0001005286-24-000124 | 10-K | XBRL Viewer | Lifecore Biomedical INC DE

Discontinued Operations (Tables)

12 Months Ended

May 26, 2024

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations

The key components of income (loss) from discontinued operations for the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022 were as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Revenues	$	—	$	49,988	$	261,311
Cost of goods sold	—		51,175		248,670
Gross profit	—		(1,187)		12,641
Operating costs and expenses:
Research and development	—		220		2,441
Selling, general and administrative	—		10,143		24,423
Impairment of goodwill and long-lived and indefinite-lived assets	—		1,300		78,146
Legal settlement charge	—		407		—
Loss on Sale of Eat Smart	—		—		336
Loss on Sale of Yucatan	—		20,663		—
Loss on Sale of O Olive	—		319		—

Restructuring costs	—		1,255		6,542
Total operating costs and expenses	—		34,307		111,888
Operating loss	—		(35,494)		(99,247)


Interest expenses (1)	—		—		(2,682)
Other income (expense), net	2,700		167		—
Income (loss) from discontinued operations before taxes	2,700		(35,327)		(101,929)
Income tax benefit	(18)		—		690
Income (loss) from discontinued operations, net of tax	$	2,682	$	(35,327)	$	(101,239)

(1)The Company does not allocate general corporate interest expense to discontinued operations. The amount shown for the year ended May 29, 2022 related to debt held specifically by discontinued operations.

The key components of cash flows from discontinued operations for the fiscal years ended May 28, 2023, and May 29, 2022 were as follows (in thousands):


	Year Ended
	May 28, 2023		May 29, 2022
Cash provided by (used in) operating activities	$	12	$	(13,600)
Cash (used in) provided by investing activities	$	(42)	$	105,300
Depreciation and amortization expense	$	400	$	7,628
Capital expenditures	$	(42)	$	(4,467)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

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+ Details

Restructuring Costs

12 Months Ended

May 26, 2024

Restructuring and Related Activities [Abstract]

Restructuring Costs

During fiscal year 2020, the Company announced a restructuring plan to drive enhanced profitability, focus the business on its strategic assets and redesign the organization to be the appropriate size to compete and thrive. This includes a reduction-in-force, a reduction in leased office spaces and the sale of non-strategic assets.

The following table summarizes the restructuring costs recognized in the Consolidated Statements of Operations for the fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022:


(In thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Asset write-off costs	$	—	$	—	$	3,127
Employee severance and benefit costs	234		2,542		405
Lease costs	1,036		96		2,072
Other restructuring costs	386		1,546		2,755
Total restructuring costs	$	1,656	$	4,184	$	8,359

Asset Write-off Costs

Asset write-off costs are costs related to impairment or disposal of property and equipment as part of the Company’s restructuring plan to drive enhanced profitability, focus the business on its strategic assets and redesign the organization to be the appropriate size to compete and thrive.

The Company leased an office for Curation located in Santa Maria, California (the “Santa Maria Office”). During the third quarter of fiscal year 2022, the Company approved a plan to explore opportunities to sub lease its Santa Maria Office. The Company recognized a $5.3 million impairment loss ($3.7 million included in asset write-off costs related to leasehold improvements impairment and $1.6 million included in lease costs related to right-of-use asset impairment) for the year ended May 29, 2022.

Employee Severance and Benefit Costs

Employee severance and benefit costs are costs incurred as a result of reduction-in-force driven by our restructuring plan and closure of offices and facilities. These costs were driven primarily by a reduction-in-force related to our Curation Foods business.

Lease Costs

During the third quarter of fiscal year 2024, the Company recognized $1.4 million in lease costs primarily as a result of an impairment of an ROU asset on the Santa Maria Office. Also in the third quarter of fiscal year 2024, the Company vacated the Santa Maria Office and recognized a $0.7 million net reduction in lease costs estimated for contractual amounts owed under the terminated lease, net of estimated liabilities of $0.6 million that are accrued in other accrued liabilities.

Other restructuring costs

Other restructuring costs primarily related to consulting costs to execute the Company’s restructuring plan to drive enhanced profitability, focus the business on its strategic assets, and redesign the organization to be the appropriate size to compete and thrive.

Accumulated Restructuring Costs

The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Operations since inception of the restructuring plan in fiscal year 2020 through the fiscal year ended May 26, 2024, excluding discontinued operations:



(In thousands)	Total
Asset write-off costs	$	13,893
Employee severance and benefit costs	4,333
Lease costs	5,150
Other restructuring costs	8,236
Total restructuring costs	$	31,612

Restructuring Costs Liability Roll-forward

The following table presents the movement of the restructuring liability from May 28, 2023 through May 26, 2024, within current liabilities in the Consolidated Balance Sheets:



(In thousands)	May 28, 2023		Expense		Payments		Other (1)		May 26, 2024
Employee severance and benefit	$	1,600	$	234	$	(1,617)	$	—	$	217
Lease	257		587		(129)		3,575		4,290
Other restructuring	1,140		386		(1,262)		—		264
	$	2,997	$	1,207	$	(3,008)	$	3,575	$	4,771

(1) The increase to the restructuring liability of $3.6 million relates terminated lease obligations in connection with the exit of a leased property when the Company relocated its headquarters to Minnesota.

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Impairment Review of Intangible Assets and Business Interruption Insurance Recoveries (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Nov. 27, 2022	May 28, 2023	May 29, 2022
Eat Smart
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Goodwill impairment loss			$ 32.1
Yucatan Foods
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Goodwill impairment loss			20.0
Yucatan Foods \| Trademarks
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Impairment of intangible assets		$ 1.0	$ 8.4
Impairment, Intangible Asset, Statement of Income or Comprehensive Income [Extensible Enumeration]			Income (loss) from discontinued operations, net of tax
O Olive & Vinegar \| Trademarks
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Impairment of intangible assets	$ 0.3

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Cash flows from operating activities:
Net income (loss)	$ 12,013	$ (99,563)	$ (116,715)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	8,859	13,177	18,061
Loss on debt extinguishment	0	23,741	0
Stock-based compensation expense	6,201	3,612	2,608
Provision (benefit) for expected credit losses	263	163	(14)
Deferred taxes	163	357	(6,825)
Net loss on disposal of property and equipment	18	38	152
Non-cash restructuring and impairment of assets charges	1,402	640	0
Impairment of goodwill and long-lived and indefinite-lived assets	0	1,300	78,146
Loss on disposal of property and equipment related to restructuring, net	0	0	5,185
Interest expense, related party	14,209	343	0
Change in debt derivative liability, related party	(39,500)	0	0
Other, net	0	86	(426)
Changes in current assets and current liabilities:
Inventories	862	(14,811)	(2,180)
Other assets	2,380	2,156	(689)
Accounts payable	(6,676)	16,038	9,343
Accrued compensation	1,388	(4,483)	(2,546)
Other accrued liabilities	319	3,982	(873)
Accrued interest - related party	453	9	0
Net cash used in operating activities	(217)	(17,441)	(22,593)
Cash flows from investing activities:
Purchases of property and equipment	(17,921)	(21,482)	(29,940)
Proceeds from sales of property and equipment	0	0	1,141
Eat Smart sale net working capital adjustment	0	0	(9,839)
Proceeds from the sale of divested business, net of cash acquired	0	16,671	73,500
Proceeds from sale of investment in non-public company	0	0	45,100
Net cash (used in) provided by investing activities	(17,921)	(4,811)	79,962
Cash flows from financing activities:
Taxes paid by Company for employee stock plans	(152)	(274)	(789)
Principal payments on finance leases	(135)	0	0
Principal payments on equipment financing, related party	(579)	0	0
Payments on long-term debt	0	(123,690)	(86,411)
Proceeds from revolving credit facility	149,586	31,450	55,111
Payments on revolving credit facility	(146,704)	(54,640)	(44,111)
Proceeds from exercise of stock options	724	0	0
Payments for debt issuance costs	(231)	(6,050)	(821)
Proceeds from long-term customer deposit	5,000	0	0
Proceeds from sale of common stock, net of issuance costs	0	4,822	0
Proceeds from sale of convertible preferred stock, net of issuance costs	0	38,082	0
Net cash provided by (used in) financing activities	7,509	39,700	(57,021)
Net (decrease) increase in cash and cash equivalents	(10,629)	17,448	348
Cash and cash equivalents, beginning of period	19,091	1,643	1,295
Cash and cash equivalents, end of period	8,462	19,091	1,643
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	2,730	31,024	16,888
Cash paid during the period for income taxes, net of refunds received	72	23	441
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment on trade vendor credit	7,858	6,945	2,260
Convertible Preferred Stock paid-in-kind (“PIK”) dividend	(3,078)	(1,163)	0
Debt derivative	0	64,900	0
Nonrelated Party
Changes in current assets and current liabilities:
Accounts receivable, net	(699)	19,941	(6,138)
Deferred revenues	536	(367)	(18)
Cash flows from financing activities:
Proceeds from long-term debt	0	0	20,000
Related Party
Changes in current assets and current liabilities:
Accounts receivable, net	(1,693)	(9,117)	0
Deferred revenues	(715)	6,443	0
Cash flows from financing activities:
Proceeds from long-term debt	0	150,000	0
BreatheWay
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain (loss) on sale of business	0	(2,108)	0
Eat Smart
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain (loss) on sale of business	0	0	336
Yucatan Foods
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain (loss) on sale of business	0	20,663	0
O Olive
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain (loss) on sale of business	$ 0	$ 319	$ 0

Discontinued Operations - Components of Loss from Discontinued Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income (loss) from discontinued operations, net of tax	$ 2,700	$ (35,327)	$ (101,929)
Income tax benefit	(18)	0	690
Income (loss) from discontinued operations, net of tax	2,682	(35,327)	(101,239)
O Olive, Yucatan and Eat Smart \| Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	0	49,988	261,311
Cost of goods sold	0	51,175	248,670
Gross profit	0	(1,187)	12,641
Research and development	0	220	2,441
Selling, general and administrative	0	10,143	24,423
Impairment of goodwill and long-lived and indefinite-lived assets	0	1,300	78,146
Legal settlement charge	0	407	0
Restructuring costs	0	1,255	6,542
Total operating costs and expenses	0	34,307	111,888
Operating loss	0	(35,494)	(99,247)
Interest expenses	0	0	(2,682)
Other income (expense), net	2,700	167	0
Income (loss) from discontinued operations, net of tax	2,700	(35,327)	(101,929)
Income tax benefit	(18)	0	690
Income (loss) from discontinued operations, net of tax	2,682	(35,327)	(101,239)
Eat Smart \| Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on sale of business	0	0	336
Yucatan Foods \| Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on sale of business	0	20,663	0
O Olive \| Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on sale of business	$ 0	$ 319	$ 0

Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 761	$ 2,067
Operating cash flows from finance leases	373	351
Financing cash flows from finance leases	136	96
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$ 0	$ 83

Restructuring Costs (Tables)

12 Months Ended

May 26, 2024

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following table summarizes the restructuring costs recognized in the Consolidated Statements of Operations for the fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022:


(In thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Asset write-off costs	$	—	$	—	$	3,127
Employee severance and benefit costs	234		2,542		405
Lease costs	1,036		96		2,072
Other restructuring costs	386		1,546		2,755
Total restructuring costs	$	1,656	$	4,184	$	8,359



(In thousands)	Total
Asset write-off costs	$	13,893
Employee severance and benefit costs	4,333
Lease costs	5,150
Other restructuring costs	8,236
Total restructuring costs	$	31,612

Restructuring Costs Liability Roll-forward

The following table presents the movement of the restructuring liability from May 28, 2023 through May 26, 2024, within current liabilities in the Consolidated Balance Sheets:



(In thousands)	May 28, 2023		Expense		Payments		Other (1)		May 26, 2024
Employee severance and benefit	$	1,600	$	234	$	(1,617)	$	—	$	217
Lease	257		587		(129)		3,575		4,290
Other restructuring	1,140		386		(1,262)		—		264
	$	2,997	$	1,207	$	(3,008)	$	3,575	$	4,771

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Employee Saving Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Amount participants are allowed to contribute of their salaries	50.00%
Company contribution to employee contribution plan	$ 1.7	$ 1.5	$ 1.4
First Three Percent Match
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Company match of contribution plan, percent	100.00%
Percent of employees' gross pay	3.00%
Next Two Percent Match
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Company match of contribution plan, percent	50.00%
Percent of employees' gross pay	2.00%

Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Policies)

12 Months Ended

May 26, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation and Consolidation

The consolidated financial statements are presented on the accrual basis of accounting in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and include the accounts of Lifecore and its subsidiaries. All material inter-company transactions and balances have been eliminated.

Consolidation

Basis of Presentation and Consolidation

Fiscal Period

The Company’s fiscal year is the 52- or 53-week period that ends on the last Sunday of May with quarters within each year ending on the last Sunday of August, November, and February; however, in instances where the last Sunday would result in a quarter being 12-weeks in length, the Company’s policy is to extend that quarter to the following Sunday. A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets and goodwill) and inventories; the valuation and recognition of stock-based compensation; and the valuation of debt derivative liability.

These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates.

Reportable Segments

The Company operates as one reportable segment: Lifecore. This is based on the objectives of the business and how our chief operating decision maker, the President and Chief Executive Officer, regularly reviews and manages the business, monitors operating performance and allocates resources.

Concentrations of Risk

Cash and trade accounts receivable are financial instruments that potentially subject the Company to concentrations of credit risk. Our Company policy limits, among other things, the amount of credit exposure to any one issuer and to any one type

of investment, other than securities issued or guaranteed by the U.S. government. The Company maintains cash in U.S. bank accounts, the balance of which may at times exceed the federally insured limit.

Cash and Cash Equivalents

The Company records all highly liquid securities with original maturities of three months or less from date of purchase as cash equivalents. Cash equivalents consist mainly of money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature.

Impairment of Long-Lived Assets

Long-lived assets (groups) are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of assets (groups) is measured by comparison of the carrying amount of the asset to the net undiscounted future cash flow expected to be generated from the asset (group). If the future undiscounted cash flows are not sufficient to recover the carrying value of the assets (group), the assets’ carrying value is adjusted to fair value. The Company regularly evaluates its long-lived assets for indicators of possible impairment.

Financial Instruments

The Company’s financial instruments are primarily composed of commercial-term trade payables, debt instruments, and derivative instruments. For short-term financial instruments, the historical carrying amounts approximate the fair value of the instruments.

Derivative Financial Instruments

The Company accounts for put and call options embedded in the term debt in accordance with ASC Topic 815, Derivatives and Hedging. ASC Topic 815 generally requires companies to bifurcate put and call options embedded in the Term Loan Credit Facility (as defined in Note 6 - Debt) from their host instruments and to account for them as free standing derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument that is required to be bifurcated, the bifurcated derivative instruments are accounted for as separate derivative instruments.

The fair value of the embedded features are accounted for as a derivative debt liability in the Company’s consolidated balance sheets and adjusted to fair value each reporting period. The change in fair value of derivatives is recorded as a component of other income (expense) in the Company’s Consolidated Statements of Operations.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) consists of two components, Net income (loss) and Other comprehensive (loss) income (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net loss. The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments. The interest rate swap matured in November 2022.

