, with approximately
428,000 samples distributed.
• Digital Marketing and Social Media
The primary means by which we drive consumer awareness and interest in our products is via (i) social and
digital media, (ii) PR, (iii) ambassador and influencer activations, (iv) customer media, and (iv) strategic
partnerships. We are fortunate to have partnered with a network of brand ambassadors and developed a strong
following by celebrities from the worlds of sports and entertainment who share our core values. Their organic
involvement and interest are helpful to promote our overall mission.
While we enjoy upward growth in our online marketing activities, we have historically done a relatively
modest amount of paid targeting. We maintain a registered domain website at www.beyondmeat.com, which
serves as the primary source of information regarding our products. Our website is used as a platform to
promote our products, provide news, share recipes, highlight nutritional facts and provide general information
on where to purchase our products, whether retail or as served in an establishment.
We extensively use social media platforms such as Facebook, Instagram and Twitter for online
collaboration. These platforms are fundamentally changing the way we engage with our consumers and allow
us to directly reach desirable target demographics such as millennials and “Generation Z.” A few examples of
how we use social media to connect with our consumers and promote healthy lifestyles are summarized below.
• Facebook: We maintain a company Facebook page, which we use to facilitate consumer services,
distribute brand information and news and publish videos and pictures promoting the brand. We also conduct
regular contests and giveaways. As of December 31, 2019, we had over 412,000 Facebook followers.
• Instagram: We maintain an active company Instagram account, @beyondmeat, which we use to publish
content related to our products and company in order to better connect with potential and existing consumers.
We frequently publish news, celebrity promotion and content related to our activities. As of December 31, 2019,
we had over 870,000 Instagram followers.
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• Twitter: We maintain an active company Twitter account, @BeyondMeat, which we use to disseminate
trending news and information, as well as to publish short format tips, tricks and shortcuts. We also regularly
interact with our consumers. As of December 31, 2019, we had over 100,000 Twitter followers.
• LinkedIn: We maintain an active company LinkedIn account, which we use to disseminate news related to
Beyond Meat and industry-related media and information. We use our LinkedIn account as a job board for
individuals interested in working with us. As of December 31, 2019, we had more than 50,000 LinkedIn
followers.
Competition
We operate in a highly competitive environment. We believe that we compete with both conventional
animal-protein companies, such as Cargill, Hormel, JBS, Perdue Foods, Tyson and WH Group, and also plant-
based protein brands, including brands affiliated with conventional animal-protein companies and other large
food operators, such as Boca Foods (Kraft Heinz), Field Roast Grain Meat Co., Gardein (Conagra), Impossible
Foods, Lightlife (Maple Leaf Foods), Incogmeato (Morningstar Farms/Kellogg), Tofurky, Nestle’ S.A., Pure
Farmland by Smithfield Foods (WH Group), Raised & Rooted (Tyson), Happy Little Plants (Hormel) and Sysco’s
Simply Plant-Based Meatless Burger. Additionally, a number of U.S. and international companies are working
on developing lab-grown or “clean meat,” an animal-protein product cultivated from cells taken from animals,
which could have a similar appeal to consumers as plant-based products. We believe the principal competitive
factors in our industry are:
• taste;
• nutritional profile;
• ingredients;
• texture;
• ease of integration into the consumer diet;
• low-carbohydrate, low-sugar, high fiber and protein;
• lack of soy, gluten and GMOs;
• convenience;
• cost;
• brand awareness and loyalty among consumers;
• media spending;
• product variety and packaging;
• access to major retailer shelf space and retail locations;
• access to major restaurant and foodservice outlets and integration into menus; and
• intellectual property protection on products.
We believe we compete effectively with respect to each of these factors. However, many companies in our
industry have substantially greater financial resources, more comprehensive product lines, broader market
presence, longer standing relationships with distributors and suppliers, longer operating histories, greater
production and distribution capabilities, stronger brand recognition and greater marketing resources than we
have.
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Employees
As of December 31, 2019, we had 472 full-time employees, including contract workers. None of our
employees is represented by a labor union. We have never experienced a labor-related work stoppage.
Research and Development
Our research and development team creates, tests and refines our products at our Manhattan Beach
Project Innovation Center. We employ in-house scientists, engineers, researchers and testers to help create the
next iterations to plant-based meat products. Our team has delivered a number of first-to-market breakthroughs
focused on plant-based meat and we are also focused on continuous improvement of existing products. We
have and will continue to protect any intellectual property created by us.
As of December 31, 2019, we employed approximately 104 scientists, engineers, researchers, technicians
and chefs to help create the next generation of food for our consumers.
Our Beyond Meat Rapid and Relentless Innovation Program defines the details of the product innovation
process from ideation and prototype development through commercialization. This process assigns
responsibility and accountability of each functional team throughout the process and defines deliverables at
each step.
Product Innovation
Innovation is a core competency of ours and important part of our growth strategy. Our goal is to identify
large, animal-based meat product categories across our core plant-based platforms of beef, pork and poultry
that exhibit long-term consumer trends. We then dedicate significant research and development resources to
create authentic plant-based versions of these products that replicate the taste, texture, aroma and appearance
of their animal-based equivalents. We have been able to leverage the success of our existing products and
resulting brand equity to launch improved versions our existing products and create new products. We have a
range of new products in our pipeline and our goal is to develop at least one new product a year.
The innovation team undertakes extensive research projects to increase our fundamental understanding of
animal-based meat and plant-based equivalents. A few examples of where we are focusing on continued
refinements of our products include:
• Better fat adipose tissue and saturated fat mimics: We are researching new materials and technologies
capable of mimicking saturated fat in terms of texture and appearance, but without the nutritional drawbacks of
saturated fat.
• Alternative functional proteins: We pursue new non-animal proteins that add function to our food products,
including native proteins that can denature during cooking, protein binders and protein emulsifying agents and
proteins.
• Additional connective tissue equivalents: We are seeking materials and methods to introduce additional
cartilaginous-like materials and heterogeneity in the form of both texture and appearance in our food products.
• Encapsulation materials and technology: We are seeking new materials and technologies to expand the
scope of controlled-release delivery systems in our food products as it relates to delivering flavor, color and
texturizing agents.
• Materials and technologies to support flavor and texture development: We are seeking non-GMO enzymes
that can assist with protein enzymolysis as it relates to flavor reactions.
Seasonality
Generally, we expect to experience greater demand for certain of our products during the summer grilling
season. In each of 2019 and 2018, we experienced strong net revenue growth compared to the previous year,
which masked this seasonal impact. As our business continues to grow, we expect to see additional seasonality
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effects, especially within our retail channel, with revenue contribution from this channel tending to be greater in
the second and third quarters of the year.
Trademarks and Other Intellectual Property
We own domestic and international trademarks and other proprietary rights that are important to our
business. Depending upon the jurisdiction, trademarks are valid as long as they are used in the regular course
of trade and/or their registrations are properly maintained. Our primary trademarks include Beyond Meat,
Beyond Burger, Beyond Beef, Beyond Sausage, Beyond Breakfast Sausage, Beyond Chicken, Beyond Fried
Chicken, Beyond Meatball, the Caped Steer Logo, GO BEYOND, Eat What You Love, The Cookout Classic,
The Future of Protein, and The Future of Protein Beyond Meat, and design are registered or pending
trademarks of Beyond Meat, Inc. in the United States and, in some cases, in certain other countries. Our
trademarks are valuable assets that reinforce the distinctiveness of our brand to our consumers. We have
applied for or have trademark registrations internationally as well. We believe the protection of our trademarks,
copyrights, patents, domain names, trade dress and trade secrets are important to our success.
We aggressively protect our intellectual property rights by relying on trademark, copyright, patent, trade
dress and trade secret laws and through the domain name dispute resolution system. Our domain name is
www.beyondmeat.com.
We believe our intellectual property has substantial value and has contributed significantly to our business.
At December 31, 2019, we had one issued patent in the United States and five pending patent applications in
the United States and 13 pending international patent applications.
We consider the specifics of our marketing, promotions and products as a trade secret, and information we
wish to keep confidential. In addition, we consider proprietary information related to formulas, processes, know-
how and methods used in our production and manufacturing as trade secrets, and information we wish to keep
confidential. We have taken reasonable measures to keep the above-mentioned items, as well as our business
and marketing plans, customer lists and contracts reasonably protected, and they are accordingly not readily
ascertainable by the public.
Segments
Operating segments are defined as components of an entity for which separate financial information is
available and that is regularly reviewed by its chief operating decision maker (“CODM”), in deciding how to
allocate resources to an individual segment and in assessing performance. Our CODM is our Chief Executive
Officer. We have determined that we operate in one operating segment and one reportable segment, as our
CODM reviews financial information presented on an aggregate basis for purposes of making operating
decisions, allocating resources, and evaluating financial performance.
Government Regulation
Along with our co-manufacturers, brokers, distributors and ingredients and packaging suppliers, we are
subject to extensive laws and regulations in the United States by federal, state and local government
authorities and in Canada, the European Union, the United Kingdom, and other jurisdictions by foreign
authorities. In the United States, the primary federal agencies governing the manufacture, distribution, labeling
and advertising of our products are the FDA and the FTC, and foreign regulatory authorities include Health
Canada or the Canadian Food Inspection Agency (“CFIA”) and the authorities of the EU or the EU member
states. Under various federal statutes and implementing regulations and foreign requirements, these agencies,
among other things, prescribe the requirements and establish the standards for quality and safety and regulate
our product composition, ingredients, manufacturing, labeling and other marketing and advertising to
consumers. Among other things, the facilities in which our products and ingredients are manufactured must
register with the FDA and any other relevant authorities based on location, comply with current good
manufacturing practices, or cGMPs, and comply with a range of food safety requirements established by and
implemented under the Food Safety Modernization Act of 2011 and applicable foreign food safety and
manufacturing requirements. Federal, state, and foreign regulators have the authority to inspect our facilities to
evaluate compliance with applicable requirements. Federal, state, and foreign regulatory authorities also require
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that certain nutrition and product information appear on our product labels and, more generally, that our labels
and labeling be truthful and non-misleading and that our marketing and advertising be truthful, non-misleading
and not deceptive to consumers. We are also restricted from making certain types of claims about our products,
including for example, in the United States, nutrient content claims, health claims, and claims regarding the
effects of our products on any structure or function of the body, whether express or implied, unless we satisfy
certain regulatory requirements.
In addition, the U.S. Department of Agriculture, or USDA, regulates certain categories of food products,
including meat and poultry products. Although our plant-based products are not currently regulated by the
USDA, in February 2018, the agency received a petition from industry requesting that it exclude products not
derived from the tissue or flesh of animals that have been harvested in the traditional manner from being
labeled and marketed as “meat,” and exclude products not derived from cattle born, raised and harvested in the
traditional manner from being labeled and marketed as “beef.” The USDA has not yet responded substantively
to this petition, but has indicated that the petition is being considered as a petition for a policy change under the
USDA’s regulations. The United States Congress is also currently considering federal legislation, called the
Real MEAT Act, that could require changes to our product labeling and marketing, including identifying products
as “imitation” meat products.
In addition to federal regulatory requirements in the United States, certain states impose their own
manufacturing and labeling requirements. For example, every state in which our products are manufactured
requires facility registration with the relevant state food safety agency, and those facilities are subject to state
inspection as well as federal inspection. Further, states can impose state-specific labeling requirements. For
example, in 2018, the state of Missouri passed a law that prohibits any person engaged in advertising, offering
for sale, or sale of food products from misrepresenting products as meat that are not derived from harvested
production livestock or poultry. The state of Missouri Department of Agriculture has clarified its interpretation
that products which include prominent disclosure that the product is “made from plants,” or comparable
disclosure such as through the use of the phrase “plant-based,” are not misrepresented under Missouri law.
Additional states, including Mississippi, have subsequently passed similar laws, and legislation that would
impose additional requirements on plant-based meat products is currently pending in a number of states. We
believe that our products are manufactured and labeled in material compliance with all relevant state
requirements, including the recent Missouri law, and pay close attention to any developments at the state or
federal level that could apply to our products and our labeling claims.
We are also subject to the laws of Australia, Canada, Hong Kong, Israel and the United Kingdom, among
others, and requirements specific to those jurisdictions could impose additional manufacturing or labeling
requirements or restrictions. For example, in Europe, the Agriculture Committee of the European Parliament
proposed in May 2019 to reserve the use of “meat” and meat-related terms and names for products that are
manufactured from the edible parts of animals. At country level, however, for example in the United Kingdom,
this proposal was challenged by the House of Lords stating that there is no evidence that consumers are being
misled. Beyond Meat is actively monitoring these developments, but if adopted, they may require it to change
its labeling and advertising.
We are subject to labor and employment laws, laws governing advertising, privacy laws, safety regulations
and other laws, including consumer protection regulations that regulate retailers or govern the promotion and
sale of merchandise. Our operations, and those of our co-manufacturers, distributors and suppliers, are subject
to various laws and regulations relating to environmental protection and worker health and safety matters. We
monitor changes in these laws and believe that we are in material compliance with applicable laws.
Corporate Information
Beyond Meat, Inc. was incorporated in Delaware on April 8, 2011 originally under the name
“J Green Natural Foods Co.” On October 5, 2011, we changed our corporate name to “Savage River, Inc.,” with
“Beyond Meat” being our “doing business as” name. On September 7, 2018, we changed our corporate name to
“Beyond Meat, Inc.”
On May 6, 2019, we completed our initial public offering (“IPO”) of 11,068,750 shares of our common stock
at a public offering price of $25.00 per share. We received net proceeds of approximately $252.4 million, after
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deducting underwriting discounts and commissions and issuance costs. On August 5, 2019, we completed a
secondary public offering (“Secondary Offering”) of common stock, in which we sold 250,000 shares. The
shares were sold at a public offering price of $160.00 per share for net proceeds to the Company of
approximately $37.4 million, after deducting underwriting discounts and commissions of $1.5 million and
issuance costs of approximately $1.1 million payable by us. Total Secondary Offering costs paid in 2019 were
approximately $2.2 million, of which approximately $1.1 million was capitalized to reflect the costs associated
with the issuance of new shares and offset against proceeds from the Secondary Offering. We did not receive
any proceeds from the sale of common stock by the selling stockholders in the Secondary Offering. Our
common stock is listed on the Nasdaq Global Select Market under the symbol “BYND.”
Subsequent to the year ended December 31, 2019, on January 14, 2020, we registered our new subsidiary,
Beyond Meat EU B.V., in the Netherlands.
“Beyond Meat,” “Beyond Burger,” “Beyond Beef,” “Beyond Sausage,” “Beyond Breakfast Sausage,”
“Beyond Chicken,” “Beyond Fried Chicken,” “Beyond Meatball,” the Caped Steer Logo, “GO BEYOND,” “Eat
What You Love,” “The Cookout Classic,” “The Future of Protein” and “The Future of Protein Beyond Meat” and
design are registered or pending trademarks of Beyond Meat, Inc. in the United States and, in some cases, in
certain other countries. All other brand names or trademarks appearing in this report are the property of their
respective holders. Solely for convenience, the trademarks and trade names contained herein are referred to
without the ® and ™ symbols, but such references should not be construed as any indicator that their
respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Our Website and Availability of SEC Reports and Other Information
The Company maintains a website at the following address: www.beyondmeat.com. The information on the
Company's website is not incorporated by reference in this report or in any other report or document we file with
the SEC, and any references to our website are intended to be inactive textual references only.
We make available on or through our website certain reports and amendments to those reports we file with
or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and
our current reports on Form 8-K. We make this information available on our website free of charge as soon as
reasonably practicable after we electronically file the information with, or furnish it to, the SEC. The SEC also
maintains a web site that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. The address of the site is http://www.sec.gov.
Investors and others should note that Beyond Meat routinely announces material information to investors
and the marketplace using SEC filings, press releases, public conference calls, webcasts and the Beyond Meat
Investor Relations website. We also intend to use certain social media channels as a means of disclosing
information about us and our products to consumers, our customers, investors and the public (e.g.,
@BeyondMeat, #BeyondBurger and #GoBeyond on Facebook, Instagram and Twitter). The information posted
on social media channels is not incorporated by reference in this report or in any other report or document we
file with the SEC. While not all of the information that the Company posts to the Beyond Meat Investor Relations
website or to social media accounts is of a material nature, some information could be deemed to be material.
Accordingly, the Company encourages investors, the media, and others interested in Beyond Meat to review the
information that it shares at the ”Investors” link located at the bottom of our webpage at https://
investors.beyondmeat.com/investor-relations and to sign up for and regularly follow our social media accounts.
Users may automatically receive email alerts and other information about the Company when enrolling an email
address by visiting "Request Email Alerts" in the "Investors" section of Beyond Meat’s website
at www.investors.beyondmeat.com/investor-relations.
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ITEM 1A. RISK FACTORS.
Investing in our common stock involves a high degree of risk. You should carefully consider the following
risk factors, as well as the other information in this report, including the section titled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes,
before deciding whether to invest in shares of our common stock. The risks and uncertainties described below
may not be the only ones we face. If any of the risks actually occurs, our business, financial condition, operating
results, cash flows and prospects could be materially and adversely affected. In this case, the trading price of
our common stock would likely decline and you might lose part or all of your investment in our common stock.
Risks Related to Our Business, Our Brand, Our Products and Our Industry
We have a history of losses, and we may be unable to achieve or sustain profitability.
We have experienced net losses in almost every period since our inception. In 2019, 2018 and 2017, we
incurred net losses of $12.4 million, $29.9 million and $30.4 million, respectively. We anticipate that our
operating expenses and capital expenditures will increase substantially in the foreseeable future as we continue
to invest to increase our customer base, supplier network and co-manufacturing partners, expand our marketing
channels, invest in our distribution and manufacturing facilities, pursue geographic expansion, hire additional
employees and enhance our technology and production capabilities. Our expansion efforts may prove more
expensive than we anticipate, and we may not succeed in increasing our revenues and margins sufficiently to
offset the anticipated higher expenses. We incur significant expenses in developing our innovative products,
building out our manufacturing facilities, securing an adequate supply of raw materials, obtaining and storing
ingredients and other products and marketing the products we offer. In addition, many of our expenses,
including some of the costs associated with our existing and any future manufacturing facilities, are fixed.
Accordingly, we may not be able to achieve or sustain profitability, and we may incur significant losses for the
foreseeable future.
If we fail to effectively expand our manufacturing and production capacity, accurately forecast demand
for our products or quickly respond to forecast changes, our business and operating results and our
brand reputation could be harmed.
If we do not have sufficient capacity to meet our customers’ demands and to satisfy increased demand, we
will need to expand our operations, supply and manufacturing capabilities. However, there is risk in our ability to
effectively scale production processes and effectively manage our supply chain requirements. We must
accurately forecast demand for our products and inventory needs in order to ensure we have adequate
available manufacturing capacity and to ensure we are effectively managing our inventory. Our forecasts are
based on multiple assumptions which may cause our estimates to be inaccurate and affect our ability to obtain
adequate manufacturing capacity (whether our own manufacturing capacity or co-manufacturing capacity) and
adequate inventory supply in order to meet the demand for our products, which could prevent us from meeting
increased customer demand and harm our brand and our business and in some cases may result in fines or
indemnification obligations we must pay customers or distributors if we are unable to fulfill orders placed by
them in a timely manner or at all.
However, if we overestimate our demand and overbuild our capacity or inventory, we may have significantly
underutilized assets underutilized assets, experience reduced margins, and have excess inventory which we
may be required to write-down. If we do not accurately align our manufacturing capabilities and inventory supply
with demand, if we experience disruptions or delays in our supply chain, or if we cannot obtain raw materials of
sufficient quantity and quality at reasonable prices and in a timely manner, our business, financial condition and
results of operations may be materially adversely affected.
Because we rely on a limited number of third-party suppliers, we may not be able to obtain raw
materials on a timely basis or in sufficient quantities to produce our products or meet the demand for
our products.
We rely on a limited number of vendors to supply us with raw materials. Our financial performance depends
in large part on our ability to arrange for the purchase of raw materials in sufficient quantities at competitive
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prices. We are not assured of continued supply or pricing of raw materials. Any of our suppliers could
discontinue or seek to alter their relationship with us.
We currently have three suppliers for the pea protein used in our fresh products. We have in the past
experienced interruptions in the supply of pea protein from one supplier that resulted in delays in delivery to us.
We could experience similar delays in the future from any of these suppliers. Any disruption in the supply of pea
protein from these suppliers would have a material adverse effect on our business if we cannot replace these
suppliers in a timely manner or at all.
In addition, our pea protein suppliers manufacture their products at a limited number of facilities. A natural
disaster, fire, power interruption, work stoppage or other calamity affecting any of these facilities, or any
interruption in their operations, could negatively impact our ability to obtain required quantities of pea protein in
a timely manner, or at all, which could materially reduce our net product sales and have a material adverse
effect on our business and financial condition.
Events that adversely affect our suppliers of pea protein and other raw materials could impair our ability to
obtain raw material inventory in the quantities that we desire. Such events include problems with our suppliers’
businesses, finances, labor relations, ability to import raw materials, product quality issues, costs, production,
insurance and reputation, as well as disease outbreaks or pandemics (such as the recent coronavirus
(COVID-19) pandemic), acts of war, terrorism, natural disasters, fires, earthquakes, flooding or other
catastrophic occurrences. We continuously seek alternative sources of protein to use in our products, but we
may not be successful in diversifying the raw materials we use in our products.
If we need to replace an existing supplier, there can be no assurance that supplies of raw materials will be
available when required on acceptable terms, or at all, or that a new supplier would allocate sufficient capacity
to us in order to meet our requirements, fill our orders in a timely manner or meet our strict quality standards. If
we are unable to manage our supply chain effectively and ensure that our products are available to meet
consumer demand, our operating costs could increase and our profit margins could decrease.
Our future business, results of operations and financial condition may be adversely affected by reduced
or limited availability of pea protein that meets our standards.
Our ability to ensure a continuing supply of ingredients at competitive prices depends on many factors
beyond our control, such as the number and size of farms that grow certain crops such as Canadian, European
and North American yellow peas, the vagaries of these farming businesses (including poor harvests impacting
the quality of the peas grown), changes in national and world economic conditions, tariffs, and our ability to
forecast our ingredient requirements. The high quality ingredients used in many of our products are vulnerable
to adverse weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes, hurricanes
and pestilence. Adverse weather conditions and natural disasters can lower crop yields and reduce crop size
and quality, which in turn could reduce the available supply of, or increase the price of, quality ingredients. In
addition, we purchase some ingredients offshore, and the availability of such ingredients may be affected by
events in other countries, including Canada, France and China. We also compete with other food producers in
the procurement of ingredients, and this competition may increase in the future if consumer demand for plant-
based protein products increases. If supplies of quality ingredients are reduced or there is greater demand for
such ingredients from us and others, we may not be able to obtain sufficient supply that meets our strict quality
standards on favorable terms, or at all, which could impact our ability to supply products to distributors and
retailers and may adversely affect our business, results of operations and financial condition.
The COVID-19 pandemic could have a material adverse impact on our business, results of operations
and financial condition.
In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, China.
Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a pandemic
—the first pandemic caused by a coronavirus. The outbreak has reached more than 160 countries, resulting in
the implementation of significant governmental measures, including lockdowns, closures, quarantines and travel
bans, intended to control the spread of the virus.
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The COVID-19 outbreak has already caused severe global disruptions. In response to the virus, China and
Italy placed tens of millions of people under lockdown. Spain and France also recently implemented lockdown
measures, and other countries and local governments may enact similar policies. As of March 15, 2020, the
United States has temporarily restricted travel by foreign nationals into the country from a number of places,
including China and Europe. In addition, on March 18, 2020, the U.S. and Canada agreed to restrict all
nonessential travel across the border. Companies are also taking precautions, such as requiring employees to
work remotely, imposing travel restrictions and temporarily closing businesses. These restrictions, and future
prevention and mitigation measures, are likely to have an adverse impact on global economic conditions and
consumer confidence and spending, which could materially adversely affect the supply of as well as the
demand for our products. Uncertainties regarding the economic impact of COVID-19 is likely to result in
sustained market turmoil, which could also negatively impact our business, financial condition and cash flows.
Currently, the principal ingredient in most of our products is pea protein. We purchase pea protein from four
suppliers, one of which is based in China. The impact of COVID-19 on this supplier, or any of our other
suppliers, co-manufacturers, distributors or transportation or logistics providers, may negatively affect the price
and availability of our ingredients and/or packaging materials and impact our supply chain. If the disruptions
caused by COVID-19 continue for an extended period of time, our ability to meet the demands of our customers
may be materially impacted.
Additionally, we operate production space in two facilities in Columbia, Missouri where we produce our
woven protein. We also operate our Manhattan Beach Project Innovation Center, where our teams of scientists
and engineers work to create new products and make improvements to existing products. If we are forced to
scale back hours of production or close these facilities in response to the pandemic, we expect our business,
financial condition and results of operations would be materially adversely affected.
Part of our growth strategy includes increasing the number of international customers and expanding into
additional geographies. We are also exploring adding co-manufacturing partners and production facilities
abroad, including in Asia. The timing and success of our international expansion with respect to customers, co-
manufacturing partners and/or production facilities, especially in China and other parts of Asia, may be
negatively impacted by COVID-19, which could impede our anticipated growth.
Additionally, COVID-19 may impact customer and consumer demand. Governmental organizations, such
as the U.S. Centers for Disease Control and Prevention and state and local governments, have recommended
and/or imposed increased community-based interventions, including event cancellations, social distancing
measures, and restrictions on gatherings of more than ten people. The governors of several states have
temporarily closed bars and restaurants, and others may follow suit. As of March 16, 2020, almost 7 million
northern California residents were under a shelter-in-place order, and New York Mayor Bill de Blasio has
cautioned New York residents to prepare for a similar order. In the future, government authorities may impose
similar and/or additional restrictions on people’s movement, public gatherings and businesses. These
measures are likely to result in fewer people eating out and greater numbers of restaurant closures, both of
which would negatively affect our restaurant and foodservice business. Retail and grocery stores may be
similarly impacted, particularly if governments continue to implement regional lockdowns and business closures
to slow the spread of the virus.
The extent of COVID-19’s effect on our operational and financial performance will depend on future
developments, including the duration, spread and intensity of the outbreak, all of which are uncertain and
difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain
the overall impact of COVID-19 on our business. However, if the pandemic continues to evolve into a severe
worldwide health crisis, the disease could have a material adverse effect on our business, results of operations,
financial condition and cash flows and adversely impact the trading price of our common stock.
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We use a limited number of distributors for the substantial majority of our sales, and if we experience
the loss of one or more distributors and cannot replace them in a timely manner, our results of
operations may be adversely affected.
Many retailers and restaurant and foodservice providers purchase our products through food distributors
who purchase, store, sell, and deliver our products to such retailers and restaurant and foodservice providers.
For 2019, our largest distributors in terms of their respective percentage of our gross revenues included the
following: DOT, 17% and UNFI, 16%. We expect that most of our sales will be made through a core number of
distributors for the foreseeable future. Since these distributors act as intermediaries between us and the retail
grocers or restaurants and foodservice providers, we do not have short-term or long-term commitments or
minimum purchase volumes in our contracts with them that ensure future sales of our products. If we lose one
or more of our significant distributors and cannot replace the distributor in a timely manner or at all, our
business, results of operation and financial condition may be materially adversely affected.
If we fail to cost-effectively acquire new customers or retain our existing customers, or if we fail to
derive revenue from our existing customers consistent with our historical performance, our business
could be materially adversely affected.
Our success, and our ability to increase revenues and operate profitably, depends in part on our ability to
cost-effectively acquire new customers, to retain existing customers, and to keep existing customers engaged
so that they continue to purchase products from us. We intend to continue to expand our number of restaurant
and foodservice customers, both in the United States and internationally, as part of our growth strategy. New
national restaurant and foodservice customers will often initially add certain of our product offerings to their
menus at limited locations on a limited test basis, after which time these customers may choose to no longer
offer our products or may ultimately scale back subsequent expansions. For example, Tim Hortons, which
added the Beyond Breakfast Sausage to its menus across Canada in June 2019 and included the Beyond
Burger at its nearly 4,000 locations in Canada in July 2019, recently announced it would no longer sell our
product offerings. If we fail to attract and retain new restaurant and foodservice customers, or retain our existing
restaurant and foodservice customers, our business, financial condition and results of operations could be
materially adversely affected.
Further, if customers do not perceive our product offerings to be of sufficient value and quality, or if we fail to
offer new and relevant product offerings, we may not be able to attract or retain customers or engage existing
customers so that they continue to purchase products from us. We may lose loyal customers to our competitors
if they offer superior products to ours or if we are unable to meet customers’ orders in a timely manner. The loss
of any large customer or the reduction of purchasing levels or the cancellation of business from such customers
could have a material adverse impact on our business.
Consolidation of customers or the loss of a significant customer could negatively impact our sales and
profitability.
Supermarkets in North America and the European Union continue to consolidate. This consolidation has
produced larger, more sophisticated organizations with increased negotiating and buying power that are able to
resist price increases, as well as operate with lower inventories, decrease the number of brands that they carry
and increase their emphasis on private label products, all of which could negatively impact our business. The
consolidation of retail customers also increases the risk that a significant adverse impact on their business
could have a corresponding material adverse impact on our business.
The loss of any large customer, the reduction of purchasing levels or the cancellation of any business from
a large customer for an extended length of time could negatively impact our sales and profitability.
Furthermore, as retailers consolidate, they may reduce the number of branded products they offer in order
to accommodate private label products and generate more competitive terms from branded suppliers competing
for limited retailer shelf space. Consequently, our financial results may fluctuate significantly from period to
period based on the actions of one or more significant retailers. A retailer may take actions that affect us for
reasons that we cannot always anticipate or control, such as their financial condition, changes in their business
strategy or operations, the introduction of competing products or the perceived quality of our products. Despite
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operating in different channels, our retailers sometimes compete for the same consumers. Because of actual or
perceived conflicts resulting from this competition, retailers may take actions that negatively affect us.
We currently only have a written contract with one of our co-manufacturers in the United States. Loss of
one or more of our co-manufacturers or our failure to timely identify and establish relationships with
new co-manufacturers could harm our business and impede our growth.
A significant amount of our revenue is derived from products manufactured at manufacturing facilities
owned and operated by our co-manufacturers. We currently only have a written manufacturing contract with one
of our co-manufacturers in the United States. Any of the co-manufacturers with whom we do not have a written
contract could seek to alter or terminate its relationship with us at any time, leaving us with periods during which
we have limited or no ability to manufacture our products. If we need to replace a co-manufacturer, there can be
no assurance that additional capacity will be available when required on acceptable terms, or at all.
An interruption in, or the loss of operations at, one or more of our co-manufacturing facilities, which may be
caused by work stoppages, production disruptions, product quality issues, disease outbreaks or pandemics
(such as the recent coronavirus (COVID-19) pandemic), acts of war, terrorism, fire, earthquakes, flooding or
other natural disasters at one or more of these facilities, could delay, postpone or reduce production of some of
our products, which could have a material adverse effect on our business, results of operations and financial
condition until such time as such interruption is resolved or an alternate source of production is secured.
We believe there are a limited number of competent, high-quality co-manufacturers in the industry that meet
our strict quality and control standards, and as we seek to obtain additional or alternative co-manufacturing
arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in
a timely manner, or at all. Additionally, as we expand our operations internationally, we will need to develop
relationships with co-manufacturers overseas to meet sales demand, and there can be no assurance that we
will be able to successfully do so. Therefore, the loss of one or more co-manufacturers, any disruption or delay
at a co-manufacturer or any failure to identify and engage co-manufacturers for new products, product
extensions and expanded operations could delay, postpone or reduce production of our products, which could
have a material adverse effect on our business, results of operations and financial condition.
We may not be able to compete successfully in our highly competitive market.
We operate in a highly competitive market. Numerous brands and products compete for limited retailer shelf
space, foodservice and restaurant customers and consumers. In our market, competition is based on, among
other things, taste, ingredients, texture, ease of integration into the consumer diet, nutritional claims,
convenience, brand recognition and loyalty, product variety, product packaging and package design, shelf
space, reputation, price, advertising, access to restaurant and foodservice customers, intellectual property
protection on products, and consumer tastes and preferences.
We compete with conventional animal-protein companies such as Cargill, Hormel, JBS, Perdue Foods,
Tyson and WH Group, who may have substantially greater financial and other resources than us and whose
animal-based products are well-accepted in the marketplace today. They may also have lower operational
costs, and as a result may be able to offer conventional animal meat to customers at lower costs than plant-
based meat. This could cause us to lower our prices, resulting in lower profitability or, in the alternative, cause
us to lose market share if we fail to lower prices.
We also compete with other food brands, including brands affiliated with conventional animal-protein
companies and other large food operators, that develop and sell plant-based protein products, including, but not
limited to, Boca Foods (Kraft Heinz), Field Roast Grain Meat Co., Gardein (Conagra), Impossible Foods,
Lightlife (Maple Leaf Foods), Incogmeato (Morningstar Farms/Kellogg), Tofurky, Nestle’ S.A., Pure Farmland by
Smithfield Foods (WH Group), Raised & Rooted (Tyson), Happy Little Plants (Hormel) and Sysco’s Simply
Plant-Based Meatless Burger, and with companies which may be more innovative, have more resources and be
able to bring new products to market faster and to more quickly exploit and serve niche markets. For example, a
number of U.S. and international companies are working on developing lab-grown or “clean meat,” an animal-
protein product cultivated from cells taken from animals, which could have a similar appeal to consumers as
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plant-based protein products. We compete with these competitors for foodservice and restaurant customers,
retailer shelf space and consumers.
Generally, the food industry is dominated by multinational corporations with substantially greater resources
and operations than us. We cannot be certain that we will successfully compete with larger competitors that
have greater financial, sales and technical resources. Conventional food companies may acquire our
competitors or launch their own plant-based protein products, and they may be able to use their resources and
scale to respond to competitive pressures and changes in consumer preferences by introducing new products,
reducing prices or increasing promotional activities, among other things. Retailers also market competitive
products under their own private labels, which are generally sold at lower prices and compete with some of our
products. Similarly, retailers could change the merchandising of our products and we may be unable to retain
the placement of our products in meat cases to effectively compete with animal-protein products. Competitive
pressures or other factors could cause us to lose market share, which may require us to lower prices, increase
marketing and advertising expenditures, or increase the use of discounting or promotional campaigns, each of
which would adversely affect our margins and could result in a decrease in our operating results and
profitability.
We may require additional financing to achieve our goals, and a failure to obtain this necessary capital
when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our
product manufacturing and development, and other operations.
Since our inception, substantially all of our resources have been dedicated to the development of our three
core plant-based product platforms of beef, pork and poultry, including purchases of property, plant and
equipment, principally to support the development and production of our products, the build-out and equipping
of our Manhattan Beach Project Innovation Center, and manufacturing facility improvements and purchases of
manufacturing equipment. We believe that we will continue to expend substantial resources for the foreseeable
future as we expand into additional markets we may choose to pursue. These expenditures are expected to
include costs associated with research and development, manufacturing and supply, as well as marketing and
selling existing and new products. In addition, other unanticipated costs may arise.
As of December 31, 2019, we had cash and cash equivalents of $276.0 million. Our operating plan may
change because of factors currently unknown to us, and we may need to seek additional funds sooner than
planned, through public or private equity or debt financings or other sources, such as strategic collaborations.
Such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations,
or other restrictions that may adversely affect our business. In addition, we may seek additional capital due to
favorable market conditions or strategic considerations even if we believe we have sufficient funds for our
current or future operating plans.