Debt

The Company incurred debt origination costs related to the financing transactions (see Note 6 - Debt) and amortizes these costs over the life of the related debt using the straight-line method, which approximates the effective interest method, except for the Term Loan Credit Facility, related party, which amortizes the costs using the effective interest method. The unamortized portion of debt origination costs is recorded on the consolidated balance sheets as an offset to its related debt. Amortization of debt origination costs is included as a component of interest expense in the consolidated statements of operations.

Accounts Receivable, Sales Returns and Allowance for Credit Losses

The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and credit losses. Sales return allowances are estimated based on historical sales return amounts.

The Company uses the loss rate method to estimate its expected credit losses on trade accounts receivable and contract assets. In order to estimate expected credit losses, the Company assessed recent historical experience, current economic conditions and any reasonable and supportable forecast to identify risk characteristics that are shared within the financial asset. These risk characteristics are then used to bifurcate the loss rate method into risk pools. The risk pools were determined based on the industries in which the Company operates. Historical credit loss for each risk pool is then applied to the current period aging as presented in the identified risk pool to determine the needed reserve allowance. At times when there are no current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provides the best basis for estimating credit losses. The Company makes all reasonable efforts to collect outstanding balances due from customers; however, trade receivables and contract assets are written off when the related balances are no longer deemed collectible.

The information obtained from assessing historical experience, current economic conditions and reasonable and supportable forecasts were used to identify risk characteristics that can affect future credit loss experience. There were no significant risk characteristics identified in the review of historical experiences or in the review of estimates of current economic conditions and forecasts.

Estimating credit losses based on risk characteristics requires significant judgment by management. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which they are relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and the level of reliance on historical experience in light of economic conditions. The Company will continually review and update, when necessary, its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the natural course of business, and the estimated life of its financial assets.

The accounts receivable balances are as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Accounts receivable	$	31,864	$	29,509	$	38,836
Less: Allowance for credit losses	(711)		(485)		(522)
Accounts receivable, less allowance for credit losses	$	31,153	$	29,024	$	38,314

Revenue Recognition and Deferred Revenue

Contract assets primarily relate to the Company’s unconditional right to consideration for work completed but not billed at the reporting date.Contract liabilities primarily relate to payments received from customers in advance of performance under the contract.

Deferred Revenue

Cash received in advance of services performed are recorded as deferred revenue.

Revenue Recognition

The Company follows the five step, principles-based model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. Revenue, net of estimated allowances and returns, is recognized when or as the Company satisfies its performance obligations under a contract and control of the product is transferred to the customer.

Lifecore generates revenue from two integrated activities: CDMO and Fermentation. CDMO is comprised of aseptic and development services. Lifecore’s standard terms of sale are generally included in its contracts and purchase orders. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Lifecore has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Lifecore’s standard payment terms with its customers generally range from 30 days to 60 days.

CDMO - Aseptic

Lifecore provides aseptic formulation and filling of syringes, vials and cartridges with precisely formulated medical grade HA and non-HA materials for injectable products used for medical purposes. In instances where our customers contract with us to aseptically fill syringes, vials or cartridges with our HA, the goods (syringes, vials, cartridges and HA) are distinct in the context of the contract. Lifecore generally recognizes revenue for these products at the point in time when the product is released through the completion of the certificate of analysis or at the time the shipment is made or upon delivery of the product.

CDMO - Development Services

Lifecore provides product development services to assist its customers in obtaining regulatory approval for the commercial sale of their device or drug product. These services include activities such as technology development, material component changes, analytical method development, formulation development, pilot studies, stability studies, process validation, production of proprietary materials for use within clinical studies and the transfer of proprietary process documentation and results of validation to the customers. Lifecore’s customers benefit from the expertise of the Company’s scientists who have extensive experience performing such tasks and from the proprietary documentation and validation of processes that are received upon completion of the services that can be used by the customers.

Each of the promised goods and services are not distinct in the context of the contract as the goods and services are highly interdependent and interrelated. The services described above are significantly affected by each other because Lifecore would not be able to fulfill its promise by transferring each of the goods or services independently.

Revenues generated from development services arrangements are recognized over time as Lifecore is creating an asset without an alternate use as it is unique to the customer. Furthermore, the Company has an enforceable right to payment for the performance completed to date for its costs incurred in satisfying the performance obligation plus a reasonable profit margin. For each of the development activities performed by Lifecore as described above, labor is the primary input (i.e., labor costs represent the majority of the costs incurred in the completion of the services). The Company determined that labor hours are the best measure of progress as it most accurately depicts the effort extended to satisfy the performance obligation over time and therefore recognizes development services revenue over time based on the proportion of labor hours incurred compared to total estimated hours for an individual arrangement.

Fermentation

Lifecore manufactures and sells pharmaceutical-grade, sterile and non-sterile HA in bulk form to its customers. The HA produced is distinct as customers are able to utilize the product provided under HA supply contracts when they obtain control. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product to our customer.

The Company is party to a bill-and-hold arrangement with a customer under which $2.7 million and $3.2 million of revenues were recognized in the years ended May 26, 2024 and May 28, 2023, respectively. Revenue for bill-and-hold arrangements is recognized when control transfers to the customer, even though the customer does not have physical possession of the goods. Control transfers when the bill-and-hold arrangement has been determined to have substantive reason, the product is identified as belonging to the customer, the product is ready for physical transfer to the customer and the product cannot be used or directed to another customer.

Shipping and Handling Costs

Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship products from the processing facility or distribution center to the end consumer markets.

Inventories, net

Inventories primarily consist of in-process and finished goods related to sterile injectable pharmaceutical products in syringes, vials and cartridges. This includes premium, pharmaceutical grade HA in bulk form as well as formulated and filled syringes, vials and cartridges for injectable products used in treating a broad spectrum of medical conditions and procedures.

Inventories are stated at the lower of cost (using the first-in, first-out method) or net realizable value.

The Company has costs adjustments of $0.8 million and $4.9 million to reduce inventory to its net realizable value as of May 26, 2024 and May 28, 2023, respectively.

The amounts reflected in cost of goods sold to record inventory to its net realizable value were income of $4.1 million and expenses of $0.3 million and $3.5 million for fiscal years 2024, 2023 and 2022, respectively.

The Company’s inventories serve as part of the collateral for certain of the Company’s debt arrangements.

Advertising Expense

Advertising expenditures for the Company are expensed as incurred and included in selling, general, and administrative in the accompanying Consolidated Statements of Operations.

Related Party Transactions

The Company has reflected the related party balances on the face of its financial statements beginning in the period which Alcon Research, LLC (“Alcon”) became a related party, which was as of May 22, 2023 at the time Alcon provided financing to the Company. Prior to providing financing, and continuing subsequently, Alcon was/is a significant customer of the Company.

All related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors.

Property and Equipment and Finite-Lived Intangible Assets

Property and equipment and finite-lived intangible assets are stated at cost. Expenditures for major improvements are capitalized while repairs and maintenance are charged to expense. Depreciation is expensed on a straight-line basis over the estimated useful lives of the respective assets. Customer relationships are amortized to operating expense on a basis that reflects the pattern in which the economic benefits are consumed. Leasehold improvements are amortized on a straight-line basis over the lesser of the economic life of the improvement or the life of the lease. Depreciation and amortization expense for these assets is recorded either in cost of goods sold or selling, general and administrative expenses in the Consolidated Statements of Operations, depending on the asset and its intended use. The Company capitalizes interest on long-term construction in process projects based on its incremental borrowing rate.

The Company capitalizes software development costs for internal use. Capitalization of software development costs begins in the application development stage and ends when the asset is placed into service. The Company amortizes such costs on a straight-line basis over estimated useful lives of three to seven years, and the amortization expenses is recorded either in cost of goods sold or selling, general and administrative expenses in the Consolidated Statements of Operations, depending on the asset and its intended use.

Property and equipment and finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be recoverable. The Company’s impairment review requires significant management judgment including estimating the future success of, revenues and expense growth rates, alternative uses for the assets and estimated proceeds from the disposal of the assets. The Company conducts quarterly reviews of idle and underutilized equipment, and reviews business plans for possible impairment indicators. Impairment is indicated when the carrying amount of the asset (or asset group) exceeds its estimated future undiscounted cash flows and the impairment is viewed as other than temporary. When impairment is indicated, an impairment charge is recorded for the difference between the asset’s book value and its estimated fair value. Depending on the asset, estimated fair value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition. The use of different assumptions would increase or decrease the estimated fair value of assets and would increase or decrease any impairment measurement.

During fiscal year 2022, the Company recorded impairment charges of $5.8 million and $11.9 million related to Yucatan’s customer relationships, and property and equipment, respectively. These impairment charges were primarily a result of an indication of a decrease in the fair market values of the Yucatan businesses driven by lower market valuations and a decrease in projected cash flows. The Yucatan related impairment charges are included in Loss from discontinued operations on the Consolidated Statements of Operations. Refer to Note 3 - Property and Equipment for discussion of any impairments during fiscal years 2024 and 2023.

Impairment Review of Goodwill and Indefinite-Lived Intangible Asset

The Company tests its goodwill and trademarks with indefinite lives annually for impairment in the fiscal fourth quarter or earlier if there are indications during a different interim period that these assets may have become impaired.

On a quarterly basis, the Company considers the need to update its most recent annual tests for possible impairment of its indefinite-lived intangible assets and goodwill, based on management’s assessment of changes in its business and other economic factors since the most recent annual evaluation. Such changes, if significant or material, could indicate a need to update the most recent annual tests for impairment of the indefinite-lived intangible assets during the current period. The results of these tests could lead to write-downs of the carrying values of these assets in the current period.

With respect to goodwill, the Company has the option to first assess qualitative factors such as macro-economic conditions, industry and market environment, cost factors, overall financial performance of the Company, cash flow from operating activities, market capitalization, litigation, and stock price. If the result of a qualitative test indicates a potential for impairment of a reporting unit, a quantitative test is performed. The quantitative test compares the carrying amount of a reporting unit that includes goodwill to its fair value. The Company determines the fair value using a combination of the income and market approaches.

To determine the fair value of a reporting unit as part of its quantitative test, the Company considers both the market and income approach as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of their future earnings and cash flows. The income approach is a discounted cash flow (“DCF”) method which requires significant judgments. The Company estimates the future cash flows and discounts these cash flows at a rate of return that reflects their relative risk. The cash flows used in the DCF method are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced, and the broader business strategy for the long term. The other key estimates and factors used in the DCF method include, but are not limited to, future volumes, net sales and expense growth rates, gross margin and gross margin growth rates, and the discount rate applied. Changes in such estimates or the application of alternative assumptions could produce different results. A goodwill impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit.

For trademarks and other intangible assets with indefinite lives, the Company first assesses qualitative factors such as macro-economic conditions, industry and market environment, cost factors, overall financial performance of the Company, litigation, and changes in the business in its annual, qualitative analysis to test for impairment. If the results of a qualitative test indicate a potential for impairment of an intangible asset with an indefinite life, a quantitative test is performed. The quantitative test compares the estimated fair value of an asset to its carrying amount. If the carrying amount of such asset exceeds its estimated fair value, an impairment charge is recorded for the difference between the carrying amount and the estimated fair value. The Company uses the discounted cash flow - income approach to estimate the fair value of its trademarks. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value. Changes in such estimates or the use of alternative assumptions could produce different results.

Leases

Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets are measured at cost and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is a quoted rate based on the understanding of what the Company’s credit rating would be. Certain agreements may contain the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset. The Company, when reasonably certain to exercise the option, considers these options in determining the measurement of the lease. The Company’s lease agreements do not contain any material residual value guarantees.

The Company’s lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company combines fixed payments for non-lease components with lease payments and accounts for them together as a single lease component which increases the amount of lease assets and liabilities.

Payments under lease arrangements are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and are not included in the operating lease assets and liabilities. These amounts primarily include payments affected by changes in price indices.

Income Taxes

The Company accounts for income taxes in accordance with accounting guidance which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. The Company maintains valuation allowances when it is likely that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In determining whether a valuation allowance is warranted, the Company considers such factors as prior earnings history, expected future earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.

In addition to valuation allowances, the Company establishes accruals for uncertain tax positions. The tax-contingency accruals are adjusted in light of changing facts and circumstances, such as the progress of tax audits, case law and emerging legislation. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. The Company’s effective tax rate includes the impact of tax-contingency accruals as considered appropriate by management.

A number of years may elapse before a particular matter, for which the Company has accrued, is audited and finally resolved. The number of years with open tax audits varies by jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes its tax-contingency accruals are adequate to address known tax contingencies. Favorable resolution of such matters could be recognized as a reduction to the Company’s effective tax rate in the year of resolution. Unfavorable settlement of any particular issue could increase the Company’s effective tax rate in the year of resolution. Any resolution of a tax issue may require the use of cash in the year of resolution. The Company’s tax-contingency accruals are recorded in Other accrued liabilities in the accompanying Consolidated Balance Sheets.

Per Share Information

Accounting guidance requires the presentation of basic and diluted earnings per share. Basic earnings per share exclude any dilutive effects of stock options, restricted stock unit (“RSU”), performance share units (“PSU”) and convertible securities and is computed using the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution as if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. Diluted common equivalent shares consist of preferred stock, stock options, RSUs and PSUs. Dilution related to stock options, RSUs and PSUs is calculated using the treasury stock method. The potential dilutive effect of the Convertible Preferred Stock is calculated using the if-converted method assuming the conversion as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive.

Research and Development Expenses

Costs related to both research and development contracts and Company-funded research is included in research and development expenses. Research and development costs are primarily comprised of salaries and related benefits, supplies, travel expenses, consulting expenses and corporate allocations.

Accounting for Stock-Based Compensation

The Company’s stock-based awards include stock option grants, RSUs and PSUs. The Company records compensation expense for stock-based awards issued to employees and directors in exchange for services provided based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods, generally the vesting period. The Company has elected to account for forfeitures as they occur.

The estimated fair value for stock options, which determines the Company’s calculation of stock-based compensation expense, is based on the Black-Scholes option pricing model. The use of Black-Scholes requires the Company to make estimates and assumptions, such as expected volatility, expected term, and risk-free interest rate. RSUs are valued at the closing market price of the Company’s Common Stock on the date of grant. The Company uses the straight-line single option method to calculate and recognize the fair value of stock-based compensation arrangements. PSU valuation is done through the use of a Monte Carlo simulation model.

Employee Savings and Investment Plans

The Company sponsors a 401(k) plan (“Lifecore Plan”), which is available to all full-time Lifecore employees and allows participants to contribute from 1% to 50% of their salaries, up to the Internal Revenue Service limitation into designated investment funds. The Company matches 100% on the first 3% and 50% on the next 2% contributed by an employee. Employee and Company contributions are fully vested at the time of the contributions. The Company retains the right, by action of the Board of Directors, to amend, modify, or terminate the plan.

Fair Value Measurements

The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value.

Applicable accounting guidance establishes a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – observable inputs such as quoted prices for identical instruments in active markets.

Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

Cash is stated at cost, which approximates its fair value. The carrying amounts reported in the balance sheets for accounts receivable, accounts payable, accrued liabilities, revolving credit facility approximate fair value, due to their short-term maturities.

Outstanding borrowings under the Company's Revolving Credit Facility are carried at cost, which approximates their fair value as of May 26, 2024 and May 28, 2023, due to their short duration.

Reclassification

Certain prior year amounts have been reclassified to conform with current year presentation of related party balances. These changes did not have any effect on net loss, stockholders’ equity, the statement of operations or the net change in cash, cash equivalents and restricted cash in the statement of cash flows.

Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued new guidance on income tax disclosures (ASU 2023-09, “Income Taxes Topic 740: Improvements to Income Tax Disclosures”). Among other requirements, this update adds specific disclosure requirements for income taxes, including: (1) disclosing specific categories in the rate reconciliation and (2) providing additional information for reconciling items that meet quantitative thresholds. The guidance is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2023-09 on the Company’s condensed consolidated financial statements and disclosures.

In November 2023, the FASB issued new guidance on segment reporting (ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”). The amendments in the ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,

2024. Early adoption is permitted. The Company is in the process of evaluating the impact of the adoption of ASU 2023-07 on the Company’s condensed consolidated financial statements and disclosures.

Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Tables)

12 Months Ended

May 26, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Components of AOCL, Net of Tax

The components of accumulated other comprehensive income (“AOCI”), net of tax, are as follows (in thousands):


	AOCI




May 30, 2021	$	(1,358)
Amounts reclassified from OCI	772
Other comprehensive income, net of tax effect of $(430)	772
May 29, 2022	(586)

Amounts reclassified from OCI	586
Other comprehensive income, net of tax effect of $16	586
May 28, 2023	—

Schedule of Accounts, Notes, Loans and Financing Receivable

The accounts receivable balances are as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Accounts receivable	$	31,864	$	29,509	$	38,836
Less: Allowance for credit losses	(711)		(485)		(522)
Accounts receivable, less allowance for credit losses	$	31,153	$	29,024	$	38,314

The changes in the allowance for credit losses related to accounts receivable are as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Beginning balance	$	485	$	522	$	522
Provision	263		163		—
Charge-offs	(37)		(200)		—

Ending Balance	$	711	$	485	$	522

Summary of Contract Liabilities


Contract liabilities consisted of the following (in millions):	May 26, 2024	May 28, 2023	May 29, 2022
Current deferred revenues:
Non related party (1)	$1.1	$0.6	$0.3
Related party (1)	1.0	3.5	0.6

Non-current deferred revenues:
Related party (1)	4.7	2.9	—

Non-current customer deposit (2)	0.3	—	—
Total contract liabilities	$7.1	$7.0	$0.9

(1) These are separate lines on the consolidated balance sheet for these deferred revenues.

(2) This is with a non-related party and is included within other non-current liabilities on the consolidated balance sheet.

Schedule of Disaggregation of Revenue

The Company disaggregates its revenue based on how it markets its products and services and reviews results of operations. The following tables disaggregates revenue by major product lines and services (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
CDMO	$	96,616	$	76,378	$	86,353
Fermentation	31,645		26,891		23,007
Other	—		—		1,910
Total	$	128,261	$	103,269	$	111,270

Schedule of Inventories

As of May 26, 2024 and May 28, 2023, inventories consisted of the following (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023
Finished goods	$	14,924	$	13,141
Raw materials	14,555		17,735
Work in process	11,915		10,349
Inventory reserve	(1,415)		(384)
Total inventories	$	39,979	$	40,841

Schedule of Diluted Net Income (Loss) Per Share

The following table sets forth the computation of diluted net income (loss) per share:


	Year Ended
(in thousands, except per share amounts)	May 26, 2024		May 28, 2023		May 29, 2022
Numerator:
Net Income (loss) from continuing operations	$	9,331	$	(64,236)	$	(15,476)
Income (loss) from discontinued operations, net of tax	2,682		(35,327)		(101,239)
Net income (loss)	$	12,013	$	(99,563)	$	(116,715)
Denominator:
Weighted average shares for basic income per share	30,474		29,958		29,466
Potential preferred stock conversion to common stock	5,847		—		—
Dilutive stock options, RSUs, and PSUs	337		—		—
Weighted average shares for diluted income per share	36,658		29,958		29,466

Basic income (loss) per share:
Income (loss) from continuing operations	$	0.31	$	(2.14)	$	(0.53)
Income (loss) from discontinued operations	0.09		(1.18)		(3.44)
Total basic income (loss) per share	$	0.40	$	(3.32)	$	(3.97)

Diluted income (loss) per share:
Income (loss) from continuing operations	$	0.25	$	(2.14)	$	(0.53)
Income (loss) from discontinued operations	0.07		(1.18)		(3.44)
Total diluted income (loss) per share	$	0.32	$	(3.32)	$	(3.97)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	Fair Value at May 26, 2024						Fair Value at May 28, 2023
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3






Liabilities:
Debt derivative liability, related party(1)	$	—	$	—	$	25,400	$	—	$	—	$	64,900


Total liabilities	$	—	$	—	$	25,400	$	—	$	—	$	64,900

(1) As of May 26, 2024 and May 28, 2023, the fair value of the debt derivative liability, related party, is included in non-current liabilities in the Company’s Consolidated Balance Sheets.

Fair Value Measurement Inputs and Valuation Techniques

Key inputs into the discount rate assumptions during the years ended May 26, 2024 and May 28, 2023 were as follows:


	Year Ended	As of
	May 26, 2024	May 28, 2023
Assumptions
Discount rate	21.3% — 23.5%	22.3% — 24.5%
Implied spread	16.8% — 17.9%	18.5%
Risk free rate	4.3% — 5.6%	3.8% — 6.0%

Schedule of Fair Value Reconciliation of Level 3

The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value (in thousands):


	Debt Derivative Liability
Balance as of May 29, 2022	$	—
Fair value on issuance	64,900
Balance as of May 28, 2023(1)	$	64,900
Decrease in fair value(2)	$	(39,500)
Balance as of May 26, 2024	$	25,400

(1) At May 28, 2023, the fair value of the embedded derivative liability, related party, approximated the fair value upon issuance on May 22, 2023.

(2)For the year ended May 26, 2024, the decrease in fair value is recorded within “Change in fair value of debt derivative liability, related party” within the consolidated statement of operations.

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands	12 Months Ended
	May 28, 2023	May 29, 2022
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Amounts reclassified from OCI	$ 586	$ 772
Other comprehensive income, net	586	772
Changes in net unrealized gains (losses) on interest rate swap, tax	16	(430)
Accumulated Other Comprehensive Loss
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(586)	(1,358)
Other comprehensive income, net	586	772
Ending balance	$ 0	$ (586)

- Definition

Amount after tax of reclassification adjustments of other comprehensive income (loss).

+ References + Details

- Definition

Amount of equity (deficit) attributable to parent and noncontrolling interest. Excludes temporary equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 805
-SubTopic 60
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147476176/805-60-65-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 805
-SubTopic 60
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (d)(1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147476176/805-60-65-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 323
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478666/740-323-65-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 323
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (g)(4)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478666/740-323-65-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 323
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (d)(2)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478666/740-323-65-2

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 323
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (d)(1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478666/740-323-65-2

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 848
-SubTopic 10
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (a)(3)(iii)(03)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483550/848-10-65-2

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 10
-Name Accounting Standards Codification
-Section 65
-Paragraph 8
-Subparagraph (c)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479832/842-10-65-8

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 24
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483421/250-10-45-24

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 23
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483421/250-10-45-23

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 5
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483421/250-10-45-5

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 326
-SubTopic 10
-Name Accounting Standards Codification
-Section 65
-Paragraph 5
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-URI https://asc.fasb.org/1943274/2147476166/350-60-65-1

+ Details

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 22, 2023	May 26, 2024	May 28, 2023	May 29, 2022
Segment Reporting Information [Line Items]
Revenues		$ 128,261	$ 103,269	$ 111,270
Proceeds from long-term customer deposit	$ 5,000	5,000	0	0
CDMO
Segment Reporting Information [Line Items]
Revenues		96,616	76,378	86,353
Fermentation
Segment Reporting Information [Line Items]
Revenues		31,645	26,891	23,007
Other
Segment Reporting Information [Line Items]
Revenues		$ 0	$ 0	$ 1,910

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Loss
Convertible Preferred Stock, beginning balance (in shares) at May. 30, 2021	0
Convertible Preferred Stock, beginning balance at May. 30, 2021	$ 0
Convertible Preferred Stock, ending balance (in shares) at May. 29, 2022	0
Convertible Preferred Stock, ending balance at May. 29, 2022	$ 0
Beginning balance (in shares) at May. 30, 2021		29,333,000
Beginning balance at May. 30, 2021	201,946	$ 29	$ 165,533	$ 37,742	$ (1,358)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock plans, net of shares withheld (in shares)		180,000
Issuance of stock under stock plans, net of shares withheld	1	$ 1
Taxes paid by Company for employee stock plans	(789)		(789)
Stock-based compensation	2,608		2,608
Net income (loss)	(116,715)			(116,715)
Other comprehensive income, net of tax	772				772
Ending balance (in shares) at May. 29, 2022		29,513,000
Ending balance at May. 29, 2022	$ 87,823	$ 30	167,352	(78,973)	(586)
Increase (Decrease) in Temporary Equity [Roll Forward]
Proceeds from Convertible Preferred Stock, net of issuance costs (in shares)	39,000
Proceeds from Convertible Preferred Stock, net of issuance costs	$ 38,082
Accretion of Convertible Preferred Stock	73
Convertible Preferred Stock PIK dividend	$ 1,163
Convertible Preferred Stock, ending balance (in shares) at May. 28, 2023	39,000
Convertible Preferred Stock, ending balance at May. 28, 2023	$ 39,318
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock plans, net of shares withheld (in shares)		181,000
Accretion of Convertible Preferred Stock	(73)		(73)
Convertible Preferred Stock paid-in-kind (“PIK”) dividend	(1,163)		(1,163)
Taxes paid by Company for employee stock plans	(274)		(274)
Stock-based compensation	3,612		3,612
Net income (loss)	(99,563)			(99,563)
Other comprehensive income, net of tax	586				586
Issuance of Common Stock, net of issuance costs (in shares)		628,000
Issuance of Common Stock, net of issuance costs	$ 4,822		4,822
Ending balance (in shares) at May. 28, 2023	30,322,000	30,322,000
Ending balance at May. 28, 2023	$ (4,230)	$ 30	174,276	(178,536)	0
Increase (Decrease) in Temporary Equity [Roll Forward]
Accretion of Convertible Preferred Stock	$ 191
Convertible Preferred Stock PIK dividend (in shares)	3,000
Convertible Preferred Stock PIK dividend	$ 3,078
Convertible Preferred Stock, ending balance (in shares) at May. 26, 2024	42,000
Convertible Preferred Stock, ending balance at May. 26, 2024	$ 42,587
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock under stock plans, net of shares withheld (in shares)		241,000
Issuance of stock under stock plans, net of shares withheld	724		724
Accretion of Convertible Preferred Stock	(191)		(191)
Convertible Preferred Stock paid-in-kind (“PIK”) dividend	(3,078)		(3,078)
Taxes paid by Company for employee stock plans	(152)		(152)
Stock-based compensation	6,229		6,229
Net income (loss)	$ 12,013			12,013
Ending balance (in shares) at May. 26, 2024	30,563,000	30,563,000
Ending balance at May. 26, 2024	$ 11,315	$ 30	$ 177,808	$ (166,523)	$ 0

Income Taxes (Tables)

12 Months Ended

May 26, 2024

Income Tax Disclosure [Abstract]

Schedule of Benefits and Provisions for Income Taxes

The (benefit) provision for income taxes from continuing operations consisted of the following:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Current:
Federal	$	(10)	$	(1)	$	—
State	37		55		23
Foreign	—		—		356
Total	27		54		379

Deferred:
Federal	173		234		(4,936)
State	(17)		20		(654)
Total	156		254		(5,590)
Income tax provision (benefit)	$	183	$	308	$	(5,211)

Schedule of Actual Provisions for Income Taxes

The actual (benefit) provision for income taxes from continuing operations differs from the statutory U.S. federal income tax rate as follows:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Tax at U.S. statutory rate (1)	$	1,999	$	(13,932)	$	(4,344)
State income taxes, net of federal benefit	52		(1,805)		(638)

Change in valuation allowance	(5,773)		19,461		(1,065)
Tax credit carryforwards	(518)		(611)		(436)
Other compensation-related activity	418		283		234
Impairment of goodwill	—		—		2,347
Foreign rate differential	—		(2,749)		(496)
Net operating loss write-off from final state return filings	711		—		—

Provision to return	3,136		—		—
Other	158		(339)		(813)
Income tax provision (benefit)	$	183	$	308	$	(5,211)

(1) Statutory rate was 21.0% for all fiscal years presented.

Schedule of Deferred Tax Assets and Liabilities

Significant components of deferred tax assets and liabilities reported in the accompanying Consolidated Balance Sheets consisted of the following:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023
Deferred tax assets:

Net operating loss carryforwards	$	40,806	$	44,618

Limitations on business interest expense	11,783		8,614
Research credit carryforwards	6,700		6,269
Amortization of research development expenses	2,916		1,805
Lease liability	1,218		1,843


Other	2,492		3,216
Gross deferred tax assets	65,915		66,365

Valuation allowance	(46,173)		(52,510)
Net deferred tax assets	19,742		13,855

Deferred tax liabilities:
Depreciation and amortization	(11,809)		(13,208)

Debt Derivative/Debt Discount	(7,911)		—
Right-of-use asset	(565)		(1,027)
Deferred tax liabilities	(20,285)		(14,235)

Net deferred tax liabilities	$	(543)	$	(380)

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Unrecognized tax benefits – beginning of the period	$	1,173	$	1,041	$	958
Gross increases – prior-period tax positions	—		16		—

Gross increases – current-period tax positions	98		116		83


Unrecognized tax benefits – end of the period	$	1,271	$	1,173	$	1,041

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Numerator:
Net Income (loss) from continuing operations	$ 9,331	$ (64,236)	$ (15,476)
Income (loss) from discontinued operations, net of tax	2,682	(35,327)	(101,239)
Net income (loss)	$ 12,013	$ (99,563)	$ (116,715)
Denominator:
Weighted average shares for basic net loss per share (in shares)	30,474	29,958	29,466
Potential preferred stock conversion to common stock (in shares)	5,847	0	0
Dilutive stock options, RSUs, and PSUs (in shares)	337	0	0
Weighted average shares for diluted income (loss) per share (in shares)	36,658	29,958	29,466
Basic income (loss) per share:
Income (loss) from continuing operations (in dollars per share)	$ 0.31	$ (2.14)	$ (0.53)
Income (loss) from discontinued operations (in dollars per share)	0.09	(1.18)	(3.44)
Total basic net income (loss) per share (in dollars per share)	0.40	(3.32)	(3.97)
Diluted net income (loss) per share:
Income (loss) from continuing operations (in dollars per share)	0.25	(2.14)	(0.53)
Income (loss) from discontinued operations (in dollars per share)	0.07	(1.18)	(3.44)
Total diluted net income (loss) per share (in dollars per share)	$ 0.32	$ (3.32)	$ (3.97)

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Contract Assets and Liabilities Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Revenue from External Customer [Line Items]
Deferred revenues, less current portion, related party	$ 4,703	$ 2,940
Increase in non-current deferred revenue	1,800
Increase in deferred revenue, prepayments	5,500
Increase in deferred revenue, prepayments discounted	4,700
Decrease in non-current deferred revenue, transition to current	2,900
Deferred revenue recognized	6,800	600	$ 400
Related Party
Revenue from External Customer [Line Items]
Deferred revenues, less current portion, related party	4,700	2,900	0
Equipment
Revenue from External Customer [Line Items]
Deferred revenues, less current portion, related party	3,500
Unbilled Revenues
Revenue from External Customer [Line Items]
Contract with customer, assets	4,100	3,200	10,400
Unbilled Revenues \| Related Party
Revenue from External Customer [Line Items]
Contract with customer, assets	$ 200	$ 100	$ 0