Our future capital requirements depend on many factors, including:
the number and characteristics of any additional products or manufacturing processes we develop or
acquire to serve new or existing markets;
the expenses associated with our marketing initiatives;
our investment in manufacturing to expand our manufacturing and production capacity;
the costs required to fund domestic and international growth;
the scope, progress, results and costs of researching and developing future products or improvements
to existing products or manufacturing processes;
any lawsuits related to our products or commenced against us, including the costs associated with our
current litigation with a former co-manufacturer, the putative class actions recently brought against us or
the derivative actions recently brought against certain of our directors and officers;
the expenses needed to attract and retain skilled personnel;
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the costs associated with being a public company;
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual
property claims, including litigation costs and the outcome of such litigation; and
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the timing, receipt and amount of sales of, or royalties on, any future approved products, if any.
Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If
adequate funds are not available to us on a timely basis, we may be required to:
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delay, limit, reduce or terminate our manufacturing, research and development activities or our growth
and expansion plans; or
delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities
that may be necessary to generate revenue and achieve profitability.
Our brand and reputation may be diminished due to real or perceived quality or health issues with our
products, which could have an adverse effect on our business, reputation, operating results and
financial condition.
We believe our consumers rely on us to provide them with high-quality plant-based protein products.
Therefore, real or perceived quality or food safety concerns or failures to comply with applicable food
regulations and requirements, whether or not ultimately based on fact and whether or not involving us (such as
incidents involving our competitors), could cause negative publicity and reduced confidence in our company,
brand or products, or the industry as a whole, which could in turn harm our reputation and sales, and could
materially adversely affect our business, financial condition and operating results. Although we believe we have
a rigorous quality control process, there can be no assurance that our products will always comply with the
standards set for our products, and although we strive to keep our products free of pathogenic organisms, they
may not be easily detected and cross-contamination can occur. For example, in 2017, before our products were
shipped to distributors or customers, we discovered, through our quality control process, that certain of our
products manufactured by a former co-manufacturer were contaminated with salmonella. There is no assurance
that this health risk will always be preempted by our quality control processes.
We have no control over our products once purchased by consumers. Accordingly, consumers may prepare
our products in a manner that is inconsistent with our directions or store our products for long periods of time,
which may adversely affect the quality and safety of our products. If consumers do not perceive our products to
be safe or of high quality, then the value of our brand would be diminished, and our business, results of
operations and financial condition would be adversely affected.
Any loss of confidence on the part of consumers in the ingredients used in our products or in the safety and
quality of our products would be difficult and costly to overcome. Any such adverse effect could be exacerbated
by our position in the market as a purveyor of high-quality plant-based protein products and may significantly
reduce our brand value. Issues regarding the safety of any of our products, regardless of the cause, may have a
substantial and adverse effect on our brand, reputation and operating results.
The growing use of social and digital media by us, our consumers and third parties increases the speed and
extent that information or misinformation and opinions can be shared. Negative publicity about us, our brands or
our products on social or digital media could seriously damage our brands and reputation. If we do not maintain
the favorable perception of our brands, our sales and profits could be negatively impacted.
Food safety and food-borne illness incidents or advertising or product mislabeling may materially
adversely affect our business by exposing us to lawsuits, product recalls or regulatory enforcement
actions, increasing our operating costs and reducing demand for our product offerings.
Selling food for human consumption involves inherent legal and other risks, and there is increasing
governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury or
death related to allergens, food-borne illnesses or other food safety incidents caused by products we sell, or
involving our suppliers or co-manufacturers, could result in the discontinuance of sales of these products or our
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relationships with such suppliers or co-manufacturers, or otherwise result in increased operating costs,
regulatory enforcement actions or harm to our reputation. Shipment of adulterated or misbranded products,
even if inadvertent, can result in criminal or civil liability. Such incidents could also expose us to product liability,
negligence or other lawsuits, including consumer class action lawsuits. Any claims brought against us may
exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment
against us that is more than our policy limits or not covered by our policies or not subject to insurance would
have to be paid from our cash reserves, which would reduce our capital resources.
The occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price
and availability of affected ingredients, resulting in higher costs, disruptions in supply and a reduction in our
sales. Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused
by our actions, could compel us, our suppliers, our distributors or our customers, depending on the
circumstances, to conduct a recall in accordance with FDA regulations, comparable state laws or international
laws. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost
sales due to the unavailability of the product for a period of time and potential loss of existing distributors or
customers and a potential negative impact on our ability to attract new customers due to negative consumer
experiences or because of an adverse impact on our brand and reputation. The costs of a recall could exceed
or be outside the scope of our existing or future insurance policy coverage or limits.
In addition, food companies have been subject to targeted, large-scale tampering as well as to
opportunistic, individual product tampering, and we, like any food company, could be a target for product
tampering. Forms of tampering could include the introduction of foreign material, chemical contaminants and
pathological organisms into consumer products as well as product substitution. Recently issued FDA
regulations require companies like us to analyze, prepare and implement mitigation strategies specifically to
address tampering (i.e., intentional adulteration) designed to inflict widespread public health harm. If we do not
adequately address the possibility, or any actual instance, of intentional adulteration, we could face possible
seizure or recall of our products and the imposition of civil or criminal sanctions, which could materially
adversely affect our business, financial condition and operating results.
Sales of the Beyond Burger contribute a significant portion of our revenue. A reduction in sales of the
Beyond Burger would have an adverse effect on our financial condition.
The Beyond Burger accounted for approximately 64%, 70% and 48% of our gross revenues in 2019, 2018
and 2017, respectively. The Beyond Burger is our flagship product and has historically been the focal point of
our development and marketing efforts, and we believe that sales of the Beyond Burger will continue to
constitute a significant portion of our revenues, income and cash flow for the foreseeable future. We cannot be
certain that we will be able to continue to expand production and distribution of the Beyond Burger, or that
customer demand for our other existing and future products will expand to allow such products to represent a
larger percentage of our revenue than they do currently. Accordingly, any factor adversely affecting sales of the
Beyond Burger could have a material adverse effect on our business, financial condition and results of
operations.
The primary components of all of our products are manufactured in our two Columbia, Missouri
facilities and any damage or disruption at these facilities may harm our business. Moreover, Columbia,
Missouri has a tight labor market and we may be unable to hire and retain employees at these facilities.
A significant portion of our operations are located in our two Columbia, Missouri facilities. A natural disaster,
fire, power interruption, work stoppage, outbreaks of pandemics or contagious diseases (such as the recent
coronavirus (COVID-19) pandemic) or other calamity at one or both of these facilities would significantly disrupt
our ability to deliver our products and operate our business. If any material amount of our machinery or
inventory were damaged, we would be unable to meet our contractual obligations and cannot predict when, if at
all, we could replace or repair such machinery, which could materially adversely affect our business, financial
condition and operating results.
Our plans for addressing our rapid growth include expanding operations at our Columbia, Missouri facilities
and/or seeking alternative or additional facilities. In this tight labor market, we may be unable to hire and retain
skilled employees, which will severely hamper our expansion plans, product development and manufacturing
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efforts. As of December 2019, the Columbia area had an unemployment rate of 2.4%. As a result of this tight
labor market, we currently rely on temporary workers in addition to full-time employees, and in the future, we
may be unable to attract and retain employees with the skills we require, which could impact our ability to
expand our operations.
We may not successfully ramp up operations at our new Columbia, Missouri facility or this facility may
not operate in accordance with our expectations.
In June 2018, we commenced manufacturing operations in our new Columbia, Missouri facility and expect
to continue to add more production capacity through 2021. Any substantial delay in bringing this facility up to full
production on our current schedule may hinder our ability to produce all of the product needed to meet orders
and/or achieve our expected financial performance. Opening this facility has required, and will continue to
require, additional capital expenditures and the efforts and attention of our management and other personnel,
which has and will continue to divert resources from our existing business or operations. In addition, we have
hired and will need to hire and retain more skilled employees to operate the expanded facility in this tight labor
market. Even if our new Columbia, Missouri facility is brought up to full production according to our current
schedule, it may not provide us with all of the operational and financial benefits we expect to receive.
Our Columbia, Missouri facilities and the manufacturing equipment we use to produce our products is costly
to replace or repair and may require substantial lead-time to do so. For example, our estimate of throughput or
our extrusion capacity may be impacted by disruption from extruder lead-in time, calibration, maintenance and
unexpected delays. In addition, our ability to procure new extruders may face more lengthy lead times than is
typical. We may also not be able to find suitable alternatives with co-manufacturers to replace the output from
such equipment on a timely basis and at a reasonable cost. In the future, we may also experience plant
shutdowns or periods of reduced production because of regulatory issues, equipment failure or delays in raw
material deliveries. Any such disruption or unanticipated event may cause significant interruptions or delays in
our business and the reduction or loss of inventory may render us unable to fulfill customer orders in a timely
manner, or at all. We have property and business disruption insurance in place for our Columbia, Missouri
facilities; however, such insurance coverage may not be sufficient to cover all of our potential losses and may
not continue to be available to us on acceptable terms, or at all.
Failure to introduce new products or successfully improve existing products may adversely affect our
ability to continue to grow.
A key element of our growth strategy depends on our ability to develop and market new products and
improvements to our existing products that meet our standards for quality and appeal to consumer preferences.
The success of our innovation and product development efforts is affected by our ability to anticipate changes in
consumer preferences, accurately predict taste preferences and purchasing habits of consumers in new
geographic markets, the technical capability of our innovation staff in developing and testing product prototypes,
including complying with applicable governmental regulations, and the success of our management and sales
and marketing teams in introducing and marketing new products. Our innovation staff members are
continuously testing alternative plant-based proteins to the proteins we currently use in our products, as they
seek to find additional protein options to our current ingredients that are more easily sourced, and which retain
and build upon the quality and appeal of our current product offerings. Failure to develop and market new
products that appeal to consumers may lead to a decrease in our growth, sales and profitability.
Additionally, the development and introduction of new products requires substantial research, development
and marketing expenditures, which we may be unable to recoup if the new products do not gain widespread
market acceptance. If we are unsuccessful in meeting our objectives with respect to new or improved products,
our business could be harmed.
If we fail to manage our future growth effectively, our business could be materially adversely affected.
We have grown rapidly since inception and anticipate further growth. For example, our net revenues
increased from $16.2 million in 2016 to $297.9 million in 2019. Our full-time employee count at December 31,
2019 (including contract employees) has more than tripled since December 31, 2016. This growth has placed
significant demands on our management, financial, operational, technological and other resources. The
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anticipated growth and expansion of our business and our product offerings will continue to place significant
demands on our management and operations teams and require significant additional resources to meet our
needs, which may not be available in a cost-effective manner, or at all. If we do not effectively manage our
growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage
of market opportunities, satisfy customer requirements or maintain high-quality product offerings, any of which
could harm our business, brand, results of operations and financial condition.
We face intense competition in our market from our competitors, including manufacturers of animal-
based meat products and other brands that produce plant-based protein products, and potential
competitors and we may lack sufficient financial or other resources to compete successfully.
Our future success depends, in large part, on our ability to implement our growth strategy of expanding
supply and distribution, improving placement of our products, attracting new consumers to our brand and
introducing new products and product extensions, and expanding into new geographic markets. Our ability to
implement this growth strategy depends, among other things, on our ability to:
• manage relationships with various suppliers, co-manufacturers, distributors, customers and other third
parties, and expend time and effort to integrate new suppliers, co-manufacturers, distributors and
customers into our fulfillment operations;
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continue to compete in the retail channel and the restaurant and foodservice channel;
secure placement in the meat case for our products;
increase our brand recognition;
expand and maintain brand loyalty;
develop new product lines and extensions; and
expand into new geographic markets.
We may not be able to implement our growth strategy successfully. Our sales and operating results will be
adversely affected if we fail to implement our growth strategy or if we invest resources in a growth strategy that
ultimately proves unsuccessful.
We may face difficulties as we expand our operations in other countries, including into those in which
we have no prior operating experience.
We intend to continue to expand our global footprint and enter into new markets. International operations
involve a number of risks, including foreign regulatory compliance, tariffs, taxes and exchange controls,
economic downturns, inflation, foreign currency fluctuations and political and social instability in the countries in
which we operate. Expansion may involve expanding into countries other than those in which we currently
operate. It may also involve expanding into less developed countries, which may have less political, social or
economic stability and less developed infrastructure and legal systems. In addition, it may be difficult for us to
understand and accurately predict taste preferences and purchasing habits of consumers in these new
geographic markets. It is costly to establish, develop and maintain international operations and develop and
promote our brands in international markets. As we expand our business into other countries, we may
encounter regulatory, legal, personnel, technological and other difficulties that increase our expenses and/or
delay our ability to become profitable in such countries, which may have a material adverse effect on our
business and brand.
Ingredient and packaging costs are volatile and may rise significantly, which may negatively impact the
profitability of our business.
We purchase large quantities of raw materials, including ingredients derived from Canadian, European and
North American yellow peas, mung beans, sunflower seeds, rice, fava beans, canola oil and coconut oil. In
addition, we purchase and use significant quantities of cardboard, film and plastic to package our products.
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Costs of ingredients and packaging are volatile and can fluctuate due to conditions that are difficult to predict,
including global competition for resources, weather conditions, consumer demand and changes in
governmental trade and agricultural programs. Volatility in the prices of raw materials and other supplies we
purchase could increase our cost of sales and reduce our profitability. Moreover, we may not be able to
implement price increases for our products to cover any increased costs, and any price increases we do
implement may result in lower sales volumes. If we are not successful in managing our ingredient and
packaging costs, if we are unable to increase our prices to cover increased costs or if such price increases
reduce our sales volumes, then such increases in costs will adversely affect our business, results of operations
and financial condition.
If we fail to develop and maintain our brand, our business could suffer.
We have developed a strong and trusted brand that has contributed significantly to the success of our
business, and we believe our continued success depends on our ability to maintain and grow the value of the
Beyond Meat brand. Maintaining, promoting and positioning our brand and reputation will depend on, among
other factors, the success of our plant-based product offerings, food safety, quality assurance, marketing and
merchandising efforts, the nutritional benefits provided by our products and our ability to provide a consistent,
high-quality customer experience. Any negative publicity, regardless of its accuracy, could materially adversely
affect our business. Brand value is based on perceptions of subjective qualities, and any incident that erodes
the loyalty of our customers, suppliers or co-manufacturers, including adverse publicity or a governmental
investigation or litigation, could significantly reduce the value of our brand and significantly damage our
business.
Consumer preferences for our products are difficult to predict and may change, and, if we are unable to
respond quickly to new trends, our business may be adversely affected.
Our business is focused on the development, manufacture, marketing and distribution of a line of branded
plant-based protein products as alternatives to animal-based protein products. Consumer demand could
change based on a number of possible factors, including dietary habits and nutritional values, concerns
regarding the health effects of ingredients and shifts in preference for various product attributes. If consumer
demand for our products decreased, our business and financial condition would suffer. In addition, sales of
plant-based protein or meat-alternative products are subject to evolving consumer preferences that we may not
be able to accurately predict or respond to. Consumer trends that we believe favor sales of our products could
change based on a number of possible factors, including a shift in preference from plant-based protein to
animal-based protein products, economic factors and social trends. A significant shift in consumer demand
away from our products could reduce our sales or our market share and the prestige of our brand, which would
harm our business and financial condition.
Additionally, lobbyists supporting the meat industry have engaged in marketing campaigns in an attempt to
generate negative publicity regarding our products and may continue to do so in the future. Any shift in
consumer perception that our products are not healthy as a result of these campaigns could significantly reduce
the value of our brand and damage our business. Other types of adverse publicity concerning our business or
the plant-based meat industry generally could also harm our brand, reputation and results of operations. The
growing use of social and digital media over recent years has amplified the impact of such negative publicity.
Our revenue growth rate may slow over time and may not be indicative of future performance.
Although we have grown rapidly over the last several years, our revenue growth rates may slow over time
due to a number of reasons, including increasing competition, market saturation, slowing demand for our
offerings, increasing regulatory costs and challenges, and failure to capitalize on growth opportunities.
Our revenues and earnings may fluctuate as a result of our promotional activities.
We routinely offer sales discounts and promotions through various programs to customers and consumers
which may occasionally result in reduced margins. These programs include rebates, temporary on shelf price
reductions, off-invoice discounts, retailer advertisements, product coupons and other trade activities. We
anticipate needing to offer more trade and promotion discounting, primarily within the retail channel, to match
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competition pricing and promotions. We anticipate that, at times, these promotional activities may adversely
impact our net revenues and results of operations.
Fluctuations in our results of operations for our second and third quarters may impact, and may have a
disproportionate effect on our overall financial condition and results of operations.
Our business is subject to seasonal fluctuations that may have a disproportionate effect on our results of
operations. Generally, we expect to experience greater demand for certain of our products during the summer
grilling season. As our business continues to grow, we expect to see additional seasonality effects, especially
within our retail channel, with revenue contribution from this channel tending to be greater in the second and
third quarters of the year. Any factors that harm our second and third quarter operating results, including
disruptions in our supply chain, adverse weather or unfavorable economic conditions, may have a
disproportionate effect on our results of operations for the entire year.
Historical results are not indicative of future results.
Historical quarter-to-quarter and period-over-period comparisons of our sales and operating results are not
necessarily indicative of future quarter-to-quarter and period-over-period results. You should not rely on the
results of a single quarter or period as an indication of our annual results or our future performance.
Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on
our reputation or business.
From time to time, we may be party to various claims and litigation proceedings. We evaluate these claims
and litigation proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the
amount of potential losses. Based on these assessments and estimates, we may establish reserves, as
appropriate. These assessments and estimates are based on the information available to management at the
time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially
from our assessments and estimates.
For example, on May 25, 2017, following our termination of our supply agreement with Don Lee Farms, a
co-manufacturer, Don Lee Farms filed a lawsuit against us in California state court claiming that we wrongfully
terminated the parties’ contract and that we misappropriated their trade secrets principally by sharing with
subsequent co-manufacturers the processes for manufacturing our products—processes which they claim to
have developed. On July 27, 2017 we filed a cross-complaint, alleging that Don Lee Farms (1) breached the
supply agreement, including by failing to provide saleable product, as certain of our products manufactured by
Don Lee Farms were contaminated with salmonella and other foreign objects, and that Don Lee Farms did not
take appropriate actions to address these issues; (2) engaged in unfair competition in violation of California’s
Unfair Competition Law; and (3) unlawfully converted certain Beyond Meat property, including certain pieces of
equipment. In October 2018, Don Lee Farms filed an amended complaint that added ProPortion Foods, LLC
(one of Beyond Meat’s current contract manufacturers) as a defendant, principally for claims arising from
ProPortion’s alleged use of Don Lee Farms’ alleged trade secrets, and for replacing Don Lee Farms as Beyond
Meat’s co-manufacturer. ProPortion filed an answer denying all of Don Lee Farms’ claims and a cross-complaint
against Beyond Meat asserting claims of total and partial equitable indemnity, contribution, and repayment. On
March 11, 2019, Don Lee Farms filed a second amended complaint to add claims of fraud and negligent
misrepresentation against us. On May 30, 2019, the judge denied our motion to dismiss the fraud and negligent
misrepresentation claims, allowing the claims to proceed. On June 19, 2019, we filed an answer denying Don
Lee Farms' claims. On January 27, 2020, Don Lee Farms filed a third amended complaint to add three
individual defendants, all of whom are current or former employees of ours, including Mark Nelson, our Chief
Financial Officer and Treasurer, to Don Lee Farms’ existing fraud and negligent misrepresentation claims
alleging that those individuals were involved in the alleged fraud and negligent misrepresentation. The individual
defendants deny all allegations of fraud and negligent misrepresentation. On January 24, 2020, a writ judge
granted Don Lee Farms a right to attach in the amount of $628,689 on the grounds that Don Lee Farms had
established a “probable validity” of its claim that we owe it money for a small batch of unpaid invoices. This
determination was not made by the trial judge. The trial judge has yet to determine the legitimacy or merits of
Don Lee Farms’ claims. The previous trial date, May 18, 2020, has been continued. Trial is currently set for
February 8, 2021.
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Don Lee Farms is seeking from us and ProPortion unspecified compensatory and punitive damages,
declaratory and injunctive relief, including the prohibition of our use or disclosure of the alleged trade secrets,
and attorneys’ fees and costs. We are seeking from Don Lee Farms monetary damages, restitution of monies
paid to Don Lee Farms, and attorneys’ fees and costs. ProPortion is seeking indemnity, contribution, or
repayment from us of any or all damages that ProPortion may be found liable to Don Lee Farms, and attorneys’
fees and costs. We believe we were justified in terminating the supply agreement with Don Lee Farms, that we
did not misappropriate their alleged trade secrets, that we are not liable for the fraud or negligent
misrepresentation alleged in the proposed second amended complaint, that Don Lee Farms is liable for the
conduct alleged in our cross-complaint, and that we are not liable to ProPortion for any indemnity, contribution,
or repayment, including for any damages or attorneys’ fees and costs.
We intend to vigorously defend ourselves and our current and former employees against the claims and
prosecute our own. However, we cannot assure you that Don Lee Farms or ProPortion will not prevail in all or
some of their claims against us or the individual defendants, or that we will prevail in some or all of our claims
against Don Lee Farms. For example, if Don Lee Farms succeeds in the lawsuit, we could be required to pay
damages, including but not limited to contract damages reasonably calculated at what we would have paid Don
Lee Farms to produce our products through 2019, the end of the contract term, and Don Lee Farms could also
claim some ownership in the intellectual property associated with the production of certain of our products or in
the products themselves, and thus claim a stake in the value we have derived and will derive from the use of
that intellectual property after we terminated our supply agreement with Don Lee Farms. As another example,
we also could be required to pay attorneys’ fees and costs incurred by Don Lee Farms or ProPortion.
On January 30, 2020, Larry Tran, a purported shareholder of Beyond Meat, filed a putative securities class
action lawsuit in the United States District Court for the Central District of California against Beyond Meat and
two of our executive officers, our President and CEO, Ethan Brown, and our Chief Financial Officer and
Treasurer, Mark Nelson. The lawsuit asserts claims under Sections 10(b) and 20(a) of the Exchange Act and is
premised on allegedly false or misleading statements, and alleged non-disclosure of material facts, related to
our public disclosures regarding our ongoing litigation with Don Lee Farms during the proposed class period of
May 2, 2019 to January 27, 2020. We believe the claims are without merit and intend to vigorously defend all
claims asserted.
On March 16, 2020, Eric Weiner, a purported shareholder of Beyond Meat, filed a shareholder derivative
lawsuit in the United States District Court for the Central District of California, putatively on behalf of the
Company, against two of our executive officers, our President and CEO, Ethan Brown, and our Chief Financial
Officer and Treasurer, Mark Nelson, and each of our directors, including one former director, who signed our
initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the
Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of
unjust enrichment and waste of corporate assets, all relating to our ongoing litigation with Don Lee Farms,
related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 16,
2020, and the securities case brought against us. Based on the early stage of this matter, we are unable to
estimate potential losses, if any, related to this lawsuit.
On March 18, 2020, Kimberly Brink and Melvyn Klein, purported shareholders of Beyond Meat, filed a
shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively
on behalf of the Company, against two of our executive officers, our President and CEO, Ethan Brown, and our
Chief Financial Officer and Treasurer, Mark Nelson, and each of our directors who signed our initial public
offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act,
claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust
enrichment and waste of corporate assets, all relating to our ongoing litigation with Don Lee Farms, related
actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 18, 2020,
and the securities case brought against us. Based on the early stage of this matter, we are unable to estimate
potential losses, if any, related to this lawsuit.
Also on March 18, 2020, Nazrin Massaro filed a putative class action lawsuit in the United States District
Court for the Southern District of California against Beyond Meat and People for the Ethical Treatment of
Animals, Inc. (“PETA”). The lawsuit asserts claims under the Telephone Consumer Protection Act and alleges
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that PETA sent unsolicited text message advertisements promoting our products to the putative class members
in violation of consumers’ privacy rights. The lawsuit further alleges that PETA sent the text messages at the
direction, and/or under the control, of Beyond Meat. The plaintiff seeks injunctive relief and damages on behalf
of herself and the putative class members. We believe the claims are without merit and intend to vigorously
defend all claims asserted.
Even when not merited, the defense of these lawsuits may divert our management’s attention, and we may
incur significant expenses in defending these lawsuits. The results of litigation and other legal proceedings are
inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in
adverse monetary damages, penalties or injunctive relief against us, which could have a material adverse effect
on our financial position, cash flows or results of operations. Any claims or litigation, even if fully indemnified or
insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate
insurance in the future.
Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all
types and amounts of potential liabilities and is subject to self-insured retentions, various exclusions as well as
caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our
entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail,
the amount of our recovery.
Legal claims, government investigations or other regulatory enforcement actions could subject us to
civil and criminal penalties.
We operate in a highly regulated environment with constantly evolving legal and regulatory frameworks.
Consequently, we are subject to heightened risk of legal claims, government investigations or other regulatory
enforcement actions. Although we have implemented policies and procedures designed to ensure compliance
with existing laws and regulations, there can be no assurance that our employees, temporary workers,
contractors or agents will not violate our policies and procedures. Moreover, a failure to maintain effective
control processes could lead to violations, unintentional or otherwise, of laws and regulations. Legal claims,
government investigations or regulatory enforcement actions arising out of our failure or alleged failure to
comply with applicable laws and regulations could subject us to civil and criminal penalties that could materially
and adversely affect our product sales, reputation, financial condition and operating results. In addition, the
costs and other effects of defending potential and pending litigation and administrative actions against us may
be difficult to determine and could adversely affect our financial condition and operating results.
Failure by our transportation providers to deliver our products on time, or at all, could result in lost
sales.
We currently rely upon third-party transportation providers for a significant portion of our product shipments.
Our utilization of delivery services for shipments is subject to risks, including increases in fuel prices, which
would increase our shipping costs, employee strikes, disease outbreaks or pandemics (such as the recent
coronavirus (COVID-19 pandemic) and inclement weather, which may impact the ability of providers to provide
delivery services that adequately meet our shipping needs, if at all. We periodically change shipping companies,
and we could face logistical difficulties that could adversely affect deliveries. In addition, we could incur costs
and expend resources in connection with such change. Moreover, we may not be able to obtain terms as
favorable as those we receive from the third-party transportation providers that we currently use, which in turn
would increase our costs and thereby adversely affect our operating results.
Failure to retain our senior management may adversely affect our operations.
Our success is substantially dependent on the continued service of certain members of our senior
management, including Ethan Brown, our President and Chief Executive Officer. These executives have been
primarily responsible for determining the strategic direction of our business and for executing our growth
strategy and are integral to our brand, culture and the reputation we enjoy with suppliers, co-manufacturers,
distributors, customers and consumers. The loss of the services of any of these executives could have a
material adverse effect on our business and prospects, as we may not be able to find suitable individuals to
replace them on a timely basis, if at all. In addition, any such departure could be viewed in a negative light by
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investors and analysts, which may cause the price of our common stock to decline. We do not currently carry
key-person life insurance for our senior executives.
If we are unable to attract, train and retain employees, we may not be able to grow or successfully
operate our business.
Our success depends in part upon our ability to attract, train and retain a sufficient number of employees
who understand and appreciate our culture and can represent our brand effectively and establish credibility with
our business partners and consumers. We believe a critical component of our success has been our company
culture and long-standing core values. We have invested substantial time and resources in building our team. If
we are unable to hire and retain employees capable of meeting our business needs and expectations, or if we
fail to preserve our company culture among a larger number of employees dispersed in various geographic
regions as we continue to grow and develop the infrastructure associated with being a more mature public
company, our business and brand image may be impaired. Any failure to meet our staffing needs or any
material increase in turnover rates of our employees may adversely affect our business, results of operations
and financial condition.
Our employees are employed by professional employer organizations.
We contract with a professional employer organization, or U.S. PEO, that administers our human resources,
payroll and employee benefits functions for our employees in the United States. We also contract with non-U.S.
PEOs to perform the same functions as the U.S. PEO for employees outside the United States. Although we
recruit and select our workers, each of our workers is also an employee of record of the relevant PEO. As a
result, our workers are compensated through the relevant PEO, are governed by the work policies created by
the relevant PEO and receive their annual wage statements and other payroll or labor related reports from the
relevant PEO (e.g., W-2s from the US PEO for employees in the United States, T-4s for employees in Canada).
This relationship permits management to focus on operations and profitability rather than payroll administration,
but this relationship also exposes us to some risks. Among other risks, if the U.S. PEO fails to adequately
withhold or pay employer taxes or to comply with other laws, such as the Fair Labor Standards Act, the Family
and Medical Leave Act, the Employee Retirement Income Security Act or state and federal anti-discrimination
laws, each of which is outside of our control, we would be liable for such violations, and indemnification
provisions with the U.S. PEO, if applicable, may not be sufficient to insulate us from those liabilities. If any of the
non-U.S. PEOs fail to adequately withhold or pay employer taxes or to comply with applicable laws, we may be
held liable for such violations notwithstanding any indemnification provisions with the non-U.S. PEOs. In certain
non-U.S. jurisdictions, the worker may be deemed a direct employee and the potential liability for any non-
compliance with applicable laws increases depending on whether a company has an entity or other corporate
presence in the country, among other factors set forth under applicable local laws.
Court and administrative proceedings related to matters of employment tax, labor law and other laws
applicable to PEO arrangements could distract management from our business and cause us to incur significant
expense. If we were held liable for violations by PEOs, such amounts may adversely affect our profitability and
could negatively affect our business and results of operations.
We rely on information technology systems and any inadequacy, failure, interruption or security
breaches of those systems may harm our ability to effectively operate our business.
We are dependent on various information technology systems, including, but not limited to, networks,
applications and outsourced services in connection with the operation of our business. A failure of our
information technology systems to perform as we anticipate could disrupt our business and result in transaction
errors, processing inefficiencies and loss of sales, causing our business to suffer. In addition, our information
technology systems may be vulnerable to damage or interruption from circumstances beyond our control,
including fire, natural disasters, systems failures, viruses and security breaches. Any such damage or
interruption could have a material adverse effect on our business.
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A cybersecurity incident, other technology disruptions or failure to comply with laws and regulations
relating to privacy and the protection of data relating to individuals could negatively impact our
business, our reputation and our relationships with customers.
We use computers in substantially all aspects of our business operations. We also use mobile devices,
social networking and other online activities to connect with our employees, suppliers, co-manufacturers,
distributors, customers and consumers. Such uses give rise to cybersecurity risks, including security breaches,
espionage, system disruption, theft and inadvertent release of information. Our business involves the storage
and transmission of numerous classes of sensitive and/or confidential information and intellectual property,
including customers’ and suppliers’ information, private information about employees and financial and strategic
information about us and our business partners. Further, as we pursue new initiatives that improve our
operations and cost structure, potentially including acquisitions, we may also be expand and improve our
information technologies, resulting in a larger technological presence and corresponding exposure to
cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with new initiatives or
acquisitions, we may become increasingly vulnerable to such risks. Additionally, while we have implemented
measures to prevent security breaches and cyber incidents, our preventative measures and incident response
efforts may not be entirely effective. The theft, destruction, loss, misappropriation, or release of sensitive and/or
confidential information or intellectual property, or interference with our information technology systems or the
technology systems of third parties on which we rely, could result in business disruption, negative publicity,
brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage all of
which could have a material adverse effect on our business, financial condition or results of operations.
In addition, we are subject to laws, rules and regulations in the United States, the European Union and
other jurisdictions relating to the collection, use and security of personal information and data. Such data
privacy laws, regulations and other obligations may require us to change our business practices and may
negatively impact our ability to expand our business and pursue business opportunities. We may incur
significant expenses to comply with the laws, regulations and other obligations that apply to us. Additionally, the
privacy- and data protection-related laws, rules and regulations applicable to us are subject to significant
change. Several jurisdictions have passed new laws and regulations in this area, and other jurisdictions are
considering imposing additional restrictions. For example, our operations are subject to the European Union’s
General Data Protection Regulation, which imposes data privacy and security requirements on companies
doing business in the European Union, including substantial penalties for non-compliance. The California
Consumer Privacy Act (the “CCPA”), which went into effect on January 1, 2020, imposes similar requirements
on companies handling data of California residents and creates a new and potentially severe statutory damages
framework for (i) violations of the CCPA and (ii) businesses that fail to implement reasonable security
procedures and practices to prevent data breaches. Privacy- and data protection-related laws and regulations
also may be interpreted and enforced inconsistently over time and from jurisdiction to jurisdiction. Any actual or
perceived inability to comply with applicable privacy or data protection laws, regulations, or other obligations
could result in significant cost and liability, litigation or governmental investigations, damage our reputation, and
adversely affect our business.
Disruptions in the worldwide economy may adversely affect our business, results of operations and
financial condition.
The global economy can be negatively impacted by a variety of factors such as the spread or fear of spread
of contagious diseases (such as the recent coronavirus (COVID 19) pandemic) in locations where our products
are sold, man-made or natural disasters, actual or threatened war, terrorist activity, political unrest, civil strife
and other geopolitical uncertainty. Such adverse and uncertain economic conditions may impact distributor,
retailer, foodservice and consumer demand for our products. In addition, our ability to manage normal
commercial relationships with our suppliers, co-manufacturers, distributors, retailers, restaurant and foodservice
customers and consumers and creditors may suffer. Consumers may shift purchases to lower-priced or other
perceived value offerings during economic downturns as a result of various factors, including job losses,
inflation, higher taxes, reduced access to credit, change in federal economic policy and recent international
trade disputes. In particular, consumers may reduce the amount of plant-based food products that they
purchase where there are conventional animal-based protein offerings, which generally have lower retail prices.
In addition, consumers may choose to purchase private label products rather than branded products because
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they are generally less expensive. A decrease in consumer discretionary spending may also result in
consumers reducing the frequency and amount spent on food prepared away from home. Distributors, retailers
and foodservice customers may become more conservative in response to these conditions and seek to reduce
their inventories. Our results of operations depend upon, among other things, our ability to maintain and
increase sales volume with our existing distributors, retailer and foodservice customers, our ability to attract new
consumers, the financial condition of our consumers and our ability to provide products that appeal to
consumers at the right price. Decreases in demand for our products without a corresponding decrease in costs
would put downward pressure on margins and would negatively impact our financial results. Prolonged
unfavorable economic conditions or uncertainty may have an adverse effect on our sales and profitability and
may result in consumers making long-lasting changes to their discretionary spending behavior on a more
permanent basis.
Future acquisitions or investments could disrupt our business and harm our financial condition.
In the future, we may pursue acquisitions or investments that we believe will help us achieve our strategic
objectives. We may not be able to find suitable acquisition candidates, and even if we do, we may not be able to
complete acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately achieve
our goals or realize the anticipated benefits. The pursuit of acquisitions and any integration process will require
significant time and resources and could divert management time and focus from operation of our then-existing
business, and we may not be able to manage the process successfully. Any acquisitions we complete could be
viewed negatively by our customers or consumers. An acquisition, investment or business relationship may
result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations and
subjecting us to additional liabilities, increasing our expenses, and adversely impacting our business, financial
condition and operating results. Moreover, we may be exposed to unknown liabilities related to the acquired
company or product, and the anticipated benefits of any acquisition, investment or business relationship may
not be realized if, for example, we fail to successfully integrate such acquisition into our company. To pay for
any such acquisitions, we would have to use cash, incur debt, or issue equity securities, each of which may
affect our financial condition or the value of our common stock and could result in dilution to our stockholders. If
we incur more debt it would result in increased fixed obligations and could also subject us to covenants or other
restrictions that would impede our ability to manage our operations. Our acquisition strategy could require
significant management attention, disrupt our business and harm our business, financial condition and results of
operations.