Leases - Maturity Analysis of Operating and Finance Lease Liabilities (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Operating Leases
2025	$ 4,020
2026	433
2027	416
2028	302
2029	146
Thereafter	585
Total lease payments	5,902
Less: interest	(211)
Present value of lease liabilities	5,691
Less: current obligation of lease liabilities	(3,962)
Total long-term lease liabilities	1,729
Finance Leases
2025	529
2026	541
2027	553
2028	2,910
2029	36
Thereafter	9
Total lease payments	4,578
Less: interest	(1,192)
Present value of lease liabilities	3,386
Less: current obligation of lease liabilities	(171)
Total long-term lease liabilities	3,215
Total
2025	4,549
2026	974
2027	969
2028	3,212
2029	182
Thereafter	594
Total lease payments	10,480
Less: interest	(1,403)
Present value of lease liabilities	9,077
Less: current obligation of lease liabilities	(4,133)	$ (1,270)
Total long-term lease liabilities	$ 4,944	$ 9,709
Operating lease, liability, current, statement of financial position, extensible enumeration	Less: current obligation of lease liabilities
Finance lease, liability, current, statement of financial position, extensible enumeration	Less: current obligation of lease liabilities
Operating lease, liability, noncurrent, statement of financial position, extensible enumeration	Total long-term lease liabilities
Finance lease, liability, noncurrent, statement of financial position, extensible enumeration	Total long-term lease liabilities

Leases - Narrative (Details) $ in Thousands		3 Months Ended	12 Months Ended
Leases - Narrative (Details) $ in Thousands	Sep. 03, 2015 USD ($) ft² renewalOption mi	Feb. 25, 2024 USD ($)	May 26, 2024 USD ($)	May 28, 2023 USD ($)	May 29, 2022 USD ($)	Dec. 31, 2022	Sep. 01, 2020 ft²
Lessee, Lease, Description [Line Items]
Operating lease, future lease payments			$ 5,902
Distance from current facility \| mi	2
Finance lease, term of contract	7 years
Finance lease, number of renewal options \| renewalOption	2
Finance lease, renewal term	5 years					5 years
Finance lease, buyout option liability			2,600
Gross assets recorded under finance leases			4,100	$ 3,900
Accumulated amortization associated with finance leases			900	800
Initial monthly lease payment	$ 34
Percentage by which monthly payment increases per year	2.40%
Chanhassen, Minnesota warehouse and office
Lessee, Lease, Description [Line Items]
Leased area \| ft²							21,384
Operating lease, term of contract							7 years
Operating lease, extension term							5 years
Operating lease, future lease payments			2,300
Santa Maria office
Lessee, Lease, Description [Line Items]
Operating lease, future lease payments			3,600
Operating lease, impairment loss		$ 1,400	$ 1,400	600	$ 1,600
Chaska, Minnesota facility
Lessee, Lease, Description [Line Items]
Leased area \| ft²	80,950
Curation Foods Los Angeles, California
Lessee, Lease, Description [Line Items]
Operating lease, impairment loss				$ 100

Cover Page - USD ($)	12 Months Ended
Cover Page - USD ($)	May 26, 2024	Aug. 23, 2024	Nov. 26, 2023
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	May 26, 2024
Document Transition Report	false
Entity File Number	000-27446
Entity Registrant Name	LIFECORE BIOMEDICAL, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3025618
Entity Address, Address Line One	3515 Lyman Boulevard
Entity Address, City or Town	Chaska,
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55318
City Area Code	952
Local Phone Number	368-4300
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	LFCR
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	true
Document Financial Statement Error Correction	false
Entity Shell Company	false
Entity Public Float			$ 153,865,000
Entity Common Stock, Shares Outstanding		30,898,255
Documents Incorporated by Reference	None.
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	FY
Entity Central Index Key	0001005286
Current Fiscal Year End Date	--05-26

Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Current:
Federal	$ (10)	$ (1)	$ 0
State	37	55	23
Foreign	0	0	356
Total	27	54	379
Deferred:
Federal	173	234	(4,936)
State	(17)	20	(654)
Total	156	254	(5,590)
Income tax provision (benefit)	$ 183	$ 308	$ (5,211)

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	May 26, 2024	May 28, 2023
Statement of Financial Position [Abstract]
Temporary equity, par value (usd per share)	$ 0.001	$ 0.001
Temporary equity, shares authorized (in shares)	2,000,000	2,000,000
Temporary equity, shares issued (in shares)	42,000	39,000
Temporary equity, shares outstanding (in shares)	42,000	39,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	30,563,000	30,322,000
Common stock, shares outstanding (in shares)	30,563,000	30,322,000

Convertible Preferred Stock	12 Months Ended
Convertible Preferred Stock	May 26, 2024
Equity [Abstract]
Convertible Preferred Stock	Convertible Preferred Stock On January 9, 2023, the Company issued an aggregate of 38,750 shares of the Series A Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”), all of which are convertible into shares of Common Stock at the election of the holders of the Convertible Preferred Stock, subject to the exchange and beneficial ownership limitations described below. The Convertible Preferred Stock ranks senior to the Company’s Common Stock with respect to dividends, distributions and payments on liquidation, winding-up and dissolution. Upon issuance, the shares of the Convertible Preferred Stock are fully paid and non-assessable, which means that its holders have paid their purchase price in full and are not required to pay additional funds. The Company recorded the Convertible Preferred Stock net of issuance costs of $0.7 million. The issuance costs are being accounted for similar to a discount on the Convertible Preferred Stock that is being reduced over the period ending June 29, 2026 (using the effective interest method) as a charge to additional paid-in capital. Dividends The holders of Convertible Preferred Stock are entitled to dividends on the Liquidation Preference (as defined below) at the rate of 7.5% per annum, payable in-kind. The Company may, at its option, pay such dividends in cash from and after the earlier of June 29, 2026, or the termination or waiver of the restriction on cash dividends and/or redemptions that is set forth in the Prior Credit Facilities (such earlier date, the “Applicable Date”). The holders are also entitled to participate in dividends declared or paid on the Common Stock on an as-converted basis. Liquidation and Redemption Upon a liquidation, dissolution, winding up or change of control of the Company, each share of Convertible Preferred Stock will be entitled to receive an amount per share of Convertible Preferred Stock equal to the greater of (i) the Liquidation Preference and (ii) the amount that the holder of Convertible Preferred Stock (each, a “Holder” and collectively, the “Holders”) would have been entitled to receive at such time if the Convertible Preferred Stock had been converted into Common Stock immediately prior to such liquidation event. Upon certain bankruptcy events, the Company is required to pay to each Holder an amount in cash equal to the Liquidation Preference being redeemed. From and after the Applicable Date, each Holder shall have the right to require the Company to redeem all or any part of such Holder’s Convertible Preferred Stock for an amount equal to the Liquidation Preference. At the time of a redemption, if the Company does not have sufficient funds to redeem any preferred shares submitted for redemption, each holder is entitled to receive interest on the unpaid portion of the redemption at 1% per month until fully paid (the “1% contingent interest”). As of May 26, 2024 and May 28, 2023, the aggregate Liquidation Preference of the Convertible Preferred Stock approximated $43.0 million and $39.3 million, respectively. Conversion Each Holder has the right, at its option, to convert its Convertible Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Common Stock at an initial conversion price equal to $7.00 per share. The conversion price is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events, and is also subject to adjustment in the event of subsequent offerings of Common Stock or convertible securities by the Company for less than the conversion price. Pursuant to the terms of the Certificate of Designations of the Convertible Preferred Stock filed by the Company with the Delaware Secretary of State on January 9, 2023, unless and until approval of the Company’s stockholders is obtained as contemplated by NASDAQ listing rules, no Holder may convert shares of Convertible Preferred Stock through either an optional or a mandatory conversion into shares of Common Stock if and solely to the extent that the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock that is equal to 19.99% of the amount of Common Stock of the Company outstanding on the date on which we issued the Convertible Preferred Stock (the “Exchange Limit”). Additionally, subject to certain exceptions and waiver by each Holder, the Company will not issue any shares of Common Stock to any respective Holder to the extent that such issuance of Common Stock would result in such Holder beneficially owning in excess of 9.99% of the then-outstanding Common Stock (together with the Exchange Limit, the “Conversion Limits”). Subject to certain conditions, the Company may from time to time, at its option, require conversion of all or any portion of the outstanding shares of Convertible Preferred Stock to Common Stock if, for at least 20 consecutive trading days during the respective measuring period the closing price of the Common Stock was at least 150% of the conversion price (the “Mandatory Conversion Right”). The Company may not exercise this Mandatory Conversion Right unless certain conditions with regard to the shares of Common Stock to be issued upon such conversion are satisfied. Voting Each Holder is entitled to vote with the holders of the shares of Common Stock on all matters submitted for a vote of holders of shares of Common Stock (voting together with the holders of shares of Common Stock as one class). Each Holder is entitled the whole number of votes equal to the number of shares of Common Stock into which such Holder’s shares of Convertible Preferred Stock would be convertible on the record date for the vote or consent (subject to the Conversion Limits). Registration Rights Agreement On January 9, 2023, in connection with the issuance of the Convertible Preferred Stock, the Company and the Holders also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Holders certain registration rights with respect to the shares of common stock issuable upon the conversion of the Convertible Preferred Stock. The Registration Rights Agreement contains monetary penalties if the Company fails to maintain the effectiveness of the registration statement. The Company expensed in fiscal year 2024 and 2023 and accrued as of May 26, 2024 and May 28, 2023, approximately $3.5 million and $0.5 million, respectively, in monetary penalties under the Registration Rights Agreement due to the delinquent filing of the Company’s annual and quarterly reports with the SEC, which are included in Other (expense) income, net. Classification The Convertible Preferred Stock is redeemable by the holders after June 29, 2026. Until such date, it is redeemable contingent upon the occurrence of certain events. As a result, the Company has presented the Convertible Preferred Stock outside of permanent equity. The Convertible Preferred Stock was recorded at its issuance date fair value of the net proceeds raised. The current carrying value approximates fair value as it reflects the accumulation of the PIK dividends and accretion of the issue costs. The Company recorded proceeds of $38.8 million, net of costs associated with the issuance of the Convertible Preferred Stock of $0.7 million, totaling $38.1 million. The discount to the proceeds arising from issuance costs is being amortized up to its full redemption value through June 29, 2026. During the year ended of May 26, 2024, the Company recorded paid in-kind (“PIK”) dividends of approximately $3.1 million as a reduction to Additional Paid-in Capital and an increase to the Convertible Preferred Stock balance. As of May 26, 2024 and May 28, 2023, there were approximately 42,460 shares and 39,420 shares, respectively, of Convertible Preferred Stock issued and outstanding.

Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized tax benefits – beginning of the period	$ 1,173	$ 1,041	$ 958
Gross increases – prior-period tax positions	0	16	0
Gross increases – current-period tax positions	98	116	83
Unrecognized tax benefits – end of the period	$ 1,271	$ 1,173	$ 1,041

Discontinued Operations - Components of Cash Flows From Discontinued Operations (Details) - Discontinued Operations - USD ($) $ in Thousands	12 Months Ended
	May 28, 2023	May 29, 2022
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash provided by (used in) operating activities	$ 12	$ (13,600)
Cash (used in) provided by investing activities	(42)	105,300
Depreciation and amortization expense	400	7,628
Capital expenditures	$ (42)	$ (4,467)

Insider Trading Policies and Procedures	12 Months Ended
Insider Trading Policies and Procedures	May 26, 2024
Insider Trading Policies and Procedures [Line Items]
Insider Trading Policies and Procedures Adopted	true

Debt (Tables)

12 Months Ended

May 26, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt consists of the following as of May 26, 2024 and May 28, 2023 (in thousands):


	May 26, 2024		May 28, 2023
Term loan credit facility, related party	$	157,313	$	142,503
Equipment sale finance liability, related party	7,150		7,730
Total principal amount of long-term debt	164,463		150,233
Less: unamortized debt discount	(504)		(605)
Less: debt discount, related party	(62,367)		(64,792)
Total long-term debt, net of unamortized debt issuance costs	101,592		84,836
Less: current portion of long-term debt, net, related party	(773)		(580)
Long-term debt, net	$	100,819	$	84,256

Schedule of Maturities of Long-term Debt

The future minimum principal payments of the Company’s term loan and equipment sale finance liability for each year presented are as follows (in thousands), excluding forecasted cash and PIK interest:



Fiscal year 2025	$	773
Fiscal year 2026	773
Fiscal year 2027	773
Fiscal year 2028	773
Fiscal year 2029	773
Thereafter	160,598
Total	$	164,463

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(22))
-SubTopic 10
-Topic 210
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480566/210-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 69B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481568/470-20-55-69B

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 69E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481568/470-20-55-69E

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 3
-Subparagraph (SX 210.12-04(a))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-3

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 835
-SubTopic 30
-Name Accounting Standards Codification
-Section 45
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482925/835-30-45-2

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-3

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477734/942-470-50-3

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-8

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-6

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 7
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481112/505-10-50-7

+ Details

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Advertising Cost, Related Party, and Property and Equipment and Finite-Lived Intangible Assets Narrative (Details)					12 Months Ended
	May 02, 2024 USD ($)	May 03, 2023	Jan. 09, 2023 USD ($) trading_day $ / shares shares	Nov. 25, 2022 USD ($) $ / shares shares	May 26, 2024 USD ($) $ / shares	May 28, 2023 USD ($) $ / shares shares	May 29, 2022 USD ($)
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Advertising expense					$ 0	$ 5,100	$ 5,600
Proceeds of convertible preferred stock, net of issuance costs (in shares) \| shares						39,000
Temporary equity, par value (usd per share) \| $ / shares					$ 0.001	$ 0.001
Proceeds from sale of convertible preferred stock, net of issuance costs					$ 0	$ 38,082,000	0
Percent of preferred stock outstanding					30.00%
Available indebtedness threshold					$ 175,000,000
Supply agreement, automatic term extension		2 years
Payments on long-term debt					$ 0	123,690,000	86,411,000
Term Loan Credit Agreement
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Payments on long-term debt	$ 5,500,000
Series A Preferred Stock
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Proceeds of convertible preferred stock, net of issuance costs (in shares) \| shares			38,750
Temporary equity, par value (usd per share) \| $ / shares			$ 0.001
Proceeds from sale of convertible preferred stock, net of issuance costs			$ 38,800,000			$ 38,800,000
Dividend percentage rate			7.50%
Liquidation preference per share (usd per share) \| $ / shares			$ 7.00
Mandatory conversion right, threshold trading days \| trading_day			20
Mandatory conversion right minimum			150.00%
Private Placement
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Number of shares issued in transaction (in shares) \| shares				627,746
Consideration received on transaction				$ 5,000,000
Sale of stock price (usd per share) \| $ / shares				$ 7.97
Customer Relationships \| Yucatan Foods
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Asset impairment charges							5,800,000
Property, Plant and Equipment \| Yucatan Foods
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Asset impairment charges							$ 11,900,000
Minimum \| Software Development
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Useful life of property and equipment					3 years
Maximum \| Software Development
Organization, Basis of Presentation, and Summary of Significant Accounting Policies [Line Items]
Useful life of property and equipment					7 years

Property and Equipment - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Property, Plant and Equipment [Abstract]
Expected future costs	$ 10,400
Expected future costs, year one	5,200
Expected future costs, year two	4,600
Expected future costs, year three	600
Depreciation and amortization expense	8,000	$ 10,300	$ 7,100
Amortization of leased assets	137	119	100
Capitalized software development costs	200	400	300
Amortization related to computer software	500	500	400
Unamortized computer software cost	1,500	1,800
Capitalized interest	$ 3,200	$ 3,600	$ 2,100

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Discontinued Operations (Details) - USD ($)						1 Months Ended	3 Months Ended		12 Months Ended
	Feb. 22, 2024	Dec. 11, 2023	Sep. 28, 2023	Apr. 06, 2023	Feb. 07, 2023	Dec. 31, 2021	May 28, 2023	Feb. 26, 2023	May 26, 2024	May 28, 2023	May 29, 2022	Jun. 02, 2022	Dec. 13, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from the sale of divested business, net of cash acquired									$ 0	$ 16,671,000	$ 73,500,000
Transition services income									0	349,000	5,814,000
BreatheWay
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposition of business									0	2,108,000	0
Eat Smart
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposition of business									0	0	(336,000)
Transition services income											5,800,000
O Olive and Yucatan
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services income										300,000
O Olive
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from the sale of divested business, net of cash acquired				$ 1,700,000
Gain (loss) on disposition of business							$ (300,000)		0	(319,000)	0
Yucatan Foods
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain (loss) on disposition of business								$ (20,700,000)	$ 0	(20,663,000)	$ 0
Discontinued Operations, Disposed of by Sale \| O Olive Oil and Vinegar Business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received				6,400,000
Post-closing adjustments				3,300,000
Financing receivable				$ 3,100,000
Note receivable, stated rate				12.00%
Proceeds from notes receivable	$ 18,000	$ 300,000	$ 2,400,000
Discontinued Operations, Disposed of by Sale \| BreatheWay
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received												$ 3,200,000
Proceeds from the sale of divested business, net of cash acquired										3,100,000
Gain (loss) on disposition of business										$ 2,100,000
Discontinued Operations, Disposed of by Sale \| Eat Smart
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received													$ 73,500,000
Proceeds from the sale of divested business, net of cash acquired						$ 73,500,000
Gain (loss) on disposition of business						$ (300,000)
Discontinued Operations, Disposed of by Sale \| Yucatan Foods
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received					$ 17,500,000
Post-closing adjustments					$ 5,000,000

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Accounts Receivable, Sales Returns and Allowance for Credit Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts receivable	$ 31,864	$ 29,509	$ 38,836
Less: Allowance for credit losses	(711)	(485)	(522)
Accounts receivable, less allowance for credit losses	31,153	29,024	38,314
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	485	522	522
Provision	263	163	0
Charge-offs	(37)	(200)	0
Ending Balance	$ 711	$ 485	$ 522

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Liabilities:
Debt derivative liability	$ 25,400	$ 64,900
Recurring
Liabilities:
Debt derivative liability	25,400	64,900
Level 1 \| Recurring
Liabilities:
Debt derivative liability	0	0
Total liabilities	0	0
Level 2 \| Recurring
Liabilities:
Debt derivative liability	0	0
Total liabilities	0	0
Level 3 \| Recurring
Liabilities:
Debt derivative liability	25,400	64,900
Total liabilities	25,400	$ 64,900
Level 3 \| Recurring \| Term Loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt, fair value	124,700
Level 3 \| Recurring \| Equipment Sale Finance Liability
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt, fair value	$ 6,400

Stock-based Compensation and Stockholders’ Equity

12 Months Ended

May 26, 2024

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation and Stockholders’ Equity

Common Stock and Stock Option Plans

Equity Inducement Plan and Separation Agreement

On March 20, 2024, the Board adopted and approved the Company’s Equity Inducement Plan (the “Inducement Plan”) and reserved 3,500,000 shares of the Company’s common stock to be used exclusively for grants of equity awards to individuals that were not previously employees or directors of the Company (or who are returning to employment following a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with the Company. The Inducement Plan was adopted and approved without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4). The terms and conditions of the Inducement Plan are substantially similar to the Company’s stockholder-approved 2019 Stock Incentive Plan (described below).

On May 19, 2024, a Separation Agreement was entered into between James G. Hall (the Company’s former President and Chief Executive Officer). The agreement included accelerated vesting on 270,000 RSUs and 92,545 stock options. Mr. Hall has six months to exercise the stock options, which have exercise prices ranging from $9.76 to $12.14 per share. As a result of these modifications, the Company recorded an additional $0.6 million stock-based compensation expense in the fourth quarter of the fiscal year ended May 26, 2024.

On May 20, 2024, under the Inducement Plan, the Company granted Mr. Paul Josephs, the Company’s President and Chief Executive Officer: (i) a RSU award for 525,000 shares of the Company’s common stock, which will vest and be settled as to 25,000 shares of the RSU vested immediately and 100,000 shares of the RSU will vest on each of the first five anniversaries of is grant date; and (ii) a PSU award for up to 1,500,000 shares, divided into ten 150,000 PSU tranches that will vest, if at all, based upon the closing price of the Company’s stock over a five-year performance period, and to the extent the PSU award becomes vested, the Company will issue Mr. Josephs unrestricted shares of the Company’s common stock on the vesting date in settlement of 50% of the vested portion of that tranche of the PSU award and will issue Mr. Josephs unrestricted shares of the Company’s common stock on the one year anniversary of the vesting date in settlement of the other 50% of the vested portion of that tranche of the PSU award. A stock price hurdle was established for each of the 10 tranches, which resulted in a weighted average fair value for each tranche utilizing a Monte-Carlo valuation model. The grant-date fair value of these RSUs and PSUs was $3.1 million and $7.0 million, respectively, of which a total of $0.3 million was recognized within selling, general and administrative expense during the year ended May 26, 2024.

As of May 26, 2024, the Company had 1,475,000 common shares reserved for new awards under the Inducement Plan.

2019 Stock Incentive Plan

On October 16, 2019, following stockholder approval at the Annual Meeting of Stockholders of the Company, the 2019 Stock Incentive Plan (the “2019 Plan”) became effective and replaced the Company’s 2013 Stock Incentive Plan. Employees (including officers), consultants and directors of the Company and its subsidiaries and affiliates are eligible to participate in the 2019 Plan.

The 2019 Plan provides for the grant of stock options (both nonstatutory and incentive stock options), stock grants, stock units and stock appreciation rights. 2,000,000 shares of the Company’s Common Stock (the “Plan Shares”) were initially available for award under the 2019 Plan. On November 1, 2022, an additional 759,797 shares were authorized by the Company’s stockholders. In addition, any awards forfeited or expired under the 2013 or 2009 plans become available for new awards under the 2019 Plan. Under the 2019 Plan, no recipient may receive awards during any fiscal year that exceeds the following amounts: (i) stock options covering in excess of 500,000 Plan Shares in the aggregate; (ii) stock grants and stock units covering in excess of 250,000 Plan Shares in the aggregate; or (iii) stock appreciation rights covering more than 500,000 Plan Shares in the aggregate. In addition, awards to non-employee directors are discretionary. However, a non-employee director may not be granted awards in excess of an aggregate fair market value of $120,000 during any fiscal year. The exercise price of the options is the fair market value of the Company’s Common Stock on the date the options are granted.

At May 26, 2024, the Company had 725,747 common shares reserved for new awards under the 2019 Plan.

Grant Date Fair Value

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of stock option awards. The use of an option pricing model requires the Company to make estimates and assumptions, including the expected stock price volatility, expected life of option awards and risk-free interest rate which have a significant impact on the fair value estimates.

The following table displays the estimated fair value of stock option grants, and the weighted average assumptions utilized:


	Year Ended
	May 26, 2024			May 28, 2023			May 29, 2022


Weighted-average grant date fair value	$	3.91		$	3.38		$	2.62
Assumptions:
Expected life (in years)	4.35			3.50			2.80
Risk-free interest rate	4.25		%	3.14		%	0.45		%
Volatility	58		%	39		%	33		%

The Company used a Monte-Carlo valuation model to estimate the fair value of the PSUs granted to the CEO on May 20, 2024. The main inputs to the model were the following:


Valuation Date	May 20, 2024
Stock Price	$	5.94
Simulation Term	5.00 years
Expected Volatility	77.86		%
Risk-Free Rate	4.41		%
Dividend Yield	—		%

Stock-Based Compensation Activity

A summary of the activity under the Company’s stock option plans as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Options Outstanding	Weighted-Average Exercise Price Per Share		Aggregate intrinsic Value (in thousands)		Weighted-Average Remaining Contractual Term in Years















Options outstanding at May 28, 2023	2,374,325	$	10.88	$	—	3.94
Options granted	8,400	$	7.70
Options exercised	(95,800)	$	9.38	$	115
Options forfeited	(41,984)	$	10.30
Options expired	(132,350)	$	11.85
Options outstanding at May 26, 2024	2,112,591	$	10.88	$	—	2.44
Options exercisable at May 26, 2024	1,885,323	$	10.94	$	—	2.11

The fair value of stock options exercised during fiscal years 2024, 2023, and 2022 were $0.1 million, $0.0 million, and $0.3 million, respectively. The estimated fair value of stock options vested during the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022, were $1.0 million, $1.5 million and $1.1 million, respectively.

A summary of the Company’s RSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Restricted Stock Units Outstanding	Weighted-Average Grant Date Fair Value Per Share












Restricted stock units outstanding at May 28, 2023	336,791	$	9.70
Granted	1,584,005	$	7.48
Vested	(180,942)	$	7.74
Forfeited	(117,850)	$	8.68
Restricted stock units outstanding at May 26, 2024	1,622,004	$	7.83

The fair value of RSUs vested during fiscal years 2024, 2023, and 2022 were $1.3 million, $1.9 million, and $1.6 million, respectively. The weighted average grant date fair value per share for RSUs granted during fiscal years 2023 and 2022 were $9.59 and $11.98, respectively. The weighted average grant date fair value per share for RSUs vested during fiscal years 2023 and 2022 were $10.79 and $11.41, respectively.

A summary of the Company’s PSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Performance Stock Units Outstanding	Weighted-Average Grant Date Fair Value Per Share












PSU outstanding at May 28, 2023	—	$	—
Granted	1,500,000	$	4.66
Vested	—	$	—
Forfeited	—	$	—
PSU outstanding at May 26, 2024	1,500,000	$	4.66

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation by statement of operations line item:


	Year Ended
(in thousands)	May 26, 2024		May 28, 2023		May 29, 2022
Continuing operations:
Cost of sales	$	582	$	404	$	314
Research and development	168		193		202
Selling, general and administrative	5,451		3,015		2,126
Discontinued Operations	—		—		(34)
Total stock-based compensation	$	6,201	$	3,612	$	2,608

As of May 26, 2024, there was $14.3 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Company’s stock incentive plans. Total expense is expected to be recognized over the weighted-average period of 1.02 years for stock options and 2.35 years for RSUs, and 1.66 years for PSUs.

The income tax benefit related stock-based compensation was $0.0 thousand for the year ended May 26, 2024. During the fiscal year ended May 26, 2024, the Company capitalized approximately $28.0 thousand of stock-based compensation; there were no stock-based costs capitalized during the fiscal years May 28, 2023 and May 29, 2022.

Convertible Preferred Stock

The Company has authorized 2,000,000 shares of convertible preferred stock, and as of May 26, 2024 and May 28, 2023 has 42,460 and 39,420 shares, respectively, of convertible preferred stock outstanding.

Stock Repurchase Plan

On July 14, 2010, the Board of Directors of the Company approved the establishment of a stock repurchase plan which allows for the repurchase of up to $10.0 million of the Company’s Common Stock. The Company may repurchase its Common Stock from time to time in open-market purchases or in privately negotiated transactions. The timing and actual number of shares repurchased is at the discretion of management of the Company and will depend on a variety of factors, including stock price, corporate and regulatory requirements, market conditions, the relative attractiveness of other capital deployment opportunities and other corporate priorities. The stock repurchase program does not obligate the Company to acquire any amount of its Common Stock and the program may be modified, suspended or terminated at any time at the Company’s discretion without prior notice. During fiscal years 2024, 2023 and 2022, the Company did not repurchase any shares.

- Definition

The entire disclosure for equity.

+ References

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+ Details

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 12,013	$ (99,563)	$ (116,715)
Net unrealized gains on interest rate swaps, net	0	586	772
Total comprehensive income (loss)	$ 12,013	$ (98,977)	$ (115,943)

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income, attributable to parent entity. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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-URI https://asc.fasb.org/1943274/2147483499/205-20-50-7

Reference 34: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 230
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 28
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482740/230-10-45-28

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1A

Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1B

Reference 37: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478524/942-220-S99-1

+ Details

Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Deferred tax assets:
Net operating loss carryforwards	$ 40,806	$ 44,618
Limitations on business interest expense	11,783	8,614
Research credit carryforwards	6,700	6,269
Amortization of research development expenses	2,916	1,805
Lease liability	1,218	1,843
Other	2,492	3,216
Gross deferred tax assets	65,915	66,365
Valuation allowance	(46,173)	(52,510)
Net deferred tax assets	19,742	13,855
Deferred tax liabilities:
Depreciation and amortization	(11,809)	(13,208)
Debt Derivative/Debt Discount	(7,911)	0
Right-of-use asset	(565)	(1,027)
Deferred tax liabilities	(20,285)	(14,235)
Net deferred tax liabilities	$ (543)	$ (380)

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Reportable Segments (Details)	12 Months Ended
	May 26, 2024 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1
Number of reportable Segments	1

Property and Equipment (Tables)

12 Months Ended

May 26, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following (in thousands):


	Years of Useful Life			Year Ended
				May 26, 2024		May 28, 2023
Land				$	3,739	$	3,739
Buildings	15	-	40	62,874		60,688
Leasehold improvements	3	-	15	—		4,019
Computers, capitalized software, machinery, equipment and vehicles	3	-	25	69,303		75,181
Furniture and fixtures	3	-	7	1,631		2,182
Construction in process				61,385		45,587
Gross property and equipment				198,932		191,396
Less accumulated depreciation and amortization				(50,334)		(57,006)
Property and equipment, net				$	148,598	$	134,390

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	May 26, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Stock-based Compensation and Stockholders’ Equity - Stock-based Compensation Activity (Details) - $ / shares	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
RSU
Restricted Stock Units Outstanding
Beginning balance (in shares)	336,791
Granted (in shares)	1,584,005
Vested (in shares)	(180,942)
Forfeited (in shares)	(117,850)
Ending balance (in shares)	1,622,004	336,791
Weighted-Average Grant Date Fair Value Per Share
Beginning balance (in dollars per share)	$ 9.70
Granted (in dollars per share)	7.48	$ 9.59	$ 11.98
Vested (in dollars per share)	7.74	10.79	$ 11.41
Forfeited (in dollars per share)	8.68
Ending balance (in dollars per share)	$ 7.83	$ 9.70
PSU
Restricted Stock Units Outstanding
Beginning balance (in shares)	0
Granted (in shares)	1,500,000
Vested (in shares)	0
Forfeited (in shares)	0
Ending balance (in shares)	1,500,000	0
Weighted-Average Grant Date Fair Value Per Share
Beginning balance (in dollars per share)	$ 0
Granted (in dollars per share)	4.66
Vested (in dollars per share)	0
Forfeited (in dollars per share)	0
Ending balance (in dollars per share)	$ 4.66	$ 0

Discontinued Operations

12 Months Ended

May 26, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

As discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Discontinued Operations, during fiscal year 2023 we completed the disposition of O Olive Sale and Yucatan Disposition and during fiscal year 2022 we completed the Eat Smart Disposition. Yucatan, O Olive and Eat Smart represent components of the Company’s previously operated food business and their sale represents a strategic shift in the Company going forward. Accordingly, concurrent with the execution of their respective purchase agreements, Yucatan, O Olive and Eat Smart met the accounting requirements for reporting as discontinued operations for all periods presented. There were no assets or liabilities of Yucatan, O Olive or Eat Smart as of May 26, 2024 or May 28, 2023.