A major earthquake, tsunami, tornado or other natural disaster could seriously disrupt our entire
business.
Our corporate offices and research and development functions are located in El Segundo, California, and
our industrial manufacturing facilities are located in Columbia, Missouri. The impact of a major earthquake or
tsunami, or both, or other natural disasters in the Los Angeles area, or a tornado or other natural disaster in the
Columbia area, on our facilities and overall operations is difficult to predict, but such a natural disaster could
seriously disrupt our entire business. Our insurance may not adequately cover our losses and expenses in the
event of such a natural disaster. As a result, natural disasters, such as a major earthquake, tsunami or tornado
in the Los Angeles or Columbia areas or in areas where our co-manufacturers are located, could lead to
substantial losses.
Climate change may negatively affect our business and operations.
There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse
impact on global temperatures, weather patterns and the frequency and severity of extreme weather and
natural disasters. If such climate change has a negative effect on agricultural productivity, we may be subject to
decreased availability or less favorable pricing for certain commodities that are necessary for our products, such
as yellow peas, mung beans, sunflowers, rice, fava bean, canola oil and coconut oil. Due to climate change, we
may also be subjected to decreased availability of water, deteriorated quality of water or less favorable pricing
for water, which could adversely impact our manufacturing and distribution operations.
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The United Kingdom’s withdrawal from the European Union may have a negative effect on global
economic conditions, financial markets and our business.
Following a national referendum and enactment of legislation by the government of the United Kingdom, the
United Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition
period during which it will continue its ongoing and complex negotiations with the European Union relating to the
future trading relationship between the parties. Significant political and economic uncertainty remains about
whether the terms of the relationship will differ materially from the terms before withdrawal, as well as about the
possibility that a so-called “no deal” separation will occur if negotiations are not completed by the end of the
transition period.
These developments, or the perception that any of them could occur, have had and may continue to have a
material adverse effect on global economic conditions and the stability of global financial markets, and may
significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain
financial markets or restrict our access to capital. In addition, as we expand our operations internationally as
part of our growth strategy, we may be further impacted by these developments, including uncertainty
surrounding which set of laws and regulations will apply. Any of these factors could have a material adverse
effect on our business, financial condition and results of operations and reduce the price of our common stock.
Regulatory Risks
Our operations are subject to FDA governmental regulation and other foreign, federal, state and local
regulation, and there is no assurance that we will be in compliance with all regulations.
Our operations are subject to extensive regulation by the FDA, and other foreign, federal, state and local
authorities. Specifically, for products manufactured or sold in the United States we are subject to the
requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA.
This comprehensive regulatory program governs, among other things, the manufacturing, composition and
ingredients, packaging, labeling and safety of food. Under this program, the FDA requires that facilities that
manufacture food products comply with a range of requirements, including hazard analysis and preventive
controls regulations, current good manufacturing practices, or cGMPs, and supplier verification requirements.
Our processing facilities, including those of our co-manufacturers, are subject to periodic inspection by foreign,
federal, state and local authorities. We do not control the manufacturing processes of, and rely upon, our co-
manufacturers for compliance with cGMPs for the manufacturing of our products by our co-manufacturers. If we
or our co-manufacturers cannot successfully manufacture products that conform to our specifications and the
strict regulatory requirements of the FDA or other regulators, we or they may be subject to adverse inspectional
findings or enforcement actions, which could materially impact our ability to market our products, could result in
our co-manufacturers’ inability to continue manufacturing for us, or could result in a recall of our product that
has already been distributed. In addition, we rely upon our co-manufacturers to maintain adequate quality
control, quality assurance and qualified personnel. If the FDA or a comparable state, local or foreign regulatory
authority determines that we or these co-manufacturers have not complied with the applicable regulatory
requirements, our business may be materially impacted.
We seek to comply with applicable regulations through a combination of employing internal experience and
expert personnel to ensure quality-assurance compliance (i.e., assuring that our products are not adulterated or
misbranded) and contracting with third-party laboratories that conduct analyses of products to ensure
compliance with nutrition labeling requirements and to identify any potential contaminants before distribution.
Failure by us or our co-manufacturers to comply with applicable laws and regulations or maintain permits,
licenses or registrations relating to our or our co-manufacturers’ operations could subject us to civil remedies or
penalties, including fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or
manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal
sanctions, which could result in increased operating costs resulting in a material effect on our operating results
and business.
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We are subject to international regulations that could adversely affect our business and results of
operations.
We are subject to extensive regulations internationally where we manufacture, distribute and/or sell our
products. Our products are subject to numerous food safety and other laws and regulations relating to the
sourcing, manufacturing, composition and ingredients, storing, labeling, marketing, advertising and distribution
of these products. For example, in early 2018, we received an inquiry from Canadian officials about the labeling
and composition of products that we export to Canada. We responded promptly to that inquiry, identifying minor
formulation changes that we made under Canadian regulations. If regulators determine that the labeling and/or
composition of any of our products is not in compliance with Canadian law or regulations, or if we or our co-
manufacturers otherwise fail to comply with applicable laws and regulations in Canada or other jurisdictions, we
could be subject to civil remedies or penalties, such as fines, injunctions, recalls or seizures, warning letters,
restrictions on the marketing or manufacturing of the products, or refusals to permit the import or export of
products, as well as potential criminal sanctions. In addition, enforcement of existing laws and regulations,
changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in
increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our
business, financial condition or operating results. In addition, with our expanding international operations, we
could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, and similar
worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper
payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business. While our
policies mandate compliance with these anti-bribery laws, our internal control policies and procedures may not
protect us from reckless or criminal acts committed by our employees, contractors or agents. Violations of these
laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our
results of operations, cash flows and financial condition.
Changes in existing laws or regulations, or the adoption of new laws or regulations may increase our
costs and otherwise adversely affect our business, results of operations and financial condition.
The manufacture and marketing of food products is highly regulated. We, our suppliers and co-
manufacturers are subject to a variety of laws and regulations. These laws and regulations apply to many
aspects of our business, including the manufacture, composition and ingredients, packaging, labeling,
distribution, advertising, sale, quality and safety of our products, as well as the health and safety of our
employees and the protection of the environment.
In the United States, we are subject to regulation by various government agencies, including the FDA, FTC,
Occupational Safety and Health Administration and the Environmental Protection Agency, as well as the
requirements of various state and local agencies, including, in California, the Safe Drinking Water and Toxic
Enforcement Act of 1986 (“Proposition 65”). We are also regulated outside the United States by various
international regulatory bodies. In addition, we are subject to certain third-party private standards, such as
Global Food Safety Initiative, or GFSI, standards and review by voluntary organizations, such as the Council of
Better Business Bureaus’ National Advertising Division. We could incur costs, including fines, penalties and
third-party claims, because of any violations of, or liabilities under, such requirements, including any competitor
or consumer challenges relating to compliance with such requirements. For example, in connection with the
marketing and advertisement of our products, we could be the target of claims relating to false or deceptive
advertising, including under the auspices of the FTC and the consumer protection statutes of some states. In
connection with the composition of our products, we could be the target of claims relating to perceived health
risks, including under Proposition 65 and other state consumer protection statutes.
The regulatory environment in which we operate could change significantly and adversely in the future. Any
change in manufacturing, labeling or packaging requirements for our products may lead to an increase in costs
or interruptions in production, either of which could adversely affect our operations and financial condition. New
or revised government laws and regulations could result in additional compliance costs and, in the event of non-
compliance, civil remedies, including fines, injunctions, withdrawals, recalls or seizures and confiscations, as
well as potential criminal sanctions, any of which may adversely affect our business, results of operations and
financial condition. In particular, recent federal, state and foreign attention to the naming of plant-based meat
products could result in standards or requirements that mandate changes to our current labeling.
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Any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the FDA
or U.S. Department of Agriculture, or USDA, state regulators or similar foreign regulatory authorities
that relate to the use of the word “meat” or other similar words in connection with plant-based protein
products could adversely affect our business, prospects, results of operations or financial condition.
The FDA and the USDA, state regulators or similar foreign regulatory authorities, such as Health Canada or
the CFIA, or authorities of the EU or the EU member states, could take action to impact our ability to use the
term “meat” or similar words (such as “beef”) to describe our products. In addition, a food may be deemed
misbranded if its labeling is false or misleading in any particular way, and the FDA, CFIA, EU member state
authorities or other regulators could interpret the use of the term “meat” or any similar phrase(s) to describe our
plant-based protein products as false or misleading or likely to create an erroneous impression regarding their
composition.
For example, in 2018, the state of Missouri passed a law prohibiting any person engaged in advertising,
offering for sale, or sale of food products from misrepresenting a product as meat that is not derived from
harvested production livestock or poultry. The state of Missouri Department of Agriculture has clarified its
interpretation that products which include prominent disclosure that the product is “made from plants,” or
comparable disclosure such as through the use of the phrase “plant-based,” are not misrepresented under the
Missouri law. Additional states, including Mississippi, have subsequently passed similar laws, and legislation,
that would impose additional requirements on plant-based meat products is currently pending in a number of
states. More recently, in late 2019, bills were introduced in both the House and the Senate of the U.S. Congress
(titled the Real MEAT Act) that would require the word “imitation” to appear as part of the name of plant-based
meat products, and that would give USDA certain oversight over the labeling of plant-based meat products. If
these bills gain traction and ultimately become law, it could require us to identify our products as “imitation” in
our product labels. Further, the USDA has received a petition from the cattle industry requesting that USDA
exclude products not derived from the tissue or flesh of animals that have been harvested in the traditional
manner from being labeled and marketed as “meat,” and exclude products not derived from cattle born, raised
and harvested in the traditional manner from being labeled and marketed as “beef.” The USDA has not yet
responded substantively to this petition but has indicated that the petition is being considered as a petition for a
policy change under the USDA’s regulations. We do not believe that USDA has the statutory authority to
regulate plant-based products under the current legislative framework. Canadian Food and Drug Regulations
also provide requirements for “simulated meat” products, including requirements around composition and
naming. In Europe, the Agriculture Committee of the European Parliament proposed in May 2019 to reserve the
use of “meat” and meat-related terms and names for products that are manufactured from the edible parts of
animals. At country level, however, e.g., in the UK, this proposal was challenged by the House of Lords stating
that there is no evidence that consumers are being misled. If adopted, this bill could require a change to our
labeling and advertising in Europe. Should regulatory authorities take action with respect to the use of the term
“meat” or similar terms, such that we are unable to use those terms with respect to our plant-based products,
we could be subject to enforcement action or recall of our products marketed with these terms, we may be
required to modify our marketing strategy, or require us to identify our products as “imitation” in our product
labels, and our business, prospects, results of operations or financial condition could be adversely affected.
Failure by our suppliers of raw materials or co-manufacturers to comply with food safety, environmental
or other laws and regulations, or with the specifications and requirements of our products, may disrupt
our supply of products and adversely affect our business.
If our suppliers or co-manufacturers fail to comply with food safety, environmental or other laws and
regulations, or face allegations of non-compliance, their operations may be disrupted. Additionally, our co-
manufacturers are required to maintain the quality of our products and to comply with our product specifications
and our suppliers must supply ingredients that meet our internal quality standards. In the event of actual or
alleged non-compliance, we might be forced to find an alternative supplier or co-manufacturer and we may be
subject to lawsuits related to such non-compliance by our suppliers and co-manufacturers. As a result, our
supply of raw materials or finished inventory could be disrupted or our costs could increase, which would
adversely affect our business, results of operations and financial condition. The failure of any co-manufacturer
to produce products that conform to our standards could adversely affect our reputation in the marketplace and
result in product recalls, product liability claims and economic loss. For example, some of our co-manufacturers
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also process products with textured vegetable protein, a GMO product, or animal protein and while we require
them to process our products in separate designated quarters in their facilities, cross-contamination may occur
and result in genetically modified organisms or animal protein in our supply chain. Additionally, actions we may
take to mitigate the impact of any disruption or potential disruption in our supply of raw materials or finished
inventory, including increasing inventory in anticipation of a potential supply or production interruption, may
adversely affect our business, results of operations and financial condition.
Risks Related to Our Intellectual Property
We may not be able to protect our proprietary technology adequately, which may impact our
commercial success.
Our commercial success depends in part on our ability to protect our intellectual property and proprietary
technologies. We rely on a combination of patent protection, where appropriate and available, copyrights, trade
secrets and trademark laws, as well as confidentiality and other contractual restrictions to protect our
proprietary technology. However, these legal means afford only limited protection and may not adequately
protect our proprietary technology or permit us to gain or keep any competitive advantage. As of December 31,
2019, we had one issued U.S. patent and 18 pending patent applications, including five in the United States and
13 international patent applications.
We cannot offer any assurances about which, if any, patents will issue from these applications, the breadth
of any such patents, or whether any issued patents will be found invalid and unenforceable or will be threatened
by third parties. Any successful opposition to these patents or any other patents owned by or, if applicable in the
future, licensed to us could deprive us of rights necessary for the successful commercialization of products that
we may develop. Since patent applications in the United States and most other countries are confidential for a
period of time after filing (in most cases 18 months after the filing of the priority application), we cannot be
certain that we were the first to file on the technologies covered in several of the patent applications related to
our technologies or products. Furthermore, a derivation proceeding can be provoked by a third party, or
instituted by the U.S. Patent and Trademark Office, or USPTO, to determine who was the first to invent any of
the subject matter covered by the patent claims of our applications.
Patent law can be highly uncertain and involve complex legal and factual questions for which important
principles remain unresolved. In the United States and in many international jurisdictions, policy regarding the
breadth of claims allowed in patents can be inconsistent and/or unclear. The U.S. Supreme Court and the Court
of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws
of the United States are interpreted. Similarly, international courts and governments have made, and will
continue to make, changes in how the patent laws in their respective countries are interpreted. We cannot
predict future changes in the interpretation of patent laws by U.S. and international judicial bodies or changes to
patent laws that might be enacted into law by U.S. and international legislative bodies.
Moreover, in the United States, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, enacted in
September 2011, brought significant changes to the U.S. patent system, including a change from a “first to
invent” system to a “first to file” system. Other changes in the Leahy-Smith Act affect the way patent
applications are prosecuted, redefine prior art and may affect patent litigation. The USPTO developed new
regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive
changes to patent law associated with the Leahy-Smith Act became effective on March 16, 2013. The Leahy-
Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our
patent applications and the enforcement or defense of our issued patents, which could have a material adverse
effect on our business and financial condition.
We may not be able to protect our intellectual property adequately, which may harm the value of our
brand.
We believe that our intellectual property has substantial value and has contributed significantly to the
success of our business. Our trademarks, including Beyond Meat, Beyond Burger, Beyond Beef, Beyond
Sausage, Beyond Breakfast Sausage, Beyond Chicken, Beyond Fried Chicken, Beyond Meatball, the Caped
Steer Logo, GO BEYOND, Eat What You Love, The Cookout Classic, The Future of Protein, and The Future of
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Protein Beyond Meat, are valuable assets that reinforce our brand and consumers’ favorable perception of our
products. We also rely on unpatented proprietary expertise, recipes and formulations and other trade secrets
and copyright protection to develop and maintain our competitive position. Our continued success depends, to a
significant degree, upon our ability to protect and preserve our intellectual property, including our trademarks,
trade dress, trade secrets and copyrights. We rely on confidentiality agreements and trademark, trade secret
and copyright law to protect our intellectual property rights.
Our confidentiality agreements with our employees and certain of our consultants, contract employees,
suppliers and independent contractors, including some of our co-manufacturers who use our formulations to
manufacture our products, generally require that all information made known to them be kept strictly
confidential. Nevertheless, trade secrets are difficult to protect. Although we attempt to protect our trade secrets,
our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not
provide an adequate remedy in the event of unauthorized disclosure of such information. In addition, others
may independently discover our trade secrets, in which case we would not be able to assert trade secret rights
against such parties. Further, some of our formulations have been developed by or with our suppliers and co-
manufacturers. As a result, we may not be able to prevent others from using similar formulations. As we begin
to expand globally as part of our growth strategy, we may face additional risks protecting our trade secrets
internationally, where the laws may not be as protective of intellectual property rights as those in the United
States.
We cannot assure you that the steps we have taken to protect our intellectual property rights are adequate,
that our intellectual property rights can be successfully defended and asserted in the future or that third parties
will not infringe upon or misappropriate any such rights. In addition, our trademark rights and related
registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our
trademark rights could prevent us in the future from challenging third parties who use names and logos similar
to our trademarks, which may in turn cause consumer confusion or negatively affect consumers’ perception of
our brand and products. In addition, if we do not keep our trade secrets confidential, others may produce
products with our recipes or formulations. Moreover, intellectual property disputes and proceedings and
infringement claims may result in a significant distraction for management and significant expense, which may
not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no
certainty of success, and an adverse outcome could subject us to liabilities, force us to cease use of certain
trademarks or other intellectual property or force us to enter into licenses with others. Any one of these
occurrences may have a material adverse effect on our business, results of operations and financial condition.
Additionally, the laws of certain international jurisdictions in which our products may be sold may not protect
intellectual property rights to the same extent as the laws of the United States. As a result, we may not be able
to effectively prevent third parties from infringing or otherwise misappropriating our trademark rights in such
jurisdictions. Moreover, failure to obtain adequate trademark rights in these foreign jurisdictions could negatively
impact our ability to expand our business and launch products in certain international markets. Further, we may
not be able to effectively protect our intellectual property rights against unauthorized third parties that obtain the
rights to our trademarks in foreign jurisdictions where we have not yet applied for trademark protections, and we
may expend substantial cost to obtain those trademarks from such third parties. Any one of these occurrences
could reduce our competitive position or otherwise have a material adverse effect on our business, results of
operations and financial condition.
Risks Related to Being a Public Company
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial
statements on a timely basis could be impaired, investors may lose confidence in our financial
reporting and the trading price of our common stock may decline.
Ensuring that we have adequate internal financial and accounting controls and procedures in place to
produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be
re-evaluated frequently. We are in the process of upgrading our information technology systems and
implementing additional financial and management controls, reporting systems and procedures in order to keep
up with the requirements of being a reporting company under the Exchange Act. Additionally, the rapid growth of
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our operations and our being a newly public company have created a need for additional resources within the
accounting and finance functions due to the increasing need to produce timely financial information and to
ensure the level of segregation of duties customary for a U.S. public company. We have hired additional
resources in the accounting and finance function and continue to reassess the sufficiency of finance personnel
in response to these increasing demands and expectations.
As a public company, we are required to document and test our internal control over financial reporting
pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness
of our internal control over financial reporting. Though we are required to disclose changes made to our internal
controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our
internal controls over financial reporting pursuant to Section 404 until our annual report on Form 10-K for the
fiscal year ending December 31, 2020. As an “emerging growth company” as defined in the Jumpstart Our
Business Startups Act (the “JOBS Act”), our independent registered public accounting firm is not required to
formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until
our first annual report required to be filed with the SEC following the later of the date we are no longer an
emerging growth company and the date we are deemed to be an “accelerated filer” or a “large accelerated filer”
as defined in the Exchange Act. The rules governing the standards that must be met for management to assess
our internal control over financial reporting are complex and require significant documentation, testing and
possible remediation. We expect to expend significant resources in developing the necessary documentation
and testing procedures required by Section 404. We cannot be certain that the actions we will be taking to
improve our internal controls over financial reporting will be sufficient, or that we will be able to implement our
planned processes and procedures in a timely manner.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately
report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal
control over financial reporting is effective, or if our independent registered public accounting firm determines
we have a material weakness or significant deficiency in our internal control over financial reporting once that
firm begin its Section 404 reviews, investors may lose confidence in the accuracy and completeness of our
financial reports, the market price of our common stock could decline, and we could be subject to sanctions or
investigations by NASDAQ, the SEC or other regulatory authorities. Failure to remedy any material weakness in
our internal control over financial reporting, or to implement or maintain other effective control systems required
of public companies, could also restrict our future access to the capital markets.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Our disclosure controls and procedures are designed to reasonably assure that information required to be
disclosed by us in reports we file or submit under the Exchange Act is accumulated and communicated to
management, recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people or by an unauthorized override of the
controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient
disclosures due to error or fraud may occur and not be detected.
We are an emerging growth company and we cannot be certain if the reduced disclosure requirements
applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company” (“EGC”) as defined in the JOBS Act. As an EGC, the JOBS Act,
allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until
such pronouncements are made applicable to private companies. We expect to lose our EGC status upon the
filing of the Form 10-K for the year ending December 31, 2020, when we expect to qualify as a Large
Accelerated Filer based upon the current market capitalization of the Company according to Rule 12b-2 of the
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Exchange Act. Therefore, we have elected to use the adoption dates applicable to public companies beginning
in the first quarter of 2020.
For as long as we continue to be an emerging growth company, we intend to take advantage of certain
other exemptions from various reporting requirements that are applicable to other public companies that are not
emerging growth companies including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation and exemptions from the requirements of holding non-binding advisory votes on
executive compensation and stockholder approval of any golden parachute payments not previously approved.
We cannot predict if investors will find our common stock less attractive because we will rely on these
exemptions. If some investors find our common stock less attractive as a result, there may be a less active
trading market for our common stock and our stock price may be more volatile.
The requirements of being a public company will require us to incur increased costs and may strain our
resources, divert management’s attention and affect our ability to attract and retain qualified board
members.
As a public company, we have incurred and will continue to incur significant legal, accounting and other
expenses that we did not incur as a private company. We are subject to the reporting requirements of the
Exchange Act which requires, among other things, that we file with the SEC annual, quarterly and current
reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as
related rules adopted by the SEC and the Nasdaq Global Select Market, impose significant requirements on
public companies, including requiring establishment and maintenance of effective disclosure and financial
controls and changes in corporate governance practices. Further, under the Dodd-Frank Wall Street Reform
and Consumer Protection Act, or the Dodd-Frank Act, the SEC adopted rules and regulations related to
corporate governance and executive compensation, such as “say on pay” and proxy access. Emerging growth
companies are permitted to implement many of these requirements over a longer period and up to five years
following the completion of its initial public offering. We intend to take advantage of this legislation for as long as
we are permitted to do so. In preparation for and upon implementation of these requirements, we will incur
additional compliance-related expenses. Additionally, the SEC and other regulators have continued to adopt
new rules and regulations and make additional changes to existing regulations that require our compliance.
Stockholder activism, the current political environment and the current high level of government intervention and
regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to
additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we
operate our business. We expect the rules and regulations applicable to public companies to continue to
increase our legal and financial compliance costs and to make some activities more time-consuming and costly.
If these requirements divert the attention of our management and personnel from other business concerns, they
could have a material adverse effect on our business, financial condition and results of operations. The
increased costs will decrease our net income or increase our net loss and may require us to reduce costs in
other areas of our business. Furthermore, these rules and regulations could make it more difficult or more costly
for us to obtain certain types of insurance, including director and officer liability insurance, and we may be
forced to accept reduced policy limits and coverage and higher self-insured retention amounts, or incur
substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also
make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board
committees or as executive officers. We cannot predict or estimate the amount or timing of additional costs we
may incur to respond to these requirements.
Risks Related to Ownership of Our Common Stock
Our share price has been and may continue to be highly volatile, and you could lose all or part of your
investment.
The market price of our common stock following our IPO has been and is likely to continue to be highly
volatile and could be subject to wide fluctuations in response to many factors discussed in this “Risk Factors”
section, including:
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the effects of the recent global coronavirus (COVID-19) outbreak;
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general economic, market and political conditions, including negative effects on consumer confidence
and spending levels;
actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in
our quarterly and annual results;
announcements of innovations by us or our competitors;
announcement by competitors or new market entrants of their entry into or exit from the plant-based
protein market;
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overall conditions in our industry and the markets in which we operate;
• market conditions or trends in the packaged food sales industry or in the economy as a whole;
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addition or loss of significant customers or other developments with respect to significant customers;
adverse developments concerning our manufacturers or suppliers;
changes in laws or regulations applicable to our products or business;
our ability to effectively manage our growth and market expectations with respect to our growth;
success of plans for international expansion;
speculation regarding public customer announcements or geographic expansion;
actual or anticipated changes in our growth rate relative to our competitors;
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint
ventures or capital commitments;
additions or departures of key personnel;
competition from existing products or new products that may emerge;
issuance of new or updated research or reports about us or our industry, or positive or negative
recommendations or withdrawal of research coverage by securities analysts;
our failure to meet the estimates and projections of the investment community or that we may otherwise
provide to the public;
fluctuations in the valuation of companies perceived by investors to be comparable to us;
disputes or other developments related to proprietary rights, including patents, and our ability to obtain
intellectual property protection for our products;
litigation or regulatory matters;
announcement or expectation of additional financing efforts;
our cash position;
sales of our common stock by our stockholders;
issuance of equity or debt;
share price and volume fluctuations attributable to inconsistent trading volume levels of our common
stock;
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changes in accounting practices;
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ineffectiveness of our internal controls;
short-selling of our common stock;
negative media or marketing campaigns undertaken by our competitors or lobbyists supporting the
meat industry;
the public’s response to publicity relating to the health aspects or nutritional value of our products; and
other events or factors, many of which are beyond our control.
Furthermore, the stock markets have experienced price and volume fluctuations that have affected and
continue to affect the market prices of equity securities of many companies. These fluctuations often have been
unrelated or disproportionate to the operating performance of those companies. These broad market and
industry fluctuations, as well as general economic, political and market conditions such as recessions, interest
rate changes, tariffs, international currency fluctuations, or the effects of disease outbreaks or pandemics (such
as the recent coronavirus (COVID-19) pandemic), may negatively impact the market price of our common stock.
In the past, companies that have experienced volatility in the market price of their stock have been subject to
securities class action litigation. For example, we are currently subject to a securities case filed against us
alleging federal securities law violations with respect to past disclosure. We are also currently subject to multiple
shareholder derivative lawsuits related, in part, to the securities case. Securities litigation, and any other type of
litigation, brought against us could result in substantial costs and divert our management’s attention from other
business concerns, which could seriously harm our business and adversely affect our results of operations.
Future sales of our common stock in the public market could cause our share price to fall.
Sales of a substantial number of shares of our common stock in the public market could occur at any time.
These sales, or the perception in the market that the holders of a large number of shares of common stock
intend to sell shares, could reduce the market price of our common stock. Moreover, certain holders of our
common stock have rights, subject to certain conditions, to require us to file registration statements covering
their shares or to include their shares in registration statements that we may file for ourselves or other
stockholders. We also have registered all shares of common stock that we may issue under our equity
compensation plans following the IPO or that are issuable upon exercise of outstanding options following the
IPO. These shares can be freely sold in the public market upon issuance and once vested, subject to volume
limitations applicable to affiliates. If any of these additional shares are sold, or if it is perceived that they will be
sold, in the public market, the market price of our common stock could decline.
If securities or industry analysts issue an adverse or misleading opinion regarding our business or
publish unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that industry or
securities analysts publish about us or our business. If one or more of the analysts who cover us ceases
coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial
markets, which in turn could cause our stock price or trading volume to decline. Moreover, if any of the analysts
who cover us downgrade our stock or issue an adverse or misleading opinion regarding us, our business model
or our stock performance, or if our operating results fail to meet the expectations of the investor community, our
stock price could decline.
We have never paid dividends on our capital stock and we do not intend to pay dividends for the
foreseeable future. Consequently, any gains from an investment in our common stock will likely depend
on whether the price of our common stock increases.
We have never declared or paid any dividends on our common stock and do not intend to pay any
dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the
operation of our business and for general corporate purposes. Accordingly, investors should rely on sales of
their common stock after price appreciation, which may never occur, as the only way to realize any future gains
on their investments.
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Our charter documents and Delaware law could prevent a takeover that stockholders consider
favorable and could also reduce the market price of our stock.
Our restated certificate of incorporation and our amended and restated bylaws contain provisions that could
delay or prevent a change in control of our company. These provisions could also make it more difficult for
stockholders to elect directors and take other corporate actions. These provisions include:
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providing for a classified board of directors with staggered, three-year terms;
authorizing our board of directors to issue preferred stock with voting or other rights or preferences that
could discourage a takeover attempt or delay changes in control;
prohibiting cumulative voting in the election of directors;
providing that vacancies on our board of directors may be filled only by a majority of directors then in
office, even though less than a quorum;
prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the
provisions of our restated certificate of incorporation regarding the election and removal of directors
without the required approval of at least 66.67% of the shares entitled to vote at an election of directors;
prohibiting stockholder action by written consent;
limiting the persons who may call special meetings of stockholders; and
requiring advance notification of stockholder nominations and proposals.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our
current management by making it more difficult for stockholders to replace members of our board of directors,
which is responsible for appointing the members of our management. In addition, the provisions of Section 203
of the Delaware General Corporate Law, or the DGCL, govern us. These provisions may prohibit large
stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or
combining with us for a certain period of time without the consent of our board of directors.
These and other provisions in our restated certificate of incorporation and our amended and restated
bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might
be willing to pay in the future for shares of our common stock and result in the market price of our common
stock being lower than it would be without these provisions.
Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and
the federal district courts of the United States of America will be the exclusive forums for substantially all
disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us or our directors, officers, or employees.
Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the
exclusive forum for:
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any derivative action or proceeding brought on our behalf;
any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our
directors, officers, employees or agents to us or our stockholders;
any action asserting a claim against us arising pursuant to any provision of the DGCL, our restated
certificate of incorporation, or our amended and restated bylaws;
any action to interpret, apply, enforce or determine the validity of our restated certificate of incorporation
or our amended and restated bylaws; and
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any action asserting a claim against us that is governed by the internal affairs doctrine;
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provided, that with respect to any derivative action or proceeding brought on our behalf to enforce any liability or
duty created by the Exchange Act or the rules and regulations thereunder, the exclusive forum will be the
federal district courts of the United States of America. Our restated certificate of incorporation further provides
that the federal district courts of the United States of America will be the exclusive forum for resolving any
complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities
Act”).
These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers, or other employees, which may discourage
lawsuits against us and our directors, officers and other employees.
Our ability to utilize our federal net operating loss and tax credit carryforwards may be limited under
Sections 382 and 383 of the Internal Revenue Code (the “Code”).
As of December 31, 2019, we had accumulated federal and state net operating loss carryforwards of
approximately $209.5 million and $143.8 million, respectively. Approximately $117.7 million of the federal net
operating losses do not expire and the remaining federal and state tax loss carryforwards begin to expire in
2031 and 2032, respectively, unless previously utilized. Utilization of the Company’s net operating loss and tax
credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations
provided by the Code and similar state provisions.
The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a
greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-
year period. If we have experienced an ownership change at any time since our incorporation, we may already
be subject to limitations on our ability to utilize our existing net operating losses and other tax attributes to offset
taxable income. In addition, future changes in our stock ownership, which may be outside of our control, may
trigger an ownership change and, consequently, Section 382 and 383 limitations. Similar provisions of state tax
law may also apply to limit our use of accumulated state tax attributes. As a result, if we earn net taxable
income, our ability to use our pre-change net operating loss carryforwards and other tax attributes to offset such
taxable income may be subject to limitations, which could potentially result in increased future income tax
liability to us. We are currently analyzing whether and to what extent we have experienced an ownership
change pursuant to Section 382; and to the extent such change occurred, the impact to the availability of our
tax attributes.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
We do not own any real property. In addition to our headquarters, we lease approximately 30,000
square feet for our Manhattan Beach Project Innovation Center in El Segundo, California under a 5-
year lease expiring January 31, 2022, subject to an option to extend for an additional 24 months. We
also lease approximately 26,000 square feet for our industrial manufacturing plant in Columbia,
Missouri under a lease we recently amended to extend the term to June 30, 2022. We also lease
approximately 64,000 square feet for our manufacturing facility in Columbia, Missouri under a lease
expiring July 31, 2025. The lease term will be automatically extended for two consecutive three-year
periods in accordance with the terms of the lease unless we provide notice terminating the lease at
least one year before its expiration date.
ITEM 3. LEGAL PROCEEDINGS.
We are subject to various legal proceedings and claims that arise in the ordinary course of our business.
The Company establishes an accrued liability for legal matters when those matters present loss contingencies
that are both probable and estimable. Although the outcome of these and other claims cannot be predicted with
certainty, management is not currently able to estimate the reasonable possible amount of loss or range of loss
and does not believe that it is probable that the ultimate resolution of the current matters will have a material
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adverse effect on our business, financial condition, results of operations or cash flows. However, the final
results of any current or future proceeding cannot be predicted with certainty, and until there is final resolution
on any such matter that we may be required to accrue for, we may be exposed to loss in excess of the amount
accrued. Regardless of the outcome, litigation can have an adverse impact on us because of defense and
settlement costs, diversion of management resources, and other factors.
On May 25, 2017, Don Lee Farms, a division of Goodman Food Products, Inc., filed a complaint against us
in the Superior Court of the State of California for the County of Los Angeles asserting claims for breach of
contract, misappropriation of trade secrets, unfair competition under the California Business and Professions
Code, money owed and due, declaratory relief and injunctive relief, each arising out of our decision to terminate
an exclusive supply agreement between us and Don Lee Farms. We deny all of these claims and filed
counterclaims on July 27, 2017, alleging breach of contract, unfair competition under the California Business
and Professions Code and conversion. In October 2018, Don Lee Farms filed an amended complaint that
added ProPortion Foods, LLC (one of Beyond Meat’s current contract manufacturers) as a defendant,
principally for claims arising from ProPortion’s alleged use of Don Lee Farms’ alleged trade secrets, and for
replacing Don Lee Farms as Beyond Meat’s co-manufacturer. ProPortion filed an answer denying all of Don Lee
Farms’ claims and a cross-complaint against Beyond Meat asserting claims of total and partial equitable
indemnity, contribution, and repayment. On March 11, 2019, Don Lee Farms filed a second amended complaint
to add claims of fraud and negligent misrepresentation against us. On May 30, 2019, the judge denied our
motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to proceed. On June
19, 2019, the Company filed an answer denying Don Lee Farms' claims. On January 27, 2020, Don Lee Farms
filed a third amended complaint to add three individual defendants, all of whom are current or former employees
of ours, including Mark Nelson, our Chief Financial Officer and Treasurer, to Don Lee Farms’ existing fraud and
negligent misrepresentation claims alleging that those individuals were involved in the alleged fraud and
negligent misrepresentation. The individual defendants deny all allegations of fraud and negligent
misrepresentation. On January 24, 2020, a writ judge granted Don Lee Farms a right to attach in the amount of
$628,689 on the grounds that Don Lee Farms had established a “probable validity” of its claim that we owe it
money for a small batch of unpaid invoices. This determination was not made by the trial judge. The trial judge
has yet to determine the legitimacy or merits of Don Lee Farms’ claims. The previous trial date, May 18, 2020,
has been continued. Trial is currently set for February 8, 2021.
Don Lee Farms is seeking from Beyond Meat and ProPortion unspecified compensatory and punitive
damages, declaratory and injunctive relief, including the prohibition of Beyond Meat’s use or disclosure of the
alleged trade secrets, and attorneys’ fees and costs. We are seeking from Don Lee Farms monetary damages,
restitution of monies paid to Don Lee Farms, and attorneys’ fees and costs. ProPortion is seeking indemnity,
contribution, or repayment from us of any or all damages that ProPortion may be found liable to Don Lee
Farms, and attorneys’ fees and costs.