The key components of income (loss) from discontinued operations for the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022 were as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Revenues	$	—	$	49,988	$	261,311
Cost of goods sold	—		51,175		248,670
Gross profit	—		(1,187)		12,641
Operating costs and expenses:
Research and development	—		220		2,441
Selling, general and administrative	—		10,143		24,423
Impairment of goodwill and long-lived and indefinite-lived assets	—		1,300		78,146
Legal settlement charge	—		407		—
Loss on Sale of Eat Smart	—		—		336
Loss on Sale of Yucatan	—		20,663		—
Loss on Sale of O Olive	—		319		—

Restructuring costs	—		1,255		6,542
Total operating costs and expenses	—		34,307		111,888
Operating loss	—		(35,494)		(99,247)


Interest expenses (1)	—		—		(2,682)
Other income (expense), net	2,700		167		—
Income (loss) from discontinued operations before taxes	2,700		(35,327)		(101,929)
Income tax benefit	(18)		—		690
Income (loss) from discontinued operations, net of tax	$	2,682	$	(35,327)	$	(101,239)

The key components of cash flows from discontinued operations for the fiscal years ended May 28, 2023, and May 29, 2022 were as follows (in thousands):


	Year Ended
	May 28, 2023		May 29, 2022
Cash provided by (used in) operating activities	$	12	$	(13,600)
Cash (used in) provided by investing activities	$	(42)	$	105,300
Depreciation and amortization expense	$	400	$	7,628
Capital expenditures	$	(42)	$	(4,467)

Property and Equipment

12 Months Ended

May 26, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following (in thousands):


	Years of Useful Life			Year Ended
				May 26, 2024		May 28, 2023
Land				$	3,739	$	3,739
Buildings	15	-	40	62,874		60,688
Leasehold improvements	3	-	15	—		4,019
Computers, capitalized software, machinery, equipment and vehicles	3	-	25	69,303		75,181
Furniture and fixtures	3	-	7	1,631		2,182
Construction in process				61,385		45,587
Gross property and equipment				198,932		191,396
Less accumulated depreciation and amortization				(50,334)		(57,006)
Property and equipment, net				$	148,598	$	134,390

The major components of the construction in process are related to multi-purpose aseptic filler production lines, including the associated building modifications, to significantly increase manufacturing capacity. As of May 26, 2024, the

estimated future costs to complete these projects approximate $10.4 million to be incurred in fiscal years 2025, 2026 and 2027 in the amounts of $5.2 million, $4.6 million, and $0.6 million, respectively.

Depreciation and amortization expense for property and equipment for the fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022 was $8.0 million, $10.3 million and $7.1 million, respectively. Amortization related to finance leases, which is included in depreciation and amortization expense, was $0.1 million for the fiscal years ended May 26, 2024, May 28, 2023, and May 29, 2022.

During fiscal years 2024, 2023 and 2022, the Company capitalized $0.2 million, $0.4 million, and $0.3 million in software development costs, respectively. Amortization related to capitalized software was $0.5 million, $0.5 million, and $0.4 million for fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022, respectively. The unamortized computer software costs as of May 26, 2024 and May 28, 2023 were $1.5 million and $1.8 million, respectively. Capitalized interest on construction projects was $3.2 million, $3.6 million, and $2.1 million for fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022, respectively.

Commitments and Contingencies (Details) - USD ($)				12 Months Ended
Commitments and Contingencies (Details) - USD ($)	Sep. 19, 2023	Nov. 03, 2020	Sep. 02, 2020	May 28, 2023	May 26, 2024	Jan. 12, 2024
Loss Contingencies [Line Items]
Proceeds from legal settlement	$ 1,900,000
Compliance Matters
Loss Contingencies [Line Items]
Recoverable amount					$ 0
Damages sought			$ 10,000,000
Litigation settlement				$ 406,505
Compliance Matters \| Minimum
Loss Contingencies [Line Items]
Damages sought		$ 80,000,000
Landlord Complaint, Past Due Rent, One
Loss Contingencies [Line Items]
Loss contingency, minimum amount of damages						$ 200,000
Landlord Complaint, Past Due Rent, Two
Loss Contingencies [Line Items]
Loss contingency, minimum amount of damages						$ 100,000
California Labor Code Case
Loss Contingencies [Line Items]
Loss contingency realized					$ 500,000

Subsequent Events (Details) $ in Millions			3 Months Ended	12 Months Ended
Subsequent Events (Details) $ in Millions	Aug. 09, 2024 USD ($)	Jul. 08, 2024 USD ($) employee	Aug. 25, 2024 USD ($)	May 26, 2024 USD ($)
Subsequent Event [Line Items]
Cooperation agreement, expense				$ 0.4
Subsequent Event
Subsequent Event [Line Items]
Number of employees terminated \| employee		46
Percentage of position eliminated		9.00%
Severance costs		$ 1.0
Consideration received for lease adjustment	$ 2.4
Subsequent Event \| Forecast
Subsequent Event [Line Items]
Cooperation agreement, expense			$ 1.5

Goodwill and Intangible Assets (Tables)

12 Months Ended

May 26, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Indefinite-Lived Intangible Assets

As of May 26, 2024 and May 28, 2023, the Company's intangible assets consisted of the following (in thousands):


		May 26, 2024				May 28, 2023
	Amortization Period (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

Customer relationships	12	$	3,700	$	3,700	$	3,700	$	3,700


Trademarks/tradenames		4,200		—		4,200		—

Total intangible assets		$	7,900	3,700		$	7,900	$	3,700

Schedule of Finite-Lived Intangible Assets

As of May 26, 2024 and May 28, 2023, the Company's intangible assets consisted of the following (in thousands):


		May 26, 2024				May 28, 2023
	Amortization Period (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

Customer relationships	12	$	3,700	$	3,700	$	3,700	$	3,700


Trademarks/tradenames		4,200		—		4,200		—

Total intangible assets		$	7,900	3,700		$	7,900	$	3,700

Stock-based Compensation and Stockholders’ Equity (Tables)

12 Months Ended

May 26, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Weighted Average Assumptions

The following table displays the estimated fair value of stock option grants, and the weighted average assumptions utilized:


	Year Ended
	May 26, 2024			May 28, 2023			May 29, 2022


Weighted-average grant date fair value	$	3.91		$	3.38		$	2.62
Assumptions:
Expected life (in years)	4.35			3.50			2.80
Risk-free interest rate	4.25		%	3.14		%	0.45		%
Volatility	58		%	39		%	33		%

Schedule of PSU Fair Value Assumptions

The main inputs to the model were the following:


Valuation Date	May 20, 2024
Stock Price	$	5.94
Simulation Term	5.00 years
Expected Volatility	77.86		%
Risk-Free Rate	4.41		%
Dividend Yield	—		%

Schedule of Share-based Compensation Activity

A summary of the activity under the Company’s stock option plans as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Options Outstanding	Weighted-Average Exercise Price Per Share		Aggregate intrinsic Value (in thousands)		Weighted-Average Remaining Contractual Term in Years















Options outstanding at May 28, 2023	2,374,325	$	10.88	$	—	3.94
Options granted	8,400	$	7.70
Options exercised	(95,800)	$	9.38	$	115
Options forfeited	(41,984)	$	10.30
Options expired	(132,350)	$	11.85
Options outstanding at May 26, 2024	2,112,591	$	10.88	$	—	2.44
Options exercisable at May 26, 2024	1,885,323	$	10.94	$	—	2.11

A summary of the Company’s RSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Restricted Stock Units Outstanding	Weighted-Average Grant Date Fair Value Per Share












Restricted stock units outstanding at May 28, 2023	336,791	$	9.70
Granted	1,584,005	$	7.48
Vested	(180,942)	$	7.74
Forfeited	(117,850)	$	8.68
Restricted stock units outstanding at May 26, 2024	1,622,004	$	7.83

A summary of the Company’s PSU award activity as of May 26, 2024 and changes during the fiscal year then ended is presented below:


	Performance Stock Units Outstanding	Weighted-Average Grant Date Fair Value Per Share












PSU outstanding at May 28, 2023	—	$	—
Granted	1,500,000	$	4.66
Vested	—	$	—
Forfeited	—	$	—
PSU outstanding at May 26, 2024	1,500,000	$	4.66

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The following table summarizes the stock-based compensation by statement of operations line item:


	Year Ended
(in thousands)	May 26, 2024		May 28, 2023		May 29, 2022
Continuing operations:
Cost of sales	$	582	$	404	$	314
Research and development	168		193		202
Selling, general and administrative	5,451		3,015		2,126
Discontinued Operations	—		—		(34)
Total stock-based compensation	$	6,201	$	3,612	$	2,608

Stock-based Compensation and Stockholders’ Equity - Stock Option Weighted Average Assumptions (Details) - $ / shares	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value (in dollars per share)	$ 3.91	$ 3.38	$ 2.62
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)	4 years 4 months 6 days	3 years 6 months	2 years 9 months 18 days
Risk-free interest rate	4.25%	3.14%	0.45%
Volatility	58.00%	39.00%	33.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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-Topic 718
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-Name Accounting Standards Codification
-Section 35
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+ Details

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Current Assets:
Cash and cash equivalents	$ 8,462	$ 19,091
Accounts receivable, less allowance for credit losses	31,153	29,024
Inventories, net	39,979	40,841
Prepaid expenses and other current assets	1,439	4,919
Total Current Assets	81,033	93,875
Property and equipment, net	148,598	134,390
Operating lease right-of-use assets	2,442	4,282
Goodwill	13,881	13,881
Intangible assets	4,200	4,200
Other long-term assets	3,806	2,917
Total Assets	253,960	253,545
Current Liabilities:
Accounts payable	16,334	22,097
Accrued compensation	5,533	4,145
Other accrued liabilities	9,986	7,142
Current portion of lease liabilities	4,133	1,270
Current portion of long-term debt, net, related party	773	580
Total Current Liabilities	38,872	39,289
Long-term debt, less current portion, net, related party	100,819	84,256
Revolving credit facility	19,691	16,809
Debt derivative liability, related party	25,400	64,900
Long-term lease liabilities, less current portion	4,944	9,709
Deferred taxes, net	543	380
Deferred revenues, less current portion, related party	4,703	2,940
Other non-current liabilities	5,086	174
Total Liabilities	200,058	218,457
Commitments and Contingencies, see Note 9
Series A Convertible Preferred stock, $0.001 par value; 2,000 shares authorized; 42 and 39 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively	42,587	39,318
Stockholders’ Equity (Deficit):
Common stock, $0.001 par value; 50,000 shares authorized; 30,563 and 30,322 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively	30	30
Additional paid-in capital	177,808	174,276
Accumulated deficit	(166,523)	(178,536)
Total Stockholders’ Equity (Deficit)	11,315	(4,230)
Total Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)	253,960	253,545
Nonrelated Party
Current Assets:
Accounts receivable, less allowance for credit losses	20,343	19,907
Current Liabilities:
Deferred revenues	1,088	552
Related Party
Current Assets:
Accounts receivable, less allowance for credit losses	10,810	9,117
Current Liabilities:
Deferred revenues	1,025	3,503
Deferred revenues, less current portion, related party	$ 4,700	$ 2,900

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Revenue Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Revenue from External Customer [Line Items]
Revenues	$ 128,261	$ 103,269	$ 111,270
Transferred over time
Revenue from External Customer [Line Items]
Revenues	29,400	28,600	35,800
Transferred at point in time
Revenue from External Customer [Line Items]
Revenues	$ 98,900	74,600	$ 73,600
Minimum
Revenue from External Customer [Line Items]
Payment terms	30 days
Maximum
Revenue from External Customer [Line Items]
Payment terms	60 days
Billed Revenues
Revenue from External Customer [Line Items]
Revenues	$ 2,700	$ 3,200

- Definition

+ References

+ Details

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Diluted Net (Loss) Income Per Share - Narrative (Details) - shares	12 Months Ended
	May 28, 2023	May 29, 2022
RSU
Class of Stock [Line Items]
Amount of securities excluded from computation of earnings per share (in shares)	86,992	188,393
PSU
Class of Stock [Line Items]
Amount of securities excluded from computation of earnings per share (in shares)	19,080	28,709
Stock Option
Class of Stock [Line Items]
Amount of securities excluded from computation of earnings per share (in shares)	0	18,269
Convertible Preferred Stock
Class of Stock [Line Items]
Amount of securities excluded from computation of earnings per share (in shares)	39,420	0

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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-Subparagraph (d)
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Reference 2: http://www.xbrl.org/2003/role/recommendedDisclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Leases (Tables)

12 Months Ended

May 26, 2024

Leases [Abstract]

Schedule of Components of Lease Cost and Supplemental Cash Flow Information

The components of lease cost were as follows:


	Year Ended
(In thousands, except term and discount rate)	May 26, 2024			May 28, 2023
Finance lease cost:
Amortization of leased assets	$	137		$	119
Interest on lease liabilities	373			351
Operating lease cost	344			1,286
Variable lease cost	306			600
Sublease income	(148)			(53)
Total lease cost	$	1,012		$	2,303

Weighted-average remaining lease term:
Operating leases	8.53			7.69
Finance leases	3.67			4.57
Weighted-average discount rate:
Operating leases	3.04		%	4.60		%
Finance leases	11.10		%	11.40		%

Supplemental cash flow information related to leases are as follows:


	Year Ended		Year Ended
(in thousands)	May 26, 2024		May 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	761	$	2,067
Operating cash flows from finance leases	373		351
Financing cash flows from finance leases	136		96
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	—	$	83

Schedule of Maturity Analysis of Operating Lease Liability

The Company’s maturity analysis of operating and finance lease liabilities as of May 26, 2024 are as follows:


(in thousands)	Operating Leases		Finance Leases		Total
2025	$	4,020	$	529	$	4,549
2026	433		541		974
2027	416		553		969
2028	302		2,910		3,212
2029	146		36		182
Thereafter	585		9		594
Total lease payments	5,902		4,578		10,480
Less: interest	(211)		(1,192)		(1,403)
Present value of lease liabilities	5,691		3,386		9,077
Less: current obligation of lease liabilities	(3,962)		(171)		(4,133)
Total long-term lease liabilities	$	1,729	$	3,215	$	4,944

Maturity Analysis of Finance Lease Liability

The Company’s maturity analysis of operating and finance lease liabilities as of May 26, 2024 are as follows:


(in thousands)	Operating Leases		Finance Leases		Total
2025	$	4,020	$	529	$	4,549
2026	433		541		974
2027	416		553		969
2028	302		2,910		3,212
2029	146		36		182
Thereafter	585		9		594
Total lease payments	5,902		4,578		10,480
Less: interest	(211)		(1,192)		(1,403)
Present value of lease liabilities	5,691		3,386		9,077
Less: current obligation of lease liabilities	(3,962)		(171)		(4,133)
Total long-term lease liabilities	$	1,729	$	3,215	$	4,944

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Concentration of Risk (Details) - Customer Concentration Risk	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Revenue \| Customer A
Related Party Transaction [Line Items]
Concentration risk	39.00%	39.00%	26.00%
Revenue \| Customer B
Related Party Transaction [Line Items]
Concentration risk	19.00%	18.00%	22.00%
Revenue \| Customer C
Related Party Transaction [Line Items]
Concentration risk			14.00%
Accounts Receivable \| Customer A
Related Party Transaction [Line Items]
Concentration risk	34.00%	31.00%
Accounts Receivable \| Customer B
Related Party Transaction [Line Items]
Concentration risk	18.00%	18.00%

Stock-based Compensation and Stockholders’ Equity - Stock Options Outstanding and Exercisable (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period [Abstract]
Options outstanding, beginning balance (in shares)	2,374,325
Options granted (in shares)	8,400
Options exercised (in shares)	(95,800)
Options forfeited and canceled (in shares)	(41,984)
Options expired (in shares)	(132,350)
Options outstanding, ending balance (in shares)	2,112,591	2,374,325
Options exercisable (in shares)	1,885,323
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price [Abstract]
Options outstanding, beginning balance (in dollars per share)	$ 10.88
Options granted (in dollars per share)	7.70
Options exercised (in dollars per share)	9.38
Options forfeited and canceled (in dollars per share)	10.30
Options expires (in dollars per share)	11.85
Options outstanding, ending balance (in dollars per share)	10.88	$ 10.88
Options exercisable (in dollars per share)	$ 10.94
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Aggregate intrinsic value, options outstanding	$ 0	$ 0
Fair value of options exercised in period	$ 115	$ 0	$ 300
Weighted average remaining contractual term, options outstanding	2 years 5 months 8 days	3 years 11 months 8 days
Weighted average remaining contractual term, options exercisable	2 years 1 month 9 days

Organization, Basis of Presentation, and Summary of Significant Accounting Policies

12 Months Ended

May 26, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization

Lifecore Biomedical, Inc. and its subsidiaries (“Lifecore” or the “Company”) is a fully integrated contract development and manufacturing organization (“CDMO”) that offers capabilities in the development, fill and finish of complex sterile injectable pharmaceutical products in syringes, vials and cartridges.

The Company previously operated a natural food company, through its wholly-owned subsidiary, Curation Foods, Inc. (“Curation”), which was previously focused on the distribution of plant-based foods to retail, club, and food service channels throughout North America. However, upon the sale of the Divested Businesses (as defined below), the Company has ceased to operate the Curation foods business.

Basis of Presentation and Consolidation

Discontinued Operations

During the year ended May 28, 2023, the Company entered into agreements for the sale or disposition of its subsidiaries within the Curation business (a former segment), specifically O Olive Oil and Vinegar® (“O Olive”), Yucatan Foods, LLC (“Yucatan”), and BreatheWay® (“BreatheWay”, and together with O Olive, Yucatan, and BreatheWay, the “Divested Businesses”). The Company completed the disposition of Yucatan and O Olive on February 7, 2023 and April 6, 2023, respectively.

On April 6, 2023, the Company completed the sale of its O Olive Oil and Vinegar Business (“O Olive Sale”) for an aggregate sale price of $6.4 million, subject to certain customary post-closing adjustments, consisting of approximately $3.3 million in cash and a $3.1 million seller’s note. The seller’s note matures on March 31, 2026, accrues interest at a rate of 12% payable in kind beginning on October 31, 2023, and is prepayable by the buyer at any time. Net proceeds from the transaction, $1.7 million, were used to repay borrowings under the Company’s credit facilities. The Company recognized a loss on the O Olive Sale amounting to $0.3 million in the fourth quarter of fiscal year ended May 28, 2023, which is recorded in loss from discontinued operations in the Consolidated Statements of Operations. On September 28, 2023, December 11, 2023 and February 22, 2024, the Company received cash payments of $2.4 million, $0.3 million, and $18.0 thousand, respectively, toward the $3.1 million seller’s note.

On February 7, 2023 (the “Yucatan Closing Date”), the Company, Camden Fruit Corp., a direct wholly owned subsidiary of Curation Foods and an indirect wholly owned subsidiary of the Company (“Camden” and together with the Curation Foods and the Company, the “Yucatan Sellers”), Yucatan Foods, LLC, a wholly owned subsidiary of the Camden (“Yucatan”), and Yucatan Acquisition Holdings LLC, a wholly owned subsidiary of Flagship Food Group LLC (“Buyer” and together with Yucatan and the Sellers, the “Parties”) completed the sale (the “Yucatan Disposition”) of the Company’s avocado products business, including its Yucatan® and Cabo Fresh® brands, as well as the associated manufacturing facility and operations in Guanajuato, Mexico (the “Business”), pursuant to the terms of a securities purchase agreement executed by the Parties on February 7, 2023 (the “Securities Purchase Agreement”). Pursuant to the Securities Purchase Agreement, Buyer acquired all of the outstanding equity securities of Yucatan for a purchase price of $17.5 million in cash, subject to certain post-closing adjustments at closing, including selling costs, net working capital and other adjustments amounting to $5.0 million. The Company recognized a loss on the Yucatan Disposition of $20.7 million in the third quarter ended February 26, 2023. The loss on the Yucatan Disposition is recorded in loss from discontinued operations in the Consolidated Statement of Operations.

On June 2, 2022, the Company and Curation entered into and closed an Asset Purchase Agreement (the “BreatheWay Purchase Agreement”) with Hazel Technologies, Inc. (the “BreatheWay Purchaser”), pursuant to which Curation sold all of its assets related to BreatheWay packaging technology business to the BreatheWay Purchaser in exchange for an aggregate purchase price of $3.2 million (the “BreatheWay Disposition”). The BreatheWay Purchase Agreement included various representations, warranties and covenants of the parties generally customary for a transaction of this nature. In connection with the BreatheWay Disposition, the Company received net proceeds of $3.1 million and recorded a gain of $2.1 million in the Consolidated Statement of Operations for the year ended May 28, 2023.

On December 13, 2021, the Company and Curation (together, the “Eat Smart Sellers”), and Taylor Farms Retail, Inc. (“Taylor Farms” and together with the Eat Smart Sellers, the “Parties”) completed the sale (the “Eat Smart Disposition”) of Curation Foods’ Eat Smart business, including its salad and cut vegetable businesses (the “Eat Smart Business”), pursuant to the terms of an asset purchase agreement executed by the Parties on December 13, 2021 (the “Eat Smart Asset Purchase Agreement”). Pursuant to the Eat Smart Asset Purchase Agreement, Taylor Farms acquired the Business for a purchase price of $73.5 million in cash, subject to post-closing adjustments based upon net working capital at closing. As part of the Eat Smart Disposition, Taylor Farms acquired, among other assets related to the Eat Smart Business, the manufacturing facility and warehouses (and corresponding equipment) located in Bowling Green, Ohio and Guadalupe, California, as well as inventory, accounts receivable and accounts payable, intellectual property and information related to the Eat Smart Business, and assumed certain liabilities and executory obligations under the Company’s and Curation Foods’ outstanding contracts related to the Eat Smart Business, in each case, subject to the terms of the Eat Smart Asset Purchase Agreement. Upon the sale, the Company received net proceeds of $73.5 million and recorded a loss of $0.3 million, which is recorded in loss from discontinued operations in the Consolidated Statements of Operations.

The accounting requirements for reporting the Divested Businesses as discontinued operations were met when the Eat Smart Disposition, Yucatan Disposition and O Olive Sale were completed on each respective closing date. The BreatheWay Disposition did not meet the requirements for reporting the business as discontinued operations. Accordingly, the consolidated financial statements and notes to the consolidated financial statements reflect the results of the Eat Smart, Yucatan and O Olive businesses as a discontinued operation for the applicable periods. Refer to Note 11 - Discontinued Operations.

In connection with the sale of the Eat Smart, Yucatan and O Olive businesses, the Company entered into transition services agreements with each respective buyer to provide for a customary and orderly transition of the business, and such fees earned, and costs incurred for such transition services are included in continuing operations in subsequent periods. In fiscal year 2022, the Company earned $5.8 million of transition services income related to transition services provided related to the Eat Smart Disposition which is meant to defray costs incurred to provide the transition services which are reported within Selling, general and administrative costs. In fiscal year 2023, the Company earned similar transition services income of $0.3 million related to the Yucatan and O Olive dispositions. No transition services income was recorded during fiscal year 2024.

Use of Estimates

Reportable Segments

Concentrations of Risk

During the fiscal years ended May 26, 2024 and May 28, 2023, the Company had sales concentrations of 10% or greater from two customers, and for May 29, 2022, three customers had sales concentrations of 10% or greater, accounting for 39% and 19%; 39% and 18%; and 26%, 22% and 14%, respectively.

Two of the Company’s same customers had accounts receivable concentrations of 10% or greater, accounting for 34% and 18% of accounts receivable as of May 26, 2024, and 31% and 18%, as of May 28, 2023.

Cash and Cash Equivalents

Impairment of Long-Lived Assets

Financial Instruments

Derivative Financial Instruments

Accumulated Other Comprehensive Income (Loss)


	AOCI




May 30, 2021	$	(1,358)
Amounts reclassified from OCI	772
Other comprehensive income, net of tax effect of $(430)	772
May 29, 2022	(586)

Amounts reclassified from OCI	586
Other comprehensive income, net of tax effect of $16	586
May 28, 2023	—

Debt

Accounts Receivable, Sales Returns and Allowance for Credit Losses

The accounts receivable balances are as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Accounts receivable	$	31,864	$	29,509	$	38,836
Less: Allowance for credit losses	(711)		(485)		(522)
Accounts receivable, less allowance for credit losses	$	31,153	$	29,024	$	38,314

The changes in the allowance for credit losses related to accounts receivable are as follows (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Beginning balance	$	485	$	522	$	522
Provision	263		163		—
Charge-offs	(37)		(200)		—

Ending Balance	$	711	$	485	$	522

Contract Assets and Liabilities

Contract assets primarily relate to the Company’s unconditional right to consideration for work completed but not billed at the reporting date. The Company’s contract assets as of May 26, 2024, May 28, 2023 and May 29, 2022 were $4.1 million, $3.2 million and $10.4 million, respectively, and are included within accounts receivable in the Consolidated Balance Sheets. The related party portion of these contract assets as of May 26, 2024, May 28, 2023 and May 29, 2022 were $0.2 million, $0.1 million, and $0.0 million, respectively. Any incremental costs of obtaining a contract are expensed as incurred.

Contract liabilities primarily relate to payments received from customers in advance of performance under the contract.


Contract liabilities consisted of the following (in millions):	May 26, 2024	May 28, 2023	May 29, 2022
Current deferred revenues:
Non related party (1)	$1.1	$0.6	$0.3
Related party (1)	1.0	3.5	0.6

Non-current deferred revenues:
Related party (1)	4.7	2.9	—

Non-current customer deposit (2)	0.3	—	—
Total contract liabilities	$7.1	$7.0	$0.9

(1) These are separate lines on the consolidated balance sheet for these deferred revenues.

(2) This is with a non-related party and is included within other non-current liabilities on the consolidated balance sheet.

The increase as of May 28, 2023 as compared to May 29, 2022 relates to increased revenue with our largest customer. As of May 26, 2024, the Company had a $3.5 million contract liability related to customer-owned equipment purchased by the Company, which the customer paid in advance. The increase in current deferred revenue, non related party, is due to increased payments from customers in advance of performance under the contract. The net decrease in current deferred revenue, related party, relates to revenue recognized during fiscal year 2024. The $1.8 million increase in non-current deferred revenue, related party, is due to the $5.5 million prepayment (as discounted to $4.7 million) offset by $2.9 million that became current.

Revenues recognized during the fiscal years ended May 26, 2024, May 28, 2023 and May 29, 2022, that were included in the contract liability balance at the beginning of fiscal year 2024, 2023 and 2022, respectively, were $6.8 million, $0.6 million and $0.4 million, respectively.

Deferred Revenue

Cash received in advance of services performed are recorded as deferred revenue.

Revenue Recognition

CDMO - Aseptic

CDMO - Development Services

Fermentation


	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
CDMO	$	96,616	$	76,378	$	86,353
Fermentation	31,645		26,891		23,007
Other	—		—		1,910
Total	$	128,261	$	103,269	$	111,270

CDMO - Development Services revenues recognized over time were $29.4 million, $28.6 million and $35.8 million for the years ended May 26, 2024, May 28, 2023 and May 29, 2022, respectively. Revenues recognized for product sales at a point in time were $98.9 million, $74.6 million and $73.6 million for the years ended May 26, 2024, May 28, 2023 and May 29, 2022, respectively.

The Company identified certain elements of its agreements with customers for CDMO - Development Services in which the Company is the principal in those contracts, and therefore, recognizes revenues on a gross basis.

Shipping and Handling Costs

Amended and Restated Supply Agreement

On December 22, 2023, the Company entered into an amended and restated supply agreement with a customer (the “Amended Supply Agreement”). The key provisions of the Amended Supply Agreement included an extension of the agreement’s term for certain products through March 31, 2024, revised pricing for certain product purchase orders dated November 1, 2023, and the payment of a $5.0 million working capital deposit to the Company. The working capital deposit was received on December 22, 2023 and (i) may be used for any corporate purpose; (ii) will not accrue interest; and (iii) is required to be repaid, subject to certain defined provisions, upon the termination of the Amended Supply Agreement. On March 14, 2024, this agreement was amended and extended through December 31, 2026.

Inventories, net

Inventories are stated at the lower of cost (using the first-in, first-out method) or net realizable value. As of May 26, 2024 and May 28, 2023, inventories consisted of the following (in thousands):


	Year Ended
	May 26, 2024		May 28, 2023
Finished goods	$	14,924	$	13,141
Raw materials	14,555		17,735
Work in process	11,915		10,349
Inventory reserve	(1,415)		(384)
Total inventories	$	39,979	$	40,841

The Company has costs adjustments of $0.8 million and $4.9 million to reduce inventory to its net realizable value as of May 26, 2024 and May 28, 2023, respectively.

The Company’s inventories serve as part of the collateral for certain of the Company’s debt arrangements. Refer to Note 6 - Debt for additional discussion on the Company’s debt arrangements and related collateral.

Investment in Non-Public Company

On February 15, 2011, the Company made an investment in Windset which is reported at fair value in the accompanying Consolidated Balance Sheets as of May 30, 2021. The Company has elected to account for its investment in Windset under the fair value option. See Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies for further information. On June 1, 2021, the Company sold all of its equity interest in Windset to the Newell Capital Corporation and Newell Brothers Investment 2 Corp.