We believe we were justified in terminating the supply agreement with Don Lee Farms, that we did not
misappropriate their alleged trade secrets, that we are not liable for the fraud or negligent misrepresentation
alleged in the proposed second amended complaint, that Don Lee Farms is liable for the conduct alleged in our
cross-complaint, and that we are not liable to ProPortion for any indemnity, contribution, or repayment, including
for any damages or attorneys’ fees and costs. We are currently in the process of litigating this matter and intend
to vigorously defend ourselves and our current and former employees against the claims. We cannot assure
you that Don Lee Farms or ProPortion will not prevail in all or some of their claims against us or the individual
defendants, or that we will prevail in some or all of our claims against Don Lee Farms. For example, if Don Lee
Farms succeeds in the lawsuit, we could be required to pay damages, including but not limited to contract
damages reasonably calculated at what we would have paid Don Lee Farms to produce our products through
2019, the end of the contract term, and Don Lee Farms could also claim some ownership in the intellectual
property associated with the production of certain of our products or in the products themselves, and thus claim
a stake in the value we have derived and will derive from the use of that intellectual property after we terminated
our supply agreement with Don Lee Farms. Based on our current knowledge, we have determined that the
amount of any material loss or range of any losses that is reasonably possible to result from this lawsuit is not
estimable.
45
On January 30, 2020, Larry Tran, a purported shareholder of Beyond Meat, filed a putative securities class
action lawsuit in the United States District Court for the Central District of California against Beyond Meat and
two of our executive officers, our President and CEO, Ethan Brown, and our Chief Financial Officer and
Treasurer, Mark Nelson. The lawsuit asserts claims under Sections 10(b) and 20(a) of the Exchange Act, and is
premised on allegedly false or misleading statements, and alleged non-disclosure of material facts, related to
our public disclosures regarding our ongoing litigation with Don Lee Farms during the proposed class period of
May 2, 2019 to January 27, 2020. We believe the claims are without merit and intend to vigorously defend all
claims asserted.
On March 16, 2020, Eric Weiner, a purported shareholder of Beyond Meat, filed a shareholder derivative
lawsuit in the United States District Court for the Central District of California, putatively on behalf of the
Company, against two of our executive officers, our President and CEO, Ethan Brown, and our Chief Financial
Officer and Treasurer, Mark Nelson, and each of our directors, including one former director, who signed our
initial public offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the
Exchange Act, claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of
unjust enrichment and waste of corporate assets, all relating to our ongoing litigation with Don Lee Farms,
related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 16,
2020, and the securities case brought against us. Based on the early stage of this matter, we are unable to
estimate potential losses, if any, related to this lawsuit.
On March 18, 2020, Kimberly Brink and Melvyn Klein, purported shareholders of Beyond Meat, filed a
shareholder derivative lawsuit in the United States District Court for the Central District of California, putatively
on behalf of the Company, against two of our executive officers, our President and CEO, Ethan Brown, and our
Chief Financial Officer and Treasurer, Mark Nelson, and each of our directors who signed our initial public
offering registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act,
claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust
enrichment and waste of corporate assets, all relating to our ongoing litigation with Don Lee Farms, related
actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to March 18, 2020,
and the securities case brought against us. Based on the early stage of this matter, we are unable to estimate
potential losses, if any, related to this lawsuit.
Also on March 18, 2020, Nazrin Massaro filed a putative class action lawsuit in the United States District
Court for the Southern District of California against Beyond Meat and People for the Ethical Treatment of
Animals, Inc. (“PETA”). The lawsuit asserts claims under the Telephone Consumer Protection Act and alleges
that PETA sent unsolicited text message advertisements promoting our products to the putative class members
in violation of consumers’ privacy rights. The lawsuit further alleges that PETA sent the text messages at the
direction, and/or under the control, of Beyond Meat. The plaintiff seeks injunctive relief and damages on behalf
of herself and the putative class members. We believe the claims are without merit and intend to vigorously
defend all claims asserted.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock began trading on the Nasdaq Global Select Market under the symbol “BYND” on May 2,
2019. Prior to that date, there was no public trading market for our common stock.
Holders
As of March 18, 2020, there were 98 holders of record of our common stock. This number does not include
beneficial owners whose shares are held by nominees in street name.
46
Dividends
The Company has not declared or paid any dividends, or authorized or made any distribution upon or with
respect to any class or series of its capital stock.
Performance Graph
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed”
with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities
Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or
Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph depicts the total cumulative stockholder return on our common stock from May 2, 2019,
the first day of trading of our common stock on the Nasdaq Global Select Market, through December 31, 2019,
relative to the performance of the NASDAQ Composite Index and the S&P Food and Beverage Select Index, a
peer group that includes Beyond Meat. The graph assumes an initial investment of $100.00 at the close of
trading on May 2, 2019 and that all dividends paid by companies included in these indices have been
reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future
stock price performance.
Copyright 2020 Standard & Poor’s, a division of S&P Global, All rights reserved.
Use of Proceeds from IPO
On May 6, 2019, we completed our IPO pursuant to a Registration Statement filed on Form S-1 (File No.
333-228453) and declared effective by the SEC on May 1, 2019.
47
As previously reported, we received approximately $252.4 million of net proceeds from the IPO. The net
proceeds were initially invested in short-term, interest-bearing, investment grade securities. There has been no
material change in the planned use of proceeds from our IPO as described in the prospectus filed with the SEC
pursuant to Rule 424(b)(4) on May 3, 2019. We used $14.7 million of our net proceeds from the IPO to invest in
existing and additional manufacturing capacity, $46.6 million to expand our research and development and our
sales and marketing capabilities, and $79.3 million for working capital and general corporate purposes.
48
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction with “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” “Risk Factors,” and our audited financial statements
and the related notes thereto included elsewhere in this report. Our historical results are not necessarily
indicative of the results that may be expected in the future.
(in thousands, except share and per share data)
Year Ended December 31,
Statements of Operations Data:
Net revenues ............................................................ $
Cost of goods sold ....................................................
Gross profit (loss) .....................................................
Research and development expenses .....................
Selling, general and administrative expenses ..........
Restructuring expenses(1) .........................................
Total operating expenses..........................................
Loss from operations ................................................
Other expense:
Interest expense .......................................................
Remeasurement of warrant liability(2) .......................
Other, net ..................................................................
Total other expense, net ...........................................
Loss before taxes .....................................................
Income tax expense .................................................
Net loss .................................................................... $
Net loss per share available to common
stockholders—basic and diluted(3)(4) ...................... $
2019
297,897 $
2018
2017
2016
87,934 $
32,581 $
16,182
198,141
99,756
20,650
74,726
4,869
100,245
(489)
(3,071)
(12,503)
3,629
(11,945)
(12,434)
9
70,360
17,574
9,587
34,461
1,515
45,563
34,772
(2,191)
5,722
17,143
3,509
26,374
22,494
(6,312)
5,782
12,672
—
18,454
(27,989)
(28,565)
(24,766)
(1,128)
(1,120)
352
(1,896)
(29,885)
1
(1,002)
(385)
(427)
(1,814)
(30,379)
5
(380)
—
—
(380)
(25,146)
3
(12,443) $
(29,886) $
(30,384) $
(25,149)
(0.29) $
(4.75) $
(5.57) $
(5.51)
Weighted average common shares outstanding—
basic and diluted(4) ................................................
42,274,777
6,287,172
5,457,629
4,566,757
(in thousands)
Balance Sheet Data:
Cash and cash equivalents (5) ............................................... $
Working capital(6) ................................................................... $
Property, plant and equipment, net ....................................... $
As of December 31,
2019
275,988 $
2018
54,271 $
355,897 $
77,659 $
47,474 $
30,527 $
Total assets ........................................................................... $
451,923 $ 133,749 $
Total debt .............................................................................. $
Stock warrant liability(2) ......................................................... $
Convertible preferred stock(7) ................................................ $
Stockholders' equity (deficit) ................................................. $
30,569 $
30,388 $
— $
1,918 $
— $ 199,540 $
148,194
384,090 $ (121,750) $
(95,913)
_________
(1) Restructuring expenses include expenses related to the impairment write-off of long-lived assets and legal and other
expenses associated with a dispute with a co-manufacturer. See Note 3, Restructuring, to the Notes to Financial
Statements, and Part I, Item 3, Litigation, included elsewhere in this report.
(2) Reflects remeasurement of warrant liability in connection with IPO in the year ended December 31, 2019. See Note 6,
Debt—Stock Warrant Liability, to the Notes to Financial Statements included elsewhere in this report.
49
2017
39,035
39,819
14,118
66,463
4,915
550
(3) See Note 11, Net Loss Per Share Available to Common Stockholders, to the Notes to Financial Statements included
elsewhere in this report, for an explanation of the method used to calculate net loss per share available to common
stockholders and the number of shares used in the computation of the per share amounts.
(4) For the years ended December 31, 2018 and 2017, all common stock and per share amounts have been adjusted
retrospectively to reflect the 3-for-2 reverse stock split of our common stock on January 2, 2019. See Note 2, Summary
of Significant Accounting Policies—Reverse Stock Split, to the Notes to Financial Statements included elsewhere in this
report.
(5) Reflects net proceeds received by the Company of approximately $252.4 million in connection with the IPO and
approximately $37.4 million in connection with the Secondary Offering in the year ended December 31, 2019. See Note
1, Introduction—Initial Public Offering and —Secondary Public Offering, to the Notes to Financial Statements included
elsewhere in this report.
(6) Working capital is defined as total current assets minus total current liabilities.
(7) Reflects automatic conversion of convertible preferred stock into common stock upon closing of IPO. See Note 7,
Stockholders’ Equity (Deficit) and Convertible Preferred Stock, to the Notes to Financial Statements included elsewhere
in this report.
50
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those discussed in the forward-looking statements as a result of various
factors, including those set forth in Part I, Item 1A, “Risk Factors,” and “Note Regarding Forward-Looking
Statements” included elsewhere in this report. The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our audited financial statements and related notes
included elsewhere in this report, as well as the information presented under “Selected Financial Data.”
Overview
Beyond Meat is one of the fastest growing food companies in the United States, offering a portfolio of
revolutionary plant-based meats. We build meat directly from plants, an innovation that enables consumers to
experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying
the nutritional and environmental benefits of eating our plant-based meat products. Our brand commitment, “Eat
What You Love,” represents a strong belief that by eating our plant-based meats, consumers can enjoy more,
not less, of their favorite meals, and by doing so help address concerns related to human health, climate
change, resource conservation, and animal welfare. The success of our breakthrough innovation model and
products has allowed us to appeal to a broad range of consumers, including those who typically eat animal-
based meats, positioning us to compete directly in the $1.4 trillion global meat industry.
We sell a range of plant-based products across the three main meat platforms of beef, pork and poultry.
They are offered in ready-to-cook formats (generally merchandised at retail in the meat case), which we refer to
as our “fresh” platform, and ready-to-heat formats (merchandised at retail in the freezer), which we refer to as
our “frozen” platform. As of December 31, 2019, our products were available in approximately 77,000 retail and
restaurant and foodservice outlets in more than 65 countries, across mainstream grocery, mass merchandiser,
club and convenience store, and natural retailer channels, direct to consumer, and various food-away-from-
home channels, including restaurants, foodservice outlets and schools.
On May 6, 2019, we completed our IPO, in which we sold 11,068,750 shares of our common stock. The
shares began trading on the Nasdaq Global Select Market on May 2, 2019. The shares were sold at a public
offering price of $25.00 per share for net proceeds of approximately $252.4 million, after deducting underwriting
discounts and commissions of $19.4 million and issuance costs of approximately $4.9 million payable by us.
Upon the closing of the IPO, all outstanding shares of our convertible preferred stock automatically converted
into 41,562,111 shares of common stock on a one-for-one basis, and warrants exercisable for convertible
preferred stock were automatically converted into warrants exercisable for 160,767 shares of common stock.
On August 5, 2019, we completed our Secondary Offering, in which we sold 250,000 shares. The shares
were sold at a public offering price of $160.00 per share for net proceeds to the Company of approximately
$37.4 million, after deducting underwriting discounts and commissions of $1.5 million and issuance costs of
approximately $1.1 million payable by us. Total Secondary Offering costs paid in 2019 were approximately $2.2
million, of which approximately $1.1 million was capitalized to reflect the costs associated with the issuance of
new shares and offset against proceeds from the Secondary Offering. We did not receive any proceeds from
the sale of common stock by the selling stockholders in the Secondary Offering.
We continue to experience strong sales growth over prior periods. Net revenues increased to $297.9 million
in 2019 from $87.9 million in 2018 and $32.6 million in 2017, representing a 202% compound annual growth
rate. The Beyond Burger accounted for approximately 64%, 70% and 48% of our gross revenues in 2019, 2018
and 2017, respectively. We believe that sales of the Beyond Burger will continue to constitute a significant
portion of our revenues, income and cash flow for the foreseeable future. We have generated losses from
inception. Net loss in 2019, 2018, and 2017 was $12.4 million, $29.9 million, and $30.4 million, respectively, as
we invested in innovation and growth of our business.
We operate on a fiscal calendar year, and each interim quarter is comprised of one 5-week period and two
4-week periods, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on
51
December 31. As a result, our first and fourth fiscal quarters may have more or fewer days included than a
traditional 91-day fiscal quarter.
Components of Our Results of Operations and Trends and Other Factors Affecting Our Business
Net Revenues
We generate net revenues primarily from sales of our products to our customers across mainstream
grocery, mass merchandiser, club and convenience store, and natural retailer channels, direct to consumer, and
various food-away-from-home channels, including restaurants, foodservice outlets and schools, mainly in the
United States.
We continue to experience strong sales growth over prior periods. The following factors and trends in our
business have driven net revenue growth over prior periods and are expected to be key drivers of our net
revenue growth for the foreseeable future:
•
•
•
•
•
•
•
increased penetration across our restaurant and foodservice channel, including increased desire by
restaurant and foodservice establishments, including large FSR and/or global QSR customers, to add
plant-based products to their menus and to highlight these offerings, and our retail channel, including
mainstream grocery, mass merchandiser, club and convenience store, and natural retailer customers;
distribution expansion and increased velocity of our fresh product sales across our channels, by which
we mean that the volume of our products sold per outlet has generally increased period-over-period
due to greater adoption of and demand for our products;
increased international sales of our products across geographies, markets and channels as we
continue to grow our numbers of international customers;
our continued innovation, including enhancing existing products and introducing new products across
our plant-based beef, pork and poultry platforms that appeal to a broad range of consumers, including
those who typically eat animal-based meat;
enhanced marketing efforts as we continue to build our brand and drive consumer adoption of our
products, including scaling our GO BEYOND marketing campaign launched in February 2019, which
seeks to mobilize our ambassadors to help raise brand awareness, define the category and remain its
leader;
overall market trends, including growing consumer awareness and demand for nutritious, convenient
and high protein plant-based foods; and
increased production levels as we scale production to meet demand for our products across our
distribution channels both domestically and internationally.
In addition to the factors and trends above, we expect the following to positively impact net revenues going
forward:
•
•
expansion of our own internal production facilities domestically and abroad to produce our woven
proteins, blends of flavor systems and binding systems, and potentially convert our woven proteins into
packaged products, while forming additional strategic relationships with co-manufacturers; and
localized production to increase the availability and speed with which we can get our products to
customers internationally.
Net revenues from sales in our retail channel increased by 185.2% in 2019 to $144.8 million from
$50.8 million in 2018, and by 99.2% in 2018 from $25.5 million in 2017. Net revenues from sales in our
restaurant and foodservice channel increased by 312.0% in 2019 to $153.1 million from $37.1 million in 2018,
and by 424.0% in 2018 from $7.1 million in 2017. We expect further growth in both channels as we increase our
production capacity in response to demand, scale internationally, add new customers and increase sales
velocities at existing customers.
52
We distribute our products internationally, using distributors in more than 65 countries worldwide as of
December 31, 2019. In 2019, we commenced co-manufacturing in Canada and also expanded our partnership
with one of our distributors to co-manufacture our innovative plant-based meats at a new co-manufacturing
facility built by our distributor in the Netherlands, construction of which was completed in the first quarter of
2020.
Our international net revenues (which exclude revenues from Canada) are included in our retail and
restaurant and foodservice channels and were approximately 16%, 8% and 1%, respectively, of our net
revenues in 2019, 2018 and 2017. Substantially all of our long-lived assets are in the United States. Net
revenues from sales to the Canadian market are included with net revenues from sales to the United States
market. As the Company accelerates international expansion initiatives, net revenues from international sales
are expected to continue to grow.
Over the next few years, the main driver of growth in our net revenues is expected to be sales of our fresh
products, primarily the Beyond Burger, in both our retail channel and our restaurant and foodservice channel,
including strategic and global customers both in the United States and Canada, and in other international
locations.
As we seek to continue to rapidly grow our net revenues, we face several challenges. In 2017, continuing
into 2018, demand for our products exceeded our expectations and production capacity, significantly
constraining our net revenue growth relative to our total demand opportunity. While we have significantly
expanded our production capacity to address production shortfall, we may experience a lag in production
relative to customer demand if our growth rate exceeds our expectations.
We routinely offer sales discounts and promotions through various programs to customers and consumers.
These programs include rebates, temporary on-shelf price reductions, off-invoice discounts, retailer
advertisements, product coupons and other trade activities. We anticipate needing to offer more trade and
promotion discounting, primarily within the retail channel, to match competition pricing and promotions. The
expense associated with these discounts and promotions is estimated and recorded as a reduction in total
gross revenues in order to arrive at reported net revenues. We anticipate that these promotional activities could
impact our net revenues and that changes in such activities could impact period-over-period results.
In addition, because we do not have any purchase commitments from our distributors or customers, the
amount of net revenues we recognize will vary from period to period depending on the volume and the channels
through which our products are sold, causing variability in our results.
We expect to face increasing competition across all channels, especially as additional plant-based protein
product brands continue to enter the marketplace.
In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The
COVID-19 pandemic has continued to spread and has already caused severe global disruptions. The extent of
COVID-19’s effect on our operational and financial performance will depend on future developments, including
the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering
the rapidly evolving landscape. For example, the impact of COVID-19 on any of our suppliers, co-
manufacturers, distributors or transportation or logistics providers may negatively affect the price and availability
of our ingredients and/or packaging materials and impact our supply chain. Additionally, if we are forced to scale
back hours of production or close our production facilities or our Manhattan Beach Project Innovation Center in
response to the pandemic, we expect our business, financial condition and results of operations would be
materially adversely affected. In addition, our growth strategy to expand our operations internationally may be
impeded. We may also be impacted by decreased customer and consumer demand as a result of event
cancellations and social distancing, government-imposed restrictions on public gatherings and businesses,
shelter-in place orders and temporary restaurant, retail and grocery store closures. If the pandemic continues to
evolve into a severe worldwide health crisis, the disease could have a material adverse effect on our business,
results of operations, financial condition and cash flows and adversely impact the trading price of our common
stock.
53
Gross Profit (Loss)
Gross profit (loss) consists of our net revenues less cost of goods sold. Our cost of goods sold primarily
consists of the cost of raw materials and ingredients for our products, direct labor and certain supply costs, co-
manufacturing fees, in-bound and internal shipping and handling costs incurred in manufacturing our products,
plant and equipment overhead, depreciation and amortization expense, as well as the cost of packaging our
products. In order to keep pace with demand, we have had to very quickly scale production and we have not
always been able to meet all demand for our products. As a result, we have had to quickly expand our sources
of supply for our core protein inputs such as pea protein. Our growth has also significantly increased facility and
warehouse utilization rates. We intend to continue to increase our production capabilities at our two in-house
manufacturing facilities in Columbia, Missouri, while expanding our co-manufacturing capacity and exploring
additional production facilities domestically and abroad. As a result, we expect our cost of goods sold in
absolute dollars to increase to support our growth. However, we expect such expenses to decrease as a
percentage of net revenues over time as we continue to scale our business.
Over the next several years, we continue to expect that gross profit improvements will be delivered primarily
through improved volume leverage and throughput, greater internalization and geographic localization of our
manufacturing footprint, materials and packaging input cost reductions, tolling fee efficiencies, and improved
supply chain logistics and distribution costs. We intend to pass some of these cost savings on to the consumer
as we pursue our goal to achieve price parity with animal protein in at least one of our product categories by
2024.
Gross margin improved by 1,350 basis points to 33.5% in 2019 from 20.0% in 2018 and by 26.7 basis
points in 2018 from (6.7)% in 2017. Gross margin benefited from an increase in the amount of products sold,
improved production efficiencies and from a greater proportion of revenues from products in our fresh platform
which have a higher net selling price per pound. We are also working to improve gross margin through
ingredient cost savings achieved through scale of purchasing and through expanding our co-manufacturing
network and negotiating lower tolling fees. However, in the near term, margin improvements may be impacted
by our focus on growing our customer base, expanding into new geographies and markets, enhancing our
production infrastructure, improving our innovation capabilities, enhancing our product offerings and increasing
consumer engagement.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of personnel and related expenses for our research
and development staff, including salaries, benefits, bonuses, and share-based compensation, scale-up
expenses, and depreciation and amortization expense on research and development assets. Our research and
development efforts are focused on enhancements to our product formulations and production processes in
addition to the development of new products. We expect to continue to invest substantial amounts in research
and development, as evidenced in the build-out of our state-of-the-art Manhattan Beach Project Innovation
Center in 2018. Research and development and innovation are core elements of our business strategy, as we
believe they represent a critical competitive advantage for us. We believe that we need to continue to rapidly
innovate in order to be able to continue to capture a larger market share of consumers who typically eat animal-
based meats. We expect these expenses to increase in absolute dollars, but to decrease as a percentage of net
revenues as we continue to scale production.
Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses consist primarily of selling, marketing and administrative expenses, including personnel
and related expenses, share-based compensation, outbound shipping and handling costs, non-manufacturing
rent expense, depreciation and amortization expense on non-manufacturing assets and other non-production
operating expenses. Marketing and selling expenses include share-based compensation awards to brand
ambassadors, advertising costs, costs associated with consumer promotions, product samples and sales aids
incurred to acquire new customers, retain existing customers and build our brand awareness. Administrative
expenses include the expenses related to management, accounting, legal, IT, and other office functions. We
54
expect SG&A expenses in absolute dollars to increase as we increase our domestic and international expansion
efforts to meet our product demand and incur costs related to our status as a public company.
Our selling and marketing expenses are expected to significantly increase, both through a greater focus on
marketing and through additions to our sales and marketing organizations domestically and abroad. We expect
to continue to significantly expand our marketing efforts to achieve greater brand awareness, accelerate our
international expansion initiatives, attract new customers, drive consumer adoption of our products, and
increase market penetration, including through the expansion of our GO BEYOND ambassador program, as
well as the creation of an advisory board of leading experts in health and medicine to ensure that we have
access to the latest thinking on peer-reviewed research on health, nutrition and ingredients.
We have historically had a very small sales force, with only nine full-time sales employees as of
December 31, 2017 growing to 33 full-time sales employees as of December 31, 2019. As we continue to grow,
including internationally, we expect to expand our sales force to address additional opportunities, which would
substantially increase our selling expense. Our administrative expenses are expected to increase as a public
company with increased personnel cost in accounting, legal, IT and compliance-related functions.
Restructuring Expenses
In May 2017, management approved a plan to terminate an exclusive supply agreement with one of our co-
manufacturers. For a discussion of these expenses, see Note 3, Restructuring, to the Notes to Financial
Statements, and Part I, Item 3, Legal Proceedings, included elsewhere in this report.
Seasonality
Generally, we expect to experience greater demand for certain of our products during the summer grilling
season. In each of 2019, 2018 and 2017, we experienced strong net revenue growth compared to the previous
year, which masked this seasonal impact. As our business continues to grow, we expect to see additional
seasonality effects, especially within our retail channel, with revenue contribution from this channel tending to
be greater in the second and third quarters of the year.
Results of Operations
The following table sets forth selected items in our statements of operations for the periods presented:
(in thousands)
Net revenues .......................................................................... $
Cost of goods sold ..................................................................
Gross profit (loss) ...................................................................
Research and development expenses ....................................
Selling, general and administrative expenses .........................
Restructuring expenses ..........................................................
Total operating expenses ........................................................
Loss from operations .............................................................. $
Year Ended December 31,
2019
297,897 $
198,141
99,756
20,650
74,726
4,869
100,245
2018
2017
87,934 $
70,360
17,574
9,587
34,461
1,515
45,563
32,581
34,772
(2,191)
5,722
17,143
3,509
26,374
(489) $
(27,989) $
(28,565)
55
The following table presents selected items in our statements of operations as a percentage of net revenues
for the respective periods presented:
Net revenues ..........................................................................
Cost of goods sold ..................................................................
Gross profit (loss) ...................................................................
Research and development expenses ....................................
Selling, general and administrative expenses .........................
Restructuring expenses ..........................................................
Total operating expenses ........................................................
Loss from operations ..............................................................
Year Ended December 31,
2019
2018
2017
100.0 %
100.0 %
100.0 %
66.5
33.5
6.9
25.1
1.6
33.6
80.0
20.0
10.9
39.2
1.7
51.8
106.7
(6.7)
17.6
52.6
10.8
81.0
(0.2)%
(31.8)%
(87.7)%
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net Revenues
(in thousands)
Net revenues:
Year Ended December 31,
Change
2019
2018
Amount
%
Gross Fresh Platform ............................................ $
Gross Frozen Platform ..........................................
Less: Discounts .....................................................
306,585 $
81,686 $ 224,899
17,772
(26,460)
15,896
1,876
(9,648)
(16,812)
Net revenues ....................................................... $
297,897 $
87,934 $ 209,963
275.3%
11.8%
174.3%
238.8%
(in thousands)
Net revenues:
Year Ended December 31,
Change
2019
2018
Amount
%
Retail ..................................................................... $
Restaurant and Foodservice .................................
144,809 $
50,779 $
94,030
153,088
37,155
115,933
Net revenues ....................................................... $
297,897 $
87,934 $ 209,963
185.2%
312.0%
238.8%
Net revenues increased by $210.0 million, or 238.8%, in 2019, as compared to the prior year primarily
due to strong growth in sales volumes of products in our fresh platform across both our retail and our
restaurant and foodservice channels, driven by expansion in the number of retail and restaurant and
foodservice outlets, including new strategic customers, new international customers, higher sales velocities
from our existing customers and contribution from new products introduced in 2019. Net revenues from
international customers (excluding the Canadian market) are included in our retail and restaurant and
foodservice channels and were approximately 16% of net revenues in 2019, as compared to approximately
8% of net revenues in the prior year.
Gross revenues from sales of products in our fresh platform in 2019 increased $224.9 million, or 275.3%,
as compared to the prior year primarily due to increases in sales of all of our fresh platform products. Gross
revenues from sales of products in our frozen platform in 2019 increased primarily from sales of Beyond Beef
Crumbles, partially offset by the decline in sales of our frozen chicken strip product line which was
discontinued in the first quarter of 2019. In 2019, gross revenues from the Beyond Burger, all Beyond
Sausage flavors, Beyond Beef and Beyond Beef Crumbles were approximately 64%, 23%, 8% and 5%,
respectively, compared to approximately 70%,12%, 0% and 9%, respectively, in 2018.
56
Net revenues from sales through our retail channel in 2019 increased $94.0 million, or 185.2%, primarily
due to expansion in the number of retail outlets, increased sales of the Beyond Burger and Beyond Sausage,
as well as the introduction of Beyond Beef. Net revenues from sales through our restaurant and foodservice
channel in 2019 increased $115.9 million, or 312.0%, primarily due to expansion in the number of restaurant
and foodservice outlets, including new strategic customers and international customers, increases in sales of
the Beyond Burger, as well as due to increased sales of Beyond Sausage and the introduction of Beyond
Beef.
The following tables present volume of our products sold in pounds:
(in thousands)
Retail:
Year Ended December 31,
Change
2019
2018
Amount
%
Fresh Platform ....................................................
Frozen Platform ..................................................
Total ..................................................................
22,350
1,813
24,163
6,025
2,687
8,712
16,325
(874)
15,451
271.0%
(32.5)
177.4%
(in thousands)
Restaurant and Foodservice:
Year Ended December 31,
Change
2019
2018
Amount
%
Fresh Platform ....................................................
Frozen Platform ..................................................
Total ..................................................................
25,475
1,734
27,209
5,801
729
6,530
19,674
1,005
20,679
339.1%
137.9%
316.7%
Cost of Goods Sold
(in thousands)
Cost of goods sold ................................................ $
2019
198,141 $
2018
Amount
70,360 $ 127,781
%
181.6%
Year Ended December 31,
Change
Cost of goods sold increased by $127.8 million, or 181.6%, in 2019 as compared to the prior year,
primarily due to the increase in the sales volume of our products. Cost of goods sold in 2019 and 2018
included $6.4 million and $0.8 million, respectively, in write off of excess and obsolete inventories.
Gross Profit and Gross Margin
(in thousands)
Gross profit ........................................................... $
Gross margin ........................................................
2019
99,756
2018
17,574
Amount
$
82,182
$
33.5%
20.0%
N/A
%
467.6%
N/A
Year Ended December 31,
Change
Gross profit in 2019 was $99.8 million, or 33.5% of net revenues, as compared to gross profit of
$17.6 million, or 20% of net revenues, in the prior year, an improvement of $82.2 million. The improvement in
gross profit and gross margin was primarily due to an increase in the volume of products sold, with resulting
operating leverage, and improved production efficiencies. The greater proportion of product revenues from
our fresh platform also contributed to the improvement in gross margin, due to a higher net selling price per
pound of products in our fresh versus frozen platform. The increase in gross margin was partially offset by
temporary disruptions related to capacity expansion projects at two co-manufacturing partners’ plants in the
fourth quarter of 2019. As disclosed in Note 2, Summary of Significant Accounting Policies—Shipping and
Handling Costs, in the Notes to Financial Statements included elsewhere in this report, we include outbound
shipping and handling costs within SG&A expenses. As a result, our gross profit and gross margin may not be
comparable to other entities that present all shipping and handling costs as a component of cost of goods
sold.
57
Research and Development Expenses
(in thousands)
Research and development expenses .................. $
2019
2018
Amount
20,650 $
9,587 $
11,063
%
115.4%
Year Ended December 31,
Change
Research and development expenses increased $11.1 million, or 115.4%, in 2019, as compared to the
prior year. Research and development expenses increased primarily due to higher headcount, higher scale-up
expenses and higher depreciation and amortization expense compared to the prior year.
SG&A Expenses
(in thousands)
Selling, general and administrative expenses ....... $
2019
2018
Amount
74,726 $
34,461 $
40,265
%
116.8%
Year Ended December 31,
Change
SG&A expenses increased by $40.3 million, or 116.8%, in 2019, as compared to the prior year. The
increase was primarily due to $12.4 million in higher salaries, bonuses and related expenses due to higher
headcount, $10.4 million in higher share-based compensation expense, including $3.2 million relating to
equity awards made to brand ambassadors, $4.8 million in higher outbound shipping and handling expenses,
$3.1 million in higher broker and distributor commissions, $2.4 million in higher legal expenses primarily due
to the Secondary Offering and costs associated with being a public company, $1.9 million in higher insurance
costs, and continued investment in marketing capabilities.
Restructuring Expenses
As a result of the termination in May 2017 of an exclusive supply agreement with one of our co-
manufacturers due to non-performance under the agreement, we recorded restructuring expenses of
$4.9 million and $1.5 million in 2019 and 2018, respectively, primarily related to legal and other expenses
associated with the dispute. As of December 31, 2019 and 2018, there were $1.1 million and $0, respectively, in
accrued unpaid liabilities associated with this contract termination representing legal fees. We continue to incur
legal fees in connection with our ongoing efforts to resolve this dispute. See Note 3, Restructuring, to the Notes
to Financial Statements, and Part I, Item 3, Legal Proceedings, included elsewhere in this report.
Total Other Expense, Net
Total other expense, net primarily includes interest expense on the Company’s debt balances and expense
associated with the remeasurement of our preferred stock warrant liability and common stock warrant liability,
partially offset by interest income. On May 6, 2019, in connection with the IPO, our then outstanding warrants
exercisable for convertible preferred stock were automatically converted into warrants exercisable for common
stock. We remeasured and reclassified the common stock warrant liability to additional-paid-in-capital in
connection with the IPO and recorded $12.5 million in expense associated with the remeasurement of warrant
liability in 2019. Interest income in 2019 increased due to interest income from invested proceeds from the IPO
and Secondary Offering.
Subsequent to the closing of the IPO, all outstanding warrants to purchase shares of common stock were
cashless exercised. No warrants were outstanding as of December 31, 2019.
Other, net was $3.6 million in 2019 as compared to $0.4 million in 2018 primarily due to increased interest
income resulting from investment of proceeds from the IPO and Secondary Offering.
Loss from Operations
Loss from operations in 2019 was $0.5 million compared to loss from operations of $28.0 million in the prior
year. This improvement was driven entirely by the year-over-year increase in gross profit, partially offset by
higher operating expenses to support our expanded manufacturing and supply chain operations, higher share-
based compensation expense, higher administrative costs associated with being a public company, higher
restructuring expenses, and continued investment in innovation and marketing capabilities.
58
Income Tax Expense
For 2019 and 2018, we recorded income tax expense of $9,000 and $1,000, respectively. These amounts
primarily consist of income taxes for state jurisdictions which have minimum tax requirements. No tax benefit
was provided for losses incurred because those losses were offset by a full valuation allowance.
Net Loss
Net loss was $12.4 million in 2019 compared to a net loss of $29.9 million in the prior year. The decrease in
net loss was primarily the result of the higher gross profit in 2019 and interest income, partially offset by higher
operating expenses, higher share-based compensation expense, expenses associated with the remeasurement
of our preferred stock warrant liability and common stock warrant liability in connection with the IPO, and higher
interest expense.
Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
Net Revenues
(in thousands)
Net revenues:
Year Ended December 31,
Change
2018
2017
Amount
Percentage
Gross Fresh Platform .......................................... $
Gross Frozen Platform ........................................
Less: Discounts ..................................................
Net revenues .................................................... $
81,686 $
15,896
(9,648)
87,934 $
18,109 $
63,577
19,588
(5,116)
(3,692)
(4,532)
32,581 $
55,353
351.1 %
(18.8)%
88.6 %
169.9 %
(in thousands)
Net revenues:
Year Ended December 31,
Change
2018
2017
Amount
Percentage
Retail .................................................................. $
Restaurant and Foodservice ...............................
Net revenues .................................................... $
50,779 $
37,155
87,934 $
25,490 $
7,091
32,581 $
25,289
30,064
55,353
99.2%
424.0%
169.9%
Net revenues increased by $55.4 million, or 169.9%, in 2018 as compared to 2017 primarily due to strong
growth in sales volumes of products in our fresh platform across both our retail and our restaurant and
foodservice channels, partially offset by a decrease in net revenues from the frozen platform.
Gross revenues from sales of products in our fresh platform increased $63.6 million, or 351.1%, primarily
due to increases in sales of the Beyond Burger and Beyond Sausage. Net revenues from retail sales increased
$25.3 million, or 99.2%, primarily due to increase in sales of the Beyond Burger. Net revenues from sales
through our restaurant and foodservice channel increased $30.1 million, or 424.0%, primarily due to increased
sales of the Beyond Burger, which was being served in approximately 11,000 restaurant and foodservice outlets
at the end of 2018, and due to increased sales of Beyond Sausage in 2018.
The following tables present volume of our products sold in pounds:
(in thousands)
Retail:
Year Ended December 31,
Change
2018
2017
Amount
Percentage
Fresh Platform ....................................................
Frozen Platform ..................................................
Total ..................................................................
6,025
2,687
8,712
1,837
3,123
4,960
4,188
(436)
3,752
228.0 %
(14.0)%
75.6 %
59
(in thousands)
Restaurant and Foodservice:
Year Ended December 31,
Change
2018
2017
Amount
Percentage
Fresh Platform ....................................................
Frozen Platform ..................................................
Total ..................................................................
5,801
729
6,530
637
754
1,391
5,164
(25)
5,139
810.7 %
(3.3)%
369.4 %
Cost of Goods Sold
(in thousands)
2018
2017
Amount
Percentage
Cost of goods sold .................................... $
70,360 $
34,772 $
35,588
102.3%
Year Ended December 31,
Change
Cost of goods sold increased by $35.6 million, or 102.3%, in 2018 as compared to the prior year,
primarily due to the increase in the sales volume of our products and from a 103% increase in
manufacturing-related headcount to handle increased demand for our products. Cost of goods sold in 2017
includes $2.4 million in write-off of unrecoverable inventory related to the termination of an exclusive
agreement with our co-manufacturer at the time. See Note 3, Restructuring, to the Notes to Financial
Statements, and Part I, Item 3, Legal Proceedings, included elsewhere in this report.
Gross Profit (Loss) and Gross Margin
(in thousands)
Gross profit (loss) ....................................... $
Gross margin ..............................................
Year Ended December 31,
Change
2018
17,574
2017
(2,191)
$
$
19,765
Amount
Percentage
20.0%
(6.7)%
N/A
N/A
N/A
Gross profit in 2018 was $17.6 million compared to gross loss of $2.2 million in 2017, an improvement
of $19.8 million. The improvement in gross profit and gross margin was primarily due to an increase in the
amount of products sold, resulting in the ability to leverage our fixed costs across a greater amount of
revenue. The greater proportion of product revenues from our fresh platform also contributed to the
improvement in margin, due to a higher net selling price per pound of products in our fresh versus frozen
platform. As disclosed in Note 2, Summary of Significant Accounting Policies—Shipping and Handling
Costs, in the Notes to Financial Statements included elsewhere in this report, we include outbound shipping
and handling costs within selling, general and administrative expense. As a result, our gross profit and
gross margin may not be comparable to other entities that present all shipping and handling costs as a
component of cost of goods sold.
Research and Development Expenses
(in thousands)
Research and development expenses ....... $
2018
2017
Amount
Percentage
9,587 $
5,722 $
3,865
67.5%
Year Ended December 31,
Change
Research and development expenses increased $3.9 million, or 67.5%, in 2018 as compared to the prior
year. Research and development expenses increased primarily due to higher scale-up expenses and
depreciation and amortization expense.
60
SG&A Expenses
(in thousands)
Selling, general and administrative
expenses ................................................. $
Year Ended December 31,
Change
2018
2017
Amount
Percentage
34,461 $
17,143 $
17,318
101.0%
SG&A expenses increased by $17.3 million, or 101.0%, in 2018 as compared to the prior year. The increase
was primarily due to $6.8 million in higher salaries and related expenses due to a 224% increase in headcount,
$2.7 million in higher outbound freight expenses, $1.9 million in higher supply chain expenses, $1.8 million in
higher consulting and professional fees, $1.3 million in higher marketing services, $0.9 million in higher travel
expenses, and $0.7 million in higher broker commissions in 2018 as compared to the prior year. SG&A expenses
in 2017 include $1.2 million primarily related to disputed fees resulting from the co-manufacturer’s failure to meet
agreed upon minimum production and expedited outbound freight expenses we incurred for alternative
arrangements after we terminated the exclusive supply agreement with this co-manufacturer.
Restructuring Expenses
As a result of the termination in May 2017 of an exclusive supply agreement with one of our co-
manufacturers due to non-performance under the agreement, we recorded restructuring expenses of $3.5 million
in 2017, of which $2.3 million were related to the impairment write-off of long-lived assets, comprised of certain
unrecoverable equipment located at the co-manufacturer’s site and company-paid leasehold improvements to
the co-manufacturer’s facility pursuant to the agreement, and $1.2 million primarily related to legal and other
expenses associated with the dispute. See Note 9, Commitments and Contingencies—Litigation, to the Notes to
Financial Statements included elsewhere in this report. In addition, we recorded $2.4 million in write-off of
unrecoverable inventory held at the co-manufacturer’s site, which is included in cost of goods sold, and $1.2
million primarily related to disputed fees for not meeting the agreed upon minimum production and expedited
outbound freight expenses, which are included in selling, general and administrative expenses in our statement
of operations for 2017. In 2018, we recorded $1.5 million in restructuring expenses related to this dispute, which
consisted primarily of legal and other expenses. See Note 3, Restructuring, to the Notes to Financial Statements
included elsewhere in this report. As of December 31, 2018 and 2017, there were no accrued unpaid liabilities
associated with this contract termination, although we continue to incur legal fees in connection with our ongoing
efforts to resolve this dispute. See Part I, Item 3, Legal Proceedings, included elsewhere in this report.
Income Tax Expense
For 2018 and 2017, we recorded income tax expense of $1,000 and $5,000, respectively. These amounts
primarily consist of income taxes for state jurisdictions which have minimum tax requirements. No tax benefit
was provided for losses incurred because those losses are offset by a full valuation allowance.
Non-GAAP Financial Measures
We use the following non-GAAP financial measures in assessing our operating performance and in our
financial communications:
“Adjusted EBITDA” is defined as net income (loss) adjusted to exclude, when applicable, income tax expense,
interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation
expense, inventory losses from termination of an exclusive supply agreement with a co-manufacturer, costs of
termination of an exclusive supply agreement with the same co-manufacturer, and expenses primarily associated
with the conversion of our convertible notes and remeasurement of our preferred stock warrant liability and
common stock warrant liability.
“Adjusted EBITDA as a % of net revenues” is defined as Adjusted EBITDA divided by net revenues.
We use Adjusted EBITDA and Adjusted EBITDA as a % of net revenues because they are important measures
upon which our management assesses our operating performance. We use Adjusted EBITDA and Adjusted
EBITDA as a % of net revenues as key performance measures because we believe these measures facilitate
operating performance comparison from period-to-period by excluding potential differences primarily caused by the
61
impact of restructuring, asset depreciation and amortization, non-cash share-based compensation and non-
operational charges including the impact to cost of goods sold and SG&A expenses related to the termination of an
exclusive co-manufacturing agreement, early extinguishment of convertible notes and remeasurement of warrant
liability. Because Adjusted EBITDA and Adjusted EBITDA as a % of net revenues facilitate internal comparisons of
our historical operating performance on a more consistent basis, we also use these measures for our business
planning purposes. In addition, we believe Adjusted EBITDA and Adjusted EBITDA as a % of net revenues are
widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in our
industry as a measure of our operational performance.
There are a number of limitations related to the use of Adjusted EBITDA rather than net income (loss), which is
the most directly comparable measure prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”). Some of these limitations are:
• Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash
expenses, the assets being depreciated may have to be replaced in the future increasing our cash
requirements;
• Adjusted EBITDA does not reflect interest expense, or the cash required to service our debt, which reduces
cash available to us;
• Adjusted EBITDA does not reflect income tax payments that reduce cash available to us;
• Adjusted EBITDA does not reflect restructuring expenses that reduce cash available to us;
• Adjusted EBITDA does not reflect share-based compensation expense and therefore does not include all of
our compensation costs;
• Adjusted EBITDA does not reflect other income (expense) that may increase or decrease cash available to us;
and
•
other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which
reduces its usefulness as a comparative measure.
These non-GAAP financial measures should not be considered in isolation or as a substitute for financial
information provided in accordance with GAAP. These non-GAAP financial measures may not be computed in the
same manner as similarly titled measures used by other companies.
62
The following table presents the reconciliation of Adjusted EBITDA to its most comparable GAAP measure, net
loss, as reported (unaudited):
(in thousands)
Year Ended December 31,
2019
2018
2017
Net loss, as reported .................................................................... $ (12,443)
$ (29,886)
$ (30,384)
Income tax expense .....................................................................
Interest expense ...........................................................................
Depreciation and amortization expense .......................................
Restructuring expenses(1) .............................................................
Inventory losses from termination of exclusive supply
agreement(2) ..............................................................................
Costs of termination of exclusive supply agreement(3) .................
Share-based compensation expense ...........................................
Remeasurement of warrant liability ..............................................
Other, net(4) ..................................................................................
9
3,071
8,106
4,869
—
—
12,807
12,503
(3,629)
1
1,128
4,921
1,515
—
—
2,241
1,120
(352)
5
1,002
3,181
3,509
2,440
1,213
665
385
427
Adjusted EBITDA ......................................................................... $
25,293
$ (19,312)
$ (17,557)
Net loss as a % of net revenues ...................................................
Adjusted EBITDA as a % of net revenues ....................................
(4.2)%
8.5 %
(33.9)%
(22.0)%
(92.9)%
(53.9)%
_____________
(1) In connection with the termination of an exclusive supply agreement with a co-manufacturer in May 2017, we recorded
restructuring expenses related to the impairment write-off of long-lived assets, primarily comprised of certain unrecoverable
equipment located at the co-manufacturer’s site and company-paid leasehold improvements to the co-manufacturer’s
facility, and legal and other expenses associated with the dispute with the co-manufacturer. Amounts recorded in 2019 and
2018 primarily comprised of legal and other expenses associated with this dispute. See Note 3, Restructuring, to the Notes
to Financial Statements, and Part I, Item 3, Litigation, included elsewhere in this report.
(2) Consists of additional charges related to inventory losses incurred as a result of termination of an exclusive supply
agreement with a co-manufacturer and is recorded in cost of goods sold.
(3) Consists of additional charges incurred as a result of termination of an exclusive supply agreement with a co-manufacturer
and is recorded in selling, general and administrative expenses.
(4) In 2017, includes expenses associated with the conversion of our convertible notes.
Liquidity and Capital Resources
Our primary cash needs are for operating expenses, working capital and capital expenditures to support the
growth in our business. Prior to our IPO, we financed our operations through private sales of equity securities
and through sales of our products. Since our inception and through our IPO, we raised a total of $199.5 million
from the sale of convertible preferred stock, including through sales of convertible notes which were converted
into preferred stock, net of costs associated with such financings. In connection with our IPO, we sold an
aggregate of 11,068,750 shares of our common stock at a public offering price of $25.00 per share and received
approximately $252.4 million in net proceeds.
In connection with the Secondary Offering we sold 250,000 shares of our common stock. The shares were
sold at a public offering price of $160.00 per share and we received net proceeds of approximately
$37.4 million. We did not receive any proceeds from the sale of common stock by the selling stockholders in the
Secondary Offering. We have also entered into the credit facilities described below with Silicon Valley Bank
(“SVB”).
As of December 31, 2019, we had $276.0 million in cash and cash equivalents. We believe that our cash
and cash equivalents, cash flow from operating activities and available borrowings under our credit facilities will
be sufficient to fund our working capital and meet our anticipated capital requirements for the next 12 months.
Our future capital requirements may vary materially from those currently planned and will depend on many
factors, including the number and characteristics of any additional products or manufacturing processes we
63
develop or acquire to serve new or existing markets; the expenses associated with our marketing initiatives; our
investment in manufacturing to expand our manufacturing and production capacity; the costs required to fund
domestic and international growth; the scope, progress, results and costs of researching and developing future
products or improvements to existing products or manufacturing processes; any lawsuits related to our products
or commenced against us, including the costs associated with our current litigation with a former co-
manufacturer and the securities case recently brought against us; the expenses needed to attract and retain
skilled personnel; the costs associated with being a public company; the costs involved in preparing, filing,
prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the
outcome of such litigation; the impact of the COVID-19 pandemic; and the timing, receipt and amount of sales
of, or royalties on, any future approved products, if any.
Amended and Restated Loan and Security Agreement
In June 2018, we refinanced our then existing revolving credit facility and term loan facility under a loan and
security agreement with SVB (the “Amended LSA”). The Amended LSA includes a $6.0 million revolving credit
facility (the “2018 Revolving Credit Facility”) and a term loan facility (the “2018 Term Loan Facility”) comprised of
(i) a $10.0 million term loan advance at closing, (ii) a conditional $5.0 million term loan advance, if no event of
default has occurred and is continuing through the borrowing date, and (iii) an additional conditional term loan
advance of $5.0 million if no event of default has occurred and is continuing based upon a minimum level of
gross profit for the trailing 12-month period. The 2018 Term Loan Facility has a floating interest rate that is equal
to 4.0% above the prime rate, with interest payable monthly and principal amortizing commencing on July 1,
2020, and will mature in June 2022. Borrowings under the 2018 Revolving Credit Facility carry a variable annual
interest rate of prime rate plus 0.75% to 1.25% with an additional 5% on the outstanding balances in the event
of a default. The 2018 Revolving Credit Facility matures in June 2020.
The 2018 Term Loan Facility and the 2018 Revolving Credit Facility (collectively, the “SVB Credit Facilities”)
contain customary negative financial covenants that limit our ability to, among other things, incur additional
indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or
consolidate. The SVB Credit Facilities also contain customary affirmative financial covenants, including delivery
of audited financial statements. We were in compliance with the financial covenants in the SVB Credit Facilities
as of December 31, 2019.
The SVB Credit Facilities are secured by an interest in our assets including manufacturing equipment,
inventory, contract rights or rights to payment of money, leases, license agreements, general intangibles, and
cash.
In conjunction with the execution of the Amended LSA, we issued two common stock warrants one each to
SVB and its affiliate to provide the ability to purchase an aggregate of 60,002 shares of our common stock at an
exercise price of $3.00 per share. The common stock warrants were fully exercisable on the date of the grant
and had a term of 10 years. We also paid a commitment fee of $30,000 to SVB in connection with the execution
of the Amended LSA. Subsequent to the closing of the IPO, all outstanding warrants to purchase shares of
common stock were cashless exercised and no warrants were outstanding as of December 31, 2019.
As of December 31, 2019 and 2018, we had $6.0 million and $20.0 million in borrowings on the 2018
Revolving Credit Facility and 2018 Term Loan Facility, respectively, and had no availability to borrow under
either of these loan facilities. In 2019 and 2018, we incurred $2.2 million and $0.9 million, respectively, in
interest expense related to the SVB Credit Facilities. The interest rates on the 2018 Revolving Credit Facility
and the 2018 Term Loan Facility at December 31, 2019 were 5.5% and 8.75%, respectively.
Equipment Loan Facility
In September 2018, we entered into an Equipment Loan and Security Agreement with Structural Capital
Investments II, LP (“Structural Capital”) and Ocean II PLO, LLC, as administrative and collateral agent, pursuant
to which Structural Capital agreed to provide an equipment loan facility to us in the amount of $5.0 million for
the purpose of purchasing equipment.
64
Subject to Structural Capital’s approval, we may request that they advance an additional $5.0 million or an
aggregate of $10.0 million. The equipment loan facility matures on May 1, 2022, carries an interest rate of
6.25% plus the greater of 4.75% or the prime rate and is secured by the financed equipment. Principal
repayments begin six months or 18 months after loan draw depending on us achieving certain financial
milestones, and therefore, are paid over a period of 37 months or 25 months, respectively. As of June 30, 2019,
we achieved all of the milestones and, therefore, monthly installment repayments of principal are expected to
begin on December 31, 2020. We are also required to offer Structural Capital the right to purchase up to an
aggregate of $1.0 million of our capital stock or any other equity interest in any transaction where we receive
gross proceeds of at least $10.0 million. The equipment loan facility has a prepayment penalty of 2% during the
first two years of the term and 1% thereafter. We must also pay a final payment fee of 13% of the facility
commitment amount on the maturity date and such other date as the advances become due and such fee will
increase by 1% if certain milestones are achieved.
We had $5.0 million in borrowings outstanding as of December 31, 2019 and 2018 under the equipment
loan facility. The interest rate on the equipment loan facility at December 31, 2019 and 2018 was 11.0% and
11.5%, respectively. For 2019, 2018 and 2017, we recorded $0.6 million, $0.2 million and $0, respectively, in
interest expense related to the equipment loan facility.
Cash Flows
The following table presents the major components of net cash flows used in and provided by operating,
investing and financing activities for the periods indicated.
(in thousands)
Cash (used in) provided by:
Year Ended December 31,
2019
2018
2017
Operating activities ................................................................ $
Investing activities .................................................................. $
Financing activities ................................................................. $
(46,995) $
(37,721) $
(25,273)
(26,164) $
(23,242) $
294,876 $
76,199 $
(8,115)
55,425
Net Cash Used in Operating Activities
For the year ended December 31, 2019, we incurred a net loss of $12.4 million. The primary reason for net
cash used in operating activities of $47.0 million was the $68.2 million in net cash outflows from changes in our
operating assets and liabilities, primarily due to increases in inventory to meet growth in anticipated sales and to
accommodate longer lead times for international shipments and increases in accounts receivable, partially
offset by an increase in accounts payable. Net loss for the year ended December 31, 2019, included
$33.7 million in non-cash expenses primarily comprised of share-based compensation expense, change in
warrant liability, and depreciation and amortization expense.
For the year ended December 31, 2018, we incurred a net loss of $29.9 million, which was the primary
reason for net cash used in operating activities of $37.7 million. Net cash used in operating activities also
included $16.3 million in net cash outflows from changes in our operating assets and liabilities, partially offset by
$8.5 million in non-cash expenses primarily comprised of depreciation and amortization expense, share-based
compensation expense and change in warrant liability.
For the year ended December 31, 2017, we incurred a net loss of $30.4 million, which was the primary
reason for net cash used in operating activities of $25.3 million. Net cash used in operating activities also
included $2.6 million in net cash outflows from changes in our operating assets and liabilities, fully offset by $5.4
million in non-cash expenses primarily comprised of depreciation and amortization expense, share-based
compensation expense, convertible note-related expense and change in warrant liability. For the year ended
December 31, 2017, net loss included a non-cash restructuring loss of $2.3 million on the write-off of fixed
assets related to our termination of an exclusive supply agreement with a co-manufacturer.
Depreciation and amortization expense was $8.1 million, $4.9 million and $3.2 million, in 2019, 2018 and
2017, respectively. We anticipate our depreciation and amortization expense will increase in 2020 based on our
65
existing fixed assets and anticipated capital expenditures as we further invest in R&D infrastructure and expand
our production capabilities to meet increased demand for our products.
Net Cash Used in Investing Activities
Net cash used in investing activities primarily relates to capital expenditures to support our growth and
investment in property, plant and equipment.
For the year ended December 31, 2019, net cash used in investing activities was $26.2 million and
consisted of $23.8 million in cash outflows for purchases of property, plant and equipment, primarily for
manufacturing facility improvements and manufacturing equipment, $2.1 million in cash outflows related to
property, plant and equipment purchased for sale to co-manufacturers which we expect will be sold by the end
of 2020, and security deposits, partially offset by proceeds from sale of assets held for sale.
For the year ended December 31, 2018, net cash used in investing activities was $23.2 million and
consisted of $22.2 million in cash outflows for purchases of property, plant and equipment, primarily for
manufacturing facility improvements and manufacturing equipment, $1.0 million in cash outflows related to
property, plant and equipment purchased for sale to co-manufacturers, and security deposits, partially offset by
proceeds from sale of fixed assets.
For the year ended December 31, 2017, net cash used in investing activities was $8.1 million and primarily
consisted of cash outflows for the purchases of property, plant and equipment, principally for the build-out and
equipping of our Manhattan Beach Project Innovation Center.
Net Cash Provided by Financing Activities
For the year ended December 31, 2019, net cash provided by financing activities was $294.9 million
primarily as a result of $254.9 million in net proceeds from our IPO, net of issuance costs, $37.4 million in net
proceeds to us from the Secondary Offering, net of issuance costs, and $2.7 million in proceeds from stock
option exercises, partially offset by $55,000 in payments of capital lease obligations.
For the year ended December 31, 2018, net cash provided by financing activities was $76.2 million primarily
as a result of $51.3 million in proceeds from the issuance of our Series G and Series H preferred stock, net of
issuance costs, $20.0 million in borrowings under our 2018 Term Loan Facility, $6.0 million in borrowings under
our 2018 Revolving Credit Facility, $5.0 million in borrowings under an equipment loan facility, and $1.4 million
in proceeds from stock option exercises, partially offset by cash outflows for repayment of a note with the
Missouri Department of Economic Development, and borrowings under our 2016 Revolving Credit Facility and
2016 Term Loan Facility. The proceeds from the borrowings were used to finance our operations.
For the year ended December 31, 2017, financing activities provided $55.4 million in cash as a result of
$43.3 million of proceeds from the issuance of our Series F and G preferred stock, net of issuance costs,
$10.0 million in proceeds from the issuance of convertible notes that were eventually converted into Series G
preferred stock, $2.5 million in revolving credit facility borrowings and $0.4 million in proceeds from stock option
exercises, partially offset by payments towards our revolving credit facility borrowings and capital lease
obligations. The proceeds from the borrowings were used to finance our operations.
As of December 31, 2019, we had borrowed the entire availability of $20.0 million under the 2018 Term
Loan Facility and $6.0 million under the 2018 Revolving Credit Facility.
Contractual Obligations and Commitments
Effective March 16, 2020, we entered into an agreement to extend the lease for one of our facilities in
Columbia, Missouri, for an additional term of two years ending in June 2022. The aggregate lease amount for
the additional two-year term is $0.5 million, which is not included in the table below. See Note 12, Subsequent
Events, of the Notes to Financial Statements included elsewhere herein.
66
The following table summarizes our significant contractual obligations as of December 31, 2019:
(in thousands)
Rent obligations(1) ....................... $
Equipment lease obligations(2) ....
2018 Revolving Credit Facility(3)..
2018 Term Loan Facility(4) ...........
Equipment loan(5) ........................
Purchase commitments(6) ...........
Total ............................................ $
Payments Due by Period
Total
Less Than
One Year
1-3 Years
3-5 Years
13,868 $
1,878 $
3,630 $
3,193 $
325
6,164
22,570
7,021
44,102
94,050 $
86
6,164
7,473
559
22,684
38,844 $
151
—
15,097
6,462
21,418
88
—
—
—
—
—
—
—
—
—
46,758 $
3,281 $
5,167
More Than
Five Years
5,167
___________________
(1) Includes lease payments for our Manhattan Beach Project Innovation Center and corporate offices in El Segundo,
California, and our manufacturing facilities in Columbia, Missouri.
(2) Consists of payments under various capital leases for certain equipment.
(3) Includes principal and interest accrued at a floating rate under the 2018 Revolving Credit Facility.
(4) Includes principal and interest under the 2018 Term Loan Facility.
(5) Includes principal and interest on an equipment loan.
(6) Consists of commitments to purchase pea protein inventory. Excludes amounts under the multi-year sales agreement
with Roquette Frères entered into subsequent to the year ended December 31, 2019. See Note 12, Subsequent
Events, to the Notes to Financial Statements included elsewhere herein.
In addition to the amounts shown in the table above, as of December 31, 2019, we had approximately
$12.7 million in purchase order commitments for capital expenditures primarily to purchase machinery and
equipment. Payments for these purchases will be due within twelve months.
Segment Information
We have one operating segment and one reportable segment, as our CODM, who is our Chief Executive
Officer, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating
financial performance.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any holdings in variable interest entities.
Critical Accounting Policies
In preparing our financial statements in accordance with GAAP, we are required to make estimates and
assumptions that affect the amounts of assets, liabilities, revenue, costs and expenses, and disclosure of
contingent assets and liabilities that are reported in the financial statements and accompanying disclosures. We
evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience
and various other assumptions that we believe to be reasonable under the circumstances. Our actual results
may differ from these estimates and assumptions. To the extent that there are differences between our
estimates and actual results, our future financial statement presentation, financial condition, results of
operations and cash flows will be affected.
We believe that the estimates, assumptions and judgments involved in the accounting policies described
below have the greatest potential impact on our financial statements because they involve the most difficult,
subjective or complex judgments about the effect of matters that are inherently uncertain. Therefore, we
consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions
on an ongoing basis. Our actual results may differ from these estimates and assumptions. See Note 2,
Summary of Significant Accounting Policies, to the Notes to Financial Statements included elsewhere in this
67
report for information about these critical accounting policies as well as a description of our other accounting
policies.
Revenue Recognition
While our revenue recognition does not involve significant judgment, it represents an important accounting
policy. Our revenues are generated through sales of our products to distributors or customers. Revenue is
recognized at the point in which the performance obligation under the terms of a contract with the customer
have been satisfied and control has transferred. The Company’s performance obligation is typically defined as
the accepted purchase order, or the contract, with the customer which requires the Company to deliver the
requested products at agreed upon prices at the time and location of the customer’s choice. The Company does
not offer warranties or a right to return on the products it sells except in the instance of a product recall.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for
fulfilling the performance obligation. Sales and other taxes the Company collects concurrent with the sale of
products are excluded from revenue. The Company's normal payment terms vary by the type and location of its
customers and the products offered. The time between invoicing and when payment is due is not significant.
None of the Company's customer contracts as of December 31, 2019 contains a significant financing
component.
The Company routinely offers sales discounts and promotions through various programs to its customers
and consumers. These programs include rebates, temporary on shelf price reductions, off invoice discounts,
retailer advertisements, product coupons and other trade activities. Provision for discounts and incentives are
recorded in the same period in which the related revenues are recognized. At the end of each accounting
period, the Company recognizes a liability for estimated sales discounts that have been incurred but not paid.
The offsetting charge is recorded as a reduction of revenues in the same period when the expense is incurred.
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the
amortization period of the assets that the Company otherwise would have recognized is one year or less. The
incremental cost to obtain contracts was not material.
Share-Based Compensation
The 2018 Equity Incentive Plan (the “2018 Plan”) provides for the grant of incentive stock options, within the
meaning of Section 422 of the Code, to our employees and the employees of our subsidiaries, and for the grant
of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance
units, and performance shares to our employees, directors, and consultants and the employees and consultants
of any subsidiary.
Stock options. The administrator may grant incentive and/or non-statutory stock options under our 2018
Plan, provided that incentive stock options may only be granted to employees. The exercise price of such
options must generally be equal to at least the fair market value of our common stock on the date of grant. The
term of an option may not exceed 10 years, subject to certain exceptions.
Stock appreciation rights. Stock appreciation rights may be granted under our 2018 Plan. Stock
appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock
between the date of grant and the exercise date.
Restricted stock. Restricted stock may be granted under our 2018 Plan. Restricted stock awards are
grants of shares of our common stock that are subject to various restrictions, including restrictions on
transferability and forfeiture provisions. Shares of restricted stock will vest and the restrictions on such shares
will lapse, in accordance with terms and conditions established by the administrator.
Restricted stock units. Restricted stock units may be granted under our 2018 Plan, and may include the
right to dividend equivalents, as determined in the discretion of the administrator. Each restricted stock unit
granted is a bookkeeping entry representing an amount equal to the fair market value of one share of our
common stock. Vesting criteria may include achievement of specified performance criteria and/or continued
service, and the form and timing of payment.
68
Performance units/performance shares. Performance units and performance shares may be granted
under our 2018 Plan. Performance units and performance shares are awards that will result in a payment to a
participant if performance goals established by the administrator are achieved and any other applicable vesting
provisions are satisfied.
We account for all shared-based compensation awards using a fair-value method. Options are recorded at
their estimated fair value using the Black-Scholes option pricing model. We recognize the fair value of each
award as an expense over the requisite service period, generally the vesting period of the equity grant.
Determining the fair value of share-based awards at the grant date requires significant judgment. The
determination of the grant date fair value of stock options using the Black-Scholes option-pricing model is
affected by our estimated common stock fair value as well as other highly subjective assumptions including, the
expected term of the awards, our expected volatility over the expected term of the awards, expected dividend
yield, risk-free interest rates. The assumptions used in our option-pricing model represent management’s best
estimates. These assumptions and estimates are as follows:
Fair Value of Common Stock: We estimate the fair value of stock options using the Black-Scholes option
pricing model. We use the value of our common stock to determine the fair value of restricted shares.
Expected Term: As we do not have sufficient historical experience for determining the expected term of the
stock option awards granted, our expected term is based on the simplified method, generally calculated as the
mid-point between the vesting date and the end of the contractual term.
Expected Volatility: As the Company has only been a public entity since May 2, 2019, there is not a
substantive share price history to calculate volatility and, as such, we have elected to use an approximation
based on the volatility of other comparable public companies, which compete directly with the Company, over
the expected term of the options.
Expected Dividend Yield: We have never declared or paid any cash dividends and do not presently intend
to pay cash dividends in the foreseeable future. As a result, we used an expected dividend yield of zero.
Risk-Free Interest Rates: We determine the average risk-free interest rate using the yield on actively traded
U.S. Treasury notes with the same maturity as the expected term of the underlying options. If any assumptions
used in the Black-Scholes option-pricing model change significantly, share-based compensation for future
awards may differ materially compared with the awards granted previously.
The assumptions underlying these valuations represent management’s best estimates, which involve
inherent uncertainties and the application of management judgment. As a result, if factors or expected
outcomes change and we use significantly different assumptions or estimates, our share-based compensation
expense could be materially different.
Emerging Growth Company Status
We are an “emerging growth company” (“EGC”) as defined in the JOBS Act. As an EGC, the JOBS Act,
allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until
such pronouncements are made applicable to private companies. We expect to lose our EGC status upon the
filing of the Form 10-K for the year ending December 31, 2020, when we expect to qualify as a Large
Accelerated Filer based upon the current market capitalization of the Company according to Rule 12b-2 of the
Exchange Act. Therefore, we have elected to use the adoption dates applicable to public companies beginning
in the first quarter of 2020. For as long as we continue to be an emerging growth company, we intend to take
advantage of certain other exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation and exemptions from the requirements of holding non-binding
advisory votes on executive compensation and stockholder approval of any golden parachute payments not
previously approved.
69
Recently Adopted Accounting Pronouncements
Please refer to Note 2, Summary of Significant Accounting Policies, to the Notes to Financial Statements
included elsewhere in this report for a discussion of recently adopted accounting pronouncements and new
accounting pronouncements that may impact us.
70
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to certain market risks in the ordinary course of our business. These risks primarily consist
of interest rates, raw material prices and inflation as follows:
Interest Rate Risk
Our cash consists of amounts held by third-party financial institutions. In May 2019, upon closing of our
IPO, we adopted an investment policy which has as its primary objective investment activities which preserve
principal without significantly increasing risk.
We are subject to interest rate risk in connection with our SVB Credit Facilities and our equipment loan
facility. See “—Liquidity and Capital Resources—Credit Facilities” and “—Liquidity and Capital Resources—
Equipment Loan Facility” above. Based on the average interest rate on our SVB Credit Facilities and equipment
loan facility in 2019 and to the extent that borrowings were outstanding, we do not believe that a 1.0% change
in the interest rate would have a material effect on our results of operations or financial condition.
Ingredient Risk
We are exposed to risk related to the price and availability of our ingredients because our profitability is
dependent on, among other things, our ability to anticipate and react to raw material and food costs. Currently,
the main ingredient in our products is pea protein, which we source from Canada, France and the United
States. The prices of pea protein and other ingredients we use are subject to many factors beyond our control,
such as the number and size of farms that grow yellow peas, the vagaries of these farming businesses,
including poor harvests due to adverse weather conditions, natural disasters and pestilence, and changes in
national and world economic conditions, including as a result of the COVID-19 pandemic. In addition, we
purchase some ingredients and other materials offshore, and the price and availability of such ingredients and
materials may be affected by political events or other conditions in these countries or tariffs or trade wars. As of
December 31, 2019, a hypothetical 10% increase or 10% decrease in the weighted-average cost of pea protein,
our primary ingredient, would have resulted in an increase of approximately $2.8 million or a decrease of
approximately $2.8 million, respectively, to cost of goods sold. We are working to diversify our sources of supply
and intend to enter into long-term contracts to better ensure stability of prices of our raw materials. In the first
quarter of 2020, we entered into a multi-year sales agreement with Roquette for the supply of pea protein. See
Note 12, Subsequent Events, to the Notes to Financial Statements included elsewhere in this report.
Foreign Exchange Risk
Our revenues and costs are denominated in U.S. dollars and are not subject to foreign exchange risk.
However, to the extent our sourcing strategy changes or we commence generating net revenues outside of the
United States that are denominated in currencies other than the U.S. dollar, our results of operations could be
impacted by changes in exchange rates.
Inflation Risk
We do not believe that inflation has had a material effect on our business, results of operations, or financial
condition. If our costs were to become subject to significant inflationary pressures, we may not be able to fully
offset such higher costs through price increases. Our inability or failure to do so could harm our business,
results of operations and financial condition.
71
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm .................................................
Balance Sheets ...................................................................................................................
Statements of Operations ....................................................................................................
Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) ....................
Statements of Cash Flows ...................................................................................................
Notes to Financial Statements .............................................................................................
Page
73
74
76
77
78
80
72
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Beyond Meat, Inc.:
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Beyond Meat, Inc. (the "Company") as of December 31,
2019 and 2018, the related statements of operations, convertible preferred stock and stockholders’ equity
(deficit), and cash flows, for each of the three years in the period ended December 31, 2019, and the related
notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2019,
in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company's financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Los Angeles, California
March 19, 2020
We have served as the Company's auditor since 2015.
73
BEYOND MEAT, INC.
Balance Sheets
(In thousands, except share and per share data)
December 31,
2019
2018
Assets
Current assets:
Cash and cash equivalents ........................................................................... $
Accounts receivable ......................................................................................
Inventory .......................................................................................................
Prepaid expenses and other current assets ..................................................
Total current assets ....................................................................................
Property, plant, and equipment, net ..................................................................
Other non-current assets, net ...........................................................................
275,988
$
40,080
81,596
5,930
403,594
47,474
855
54,271
12,626
30,257
5,672
102,826
30,527
396
Total assets ........................................................................................... $
451,923
$
133,749
26,923
$
17,247
1,255
2,312
2,391
—
44
1,918
25,167
6,000
19,388
5,000
404
30,792
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit):
Current liabilities:
Accounts payable ......................................................................................... $
Wages payable .............................................................................................
Accrued bonus ..............................................................................................
Accrued expenses and other current liabilities ..............................................
Short-term borrowings under revolving credit line and bank term loan ..........
Short-term capital lease liabilities ..................................................................
Stock warrant liability ....................................................................................
1,768
4,129
3,805
11,000
72
—
Total current liabilities ................................................................................ $
47,697
$
Long-term liabilities:
Revolving credit line ...................................................................................... $
Long-term portion of bank term loan, net ......................................................
Equipment loan, net ......................................................................................
Capital lease obligations and other long-term liabilities .................................
Total long-term liabilities ............................................................................... $
— $
14,637
4,932
567
20,136
$
Commitments and Contingencies (Note 9)
74
Convertible preferred stock:
Series A convertible preferred stock, par value $0.0001 per share—no shares
and 3,333,500 shares authorized, issued and outstanding as of December
31, 2019 and 2018, respectively ................................................................... $
— $
2,000
December 31,
2019
2018
Series B convertible preferred stock, par value $0.0001 per share—no shares
and 4,802,260 shares authorized; no shares and 4,680,565 shares issued
and outstanding as of December 31, 2019 and 2018, respectively ...............
Series C convertible preferred stock, par value $0.0001 per share—no
shares and 8,076,643 shares authorized; no shares and 8,076,636 shares
issued and outstanding as of December 31, 2019 and 2018, respectively ....
Series D convertible preferred stock, par value $0.0001 per share—no
shares and 8,713,207 shares authorized; no shares and 8,713,201 shares
issued and outstanding as of December 31, 2019 and 2018, respectively ....
Series E convertible preferred stock, par value $0.0001 per share—no shares
and 4,740,531 shares authorized; no shares and 4,701,449 shares issued
and outstanding as of December 31, 2019 and 2018, respectively ...............
Series F convertible preferred stock, par value $0.0001 per share—no shares
and 4,866,776 shares authorized; no shares and 4,866,758 shares issued
and outstanding as of December 31, 2019 and 2018, respectively ...............
Series G convertible preferred stock, par value $0.0001 per share—no
shares and 5,140,257 shares authorized; no shares and 5,114,786 shares
issued and outstanding as of December 31, 2019 and 2018, respectively ....
Series H convertible preferred stock, par value $0.0001 per share—no
shares and 4,209,693 shares authorized; no shares and 2,075,216 shares
issued and outstanding as of December 31, 2019 and 2018, respectively ....
Stockholders’ equity (deficit):
Preferred stock, par value $0.0001 per share—500,000 shares authorized,
none issued and outstanding ........................................................................
Common stock, par value $0.0001 per share—500,000,000 shares and
58,669,600 shares authorized at December 31, 2019 and 2018,
respectively; 61,576,494 and 6,951,350 shares issued and outstanding at
December 31, 2019 and 2018, respectively ..................................................
Additional paid-in capital
..................................................................................
Accumulated deficit
..........................................................................................
Total stockholders’ equity (deficit) ................................................................. $
—
—
—
—
—
—
—
—
6
526,199
(142,115)
384,090
Total liabilities, convertible preferred stock and stockholders’ equity
(deficit) ............................................................................................... $
451,923
4,999
14,882
24,948
17,214
29,840
55,658
49,999
—
1
7,921
(129,672)
(121,750)
133,749
$
$
The accompanying notes are an integral part of these financial statements.
75
BEYOND MEAT, INC.
Statements of Operations
(In thousands, except share and per share data)
Year Ended December 31,
2019
2018
2017
297,897 $
87,934 $
Net revenues ........................................................ $
Cost of goods sold ................................................
Gross profit (loss) ..................................................
Research and development expenses ..................
Selling, general and administrative expenses .......
Restructuring expenses ........................................
Total operating expenses ......................................
Loss from operations ............................................
Other expense, net:
Interest expense ...................................................
Remeasurement of warrant liability .......................
Other, net ..............................................................
Total other expense, net........................................
Loss before taxes ..................................................
Income tax expense ..............................................
Net loss ................................................................. $
Net loss per share available to common
stockholders—basic and diluted ........................ $
Weighted average common shares outstanding
—basic and diluted ............................................
198,141
99,756
20,650
74,726
4,869
100,245
(489)
(3,071)
(12,503)
3,629
(11,945)
(12,434)
9
70,360
17,574
9,587
34,461
1,515
45,563
(27,989)
(1,128)
(1,120)
352
(1,896)
32,581
34,772
(2,191)
5,722
17,143
3,509
26,374
(28,565)
(1,002)
(385)
(427)
(1,814)
(29,885)
(30,379)
1
5
(12,443) $
(29,886) $
(30,384)
(0.29) $
(4.75) $
(5.57)
42,274,777
6,287,172
5,457,629
The accompanying notes are an integral part of these financial statements.
76
BEYOND MEAT, INC.
Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(In thousands, except share data)
Preferred Stock
Common Stock
Shares
Amount
Shares
Amount
Balance at December 31, 2016 .......
34,355,941
$ 93,804
5,278,305
$
Net loss............................................
Exercise of common stock options ..
Share-based compensation.............
Conversion of convertible notes
upon issuance of Series G
preferred stock (inclusive of
$1,123 adjustment upon
conversion) ...................................
Issuance of Series F preferred
stock, net of issuance costs of
$21 ................................................
Issuance of Series G preferred
stock, net of issuance costs of
$267 ..............................................
—
—
—
—
—
—
1,026,367
11,123
16,168
79
3,962,735
43,188
—
446,201
—
—
—
—
Balance at December 31, 2017 .......
39,361,211
$148,194
5,724,506
$
Net loss............................................
Exercise of common stock options ..
Share-based compensation.............
Re-purchase of common stock........
Grant of restricted stock ..................
Payoff of promissory notes
receivable for restricted stock
purchase .......................................
Issuance of Series G Preferred
Stock, net of issuance costs of
$27 ................................................
Issuance of Series H Preferred
Stock, net of issuance costs of
$284 ..............................................
—
—
—
—
—
—
—
—
—
—
—
—
125,684
1,347
2,075,216
49,999
—
1,139,962
—
(48,909)
135,791
—
—
—
Balance at December 31, 2018 .......
41,562,111
$199,540
6,951,350
$
Net loss............................................
Issuance of common stock
pursuant to the IPO, net of
issuance costs of $4.9 million .......
Issuance of common stock upon
conversion of convertible
preferred stock ..............................
Issuance of common stock upon
exercise of common stock
warrants ........................................
Reclassification of warrant liability to
additional paid-in capital upon
closing of the initial public offering
Issuance of common stock
pursuant to the Secondary
Offering, net of issuance costs of
$1.1 million....................................
Exercise of common stock options ..
Share-based compensation for
equity-classified awards................
—
—
—
—
—
11,068,750
(41,562,111)
(199,540)
41,562,111
—
—
—
—
—
—
—
—
—
—
—
214,875
—
250,000
1,529,408
—
61,576,494
$
Balance at December 31, 2019 .......
— $
Additional
Paid-in
Capital
Loans to
Related
Parties
Accumulate
d Deficit
Total
$
3,779
$
(951) $
(69,402) $ (66,573)
—
379
665
—
—
—
—
—
—
—
—
—
(30,384)
(30,384)
—
—
—
—
—
379
665
—
—
—
$
4,823
$
(951) $
(99,786) $ (95,913)
—
1,369
2,241
(514)
2
—
—
—
—
—
—
—
—
951
—
—
(29,886)
(29,886)
—
—
—
—
—
—
—
1,369
2,241
(514)
2
951
—
—
$
7,921
$
— $
(129,672) $(121,750)
—
252,452
199,536
—
14,421
37,394
2,669
11,806
—
—
—
—
—
—
—
—
(12,443)
(12,443)
— 252,453
— 199,540
—
—
—
14,421
—
—
—
37,394
2,669
11,806
$ 526,199
$
— $
(142,115) $384,090
1
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
1
—
1
4
—
—
—
—
—
6
The accompanying notes are an integral part of these financial statements.
77
BEYOND MEAT, INC.
Statements of Cash Flows
(In thousands)
Cash flows from operating activities:
Net loss .......................................................................... $
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ....................................
Non-cash expenses related to convertible note ..........
Share-based compensation expense..........................
Loss on sale of fixed assets ........................................
Amortization of debt issuance costs............................
Change in preferred and common stock warrant
liabilities ...................................................................
Restructuring loss on write-off of fixed assets.............
Year Ended December 31,
2019
2018
2017
(12,443) $
(29,886) $
(30,384)
8,106
—
12,807
93
181
12,503
—
4,921
—
2,241
76
109
1,120
—
3,181
1,123
665
—
37
385
2,302
Net change in operating assets and liabilities:
Accounts receivable ....................................................
Inventories ..................................................................
Prepaid expenses and other assets ............................
Accounts payable ........................................................
Accrued expenses and other current liabilities............
Long-term liabilities .....................................................
Net cash used in operating activities ....................... $
(27,454)
(51,339)
(2,362)
10,149
2,743
21
(46,995) $
(9,045)
(22,113)
325
10,455
3,798
278
(37,721) $
(2,702)
(1,959)
(795)
2,361
464
49
(25,273)
Cash flows used in investing activities:
Purchases of property, plant and equipment .................. $
Proceeds from sale of fixed assets ................................
Purchases of property, plant and equipment held for
sale .............................................................................
Proceeds from sale of assets held for sale ....................
Payment of security deposits .........................................
Net cash used in investing activities ........................ $
(23,795) $
—
(22,228) $
67
(2,123)
299
(545)
(26,164) $
(1,022)
—
(59)
(23,242) $
(7,908)
—
—
—
(207)
(8,115)
Cash flows from financing activities:
Proceeds from issuance of common stock pursuant to
the initial public offering, net of issuance costs ........... $
254,868 $
— $
Proceeds from issuance of common stock pursuant to
the secondary public offering, net of issuance costs...
Proceeds from Series H preferred stock offering, net of
offering costs ...............................................................
Proceeds from Series G preferred stock offering, net of
offering costs ...............................................................
Proceeds from Series F preferred stock offering, net of
offering costs ...............................................................
Proceeds from convertible note issuance ......................
(continued on next page)
78
—
—
—
—
37,394
—
49,999
—
—
—
1,347
43,188
—
—
79
10,000
BEYOND MEAT, INC.
Statements of Cash Flows
(In thousands)
Year Ended December 31,
2019
2018
2017
Proceeds from revolving credit line ................................
Proceeds from term loan borrowing ...............................
Proceeds from equipment loan borrowing......................
Proceeds from payoff of notes receivable for restricted
stock purchase ............................................................
Repayments on revolving credit line ..............................
Repayment on term loan ................................................
Repayment of Missouri Note ..........................................
Payments of capital lease obligations ............................
Proceeds from exercise of stock options ........................
Proceeds from restricted stock exercise .........................
Payments of deferred offering costs ...............................
Debt issuance costs .......................................................
Payment for repurchase of common stock .....................
—
—
—
—
—
—
—
(55)
2,669
—
—
—
—
Net cash provided by financing activities ................. $
Net increase in cash and cash equivalents ....................... $
Cash and cash equivalents at the beginning of the period
294,876 $
221,717 $
54,271
6,000
20,000
5,000
951
(2,500)
(1,000)
(1,450)
(153)
1,369
2
(2,415)
(437)
(514)
76,199 $
15,236 $
39,035
2,500
—
—
—
—
(500)
—
(221)
379
—
—
—
—
55,425
22,037
16,998
Cash and cash equivalents at the end of the period.......... $
275,988 $
54,271 $
39,035
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ........................................................................ $
Taxes .......................................................................... $
3,019 $
9 $
924 $
4 $
269
3
Non-cash investing and financing activities:
Capital lease obligations for the purchase of
property, plant and equipment ................................. $
Issuance of convertible preferred stock warrants in
connection with debt ................................................ $
Non-cash additions to property, plant and equipment . $
Offering costs, accrued not yet paid............................ $
Reclassification of warrant liability to additional paid-
in capital in connection with the initial public
offering ..................................................................... $
Conversion of convertible preferred stock to common
stock upon initial public offering ............................... $
(concluded)
225 $
85 $
— $
1,418 $
— $
248 $
1,146 $
745 $
14,421 $
199,540 $
— $
— $
35
—
1,376
—
—
—
The accompanying notes are an integral part of these financial statements.
79
BEYOND MEAT, INC.
Notes to Financial Statements
Note 1. Introduction
The Company
Beyond Meat, Inc., a Delaware corporation (the “Company”), is one of the fastest growing food
companies in the United States, offering a portfolio of revolutionary plant-based meats. The Company
builds meat directly from plants, an innovation that enables consumers to experience the taste, texture
and other sensory attributes of popular animal-based meat products while enjoying the nutritional and
environmental benefits of eating the Company’s plant-based meat products. The Company’s brand
commitment, “Eat What You Love,” represents a strong belief that by eating the Company’s plant-based
meats, consumers can enjoy more, not less, of their favorite meals, and by doing so, help address
concerns related to human health, climate change, resource conservation and animal welfare.
The Company’s primary production facilities are located in Columbia, Missouri, and research and
development and administrative offices are located in El Segundo, California. In addition to its own
production facilities, the Company uses co-manufacturers in various locations in the United States, and,
in 2019, the Company commenced co-manufacturing in Canada and also expanded its partnership with
one of its distributors to co-manufacture the Company’s products at a new manufacturing facility built by
this distributor in the Netherlands, construction of which was completed in the first quarter of 2020.
The Company sells to a variety of customers in the retail and foodservice channels throughout the
United States and internationally primarily through distributors who purchase, store, sell, and deliver the
Company’s products. In addition, the Company sells directly to customers in the retail and restaurant and
foodservice channels who handle their own distribution. Substantially all of the Company’s long-lived
assets are located in the United States.
On September 7, 2018, the Company changed its name from Savage River, Inc. to Beyond Meat, Inc.
Subsequent to the year ended December 31, 2019, on January 14, 2020, the Company registered its new
subsidiary, Beyond Meat EU B.V., in the Netherlands.
Initial Public Offering
On May 6, 2019, the Company completed its initial public offering (“IPO”) of common stock in which it
sold 11,068,750 shares. The shares began trading on the Nasdaq Global Select Market on May 2, 2019.
The shares were sold at a public offering price of $25.00 per share for net proceeds of approximately
$252.4 million, after deducting underwriting discounts and commissions of $19.4 million and issuance
costs of approximately $4.9 million payable by the Company. Upon the closing of the IPO, all outstanding
shares of the Company’s convertible preferred stock automatically converted into 41,562,111 shares of
common stock on a one-for-one basis, and warrants exercisable for convertible preferred stock were
automatically converted into warrants exercisable for a total of 160,767 shares of common stock.
Secondary Public Offering
On August 5, 2019, the Company completed a secondary public offering of common stock in which it
sold 250,000 shares and the selling stockholders sold 3,487,500 shares. The shares were sold at a public
offering price of $160.00 per share for net proceeds to the Company of approximately $37.4 million, after
deducting underwriting discounts and commissions of $1.5 million and issuance costs of approximately
$1.1 million payable by the Company. Total Secondary Offering issuance costs paid in 2019 were
approximately $2.2 million, of which approximately $1.1 million was capitalized to reflect the costs
associated with the issuance of new shares and offset against proceeds from the Secondary Offering.
The Company did not receive any proceeds from the sale of common stock by the selling stockholders.
80
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements have been prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”).
Fiscal Year
The Company operates on a fiscal calendar year, and each interim quarter is comprised of one 5-week
period and two 4-week periods, with each week ending on a Saturday. The Company’s fiscal year always
begins on January 1 and ends on December 31. As a result, the Company’s first and fourth fiscal quarters
may have more or fewer days included than a traditional 91-day fiscal quarter.
Segment Information
The Company has one operating segment and one reportable segment, as the Company’s chief
operating decision maker, who is the Company’s Chief Executive Officer, reviews financial information on
an aggregate basis for purposes of allocating resources and evaluating financial performance.
Management’s Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant accounting estimates made by the
Company include trade promotion accruals; useful lives of property, plant and equipment; valuation of
deferred tax assets; valuation of inventory; and the valuation of the fair value of common stock and
preferred stock used to determine stock compensation expense and in the remeasurement of warrants
and liabilities. These estimates and assumptions are based on current facts, historical experience and
various other factors believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities and the recording of
expenses that are not readily apparent from other sources. Actual results could differ from those
estimates and such differences may be material to the financial statements.
Reverse Stock Split
On January 2, 2019, the Company effected a 3-to-2 reverse stock split of its outstanding common
stock and convertible preferred stock, including outstanding stock options and common and convertible
preferred stock warrants. The reverse stock split did not result in an adjustment to par value. All
references in the accompanying financial statements and related notes to the number of shares of
common stock, convertible preferred stock, warrants and options to purchase common stock and per
share data reflect the effect of the reverse stock split.
Cash and Cash Equivalents
The Company maintains cash balances at two financial institutions in the United States. The cash
balances may, at times, exceed federally insured limits. Accounts are guaranteed by the Federal Deposit
Insurance Corporation or FDIC up to $250,000. The Company considers all highly liquid investments with
original maturity dates of 90 days or less to be cash equivalents. Cash equivalents consist primarily of
amounts invested in money market accounts. Prior to 2018, the Company did not hold any cash
equivalents.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate
allowance for estimated uncollectible accounts to reflect any anticipated losses on the accounts
81
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
receivable balances and recorded in allowance for doubtful accounts. Allowance for doubtful accounts is
calculated based on the Company’s history of write-offs, level of past due accounts, and relationships with
and economic status of the Company’s distributors or customers. The Company had no allowance for
doubtful accounts as of December 31, 2019 or 2018.
Inventories and Cost of Goods Sold
Inventories are recorded at lower of cost or net realizable value. The Company accounts for inventory
using the weighted average cost method. In addition to product cost, inventory costs include expenditures
such as direct labor and certain supply and overhead expenses including in-bound shipping and handling
costs incurred in bringing the inventory to its existing condition and location. Inventories are comprised
primarily of raw materials, direct labor, and overhead costs. Weighted average cost method is used to
absorb raw materials, direct labor, and overhead into inventory. The Company reviews inventory
quantities on hand and records a provision for excess and obsolete inventory based primarily on historical
demand, and the age of the inventory, among other factors.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation and are depreciated
using the straight-line method over the following estimated useful lives:
Leasehold improvements ..................................... Shorter of lease term or estimated useful life
Furniture and fixtures ........................................... 3 years
Manufacturing equipment .................................... 5 to 10 years
Research and development equipment ............... 5 to 10 years
Software and computer equipment ...................... 3 years
Vehicles ............................................................... 5 years
Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated
useful life of the asset or the remaining lease term. When assets are sold or retired, the asset and related
accumulated depreciation are removed from the respective account balances and any gain or loss on
disposal is included in loss from operations. Expenditures for repairs and maintenance are charged
directly to expense when incurred. See Note 5.
Impairment of Long-Lived Assets
Long-lived assets, including property and equipment, are reviewed by management for impairment
whenever events or changes in circumstances indicate that the carrying amount of the asset may not be
fully recoverable. When events or circumstances indicate that impairment may be present, management
evaluates the probability that future undiscounted net cash flows received will be less than the carrying
amount of the asset. If projected future undiscounted cash flows are less than the carrying value of an
asset, then such assets are written down to their fair values. Other than the write off of certain property,
plant and equipment in connection with the restructuring efforts disclosed in Note 3, the Company
concluded that no long-lived assets were impaired during the fiscal years ended December 31, 2019,
2018 and 2017.
Deferred Offering Costs
Offering costs, consisting primarily of legal, accounting, printing and filing services, and other direct
fees and costs related to the IPO, were capitalized and offset against proceeds from the IPO. Total IPO
issuance costs were $4.9 million, of which $2.4 million was incurred and paid as of December 31, 2018
and an additional $2.5 million was incurred and paid in 2019. Total Secondary Offering costs paid in 2019
were approximately $2.2 million, of which approximately $1.1 million was capitalized to reflect the costs
associated with the issuance of new shares and offset against proceeds from the Secondary Offering.
82
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
The remainder of the Secondary Offering costs were associated with the expense of selling existing
shares by the selling stockholders and were recorded in SG&A expenses in the statement of operations
for 2019. There were no unpaid IPO issuance costs or Secondary Offering issuance costs in accounts
payable or prepaid IPO issuance costs in prepaid expenses as of December 31, 2019.
Stock Warrant Liability
The Company accounted for freestanding warrants outstanding to purchase shares of its common
stock or, prior to its IPO, its convertible preferred stock or common stock, as a liability, as the underlying
shares of convertible preferred stock and common stock were contingently redeemable and, therefore,
could have obligated the Company to transfer assets at some point in the future. The warrants were
recorded at fair value upon issuance and were subject to remeasurement at each balance sheet date.
Any change in fair value has been recognized in the statements of operations in Total other expense, net.
Prior to the IPO, the Company had outstanding warrants to purchase an aggregate of 60,002 shares
of its common stock at an exercise price of $3.00 per share, 121,694 shares of its Series B convertible
preferred stock at an exercise price of $1.07 per share and 39,073 shares of its Series E convertible
preferred stock at an exercise price of $3.68 per share. On May 6, 2019, in connection with the IPO, the
warrants exercisable for convertible preferred stock were automatically converted into warrants
exercisable for a total of 160,767 shares of common stock at the same respective exercise price per
share. Subsequent to the closing of the IPO, all outstanding warrants to purchase shares of common
stock were cashless exercised.
Income Taxes
The Company is subject to federal and state income taxes. The Company uses the asset and liability
method of accounting for income taxes as set forth in the authoritative guidance for accounting for income
taxes. Under this method, the Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the respective carrying amounts and tax basis
of assets and liabilities. A valuation allowance is established against the portion of deferred tax assets
that the Company believes will not be realized on a more likely than not basis.
With respect to uncertain tax positions, the Company recognizes in its financial statements those tax
positions determined to be more likely than not of being sustained upon examination, based on the
technical merits of the positions. The Company’s policy is to recognize, when applicable, interest and
penalties on uncertain tax positions as part of income tax expense. See Note 10.
Fair Value of Financial Instruments
The fair value measurement accounting guidance creates a fair value hierarchy to prioritize the inputs
used to measure fair value into three categories. A financial instrument’s level within the fair value
hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is
the highest and Level 3 is the lowest.
The three levels are defined as follows:
•
•
•
Level 1—Unadjusted quoted prices in active markets accessible by the reporting entity for
identical assets or liabilities. Active markets are those in which transactions for the asset or
liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or
similar instruments in markets that are not active and model-derived valuations in which
significant value drivers are observable.
Level 3—Valuations derived from valuation techniques in which significant value drivers are
unobservable.
83
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
The Company’s financial instruments include cash equivalents, accounts receivable, accounts
payable, and accrued expenses, for which the carrying amounts approximate fair value due to the short-
term maturity of these financial instruments. Based on the borrowing rates currently available to the
Company for debt with similar terms, the carrying value of the line of credit, term debt with its bank, and
equipment loan approximate fair value as well.
The Company had no financial instruments measured at fair value on a recurring basis as of
December 31, 2019, other than the liability classified share-settled obligation to one of the Company’s
executive officers as discussed in Note 8 which represents a Level 1 financial instrument. Prior to the
IPO, the stock warrant liability was measured at fair value using Level 3 inputs upon issuance and at each
reporting date. Inputs used to determine the estimated fair value of the warrant liability as of the valuation
date included expected term of the warrants, the risk-free interest rate, volatility, and the fair value of
underlying shares.
The following table sets forth the Company’s financial instruments that were measured at fair value
on a recurring basis based on the fair value hierarchy as of December 31, 2018:
(in thousands)
Financial Liabilities:
Preferred stock warrant liability................... $
Common stock warrant liability ...................
Total ............................................................ $
December 31, 2018
Level 1
Level 2
Level 3
Total
— $
—
— $
— $
1,441 $
—
477
— $
1,918 $
1,441
477
1,918
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2 or Level 3 for
2019, 2018 and 2017.
The key assumptions used in the Black-Scholes option-pricing model for the valuation of the
preferred stock warrant liability upon re-measurement were as follows:
Expected term (in years) ...............................................................
Fair value of underlying shares .....................................................
Volatility .........................................................................................
Risk-free interest rate ....................................................................
Dividend yield ...............................................................................
For the Year Ended December 31,
2018
2.0
$19.02
55.0%
2.48%
—
2017
3.0
$3.00
55.0%
1.98%
—
Generally, increases or decreases in the fair value of the underlying convertible preferred stock or
common stock would result in a directionally similar impact in the fair value measurement of the
associated warrant liability.
The following table sets forth a summary of the changes in the fair value of the preferred and
common stock warrant liabilities:
84
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
(in thousands)
Beginning balance ................................................................... $
Fair value of warrants issued during the period ......................
Change in fair value of warrant liability ....................................
Reclassification of warrant liability to additional paid-in
capital in connection with the IPO ........................................
Ending balance ....................................................................... $
Year Ended December 31,
2019
2018
2017
1,918 $
—
550 $
248
12,503
1,120
(14,421)
—
— $
1,918 $
165
—
385
—
550
The Company remeasured and reclassified the common stock warrant liability to additional paid-in-
capital in connection with the IPO. The final re-measurement of the preferred stock warrant was based
upon the publicly available stock price on the conversion date. Subsequent to the closing of the IPO, all
outstanding warrants to purchase shares of common stock were cashless exercised and no warrants
were outstanding as of December 31, 2019.
Leases
The Company leases certain equipment used for research and development and operations under
both capital and operating lease agreements. An asset and a corresponding liability for the capital lease
obligations are established for the cost of a capital lease. Capital lease assets are included in property,
plant and equipment, net in the Company’s balance sheets. Operating lease costs are recognized as rent
expense on a straight-line basis over the applicable lease terms. See Note 9.
Contingencies
The Company is subject to a range of claims, lawsuits, and administrative proceedings that arise in
the ordinary course of business. The Company accrues a liability (which amount includes litigation costs
expected to be incurred) and charges operations for such matters when it is probable that a liability has
been incurred and the amount can be reasonably estimated, in accordance with the recognition criteria of
the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 450,
Contingencies. Estimating liabilities and costs associated with these matters require significant judgment
based upon the professional knowledge and experience of management and its legal counsel. See
Note 9.
Revenue Recognition
In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from
Contracts with Customers” (“ASU 2014-09”), which, along with subsequent ASUs, amends the existing
accounting standards for revenue recognition (“Topic 606”). This guidance is based on principles that
govern the recognition of revenue at an amount an entity expects to be entitled to receive when products
are transferred to customers. ASU 2014-09 was effective for the Company beginning January 1, 2019.
The majority of the Company’s contracts with customers generally consist of a single performance
obligation to transfer promised goods. Based on the Company’s evaluation process and review of its
contracts with customers, the timing and amount of revenue recognized based on ASU 2014-09 is
consistent with the Company’s revenue recognition policy under previous guidance. The Company has
therefore concluded that the adoption of ASU 2014-09 did not have a material impact on its financial
position, results of operations, or cash flows.
Revenue is recognized at the point in which the performance obligation under the terms of a contract
with the customer have been satisfied and control has transferred. The Company’s performance
obligation is typically defined as the accepted purchase order, or the contract, with the customer which
requires the Company to deliver the requested products at agreed upon prices at the time and location of
the customer’s choice. The Company does not offer warranties or a right to return on the products it sells
except in the instance of a product recall.
85
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Revenue is measured as the amount of consideration the Company expects to receive in exchange
for fulfilling the performance obligation. Sales and other taxes the Company collects concurrent with the
sale of products are excluded from revenue. The Company's normal payment terms vary by the type and
location of its customers and the products offered. The time between invoicing and when payment is due
is not significant. None of the Company's customer contracts as of December 31, 2019 contains a
significant financing component.
The Company routinely offers sales discounts and promotions through various programs to its
customers and consumers. These programs include rebates, temporary on shelf price reductions, off
invoice discounts, retailer advertisements, product coupons and other trade activities. Provision for
discounts and incentives are recorded in the same period in which the related revenues are recognized.
At the end of each accounting period, the Company recognizes a liability for estimated sales discounts
that have been incurred but not paid which totaled $1.6 million and $0.8 million as of December 31, 2019
and 2018, respectively. The offsetting charge is recorded as a reduction of revenues in the same period
when the expense is incurred.
The Company recognizes the incremental costs of obtaining contracts as an expense when incurred
if the amortization period of the assets that the Company otherwise would have recognized is one year or
less. The incremental cost to obtain contracts was not material.
The Company’s net revenues by platform and channel are included in the tables below:
(in thousands)
Net revenues:
Year Ended December 31,
2019
2018
2017
Gross Fresh Platform ......................................... $
Gross Frozen Platform .......................................
Less: Discounts ..................................................
306,585 $
81,686 $
17,772
(26,460)
15,896
(9,648)
Net revenues .................................................. $
297,897 $
87,934 $
18,109
19,588
(5,116)
32,581
(in thousands)
Net revenues:
Year Ended December 31,
2019
2018
2017
Retail .................................................................. $
Restaurant and Foodservice ..............................
144,809 $
50,779 $
153,088
37,155
Net revenues .................................................. $
297,897 $
87,934 $
25,490
7,091
32,581
Two distributors accounted for approximately 17% and 16%, respectively, of the Company’s gross
revenues in 2019; three distributors accounted for approximately 32%, 21% and 13%, respectively, of the
Company’s gross revenues in 2018 and three distributors accounted for approximately 38%, 10% and
10%, respectively, of the Company’s gross revenues in 2017. No other distributor or customer accounted
for more than 10% of the Company’s gross revenues in 2019, 2018 or 2017.
The Company’s international net revenues (which exclude revenues from Canada) are included in the
Company’s retail and restaurant and foodservice channels and were approximately 16%, 7% and 1%,
respectively, of the Company’s net revenues in 2019, 2018 and 2017. Net revenues from sales to the
Canadian market are included with net revenues from sales to the United States market.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Earnings (Loss) Per Share
Earnings (loss) per share (“EPS”) represents net income available to common stockholders divided
by the weighted average number of common shares outstanding for the period. Diluted EPS represents
net income available to common stockholders divided by the weighted-average number of common
shares outstanding, inclusive of the dilutive impact of potential common shares outstanding during the
period. Such potential common shares include options, unvested restricted stock, restricted stock units
(“RSUs”), contracts classified as assets or liabilities that are required or assumed to be share-settled
under the two-class method, warrants and convertible preferred stock.
The Company calculates basic and diluted EPS available to common stockholders in conformity with
the two-class method required for companies with participating securities. The Company considers all
series of convertible preferred stock issued and outstanding prior to the IPO to be participating securities.
Under the two-class method, the net loss available to common stockholders is not allocated to the
convertible preferred stock as the holders of convertible preferred stock issued and outstanding prior to
the IPO did not have a contractual obligation to share in losses. Computation of EPS for the year ended
December 31, 2019 also excludes adjustments under the two-class method relating to a liability
classified, share-settled obligation to an executive officer to deliver a variable number of shares based on
a fixed monetary amount because the shares to be delivered are not participating securities as they do
not have voting rights and are not entitled to participate in dividends until they are issued.
Nonvested restricted stock awards (referred to as participating securities) are excluded from the
dilutive impact of common equivalent shares outstanding in accordance with authoritative guidance under
the two-class method. The nonvested restricted stockholders are entitled to participate in dividends
declared on common stock as if the shares were fully vested and hence nonvested restricted stock
shares are deemed to be participating securities. Under the two-class method, net income, but not net
loss, available to nonvested restricted stockholders is excluded from net income available to common
stockholders for purposes of calculating basic and diluted EPS. Net loss available to common
stockholders is not allocated to unvested restricted stock as the holders of unvested restricted stock do
not have a contractual obligation to share in losses. In periods when the Company records net loss, all
potential common shares are excluded in the computation of EPS because their inclusion would be anti-
dilutive. See Note 11.
Prepaid Expenses
Prepaid expenses primarily include prepaid rent and insurance, which are expensed in the period to
which they relate.
Selling, General and Administrative (“SG&A”) Expenses
SG&A expenses are primarily comprised of selling, marketing expenses and administrative expenses,
share-based compensation, outbound shipping and handling costs, non-manufacturing rent expense,
depreciation and amortization expense on non-manufacturing assets and other non-production operating
expenses. Selling and marketing expenses include share-based compensation awards to brand
ambassadors, advertising costs, costs associated with consumer promotions, product samples and sales
aids incurred to acquire new customers, retain existing customers and build brand awareness.
Administrative expenses include the expenses related to management, accounting, legal, IT, and other
office functions. Advertising costs are expensed as incurred. Advertising costs in the years ended
December 31, 2019, 2018 and 2017 were $0.3 million, $62,000 and $0.3 million, respectively. Non-
advertising related components of the Company’s total marketing expenditures primarily include costs
associated with consumer promotions, product sampling, and sales aids, which are also included in
SG&A.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Shipping and Handling Costs
The Company does not bill its distributors or customers shipping and handling fees. The Company’s
products are predominantly shipped to its distributors or customers as “FOB Destination,” with control of
the products transferred to the customer at the destination. In-bound shipping and handling costs incurred
in manufacturing a product are included in inventory and reflected in cost of goods sold when the sale of
that product is recognized. Outbound shipping and handling costs are considered as fulfillment costs and
are recorded in SG&A expenses. Outbound shipping and handling costs included in SG&A expenses in
2019, 2018 and 2017 were $10.9 million, $6.1 million and $3.4 million, respectively. Outbound shipping
and handling costs in the year ended December 31, 2017 included $0.8 million related to the termination
of the exclusive supply agreement with a co-manufacturer. There were no such costs in 2019 or 2018.
Research and Development
Research and development costs, which includes enhancements to existing products and new
product development, are expensed in the period incurred. Research and development expenses
primarily consist of personnel and related expenses for the Company’s research and development staff,
including salaries, benefits, bonuses, and share-based compensation, scale-up expenses, and
depreciation and amortization expense on research and development assets. Research and development
expenses in the years ended December 31, 2019, 2018 and 2017, were $20.7 million, $9.6 million, and
$5.7 million, respectively.
Share-Based Compensation
The Company measures all share-based compensation cost at the grant date, based on the fair
values of the awards that are ultimately expected to vest, and recognizes that cost as an expense in its
statements of operations over the requisite service period. The Company estimates the fair value of
option awards using the Black-Scholes option valuation model, which requires management to make
certain assumptions for estimating the fair value of stock options at the date of grant including the fair
value and projected volatility of the underlying common stock and the expected term of the award. The
Black-Scholes option valuation model was developed for use in estimating the fair value of traded options
that have no vesting restrictions and are fully transferable. Because the Company’s stock options have
characteristics significantly different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimates, in management’s opinion, the existing
models may not necessarily provide a reliable single measure of the fair value of the Company’s stock
options. Although the fair value of stock options is determined using an option valuation model, that value
may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.
In addition, the Company estimates the expected impact of forfeited awards and recognizes share-
based compensation cost only for those awards ultimately expected to vest. If actual forfeiture rates differ
materially from the Company’s estimates, share-based compensation expense could differ significantly
from the amounts the Company has recorded in the current period. The Company periodically reviews
actual forfeiture experience and will revise its estimates, as necessary. The Company will recognize as
compensation cost the cumulative effect of the change in estimated forfeiture rates on current and prior
periods in earnings of the period of revision. As a result, if the Company revises its assumptions and
estimates, the Company’s share-based compensation expense could change materially in the future. See
Note 8.
Employee Benefit Plan
On January 1, 2017 the Company initiated a 401(k) retirement saving plan (“401-K Plan”) for the
benefit of eligible employees. Under terms of this plan, eligible employees are able to make contributions
of their wages on a tax-deferred basis. The Company has incurred $0.2 million, $0 and $0 in matching
contribution to the 401-K Plan in 2019, 2018 and 2017, respectively.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Restructuring Plan
The Company accounts for exit or disposal of activities in accordance with ASC 420, Exit or Disposal
Cost Obligations. The Company defines a business restructuring as an exit or disposal activity that
includes but is not limited to a program which is planned and controlled by management and materially
changes either the scope of a business or the manner in which that business is conducted. Business
restructuring charges may include (i) contract termination costs and (ii) other related costs associated with
exit or disposal activities.
Contract termination costs include costs to terminate a contract or costs that will continue to be
incurred under the contract without benefit to the Company. A liability is recognized and measured at its
fair value when the Company either terminates the contract or ceases using the rights conveyed by the
contract. See Note 3.
Related-Party Transactions
Seth Goldman
The Company entered into a consulting agreement with Seth Goldman, the Company’s Executive
Chair, on March 2, 2016, which was amended and restated on November 15, 2018 and further amended
on April 8, 2019. Pursuant to the consulting agreement, the Company paid Mr. Goldman $20,210.33 per
month for services rendered under the consulting agreement.
Effective February 27, 2020, Seth Goldman resigned as Executive Chair of the Company. Upon such
resignation, Mr. Goldman will continue to serve in his capacity as a Class I director and Chairman of
the Board of the Company. In connection with Mr. Goldman’s resignation as Executive Chair, the
Company and Mr. Goldman terminated the consulting agreement effective as of February 27, 2020. Total
consulting fees paid to Mr. Goldman under the consulting agreement prior to its termination in 2019, 2018
and 2017 were $265,548, $189,583 and $160,417, respectively. In addition, Mr. Goldman is entitled to
receive a bonus for service in 2019 in the amount of $121,260, which was paid in the first quarter of 2020.
Bernhard van Lengerich
The Company first entered into an advisor agreement with Food System Strategies, LLC in October
2015. Bernhard van Lengerich. Ph.D., a member of the Company’s Board of Directors, is the Chief
Executive Officer of Food System Strategies, LLC. Pursuant to this advisor agreement, the Company paid
Food System Strategies, LLC $4,000 for each day Dr. van Lengerich provided services, provided the
Company paid Food System Strategies, LLC for at least two days of services per month. In February
2016, the Company entered into a new advisor agreement with Food System Strategies, LLC, which
superseded the original agreement and provided for a $25,000 monthly retainer and a non-qualified stock
option covering 532,590 shares, which vested in equal monthly installments over three years in
consideration of Dr. van Lengerich providing services as the Company’s interim Chief Technical Officer
and head of research and development, and the increased time commitment associated with these roles.
In December 2016, the advisor agreement was amended to provide for a $10,000 monthly retainer to
reflect the fact that Dr. van Lengerich would only be providing advisory services five to six days a month
going forward.
Effective December 31, 2019, the Company and Food System Strategies, LLC agreed that the term
of the advisor agreement would end. Total advisor fees paid to Food System Strategies, LLC for the
services of Mr. van Lengerich in 2019, 2018 and 2017 were $120,000 (including amounts paid in 2020),
$140,000 and $125,000, respectively.
89
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Donald Thompson
In 2018, the Company incurred consulting costs payable to a company associated with Donald
Thompson, a member of the Company’s Board of Directors, in the amount of $121,546. The Company did
not incur any such consulting costs in 2017 or 2019.
Loans to Related Parties
In connection with the issuance of restricted stock and for value received, in December 2015, the
nonemployee members of our Board of Directors entered into a promissory note to pay the Company the
principal sum of $951,245 with interest at a fixed rate of 1.68% per annum, compounded annually, on the
unpaid balance of such principal sum. The promissory notes were secured by a pledge of the common
stock issued to the nonemployee board members. In determining the accounting for the promissory
notes, management evaluated the legal provisions of the promissory notes as well as the Company’s
intent to fully collect on the outstanding note amounts. The Company collected on the promissory notes in
their entirety in 2018.
Recently Adopted Accounting Pronouncements
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”),
which makes amendments to the guidance in GAAP on the classification and measurement of financial
instruments. ASU 2016-01 significantly revises an entity’s accounting related to (1) the classification and
measurement of investments in equity securities and (2) the presentation of certain fair value changes for
financial liabilities measured at fair value. It also amends certain disclosure requirements associated with
the fair value of financial instruments. The Company adopted and implemented ASU 2016-01 for the year
ended December 31, 2019. Adoption of ASU 2016-01 did not have a material impact on the Company’s
financial position, results of operations, or cash flows.
In August 2016, the FASB issued ASU No. 2016-15, “Statements of Cash Flows (Topic 230)
Classification of Certain Cash Receipts and Cash Payments” or ASU 2016-15, which addresses eight
specific cash flow issues with the objective of reducing the existing diversity in practice in how certain
cash receipts and cash payments are presented and classified in the statements of cash flows. ASU
2016-15 is effective for annual periods (including interim periods) beginning after December 15, 2018 for
business entities that are not public, should be applied retrospectively, and early adoption is permitted.
The Company adopted ASU 2016-15 for the year ended December 31, 2019. Adoption of 2016-15 did not
have a material impact on the Company’s financial position, results of operations, or cash flows.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). Under ASU
2018-07, the measurement of equity-classified nonemployee awards will be fixed at the grant date, and
nonpublic entities are allowed to account for nonemployee awards using certain practical expedients that
are already available for employee awards. The amendments in ASU 2018-07 are effective for nonpublic
business entities for fiscal years beginning after December 15, 2019, and interim periods within fiscal
years beginning after December 15, 2020. Early adoption is permitted, but no earlier than the Company’s
adoption date of Topic 606. The Company early adopted ASU 2018-07 beginning January 1, 2019 along
with its adoption of ASU 2014-09. Pursuant to ASU 2018-07, the measurement of equity classified
nonemployee awards will be fixed at the grant date, as compared to the previous requirement to
remeasure the awards through the performance completion date.
New Accounting Pronouncements
As an “emerging growth company,” (“EGC”) the Jumpstart Our Business Startups Act, (the “JOBS
Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to
public companies until such pronouncements are made applicable to private companies. The Company
expects to lose its EGC status upon the filing of the Form 10-K for the year ending December 31, 2020,
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
when it expects to qualify as a Large Accelerated Filer based upon the current market capitalization of the
Company according to Rule 12b-2 of the Exchange Act. Therefore, the Company has elected to use the
adoption dates applicable to public companies beginning in the first quarter of 2020 and the adoption
dates for the new accounting pronouncements disclosed below have been evaluated under such premise.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02” or “ASC
842”). ASU 2016-02 requires lessees to generally recognize most operating leases on the balance sheets
but record expenses on the income statements in a manner similar to current accounting. ASU 2016-02
along with subsequent ASU’s on Topic 842 is effective for public companies for the annual reporting
period beginning after December 15, 2018. As described above, the Company has elected to use the
adoption dates applicable to public companies beginning in the first quarter of 2020, and, therefore,
effective for the Company beginning January 1, 2020.
Based on analysis of leases and other contracts, the Company currently believes the most significant
impact of ASC 842 on its accounting will be the balance sheet impact of its operating leases, which will
significantly increase assets and liabilities.
The Company plans to elect the package of practical expedients available under the transition
provisions of ASC 842, including (i) not reassessing whether expired or existing contracts contain leases,
(ii) lease classification, and (iii) not revaluing initial direct costs for existing leases. Also, the Company
plans to elect the practical expedient which will allow aggregation of non-lease components with the
related lease components. Lastly, the Company will apply the modified retrospective adoption method,
utilizing the simplified transition option available in ASC 842, which allows entities to continue to apply the
legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented
in the year of adoption.
The impact of applying ASC 842 effective as of January 1, 2020 to the Company’s statements of
operations and cash flows is not expected to be significant. The Company currently expects the adoption
to result in an increase of between $11 million and $13 million in operating lease liabilities based on the
present value of the remaining minimum rental payments using discount rates as of the effective date and
an increase of between $11 million and $13 million in operating right-of-use assets.
In December 18, 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income
Taxes (Topic 740)” (“ASU 2019-12”). ASU 2019-12 eliminates the need for an organization to analyze
whether the following apply in a given period (1) exception to the incremental approach for intra-period
tax allocation (2) exceptions to accounting for basis differences when there are ownership changes in
foreign investments and (3) exceptions in interim period income tax accounting for year-to-date losses
that exceed anticipated losses. ASU 2019-12 also is designed to improve financial statement preparers’
application of income tax-related guidance and simplify GAAP for (1) franchise taxes that are partially
based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill,
(3) separate financial statements of legal entities that are not subject to tax, and (4) enacted changes in
tax laws in interim periods. For public business entities, the amendments in ASU 2019-12 are effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early
adoption of the amendments is permitted, including adoption in any interim period for public business
entities for periods for which financial statements have not yet been issued. An entity that elects to early
adopt the amendments in an interim period should reflect any adjustments as of the beginning of the
annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt
all the amendments in the same period. ASU 2019-12 is effective for the Company beginning in
January 1, 2021. Adoption of ASU 2019-12 is not expected to result in any material changes to the way
the tax provision is prepared and is not expected to have a material impact on the Company’s financial
position, results of operations, or cash flows.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 3. Restructuring
In May 2017, management approved a plan to terminate the Company’s exclusive supply agreement
(the “Agreement”) with one of its co-manufacturers, due to non-performance under the Agreement and on
May 23, 2017, the Company notified the co-manufacturer of its decision to terminate the Agreement. In
accordance with the Company’s policy of reviewing long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets may not be recoverable, the
Company determined that as of May 23, 2017, the date the Company notified the co-manufacturer of its
decision to terminate the Agreement, the assets held in possession of the co-manufacturer were no
longer recoverable. The Company recorded restructuring expenses of $3.5 million in 2017, of which
$2.3 million were related to the impairment write-off of long-lived assets comprised of certain
unrecoverable equipment located at the co-manufacturer’s site and company-paid leasehold
improvements to the co-manufacturer’s facility pursuant to the Agreement, and $1.2 million was primarily
related to legal and other expenses associated with the dispute with the co-manufacturer (see Note 9). In
addition, the Company recorded $2.4 million in write-off of unrecoverable inventory held at the co-
manufacturer’s site which is included in cost of goods sold (see Note 4) and $1.2 million in expenses
related to the dispute in SG&A expenses in the Company’s statement of operations in 2017. In 2019 and
2018, the Company recorded $4.9 million and $1.5 million, respectively, in restructuring expenses related
to this dispute, which consisted primarily of legal and other expenses. See Note 9 for further information.
As of December 31, 2019 and 2018, the Company had $1.1 million and $0, respectively, in accrued
unpaid liabilities associated with this contract termination.
Note 4. Inventories
Major classes of inventory were as follows:
(in thousands)
Raw materials and packaging .................................................................... $
Work in process ..........................................................................................
Finished goods ...........................................................................................
Total ............................................................................................................ $
December 31,
2019
2018
36,884 $
17,958
26,754
81,596 $
13,756
2,517
13,984
30,257
The Company wrote off $2.4 million in unrecoverable inventory related to the termination of an
exclusive supply agreement with one of the Company’s co-manufacturers which was recorded in cost of
goods sold in its statement of operations for the year ended December 31, 2017. The Company wrote off
$6.4 million, $0.8 million and $0 in excess and obsolete inventories and recognized that expense in cost
of goods sold in its statements of operations for the years ended December 31, 2019, 2018 and 2017,
respectively. There was no write down of inventory to lower of cost or net realizable value at
December 31, 2019 or 2018.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 5. Property, Plant and Equipment
Property, plant, and equipment are stated at cost and capital lease assets are included. A summary of
property, plant, and equipment as of December 31, 2019 and 2018, is as follows:
(in thousands)
Manufacturing equipment ......................................................................... $
Research and development equipment ....................................................
Leasehold improvements ..........................................................................
Capital leases ...........................................................................................
Software ...................................................................................................
Furniture and fixtures ................................................................................
Vehicles ....................................................................................................
Assets not yet placed in service ...............................................................
Total property, plant and equipment .......................................................... $
Less: accumulated depreciation and amortization ....................................
Property, plant and equipment, net ........................................................... $
December 31,
2019
2018
37,939 $
25,314
8,933
7,620
1,108
274
433
210
11,666
68,183 $
20,709
47,474 $
6,088
7,080
882
60
195
210
3,374
43,203
12,676
30,527
Depreciation and amortization expense in 2019, 2018, and 2017 was $8.1 million, $4.9 million, and
3.2 million, respectively. Of the total depreciation and amortization expense in 2019, 2018 and 2017, $5.7
million, $3.7 million and $2.9 million, respectively, were recorded in cost of goods sold, $2.4 million, $1.2
million and $0.3 million, respectively, were recorded in research and development expenses, and
$71,000, $13,000 and $0, respectively, were recorded in SG&A expenses, in the Company’s statements
of operations.
The Company had $2.6 million and $1.0 million in property, plant and equipment concluded to meet
the criteria for assets held for sale in prepaid expenses and other current assets on the balance sheets as
of December 31, 2019 and 2018, respectively. The Company expects to sell such assets in 2020 for
amounts that approximate book value.
Note 6. Debt
The Company’s debt balances are detailed below:
(in thousands)
2018 Revolving Credit Facility (defined below) ......................................... $
2018 Term Loan Facility (defined below) ...................................................
Equipment financing loan ..........................................................................
Debt issuance costs ..................................................................................
Total debt outstanding ............................................................................... $
Less: current portion of long-term debt ......................................................
Long-term debt .......................................................................................... $
December 31,
2019
2018
6,000 $
20,000
5,000
(431)
6,000
20,000
5,000
(612)
30,569 $
30,388
11,000
—
19,569 $
30,388
The Company records debt issuance costs as a reduction of carrying value of the debt in the
accompanying balance sheets. As of December 31, 2019 and 2018, debt issuance costs, net of
amortization, totaled $0.4 million and $0.6 million, respectively. Debt issuance costs are amortized as
interest expense over the term of the loan for which amortization of $0.2 million, $93,000 and 37,000 was
recorded in 2019, 2018 and 2017, respectively.
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Amended and Restated Loan and Security Agreement
In June 2018, the Company refinanced its then existing revolving credit facility and term loan facility
under a loan and security agreement with Silicon Valley Bank (“SVB”) (the “Amended LSA”). The
Amended LSA includes a $6.0 million revolving credit facility (the “2018 Revolving Credit Facility”) and a
term loan facility (the “2018 Term Loan Facility”) comprised of (i) a $10.0 million term loan advance at
closing, (ii) a conditional $5.0 million term loan advance, if no event of default has occurred and is
continuing through the borrowing date, and (iii) an additional conditional term loan advance of $5.0 million
if no event of default has occurred and is continuing based upon a minimum level of gross profit for the
trailing 12-month period. The 2018 Term Loan Facility has a floating interest rate that is equal to 4.0%
above the prime rate, with interest payable monthly and principal amortizing commencing on July 1, 2020,
and will mature in June 2022. Borrowings under the 2018 Revolving Credit Facility carry a variable annual
interest rate of prime rate plus 0.75% to 1.25% with an additional 5% on the outstanding balances in the
event of a default. The 2018 Revolving Credit Facility matures in June 2020.
The 2018 Term Loan Facility and the 2018 Revolving Credit Facility (the “SVB Credit Facilities,”)
contain customary negative financial covenants that limit the Company’s ability to, among other things,
incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer
assets and merge or consolidate. The SVB Credit Facilities also contain customary affirmative financial
covenants, including delivery of audited financial statements. The Company was in compliance with the
financial covenants in the SVB Credit Facilities as of December 31, 2019.
The SVB Credit Facilities are secured by an interest in the Company’s assets including manufacturing
equipment, inventory, contract rights or rights to payment of money, leases, license agreements, general
intangibles, and cash.
In conjunction with the execution of the Amended LSA, the Company issued two common stock
warrants one each to SVB and its affiliate to provide the ability to purchase an aggregate of
60,002 shares of the Company’s common stock at an exercise price of $3.00 per share. The common
stock warrants were fully exercisable on the date of the grant and had a term of 10 years. The Company
also paid a commitment fee of $30,000 to SVB in connection with the execution of the Amended LSA.
Subsequent to the closing of the IPO, all outstanding warrants to purchase shares of common stock were
cashless exercised and no warrants were outstanding as of December 31, 2019.
As of December 31, 2019, and 2018, the Company had $6.0 million and $20.0 million in borrowings
on the 2018 Revolving Credit Facility and 2018 Term Loan Facility, respectively, and had no availability to
borrow under either of these loan facilities. In 2019 and 2018, the Company incurred $2.2 million and $0.9
million, respectively, in interest expense related to the SVB Credit Facilities. In 2017, the Company
incurred $0.1 million in interest expense related to the predecessor credit facilities with SVB. The interest
rates on the 2018 Revolving Credit Facility and the 2018 Term Loan Facility at December 31, 2019 were
5.5% and 8.75%, respectively.
Equipment Loan Facility
In September 2018, the Company entered into an agreement with Structural Capital Investments II,
LP, or Structural Capital, wherein Structural Capital agreed to provide an equipment loan facility to the
Company in the amount of $5.0 million for the purpose of purchasing equipment. Subject to Structural
Capital’s approval, the Company may request that they advance an additional $5.0 million or an
aggregate of $10.0 million. The equipment loan facility matures on May 1, 2022, carries an interest rate of
6.25% plus the greater of 4.75% or the prime rate and is secured by the financed equipment. Principal
repayments begin six months or 18 months after loan draw depending on the Company achieving certain
financial milestones, and therefore, are paid over a period of 37 months or 25 months, respectively. As of
June 30, 2019, the Company achieved all of the milestones and, therefore, monthly installment
repayments of principal are expected to begin on December 31, 2020. The Company is also required to
offer Structural Capital the right to purchase up to an aggregate of $1.0 million of the Company’s capital
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BEYOND MEAT, INC.
Notes to Financial Statements (continued)
stock or any other equity interest in any transaction where the Company receives gross proceeds of at
least $10.0 million. The equipment loan facility has a prepayment penalty of 2% during the first two years
of the term and 1% thereafter. The Company must also pay a final payment fee of 13% of the facility
commitment amount on the maturity date and such other date as the advances become due and such fee
will increase by 1% if certain milestones are achieved.
The Company had $5.0 million in borrowings outstanding as of December 31, 2019 and 2018 under
the equipment loan facility. The interest rate on the equipment loan facility at December 31, 2019 and
2018 was 11.0% and 11.5%, respectively. For 2019, 2018 and 2017, the Company recorded $0.6 million,
$0.2 million, and $0, respectively, in interest expense related to the equipment loan facility. The Company
was in compliance with the financial covenants contained in the equipment loan facility as of
December 31, 2019.
Promissory Note
The Company entered into a note with the Missouri Department of Economic Development in the
amount of $1.5 million on December 20, 2013 or the Missouri Note. The principal was due and payable
on December 20, 2021. The Missouri Note carried a fixed interest rate of 2.0% per year, payable
quarterly, commencing on December 31, 2016. The Company recognized interest expense of $29,000, in
2017. On June 28, 2018, the Missouri Note was paid in full.
Convertible Promissory Notes
From August 2017 through November 2017, the Company issued $10.0 million in Convertible
Promissory Notes (“2017 Convertible Notes”) to several purchasers of the Series G Preferred Stock, two
of whom were 5% stockholders and two were non-employee members of the Company’s Board of
Directors. The 2017 Convertible Notes were due six months after the issuance date. The 2017
Convertible Notes had a fixed interest rate of 5% per year during their term and permitted the holders to
convert the notes to Series G Preferred Stock at 90% of the cash price per share.
The outstanding principal and all accrued but unpaid interest under the 2017 Convertible Notes were
converted into 1,026,367 shares of Series G Preferred Stock beginning in November 2017. The number
of shares issued was calculated based on the quotient obtained by dividing the outstanding principal and
all accrued interest by 90% of the cash price per share of the Series G Preferred Stock issuance. In
connection with the accounting for the 2017 Convertible Notes, a debt discount of $1.1 million was
recognized at issuance, of which $0.7 million was recognized as a component of interest expense
through the date of conversion. The remaining unamortized discount of $0.4 million was recorded in other
expense at the date of conversion.
Stock Warrant Liability
In connection with its financing arrangements, the Company issued warrants to purchase shares of its
convertible preferred stock. For one of the financing arrangements, the Company issued warrants to
purchase 121,694 shares of Series B convertible preferred stock at an exercise price of $1.07 per share.
For a separate financing arrangement, the Company issued warrants to purchase 39,073 shares of
Series E convertible preferred stock at an exercise price of $3.68 per share. In connection with the
Company’s refinancing of its credit facilities with SVB, the Company issued to SVB and its affiliates
warrants to purchase an aggregate of 60,002 shares of its common stock at an exercise price of $3.00
per share. Upon the closing of the IPO, the warrants exercisable for convertible preferred stock were
automatically converted into warrants exercisable for a total of 160,767 shares of common stock at the
same respective exercise price per share. Subsequent to the closing of the IPO, all outstanding warrants
to purchase shares of common stock were cashless exercised and no warrants were outstanding as of
December 31, 2019. See Note 2 for further information on the warrant liabilities.
95
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 7. Stockholders’ Equity (Deficit) and Convertible Preferred Stock
Upon the closing of the IPO, all outstanding shares of the Company’s convertible preferred stock
automatically converted into 41,562,111 shares of common stock on a one-for-one basis. On May 6,
2019, the Company filed a Restated Certificate of Incorporation authorizing the Company to issue
500,000,000 shares of common stock, $0.0001 par value per share, and 500,000 shares of undesignated
preferred stock, $0.0001 par value per share, with rights and preferences determined by the Company’s
Board of Directors at the time of issuance of such shares.
On August 5, 2019, the Company completed its Secondary Offering of common stock, in which it sold
250,000 shares of common stock, $0.0001 par value.
As of December 31, 2019, the Company had 61,576,494 shares of common stock issued and
outstanding.
As of December 31, 2018, the Company’s shares consisted of 58,669,600 authorized shares of
common stock, par value $0.0001 per share, of which 6,951,350 shares were issued and outstanding,
and 43,882,867 authorized shares of preferred stock, par value $0.0001 per share, of which
3,333,500 shares of Series A Preferred Stock, 4,680,565 shares of Series B Preferred Stock,
8,076,636 shares of Series C Preferred Stock, 8,713,201 shares of Series D Preferred Stock, 4,701,449
shares of Series E Preferred Stock, 4,866,758 shares of Series F Preferred Stock, 5,114,786 shares of
Series G Preferred Stock and 2,075,216 shares of Series H Preferred Stock were issued and
outstanding.
The Company has not declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock.
Note 8. Share-Based Compensation
On April 11, 2011, the Company’s stockholders approved the 2011 Equity Incentive Plan (“2011
Plan”), and most recently amended the 2011 Plan on April 10, 2019. The 2011 Plan was amended,
restated and re-named the 2018 Equity Incentive Plan (“2018 Plan”), which became effective as of April
30, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO.
The remaining shares available for issuance under the 2011 Plan were added to the shares reserved for
issuance under the 2018 Plan.
The 2018 Plan provides for the grant of stock options (including incentive stock options and non-
qualified stock options), stock appreciation rights, restricted stock, Restricted Stock Units (“RSUs”),
performance units, and performance shares to the Company’s employees, directors, and consultants. The
maximum aggregate number of shares that may be issued under the 2018 Plan is 14,482,356 shares of
the Company’s common stock. In addition, the number of shares reserved for issuance under the 2018
Plan will be increased automatically on the first day of each fiscal year beginning with the 2020 fiscal
year, by a number equal to the least of: (i) 2,144,521 shares; (ii) 4.0% of the shares of common stock
outstanding on the last day of the prior fiscal year; or (iii) such number of shares determined by the
Company’s Board of Directors.
The 2018 Plan may be amended, suspended or terminated by the Company’s Board of Directors at
any time, provided such action does not impair the existing rights of any participant, subject to
stockholder approval of any amendment to the 2018 Plan as required by applicable law or listing
requirements. Unless sooner terminated by the Company’s Board of Directors, the 2018 Plan will
automatically terminate on November 14, 2028.
The following awards were made pursuant to the 2018 Plan in the year ended December 31, 2019: (i)
options to purchase 264,033 shares of common stock were granted to certain employees on April 3,
2019, having an exercise price of $20.02 per share, (ii) options to purchase (A) 1,000,000 shares of
common stock were granted to executive officers on April 18, 2019, (B) 48,999 shares of common stock
96
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
were granted to certain employees on April 29, 2019, and (C) 50,000 shares of common stock were
granted to certain executive officers on May 1, 2019, in each case to be effective upon and subject to the
effectiveness of the registration statement relating to the Company’s IPO and having an exercise price
equal to the IPO price of $25.00 per share, (iii) awards covering 99,433 shares of restricted stock were
granted to nonemployees on April 18, 2019 at a purchase price of $0.01 per share to be issued upon
payment of the purchase price, (iv) an option to purchase 125,000 shares of common stock was granted
to an executive officer on June 10, 2019, having an exercise price of $168.10 per share, (v) 70,360 RSUs
with a grant date fair value of $168.10 per unit were granted to certain employees on June 10, 2019, (vi)
an option to purchase 5,073 shares of common stock was granted to an executive officer on August 1,
2019, having an exercise price of $176.04 per share, (vii) 14,862 RSUs with a grant date fair value of
$176.04 per unit were granted to certain employees and a consultant on August 1, 2019, (viii) options to
purchase 78,820 shares of common stock having an exercise price of $84.45 were granted on October
31, 2019 to certain employees including an option to purchase 68,590 shares of common stock granted to
executive officer, and (ix) 87,974 RSUs with a grant date fair value of $84.45 per unit were granted on
October 31, 2019 to certain ambassadors and employees including 34,295 RSUs granted to an
executive officer.
As of December 31, 2019 and 2018, there were 5,170,976 and 5,120,293 shares, respectively,
issuable under stock options outstanding, 149,004 and 0 shares, respectively, issuable under unvested
RSUs outstanding, 5,864,738 and 4,335,331 shares, respectively, issued for stock option exercises, RSU
settlement, and restricted stock grants, and 3,297,638 and 6,859 shares, respectively, available for grant
under the 2018 Plan.
Stock Options
For the periods presented, the fair value of options was estimated using the Black-Scholes option-
pricing model with the following assumptions:
Risk-free interest rate ..........................................................
Average expected term (years) ...........................................
Expected volatility ...............................................................
Dividend yield ......................................................................
Year Ended December 31,
2019
2.3%
6.1
55.0%
—
2018
2.8%
5.8
55.0%
—
2017
2.0%
5.9
55.0%
—
• Risk-Free Interest Rate: The yield on actively traded non-inflation indexed US Treasury notes with
the same maturity as the expected term of the underlying options was used as the average risk-
free interest rate.
• Expected Term: As the Company does not have sufficient historical experience for determining
the expected term of the stock option awards granted, the Company’s expected term is based on
the simplified method, generally calculated as the mid-point between the vesting date and the end
of the contractual term.
• Expected Volatility: As the Company has only been a public entity since May 2, 2019, there is not
a substantive share price history to calculate volatility and, as such, the Company has elected to
use an approximation based on the volatility of other comparable public companies, which
compete directly with the Company, over the expected term of the options.
• Dividend Yield: The Company has not issued regular dividends on common shares in the past
nor does the Company expect to issue dividends in the future.
Forfeiture Rate: The Company estimates the forfeiture rate at the time of grant based on past awards
canceled, the number of awards granted, and vesting terms and adjusted, if necessary, in subsequent
97
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
periods if actual forfeitures differ from those estimates. The cumulative effect on current and prior periods
of a change in the estimated number of awards likely to vest is recognized in compensation cost in the
period of the change.
The Plan generally provides that the Board of Directors may set the vesting schedule applicable to
grants approved under the 2011 Plan. Option grants approved under the 2018 Plan typically vest 25% of
the total award on the first anniversary of the grant date, and thereafter ratably monthly vesting over the
remaining 3.0 years of the award. The Company has not granted equity awards with performance-based
vesting conditions.
Option grants in 2019 generally vest 25% of the total award on the first anniversary of the vesting
commencement date, and thereafter ratably vesting monthly over the remaining three-year period. The
stock option grant to one executive officer on August 1, 2019 vests monthly over a 48-month period. The
stock option grant to another executive officer on October 31, 2019 begins vesting on the second
anniversary of the vesting commencement date and vests monthly thereafter over a 24-month period.
Options granted in the year ended December 31, 2018 and prior have a variety of different vesting
schedules and have a contractual life of 10 years.
The following table summarizes the Company’s stock option activity during the period from December
31, 2016 through December 31, 2019:
Outstanding at December 31, 2016..............
Granted ...........................................................
Exercised ........................................................
Cancelled/Forfeited .........................................
Outstanding at December 31, 2017..............
Granted ...........................................................
Exercised ........................................................
Cancelled/Forfeited .........................................
Outstanding at December 31, 2018..............
Granted ...........................................................
Exercised ........................................................
Cancelled/Forfeited .........................................
Outstanding at December 31, 2019..............
Vested and exercisable at December 31,
2019 .............................................................
Vested and expected to vest at December
31, 2019 .......................................................
Number
of
Stock
Options
4,879,850 $
382,476 $
(446,201) $
(609,096) $
4,207,029 $
2,136,012 $
(1,139,962) $
(82,786) $
5,120,293 $
1,571,925 $
(1,429,756) $
(91,486) $
Weighted
Average
Exercise
Price
0.83
1.56
0.85
0.97
0.88
6.49
1.20
2.03
3.13
39.01
1.87
9.33
5,170,976 $
14.28
2,533,199 $
2.32
3,761,031 $
8.55
Weighted
Average
Remaining
Contractual
Life (Years)
8.2
Aggregate
Intrinsic
Value (in
thousands)(1)
3,557
$
—
—
—
7.2
—
—
—
7.3
—
—
—
7.5
6.0
6.9
$
—
347
—
8,936
—
5,722
—
$
81,371
—
121,591
—
329,879
185,671
256,967
$
$
$
__________
(1) Aggregate intrinsic value is calculated as the difference between the value of common stock on the transaction
date and the exercise price multiplied by the number of shares issuable under the stock option.
During the years ended December 31, 2019, 2018 and 2017, the Company recorded in aggregate
$6.3 million, $1.5 million, and $0.5 million, respectively, of share-based compensation expense related to
options issued to employees and nonemployees. The share-based compensation expense is included in
98
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
cost of goods sold, research and development expenses and SG&A expenses in the Company’s
statements of operations.
As of December 31, 2019, there was $10.4 million in unrecognized compensation expense related to
nonvested stock option awards which is expected to be recognized over 3.1 years.
Restricted Stock Units
RSU awards in the year ended December 31, 2019 generally vest 25% of the total award on the first
anniversary of the grant date, and thereafter ratably vesting quarterly over the remaining three years of
the award. The RSU award to one executive officer on August 1, 2019 vests quarterly over 16 quarters.
The RSU award to a consultant on August 1, 2019 was scheduled to vest monthly over a 12-month
period, however a portion of this award was forfeited upon termination of the consulting agreement. The
RSU award to another executive officer on October 31, 2019 begins vesting on the 27th month
anniversary of the vesting commencement date and vests over 8 quarters.
In addition to the grants to employees and consultants, on October 31, 2019, the Company granted
30,496 RSUs to nonemployees serving as the Company’s brand ambassadors. These RSUs generally
vest over a period of less than one year from the date of grant, with 22,620 RSUs subject to immediate
vesting upon grant.
The following table summarizes the Company’s RSU activity in 2019:
Weighted
Average
Grant Date
Fair Value
Per Unit
Number of
Units
Unvested at January 1, 2019 ................................................................
Granted ...................................................................................................
Vested .....................................................................................................
Cancelled/Forfeited .................................................................................
Unvested at December 31, 2019 ..........................................................
— $
—
173,196 $
126.29
(23,552) $
84.84
(640) $
—
149,004 $
132.73
During the years ended December 31, 2019, 2018 and 2017, the Company recorded in aggregate
$3.7 million, $0, and $0, respectively, of share-based compensation expense related to RSUs. The share-
based compensation expense is included in cost of goods sold, research and development expense and
SG&A expenses in the Company’s statements of operations.
As of December 31, 2019, there was $5.1 million in unrecognized compensation expense related to
nonvested RSUs which is expected to be recognized over 3.3 years.
Share-Settled Obligation
Share-based compensation expense in 2019 includes $1.0 million in accrual for a liability classified,
share-settled obligation to an executive officer related to a sign-on award pursuant to the terms of the
executive officer’s offer letter with the Company. The Company is obligated to deliver a variable number
of shares based on a fixed monetary amount on the first annual anniversary of the executive officer’s
commencement date and on each quarterly anniversary thereafter through the second annual
anniversary of the executive officer’s commencement date. The liability classified award is considered
unearned until the requirements for issuance of the shares are met and is included in Accrued expenses
and other current liabilities on the Company’s balance sheet as of December 31, 2019. There were no
such liability classified share-settled obligations in 2018 and 2017. As of December 31, 2019, there was
$6.0 million in unrecognized compensation expense related to this share-settled obligation which is
expected to recognized over 1.7 years.
99
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Restricted Stock to Nonemployees
In April 2019, the Company’s Board of Directors approved the issuance of 99,433 shares of restricted
stock with a fair value of $20.02 per share and a purchase price of $0.01 per share to nonemployees
serving as the Company’s brand ambassadors. The Company has the right to repurchase the unvested
shares upon a voluntary or involuntary termination of a brand ambassador’s service; however, as shares
vest monthly over 24 months, they are being released from the repurchase option (and all such shares
will be released from the repurchase option by May 18, 2021).
In October 2018, the Company’s Board of Directors approved the issuance of 135,791 shares of
restricted stock with a fair value of $17.03 per share and a purchase price of $0.02 per share to
nonemployees serving as the Company’s brand ambassadors. The Company has the right to repurchase
the unvested shares upon a voluntary or involuntary termination of a brand ambassador’s service;
however, as shares vest monthly over 12 to 24 months, they are being released from the repurchase
option (and all such shares will be released from the repurchase option by November 1, 2020).
The following table summarizes the Company’s restricted stock activity:
Unvested at December 31, 2017 .......................................
Granted ...............................................................................
Vested/Released .................................................................
Cancelled/Forfeited .............................................................
Unvested at December 31, 2018 .......................................
Granted ...............................................................................
Vested/Released .................................................................
Cancelled/Forfeited .............................................................
Unvested at December 31, 2019 .......................................
Number
of Shares of
Restricted
Stock
—
135,791
(35,664)
—
100,127
99,433
(87,239)
(23,333)
88,988
Weighted
Average
Remaining
Contractual
Life (Years)
—
—
—
—
1.6
—
—
—
1.2
Weighted
Average
Grant Date
Fair Value
Per Share
$
$
$
$
$
$
$
$
$
—
17.03
17.03
—
17.03
20.02
19.21
—
19.49
As of December 31, 2019, 88,988 shares of restricted stock had been purchased by nonemployee
brand ambassadors which remained subject to vesting requirements and repurchase pursuant to
restricted stock purchase agreements.
During 2019, 2018 and 2017, the Company recorded in aggregate $1.8 million, $0.7 million and $0,
respectively, of share-based compensation expense related to restricted stock issued to nonemployee
brand ambassadors, which is included in SG&A expenses in the Company’s statements of operations.
As of December 31, 2019, there was $1.7 million in unrecognized compensation expense related to
nonvested restricted stock, which is expected to be recognized over 1.2 years.
Restricted Stock and Loans to Related Parties
In December 2015, the Company’s Board of Directors approved the issuance of 1,006,658 shares of
restricted stock to nonemployee board members. The Company had the option of repurchasing the
shares; however, as shares vest monthly over 36 months, they were being released from the repurchase
option (and all such shares were released from the repurchase option by November 1, 2018). In
connection with the issuance and for value received, the nonemployee board members entered into
promissory notes to pay the Company the principal sum of $951,245 with interest at a fixed rate of 1.68%
per annum, compounded annually, on the unpaid balance of such principal sum. The promissory notes
are secured by a pledge of the common stock issued to the nonemployee board members. The loans are
100
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
classified as a reduction to stockholders’ deficit in the accompanying balance sheets. In determining the
accounting for the promissory notes, management evaluated the legal provisions of the promissory notes
as well as the Company’s intent to fully collect on the outstanding note amounts. The Company collected
on the promissory notes in their entirety in July 2018.
Common Stock Repurchase
In July 2018, the Company repurchased 48,909 shares of common stock from one of its individual
investors at a negotiated price of $10.50 per share.
Employee Stock Purchase Plan
On November 15, 2018, the Company’s Board of Directors adopted its 2018 Employee Stock
Purchase Plan (“2018 ESPP”), which was subsequently approved by the Company’s stockholders and
became effective on April 30, 2019, the day immediately prior to the effectiveness of the registration
statement filed in connection with the IPO. The 2018 ESPP is intended to qualify as an “employee stock
purchase plan” within the meaning of Section 423 of the Internal Revenue Code (the “Code”) for U.S.
employees. In addition, the 2018 ESPP authorizes grants of purchase rights that do not comply with
Section 423 of the Code under a separate non-423 component for non-U.S. employees and certain non-
U.S. service providers. The Company has reserved 804,195 shares of common stock for issuance under
the 2018 ESPP. In addition, the number of shares reserved for issuance under the 2018 ESPP will be
increased automatically on the first day of each fiscal year for a period of up to ten years, starting with the
2020 fiscal year, by a number equal to the least of: (i) 536,130 shares; (ii) 1% of the shares of common
stock outstanding on the last day of the prior fiscal year; or (iii) such lesser number of shares determined
by the Company’s Board of Directors. The 2018 ESPP is expected to be implemented through a series of
offerings under which participants are granted purchase rights to purchase shares of the Company’s
common stock on specified dates during such offerings. The administrator has not yet approved an
offering under the 2018 ESPP.
101
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 9. Commitments and Contingencies
Leases
The Company has operating leases for its corporate offices including its research and development
center, its manufacturing facilities and its warehouses, and capital and operating leases for certain of the
Company’s equipment.
The following table represents the Company’s commitments as of December 31, 2019 including
future minimum lease payments required under noncancelable lease obligations:
(in thousands)
Year Ended December 31,
2020 ............................................................................... $
2021 ...............................................................................
2022 ...............................................................................
2023 ...............................................................................
2024 ...............................................................................
Thereafter ......................................................................
Total minimum lease payments...................................... $
Less: imputed interest (4.1% to 15.9%) .........................
Total capital lease obligations ........................................ $
Less: current portion of capital lease obligations ...........
Long-term capital lease obligations ............................... $
Capital Lease
Obligations
Operating
Lease
Obligations(1)
Purchase
Commitments
86 $
1,878 $
1,813
1,817
1,840
1,353
5,167
22,684
21,418
—
—
—
—
$
13,868 $
44,102
80
71
58
30
—
325
(34)
291
(72)
219
___________
(1) Excludes lease payments during two-year lease extension entered into subsequent to the year ended December
31, 2019 for one of the Company’s manufacturing facilities in Columbia, Missouri. See Note 12.
Total rent expense in 2019, 2018 and 2017 was $2.7 million, $1.7 million and $1.0 million,
respectively. Rent expense is reflected in cost of goods sold, research and development expenses and
SG&A expenses in the statements of operations for all the periods presented.
Purchase Commitments
As of December 31, 2019, the Company had committed to purchase pea protein inventory totaling
$44.1 million, approximately $22.7 million in 2020 and $21.4 million in 2021.
Subsequent to the year ended December 31, 2019, on January 10, 2020, the Company and Roquette
Frères (“Roquette”) entered into a multi-year sales agreement pursuant to which Roquette will provide the
Company with plant-based protein. See Note 12.
Litigation
On May 25, 2017, Don Lee Farms, a division of Goodman Food Products, Inc., filed a complaint
against the Company in the Superior Court of the State of California for the County of Los Angeles
asserting claims for breach of contract, misappropriation of trade secrets, unfair competition under the
California Business and Professions Code, money owed and due, declaratory relief and injunctive relief,
each arising out of our decision to terminate an exclusive supply agreement between the Company and
102
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Don Lee Farms. The Company denies all of these claims and filed counterclaims on July 27, 2017,
alleging breach of contract, unfair competition under the California Business and Professions Code and
conversion. In October 2018, the former co-manufacturer filed an amended complaint that added one of
the Company’s current contract manufacturers as a defendant, principally for claims arising from the
current contract manufacturer’s alleged use of the former co-manufacturer’s alleged trade secrets, and for
replacing the former co-manufacturer as one of the Company’s current co-manufacturers. The current
contract manufacturer filed an answer denying all of Don Lee Farms’ claims and a cross-complaint
against Beyond Meat asserting claims of total and partial equitable indemnity, contribution, and
repayment. On March 11, 2019, Don Lee Farms filed a second amended complaint to add claims of fraud
and negligent misrepresentation against the Company. On May 30, 2019, the judge denied the
Company’s motion to dismiss the fraud and negligent misrepresentation claims, allowing the claims to
proceed. On June 19, 2019, the Company filed an answer denying Don Lee Farms' claims. On January
27, 2020, Don Lee Farms filed a third amended complaint to add three individual defendants, all of whom
are current or former employees of the Company, including Mark Nelson, the Company’s Chief Financial
Officer and Treasurer, to Don Lee Farms’ existing fraud and negligent misrepresentation claims alleging
that those individuals were involved in the alleged fraud and negligent misrepresentations. The individual
defendants deny all allegations of fraud and negligent misrepresentations. On January 24, 2020, a writ
judge granted Don Lee Farms a right to attach in the amount of $628,689 on the grounds that Don Lee
Farms had established a “probable validity” of its claim that the Company owes it money for a small batch
of unpaid invoices. This determination was not made by the trial judge. The trial judge has yet to
determine the legitimacy or merits of Don Lee Farms’ claims. The previous trial date, May 18, 2020, has
been continued. Trial is currently set for February 8, 2021.
Don Lee Farms is seeking from Beyond Meat and the current contract manufacturer unspecified
compensatory and punitive damages, declaratory and injunctive relief, including the prohibition of Beyond
Meat’s use or disclosure of the alleged trade secrets, and attorneys’ fees and costs. The Company is
seeking from Don Lee Farms monetary damages, restitution of monies paid to Don Lee Farms, and
attorneys’ fees and costs. The current contract manufacturer is seeking indemnity, contribution, or
repayment from the Company of any or all damages that the current contract manufacturer may be found
liable to Don Lee Farms, and attorneys’ fees and costs.
The Company believes it was justified in terminating the supply agreement with Don Lee Farms, that
the Company did not misappropriate their alleged trade secrets, that the Company is not liable for the
fraud or negligent misrepresentation alleged in the proposed second amended complaint, that Don Lee
Farms is liable for the conduct alleged in our cross-complaint, and that the Company is not liable to
ProPortion for any indemnity, contribution, or repayment, including for any damages or attorneys’
fees and costs. The Company is currently in the process of litigating this matter and intends to vigorously
defend itself and its current and former employees against the claims. The Company cannot assure you
that Don Lee Farms or the current contract manufacturer will not prevail in all or some of their claims
against the Company or the individual defendants, or that the Company will prevail in some or all of its
claims against Don Lee Farms. For example, if Don Lee Farms succeeds in the lawsuit, the Company
could be required to pay damages, including but not limited to contract damages reasonably calculated at
what the Company would have paid Don Lee Farms to produce its products through 2019, the end of the
contract term, and Don Lee Farms could also claim some ownership in the intellectual property
associated with the production of certain of the Company’s products or in the products themselves, and
thus claim a stake in the value the Company has derived and will derive from the use of that intellectual
property after the Company terminated its supply agreement with Don Lee Farms. Based on the
Company’s current knowledge, the Company has determined that the amount of any material loss or
range of any losses that is reasonably possible to result from this lawsuit is not estimable.
On January 30, 2020, Larry Tran, a purported shareholder of Beyond Meat, filed a putative securities
class action lawsuit in the United States District Court for the Central District of California against Beyond
Meat and two of the Company’s executive officers, the Company’s President and CEO, Ethan Brown, and
the Company’s Chief Financial Officer and Treasurer, Mark Nelson. The lawsuit asserts claims under
103
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on
allegedly false or misleading statements, and alleged non-disclosure of material facts, related to the
Company’s public disclosures regarding the Company’s ongoing litigation with Don Lee Farms during the
proposed class period of May 2, 2019 to January 27, 2020. The Company believes the claims are without
merit and intends to vigorously defend all claims asserted.
On March 16, 2020, Eric Weiner, a purported shareholder of Beyond Meat, filed a shareholder
derivative lawsuit in the United States District Court for the Central District of California, putatively on
behalf of the Company, against two of the Company’s executive officers, the Company’s President and
CEO, Ethan Brown, and the Company’s Chief Financial Officer and Treasurer, Mark Nelson, and each of
the Company’s directors, including one former director, who signed the Company’s initial public offering
registration statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act,
claims of breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust
enrichment and waste of corporate assets, all relating to the Company’s ongoing litigation with Don Lee
Farms, related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019
to March 16, 2020, and the securities case brought against the Company. Based on the early stage of this
matter, the Company is unable to estimate potential losses, if any, related to this lawsuit.
On March 18, 2020, Kimberly Brink and Melvyn Klein, purported shareholders of Beyond Meat, filed a
shareholder derivative lawsuit in the United States District Court for the Central District of California,
putatively on behalf of the Company, against two of the Company’s executive officers, the Company’s
President and CEO, Ethan Brown, and the Company’s Chief Financial Officer and Treasurer, Mark
Nelson, and each of the Company’s directors who signed the Company’s initial public offering registration
statement. The lawsuit asserts claims under Sections 10(b) and 21D of the Exchange Act, claims of
breaches of fiduciary duty as directors and/or officers of Beyond Meat, and claims of unjust enrichment
and waste of corporate assets, all relating to the Company’s ongoing litigation with Don Lee Farms,
related actions taken by Beyond Meat and the named individuals during the period of May 2, 2019 to
March 18, 2020, and the securities case brought against the Company. Based on the early stage of this
matter, the Company is unable to estimate potential losses, if any, related to this lawsuit.
Also on March 18, 2020, Nazrin Massaro filed a putative class action lawsuit in the United States
District Court for the Southern District of California against Beyond Meat and People for the Ethical
Treatment of Animals, Inc. (“PETA”). The lawsuit asserts claims under the Telephone Consumer
Protection Act and alleges that PETA sent unsolicited text message advertisements promoting the
Company’s products to the putative class members in violation of consumers’ privacy rights. The lawsuit
further alleges that PETA sent the text messages at the direction, and/or under the control, of Beyond
Meat. The plaintiff seeks injunctive relief and damages on behalf of herself and the putative class
members. The Company believes the claims are without merit and intends to vigorously defend all claims
asserted.
The Company is involved in various other legal proceedings, claims, and litigation arising in the
ordinary course of business. Based on the facts currently available, the Company does not believe that
the disposition of such matters that are pending or asserted will have a material effect on its
financial statements.
104
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 10. Income Taxes
The provision for income taxes was as follows:
(in thousands)
Current:
Year Ended December 31,
2019
2018
2017
Federal ...................................................................... $
State ..........................................................................
$
Deferred:
Federal ...................................................................... $
State ..........................................................................
$
— $
9
9 $
— $
—
— $
— $
1
1 $
— $
—
— $
Provision for income tax ............................................... $
9 $
1 $
—
5
5
—
—
—
5
The Company has provided a 100% valuation allowance on its deferred tax assets. Provision for
income taxes in 2019, 2018 and 2017 is primarily for taxes payable to the states.
A reconciliation of income tax expense from continuing operations to the amount computed by applying
the statutory federal income tax rate to the net loss from continuing operations is summarized as follows:
Year Ended December 31,
2019
2018
2017
(2,611) $
(6,276) $
(10,329)
(1,072)
(1,041)
(2,550)
2,626
(21,236)
(8)
—
73
(98)
—
(615)
(6)
29
668
363
—
81
(4)
—
11,783
470
(955)
5
23,813
6,910
9 $
1 $
(in thousands)
U.S. income tax at federal statutory rate ........................ $
State income tax, net of federal benefits ........................
Stock warrant liability .....................................................
Share-based compensation ...........................................
Research and development credits ...............................
Return to provision and other .........................................
Change in tax rates ........................................................
Other ..............................................................................
Change in valuation allowance ......................................
Provision for income tax ................................................. $
105
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Significant components of the Company's deferred tax assets and liabilities as of December 31, 2019 and
2018 are shown below. A valuation allowance has been recorded to offset the net deferred tax assets as
of December 31, 2019 and 2018, as the realization of such assets does not meet the more-likely-than-not
threshold.
(in thousands)
Deferred Tax Assets:
Net operating loss (NOL) ................................................................. $
Intangibles .......................................................................................
Share-based compensation .............................................................
Interest .............................................................................................
Inventory reserve .............................................................................
Other ................................................................................................
Total gross deferred tax assets ........................................................
Deferred Tax liabilities:
December 31,
2019
2018
50,663 $
1,252
2,704
—
1,509
204
29,634
1,407
83
148
—
628
56,332
31,900
Property, plant and equipment .........................................................
Total gross deferred tax liabilities .....................................................
904
904
283
283
Valuation allowance .........................................................................
Net deferred tax assets (liabilities) ................................................... $
55,428
— $
31,617
—
As of December 31, 2019, and 2018, management assessed the realizability of deferred tax assets
and evaluated the need for an amount of a valuation allowance for deferred tax assets on a jurisdictional
basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes, pursuant to which
management analyzed all positive and negative evidence available at the balance sheet date to
determine whether all or some portion of the deferred tax assets will not be realized. Under this guidance,
a valuation allowance must be established for deferred tax assets when it is more likely than not (a
probability level of more than 50%) that they will not be realized.
In concluding on the evaluation, management placed significant emphasis on guidance in ASC 740,
which states that “a cumulative loss in recent years is a significant piece of negative evidence that is
difficult to overcome.” Based upon available evidence, it was concluded on a more-likely-than-not basis
that certain deferred tax assets were not realizable as of December 31, 2019. Accordingly, a valuation
allowance of $55.4 million has been recorded to offset these deferred tax assets. The change in valuation
allowance for the year ended December 31, 2019 from 2018 was an increase of $23.8 million.
As of December 31, 2018, the Company has accumulated federal and state net operating loss
carryforwards of approximately $119.7 million and $92.3 million, respectively. As of December 31, 2019,
the Company has accumulated federal and state net operating loss carryforwards of approximately
$209.5 million and $143.8 million, respectively. Approximately $117.7 million of the federal net operating
losses do not expire and the remaining federal and state tax loss carryforwards begin to expire in 2031
and 2032, respectively, unless previously utilized.
Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to a
substantial annual limitation due to the ownership change limitations provided by the Internal Revenue
Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of
the net operating loss and tax credit carryforwards before utilization. The Company is currently analyzing
ownership shifts since inception to determine the limitation, if any.
106
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
The Company adopted ASU 2016-09 in the first quarter of 2018. Under ASU 2016-09, the Company
no longer records excess tax benefits and certain tax deficiencies related to share-based payments to
employees in additional paid-in capital. Instead, the Company will recognize all income tax effects of
share-based awards in its statement of operations when awards vest or are settled. All excess tax
benefits not previously recognized were to be recorded to retained earnings as a cumulative effect
adjustment upon adoption. Upon adoption, no adjustment to retained earnings was necessary due to the
Company’s valuation allowance position. In 2018, approximately $0.2 million attributable to excess tax
benefits on share-based compensation that had not been previously recognized were added to the NOL
with a corresponding increase to the valuation allowance.
Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act or the Tax Act was enacted in the United States on December 22, 2017.
The Tax Act reduced the United States federal corporate income tax rate to 21% from 35%, required
companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously
tax deferred and created new taxes on certain foreign-sourced earnings. In 2017 the Company recorded
provisional amounts for certain enactment-date effects of the Tax Act by applying the guidance in Staff
Accounting Bulletin No. 118 or SAB 118 because the Company had not yet completed its enactment-date
accounting for these effects. The Company completed its accounting for all of the enactment-date income
tax effects of the Act as of December 31, 2018 and did not recognize adjustments to the provisional
amounts recorded at December 31, 2017.
The following table summarizes the activity related to the Company’s gross unrecognized tax benefits
at the beginning and end of the years ended December 31, 2019 and 2018:
Year Ended December 31,
2019
2018
Gross unrecognized tax benefits at the beginning of the year ......... $
Increases related to current year positions ......................................
Increases/Decreases related to prior year positions ........................
Gross unrecognized tax benefits at the end of the year................... $
1,846 $
1,695
(205)
3,336 $
1,201
888
(243)
1,846
As of December 31, 2019 and 2018, the Company had $3.1 million and $1.1 million, respectively, of
unrecognized tax benefits from research and development tax credits, none of which, if recognized, would
affect the Company’s effective tax rate.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in
income tax expense. During the years ended December 31, 2019, 2018 and 2017, interest and penalties
recognized were insignificant. The Company does not expect any significant increases or decreases to its
unrecognized tax benefits within the next 12 months.
The Company files U.S. federal and state income tax returns in jurisdictions with varying statute of
limitations. The Company’s tax years from 2011 (inception) are subject to examination by the United
States and state authorities due to the carry forward of unutilized net operating losses and research and
development credits.
Note 11. Net Loss Per Share Available to Common Stockholders
The Company calculates basic and diluted net loss per share available to common stockholders in
conformity with the two-class method required for companies with participating securities. See Note 2.
Computation of EPS for the year ended December 31, 2019 excludes the dilutive effect of 5,170,976
shares issuable under stock options and 149,004 RSUs, because the Company incurred a net loss and
their inclusion would be anti-dilutive. Computation of EPS for the year ended December 31, 2019 also
107
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
excludes adjustments under the two-class method relating to a liability classified, share-settled obligation
to an executive officer to deliver a variable number of shares based on a fixed monetary amount because
the shares to be delivered are not participating securities as they do not have voting rights and are not
entitled to participate in dividends until they are issued. Computation of EPS for the years ended
December 31, 2018 and 2017 excludes the dilutive effect of 5,120,293 and 4,207,029 shares,
respectively, issuable under stock options because the Company incurred net losses and their inclusion
would have been antidilutive.
(in thousands, except share and per share
amounts)
Numerator: ............................................................
Net loss available to common stockholders .......... $
Denominator: ........................................................
Weighted average common shares outstanding
—basic ...............................................................
Dilutive effect of stock equivalents resulting from
stock options, RSUs, common stock warrants,
preferred stock warrants and convertible
preferred stock (as converted) ...........................
Weighted average common shares outstanding
—diluted ............................................................
Net loss per share available to common
stockholders—basic and diluted ........................ $
Year Ended December 31,
2019
2018
2017
(12,443) $
(29,886) $
(30,384)
42,274,777
6,287,172
5,457,629
—
—
—
42,274,777
6,287,172
5,457,629
(0.29) $
(4.75) $
(5.57)
The following weighted-average outstanding shares of common stock equivalents were excluded
from the computation of diluted net loss per share available to common stockholders for the periods
presented because the impact of including them would have been antidilutive:
Options to purchase common stock .......................
Restricted stock units .............................................
Convertible preferred stock (as converted) ............
Preferred stock warrants ........................................
Total .......................................................................
Year Ended December 31,
2019
5,170,976
149,004
2018
2017
—
—
—
—
—
—
39,953,983
39,361,211
160,767
160,767
5,319,980
40,114,750
39,521,978
Note 12. Subsequent Events
Multi-Year Sales Agreement with Roquette
Subsequent to the year ended December 31, 2019, on January 10, 2020, the Company and Roquette
Frères (“Roquette”) entered into a multi-year sales agreement pursuant to which Roquette will provide the
Company with plant-based protein. The agreement expires on December 31, 2022; however it can be
terminated after 18 months under certain circumstances. This agreement increases the amount of plant-based
protein to be supplied by Roquette in each of 2020, 2021 and 2022 compared to the amount supplied 2019. The
plant-based protein sourced under the supply agreement is secured on a purchase order basis regularly, per
specified minimum monthly and semi-annual quantities, throughout the term. The Company is not required to
purchase plant-based protein in amounts in excess of such specified minimum quantities; however the
Company has the option to increase such minimum quantities for delivery in each of 2021 and 2022. The total
108
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
annual amount purchased each year by the Company must be at least the minimum amount specified in the
agreement, which totals in the aggregate $154.1 million over the term of the agreement. The Company also has
the right to be indemnified by Roquette in certain circumstances.
Extension of Facility Lease
Effective March 16, 2020, the Company entered into an agreement to extend the lease for one of its
facilities in Columbia, Missouri, for an additional term of two years ending in June 2022. The aggregate lease
amount for the additional two-year term is $0.5 million.
COVID-19 Pandemic
In December 2019, a novel strain of coronavirus disease (“COVID-19”) was first reported in Wuhan, China.
Less than four months later, on March 11, 2020, the World Health Organization declared COVID-19 a
pandemic. The extent of COVID-19’s effect on the Company’s operational and financial performance will
depend on future developments, including the duration, spread and intensity of the pandemic, all of which are
uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently
possible to ascertain the overall impact of COVID-19 on the Company’s business. However, if the pandemic
continues to evolve into a severe worldwide health crisis, the disease could have a material adverse effect on
the Company’s business, results of operations, financial condition and cash flows.
109
BEYOND MEAT, INC.
Notes to Financial Statements (continued)
Note 13. Quarterly Results of Operations (Unaudited)
The following table presents selected unaudited quarterly financial data for each full quarterly period of 2019
and 2018:
(in thousands)
Mar. 31,
2018
Jun. 30,
2018
Sep. 29,
2018
Dec. 31,
2018
Mar. 30,
2019
Jun. 29,
2019
Sep. 28,
2019
Dec. 31,
2019
Net revenues ............................... $ 12,776
$ 17,367
$ 26,277
$ 31,514
$ 40,206
$ 67,251
$ 91,961
$ 98,479
Cost of goods sold ......................
10,719
Gross profit ..................................
2,057
14,755
2,612
21,235
5,042
23,651
7,863
29,435
10,771
44,510
22,741
59,178
32,783
65,018
33,461
Gross margin ...............................
16.1%
15.0%
19.2%
25.0%
26.8%
33.8%
35.6%
34.0%
Three Months Ended(1)
Research and development
expenses .................................
Selling, general and
administrative expenses ..........
Restructuring expenses...............
Total operating expenses ............
1,605
2,497
2,165
3,320
4,498
4,212
5,951
5,989
5,737
294
7,636
7,043
348
9,888
10,353
11,328
11,177
15,515
528
345
394
13,046
14,993
16,069
847
20,574
2,167
20,944
2,319
29,214
3,569
27,090
1,309
34,388
(927)
(Loss) income from operations ....
(5,579)
(7,276)
(8,004)
(7,130)
(5,298)
Other (expense) income:
Interest expense ..........................
(47)
(28)
(313)
(740)
(733)
(741)
(855)
(742)
Remeasurement of warrant
liability .....................................
Other, net ....................................
Total other (expense) income,
net ...........................................
(129)
59
(117)
(Loss) income before taxes .........
(5,696)
Income tax expense (benefit) ......
—
(130)
38
(120)
(7,396)
—
(994)
(31)
(1,338)
(9,342)
—
133
286
(321)
(7,451)
1
(759)
(11,744)
141
898
(1,351)
(6,649)
—
(11,587)
(9,420)
21
—
1,385
530
4,099
—
—
1,205
463
(464)
(12)
Net (loss) income ........................ $ (5,696)
$
(7,396)
$ (9,342)
$ (7,452)
$ (6,649)
$ (9,441)
$ 4,099
$
(452)
Net (loss) income per share
available to common
stockholders: ...........................
Basic ......................................... $
(0.98)
Diluted ....................................... $
(0.98)
$
$
(1.22)
(1.22)
$
$
(1.45)
(1.45)
$
$
(1.10)
(1.10)
$
$
(0.95)
(0.95)
$
$
(0.24)
(0.24)
$
$
0.07
0.06
$
$
(0.01)
(0.01)
______________
(1) The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods.
This is due to the effects of rounding and changes in the number of weighted-average shares outstanding for each
period.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer,
has evaluated the effectiveness of our disclosure controls and procedures as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
as of the end of the period covered by this Annual Report on Form 10-K. Based on that evaluation, our principal
executive officer and principal financial officer have concluded that, as of the end of the period covered by this
Annual Report on Form 10-K, our disclosure controls and procedures were effective to provide reasonable
assurance that information we are required to disclose in reports that we file or submit under the Exchange
110
Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms,
and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
This Annual Report on Form 10-K does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of the Company’s registered public accounting
firm due to a transition period established by rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended
December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
Our management does not expect that our disclosure controls and procedures or our internal control over
financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud,
if any, within our Company have been detected.
ITEM 9B. OTHER INFORMATION.
None.
111
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by this item will be set forth in our Proxy Statement for the Annual Meeting of
Stockholders and is incorporated by reference. The Proxy Statement will be filed with the SEC within 120 days
of the fiscal year ended December 31, 2019.
Our board of directors has adopted a code of business conduct and ethics that applies to all of our
employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other
executive and senior financial officers. The full text of our code of business conduct and ethics is posted on the
investor relations page on our website which is located at https://investors.beyondmeat.com/investor-relations.
We will post any amendments to our code of business conduct and ethics other than technical, administrative or
other non-substantive amendments, or waivers of its requirements, on our website or in a Form 8-K filed with
the SEC.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item will be set forth in our Proxy Statement and is incorporated herein
by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December
31, 2019.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The information required by this item will be set forth in our Proxy Statement and is incorporated herein
by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December
31, 2019.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this item will be set forth in our Proxy Statement and is incorporated herein
by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December
31, 2019.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this item will be set forth in our Proxy Statement and is incorporated herein
by reference. The Proxy Statement will be filed with the SEC within 120 days of the fiscal year ended December
31, 2019.
112
PART IV.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)(1) Financial Statements
See Index to Financial Statements in Item 8 of this report.
(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted as the information is not required under the related
instructions or is not applicable or because the information required is already included in the financial
statements or the notes those financial statements.
(a)(3) EXHIBITS.
The documents set forth below are filed herewith or incorporated herein by reference to the location
EXHIBIT INDEX
Exhibit Description
Incorporated by Reference
Filed
Herewith
Restated Certificate of Incorporation. ...................... 10-Q
Form
Date
6/12/2019
Number
3.1
Amended and Restated Bylaws. .............................. 10-Q
6/12/2019
Form of Common Stock Certificate. ......................... S-1/A
3/27/2019
S-1
11/16/2018
3.2
4.1
4.2
Amended and Restated Investors’ Rights
Agreement, dated as of October 5, 2018, by and
among the Registrant and the other parties thereto.
Description of Registrant’s Securities. .....................
Standard Industrial/Commercial Single-Tenant
Lease, dated as of January 18, 2017, by and
between Smoky Hollow Industries, LLC and
Registrant with attachments thereto. .......................
Lease, dated March 13, 2014, as amended, by and
between Sara Maguire LeMone as Trustee of the
Sara Maguire LeMone Revocable Trust dated
February 6, 2004 and Registrant and amendment
thereto dated November 1, 2017. ............................
Second Lease Amendment to Lease, dated March
13, 2014, as amended, by and between Sara
Maguire LeMone as Trustee of the Sara Maguire
Lemone Revocable Trust, dated May 6, 2019. ........
Third Lease Amendment to Lease, dated March
13, 2014, as amended, by and between Sara
Maguire LeMone as Trustee of the Sara Maguire
Lemone Revocable Trust, dated March 16, 2020. ...
Lease, dated October 12, 2017, by and between
LeMone Family Limited Partnership, LLLP and
Registrant as amended by the Lease Amendment
dated April 18, 2018. ................................................
113
X
X
X
S-1
11/16/2018
10.1
S-1
11/16/2018
10.2
S-1
11/16/2018
10.3
indicated.
Exhibit
No.
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Exhibit
No.
Exhibit Description
EXHIBIT INDEX
Amended and Restated Loan and Security
Agreement (Revolving Line), dated as of June 27,
2018, by and between Silicon Valley Bank and
Registrant. ...............................................................
Loan and Security Agreement (Term Loan), dated
June 27, 2018, by and between Silicon Valley Bank
and Registrant. ........................................................
First Amendment to Loan and Security Agreement
(Term Loan), dated September 27, 2018, by and
between Silicon Valley Bank and Registrant............
Intellectual Property Security Agreement, dated
June 27, 2018, by and between Silicon Valley Bank
and Registrant (Revolving Line)...............................
Intellectual Property Security Agreement, dated
June 27, 2018, by and between Silicon Valley Bank
and Registrant (Term Loan). ....................................
Equipment Loan and Security Agreement, dated
September 19, 2018, by and between Ocean II
PLO, LLC and Registrant. ........................................
Multi-Year Sales Agreement, dated January 10,
2020, by and between Roquette Frères and
Beyond Meat, Inc.+ ..................................................
Master Supply Agreement, dated as of December
21, 2018, between Registrant and PURIS Proteins,
LLC.+ .......................................................................
Incorporated by Reference
Form
S-1
Date
11/16/2018
Number
10.4
Filed
Herewith
S-1
11/16/2018
10.5
S-1
11/16/2018
10.6
S-1
11/16/2018
10.7
S-1
11/16/2018
10.8
S-1
11/16/2018
10.9
8-K
1/15/2020
10.1
S-1/A
4/15/2019
10.21
Amendment No. 1 to PURIS Master Supply
Agreement. ..............................................................
10-Q
9/28/2019
10.1
Form of Indemnification Agreement with directors
and executive officers.* ............................................
S-1/A
1/9/2019
10.11
2011 Equity Incentive Plan, amended as of April 3,
2019, and related forms of stock award
agreements.* ...........................................................
S-1/A
4/15/2019
10.12
2018 Equity Incentive Plan, and related forms of
stock award agreements.* .......................................
S-1/A
1/9/2019
10.13
Amended form of 2018 Equity Incentive Plan stock
option award agreement.* ........................................
10-Q
7/29/2019
10.1
Amended form of 2018 Equity Incentive Plan
restricted stock unit award agreement.*...................
10-Q
7/29/2019
10.2
10.20
2018 Employee Stock Purchase Plan.* ................... S-1/A
1/9/2019
10.14
10.21
Executive Incentive Bonus Plan.* ............................ S-1
11/16/2018
10.15
10.22
Form of Executive Change in Control Severance
Agreement.* .............................................................
S-1
11/16/2018
10.16
114
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
21.1
23.1
31.1
31.2
32.1**
32.2**
Exhibit
No.
Exhibit Description
EXHIBIT INDEX
Option Amendment Letter, dated May 11, 2017, by
and between Mark J. Nelson and Registrant.*.........
Advisor Agreement, dated February 26, 2016, by
and between Bernhard van Lengerich and
Registrant, as amended on September 5, 2017.* ....
Second Amended & Restated Consulting
Agreement, dated April 8, 2019, by and between
Seth Goldman and Registrant.* ...............................
Employment Agreement by and between
Registrant and Ethan Brown.*..................................
Amended and restated agreement, dated as of
January 18, 2019, between Registrant and Chuck
Muth.* ......................................................................
Filed
Herewith
Incorporated by Reference
Form
S-1
Date
11/16/2018
Number
10.17
S-1
11/16/2018
10.18
S-1/A
4/15/2019
10.19
S-1/A
1/9/2019
10.20
S-1/A
3/27/2019
10.23
Offer Letter dated April 29, 2019 with Teri L.
Witteman.* ...............................................................
8-K
5/20/2019
10.1
Offer Letter dated August 1, 2019 with Sanjay
Shah.* ......................................................................
8-K
9/19/2019
10.1
Offer Letter Correction dated March 3, 2020 ...........
8-K/A
3/5/2020
10.2
Letter Agreement, dated February 27, 2020, by
and between Seth Goldman and Registrant.*..........
Letter Agreement, dated December 31, 2019, by
and between Food System Strategies, LLC and
Registrant.* ..............................................................
List of Subsidiaries of Beyond Meat, Inc. .................
Consent of Independent Registered Public
Accounting Firm .......................................................
Certification of Chief Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. ....................................................................
Certification of Chief Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) of the Securities
Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. ....................................................................
Certification of Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. .....
Certification of Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. .....
115
X
X
X
X
X
X
X
X
EXHIBIT INDEX
Exhibit Description
Incorporated by Reference
Form
Date
Number
Filed
Herewith
Exhibit
No.
101
The following financial statements from the
Company's Yearly Report on Form 10-K for the
fiscal year ended December 31, 2019 formatted in
Inline XBRL: (i) Balance Sheets, (ii) Statements of
Operations, (iii) Statements of Convertible
Preferred Stock and Stockholders' Equity (Deficit)
and (vi) Notes to Financial Statements, tagged as
blocks of text and including detailed tags. ...............
104
Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101)
.................................................................................
_________________
* Indicates management contract or compensatory plan or arrangement.
X
X
** This certification is deemed furnished, and not filed, with the Securities and Exchange Commission and is
not to be incorporated by reference into any filing of Beyond Meat, Inc. under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this
Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
+ Certain portions of this document that constitute confidential information have been redacted in accordance
with Regulation S-K, Item 601(b)(10)
116
ITEM 16. FORM 10-K SUMMARY.
None.
117
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
BEYOND MEAT, INC.
By:
/s/ Ethan Brown
Name: Ethan Brown
Title:
President and Chief Executive Officer
Date: March 19, 2020
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the
following persons, on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Ethan Brown
Ethan Brown
/s/ Mark J. Nelson
Mark J. Nelson
/s/ Seth Goldman
Seth Goldman
/s/ Diane Carhart
Diane Carhart
/s/ Raymond J. Lane
Raymond J. Lane
/s/ Bernhard van Lengerich
Bernhard van Lengerich, Ph.D.
/s/ Ned Segal
Ned Segal
/s/ Christopher Isaac Stone
Christopher Isaac Stone
/s/ Donald Thompson
Donald Thompson
/s/ Kathy N. Waller
Kathy N. Waller
President, Chief Executive Officer,
and Director (Principal Executive
Officer)
Chief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
March 19, 2020
March 19, 2020
Chairman of the Board
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
March 19, 2020
Director
Director
Director
Director
Director
Director
Director
118
EXECUTIVE TEAM
BOARD OF DIRECTORS
Ethan Brown
Founder, President and Chief Executive Officer
of Beyond Meat, Inc.
Diane Carhart
Chief Operating Officer and Chief Financial Officer
of Stonyfield Farm, Inc.
Seth Goldman
Chair of the Board of Beyond Meat, Inc.
Former Executive Chair of Beyond Meat, Inc.
Founder and Chief Change Agent of Eat the Change
Raymond J. Lane
Managing Partner, GreatPoint Ventures
Partner Emeritus and Advisor of Kleiner, Perkins,
Caufield & Byers LLC
Bernhard van Lengerich, Ph.D.
Founder and CEO of Food System Strategies, LLC
Ned Segal
Chief Financial Officer of Twitter, Inc.
Christopher Isaac ‘‘Biz’’ Stone
Co-founder and Creative Director of Twitter, Inc.
Donald Thompson
Founder and Chief Executive Officer of
Cleveland Avenue, LLC
Kathy N. Waller
Retired Executive Vice President, Chief Financial
Officer and President, Enabling Services of
The Coca-Cola Company
Ethan Brown
Founder, President and Chief Executive Officer
Mark J. Nelson
Chief Financial Officer and Treasurer
Sanjay C. Shah
Chief Operating Officer
Charles Muth
Chief Growth Officer
Dariush Ajami, Ph.D.
Chief Innovation Officer
Teri L. Witteman
General Counsel and Secretary
Stuart Kronauge
Chief Marketing Officer
Cari Soto
Chief People Officer
HEADQUARTERS
119 Standard Street
El Segundo, California 90245
INDEPENDENT AUDITORS
Deloitte & Touche LLP
555 West 5th Street
Suite 2700
Los Angeles, California 90013
www.deloitte.com
TRANSFER AGENT
EQ Shareowner Services
1110 Centre Pointe Curve
Mendota Heights, Minnesota 55120
800-468-9716
stocktransfer@equiniti.com
www.beyondmeat.com
© 2020 BEYOND MEAT, INC.