Advertising Expense

Advertising expenditures for the Company are expensed as incurred and included in selling, general, and administrative in the accompanying Consolidated Statements of Operations. Advertising expenses for the Company for fiscal years ended May 28, 2023 and May 29, 2022 was $5.1 thousand and $5.6 thousand, respectively. There were no advertising expenses for fiscal year ended 2024.

Related Party Transactions

Securities Purchase Agreement

On November 25, 2022, the Company entered into a Securities Purchase Agreement (the “Wynnefield Purchase Agreement”) with entities affiliated with Wynnefield Capital, Inc. and controlled by the Company’s director, Nelson Obus (the “Wynnefield Purchasers”). Pursuant to the Wynnefield Purchase Agreement, the Company agreed to sell an aggregate of 627,746 shares of its Common Stock (the “Shares”) for aggregate gross proceeds of $5.0 million (the “Offering”). The purchase price for each Share was $7.97. The Offering closed on November 25, 2022. Pursuant to the Wynnefield Purchase Agreement, the Company granted the Wynnefield Purchasers certain piggyback registration rights and agreed, among other things, to indemnify such parties under any registration statement filed that includes the Shares from certain losses, claims, damages and liabilities.

Series A Convertible Preferred Share Purchase Agreement

On January 9, 2023, the Company simultaneously signed and closed the Preferred Share Purchase Agreement with a group of qualified investors (the “Purchasers”), including, among others, entities controlled by the Company’s directors Christopher Kiper and Nelson Obus. Pursuant to the Preferred Share Purchase Agreement, the Company issued and sold an aggregate of 38,750 shares of a new series of convertible preferred stock of the Company designated as Series A Convertible Preferred Shares, par value $0.001 per share (the “Convertible Preferred Stock”) for aggregate proceeds of $38.8 million. Each share of Convertible Preferred Stock has the powers, designations, preferences and other rights as are set forth in the Certificate of Designations of the Series A Preferred Stock filed by the Company with the Delaware Secretary of State on January 9, 2023 (the “Certificate of Designations”). The Convertible Preferred Stock ranks senior to the Company’s Common Stock with respect to dividends, distributions, and payments on liquidation, winding up and dissolution.

Upon a liquidation, dissolution, winding up or change of control of the Company, each share of Convertible Preferred Stock will be entitled to receive an amount per share of Convertible Preferred Stock equal to the greater of (i) the purchase price paid by the Purchaser, plus all accrued and unpaid dividends (the “Liquidation Preference”) and (ii) the amount that the holder of Convertible Preferred Stock (each, a “Holder” and collectively, the “Holders”) would have been entitled to receive at such time if the Convertible Preferred Stock had been converted into Common Stock immediately prior to such liquidation event.

The Holders will be entitled to dividends on the Liquidation Preference at the rate of 7.5% per annum, payable in-kind. The Company may, at its option, pay such dividends in cash from and after the earlier of June 29, 2026, or the termination or waiver of the restriction on cash dividends and/or redemptions that is set forth in the Credit Agreements (as defined in the

Certificate of Designations) (such earlier date, the “Applicable Date”). The Holders are also entitled to participate in dividends declared or paid on the Common Stock on an as-converted basis.

Upon certain bankruptcy events, the Company is required to pay to each Holder an amount in cash equal to the Liquidation Preference being redeemed. From and after the Applicable Date, each Holder shall have the right to require the Company to redeem all or any part of the Holder’s Convertible Preferred Stock for an amount equal to the Liquidation Preference.

Each Holder of Convertible Preferred Stock has the right, at its option, to convert its Convertible Preferred Stock, in whole or in part, into fully paid and non-assessable shares of our Common Stock at an initial conversion price equal to $7.00 per share. The conversion price is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events, and is also subject to adjustment in the event of subsequent offerings of Common Stock or convertible securities by the Company for less than the conversion price.

Subject to certain conditions, the Company may from time to time, at its option, require conversion of all or any portion of the outstanding shares of Convertible Preferred Stock to Common Stock if, for at least 20 consecutive trading days during the respective measuring period the closing price of the Common Stock was at least 150% of the conversion price. The Company may not exercise its right to mandatorily convert outstanding shares of Convertible Preferred Stock unless certain liquidity conditions with regard to the shares of Common Stock to be issued upon such conversion are satisfied.

The Holders are entitled to vote with the holders of the shares of Common Stock on all matters submitted for a vote of holders of shares of Common Stock (voting together with the holders of shares of Common Stock as one class) on an as-converted basis, subject to certain limitations.

Additionally, for so long as 30% of the outstanding Convertible Preferred Stock remains outstanding, certain matters will require the approval of the majority of the outstanding Convertible Preferred Stock, voting as a separate class, including (i) amending, altering or repealing any provision of the Certificate of Designations; (ii) amending, altering or repealing any provision of the Company’s Certificate of Incorporation or Bylaws, in each case, in a manner that adversely affects the powers, preferences or rights of the Convertible Preferred Stock; (iii) increasing or decreasing the authorized number of shares of Convertible Preferred Stock (except to provide for the issuance of PIK dividends); (iv) creating (including by reclassification), issuing shares of or increasing the authorized number of shares of any additional class or series of capital stock of the Company unless such class or series rank junior to the Convertible Preferred Stock and are issued at fair market value; (v) purchasing or redeeming or paying, declaring or setting aside any fund for, any dividend or distribution on, any Common Stock or other Junior Stock (as defined in the Certificate of Designations), other than purchases of equity securities of the Company upon the termination of an employee of the Company or any of its subsidiaries in accordance with the terms of such employee’s employment agreement or any equity incentive or similar plan approved by the Board; or (vi) creating, incurring, granting, entering into, permitting, assuming or allowing, directly or indirectly, (a) any indebtedness by the Company (or any of its subsidiaries), excluding equity securities and non-convertible preferred stock (but including convertible debt), at any time when, or as a result of which, the principal amount of the Company’s total outstanding and available indebtedness exceeds $175.0 million, or (b) any lien, charge or other encumbrance on all or substantially all of the Company’s (or any of its subsidiaries’) properties or assets.

Immediately following the closing of a preferred share repurchase agreement, two Series A Convertible Preferred Stock directors, Nathaniel Calloway and Christopher Kiper, were appointed to the Company’s Board of Directors.

Alcon Supply Agreement

On May 3, 2023, the Company entered into an Amended and Restated Supply Agreement (the “Supply Agreement”), dated May 3, 2023, with Alcon, which amended and restated certain existing supply agreements entered into between the Company and Alcon-Couvreur N.V., an affiliate of Alcon, related to the Company’s manufacture and supply of HA for Alcon.

The initial term of the Supply Agreement expires December 31, 2033. Following the initial term, the Supply Agreement automatically extends for an additional two-year term unless Alcon provides the Company with a notice of non-renewal prior to the expiration of the initial term. The Supply Agreement also contains certain termination provisions which provide that the agreement may be terminated (a) by Alcon upon six months’ written notice to the Company, or (b) by either party if the other party fails to perform or otherwise breaches any of its material obligations under the Supply Agreement, the non-breaching party notifies the breaching party of its intent to terminate the Supply Agreement, and the breaching party fails to cure such breach.

The Supply Agreement contains terms and provisions customary for transactions of this type, including product warranties and confidentiality and indemnification obligations. Orders of HA pursuant to the Supply Agreement are based on customary forecasting mechanics and are payable by Alcon based on certain prices that are subject to annual index-based

adjustments. Pursuant to the Supply Agreement, the Company is also required to commit certain HA manufacturing capacity based on Alcon’s forecasts. Alcon and the Company have also agreed to negotiate in good faith to finalize a plan to increase the Company’s HA manufacturing capacity to meet the anticipated volumes. In the event the Company is unable to supply the agreed-upon volumes and safety stock pursuant to the Supply Agreement, under certain circumstances, Alcon will be entitled to certain rights with respect to the manufacturing and supply of HA for Alcon.

All related party transactions are monitored quarterly by the Company and approved by the Audit Committee of the Board of Directors.

Amended and Restated Contract Manufacturing Agreement

On December 31, 2023, the Company entered into an Amended and Restated Contract Manufacturing Agreement (the “Amended and Restated CMA”), with Alcon, which amended and restated the existing contract manufacturing agreement between the Company and Alcon related to the Company’s aseptic manufacturing of a variety of ophthalmic viscoelastic injection devices.

The initial term of the Amended and Restated CMA expires December 31, 2031, subject to earlier termination by Alcon under certain circumstances or by either party for a material breach by the other party that is not cured after notice and an opportunity to cure.

The Amended and Restated CMA contains terms and provisions customary for transactions of this type, including forecast and purchase order procedures, prices that are subject to annual index-based adjustments, minimum purchase obligations, on-time-in-full service level metrics and remedies, product warranties and confidentiality and indemnification obligations. In the event the Company is unable to meet specified metrics pursuant to the Amended and Restated CMA, under certain circumstances, Alcon will be entitled to certain financial concessions, as well as certain rights and documents with respect to Alcon purchase orders until applicable metrics are met.

On May 2, 2024, the Company entered into an amendment to the Amended and Restated CMA, in which Alcon made a prepayment in the amount of $5.5 million in cash as an advance on future purchases in deferred revenue, related party. Under the terms, Alcon is entitled to apply the prepayment towards invoices issued by the Company within the scope of the agreement during calendar year 2026.

Alcon Supply Agreement Amendment

On December 31, 2023, the Company entered into Amendment No. 1 (the “Supply Agreement Amendment”) to the Supply Agreement, related to the Company’s manufacture and supply of HA for Alcon.

The Supply Agreement Amendment provides Alcon with the option to purchase a new filter dryer (the “Filter Dryer”), for use by the Company to expand the Company’s capacity to produce certain ingredients for Alcon, which may be exercised by Alcon by written notice. If Alcon exercises the option, all associated costs to acquire and install the Filter Dryer at the Company’s facilities would be paid in full by Alcon. The Filter Dryer would be deemed the property of Alcon. The Filter Dryer would be solely and exclusively used for the manufacturing of ingredients for Alcon and only to the extent needed to meet Alcon purchase orders in excess of a certain specified committed capacity. After the Filter Dryer is installed, the Company will be committed to a revised specified amount of production capacity to Alcon, and Alcon will commit to purchase a specified percentage of its global annual requirements for certain ingredients from the Company.

Property and Equipment and Finite-Lived Intangible Assets

Impairment Review of Goodwill and Indefinite-Lived Intangible Asset

During fiscal year 2022, the Company recorded impairment charges of $32.1 million and $20.0 million related to its Eat Smart business and Yucatan goodwill, respectively. The Company also recorded an impairment charge of $8.4 million related to its Yucatan trademarks. These impairment charges were primarily a result of an indication of a decrease in the fair market values of the Eat Smart and Yucatan businesses driven by lower market valuations and a decrease in projected cash flows. The Eat Smart and Yucatan impairment charges are included in Loss from discontinued operations within the Consolidated Statements of Operations.

During fiscal year 2023, the Company recorded an impairment charge of $1.0 million related to Yucatan indefinite-lived intangible asset related to trademarks/tradenames. In addition, during the quarter ended November 27, 2022, the Company recorded an impairment charge of $0.3 million related to O Olive’s indefinite-lived intangible asset for their trademarks/tradenames. The impairments were determined using the royalty savings method to estimate the fair value of its trademarks and was primarily a result of an indication of a decrease in the fair market value of the Yucatan and O Olive businesses driven by lower market valuations and a decrease in projected cash flows. The impairment charges are included in Loss from sales in discontinued operations on the Consolidated Statements of Operations.

During fiscal year 2024, the Company performed its annual impairment evaluation on the 1st day of the fourth quarter in accordance with its accounting policy and concluded its goodwill and indefinite-lived intangible assets were not impaired. As of May 26, 2024, the Company completed is qualitative assessment and determined that a reduction in the forecasted fiscal year 2025 revenue was considered to be a “trigger event” requiring another quantitative assessment to be performed as of that date, and concluded its goodwill and indefinite-lived intangible assets were not impaired.

Leases

Income Taxes

Per Share Information

The following table sets forth the computation of diluted net income (loss) per share:


	Year Ended
(in thousands, except per share amounts)	May 26, 2024		May 28, 2023		May 29, 2022
Numerator:
Net Income (loss) from continuing operations	$	9,331	$	(64,236)	$	(15,476)
Income (loss) from discontinued operations, net of tax	2,682		(35,327)		(101,239)
Net income (loss)	$	12,013	$	(99,563)	$	(116,715)
Denominator:
Weighted average shares for basic income per share	30,474		29,958		29,466
Potential preferred stock conversion to common stock	5,847		—		—
Dilutive stock options, RSUs, and PSUs	337		—		—
Weighted average shares for diluted income per share	36,658		29,958		29,466

Basic income (loss) per share:
Income (loss) from continuing operations	$	0.31	$	(2.14)	$	(0.53)
Income (loss) from discontinued operations	0.09		(1.18)		(3.44)
Total basic income (loss) per share	$	0.40	$	(3.32)	$	(3.97)

Diluted income (loss) per share:
Income (loss) from continuing operations	$	0.25	$	(2.14)	$	(0.53)
Income (loss) from discontinued operations	0.07		(1.18)		(3.44)
Total diluted income (loss) per share	$	0.32	$	(3.32)	$	(3.97)

Due to the Company’s net loss for the fiscal years 2023, and 2022, the net loss per share includes only the weighted average shares outstanding and thus excludes the potential dilutive effect of 86,992 and 188,393 RSUs; 19,080 and 28,709 PSUs; zero and 18,269 stock options; and 39,420 and zero Convertible Preferred Stock, respectively, as such impact would be antidilutive. All antidilutive items relate to the Company’s continuing operations. See Note 2 – Convertible Preferred Stock for more information on outstanding Convertible Preferred Stock and Note 5 – Stock-based Compensation and Stockholders’ Equity more information on outstanding stock options, RSUs and PSUs.

Research and Development Expenses

Accounting for Stock-Based Compensation

Employee Savings and Investment Plans

Fair Value Measurements

The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value.

Applicable accounting guidance establishes a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows:

Level 1 – observable inputs such as quoted prices for identical instruments in active markets.

Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data.

Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

Outstanding borrowings under the Company's Revolving Credit Facility are carried at cost, which approximates their fair value as of May 26, 2024 and May 28, 2023, due to their short duration.

The Term Loan Credit Facility, related party, has a fair value of $124.7 million that exceeds its carrying value as of May 26, 2024. The Equipment Sale Finance Liability, related party, has a fair value of $6.4 million that is less than its carrying value as of May 26, 2024. As of May 28, 2023, the fair value of the Term Loan Credit Facility and Equipment Sale Finance Liability, related party, approximated their carrying value. The fair value of each of these financial instruments was estimated using discounted cash flow model using Level 3 inputs and assumptions.

The Term Loan Credit Facility (as defined in Note 6 – Debt) contains embedded derivatives requiring bifurcation as a multiple derivative instruments (“debt derivative liability”). The debt derivative liability related to the Term Loan Credit Facility is recorded as a discount to the long-term debt in the Condensed Consolidated Financial Statements. The embedded debt

derivative liability is recorded at fair value, and remeasured every reporting period, with changes in fair value recognized as a component of other income (expense), net. The fair value of the embedded derivative liabilities associated with the Term Loan Credit Facility was estimated using a probability weighted discounted cash flow model. This involves significant Level 3 inputs and assumptions including (i) an estimated probability and timing of a change in control and event of default, and (ii) a risk-adjusted discount rate. At May 26, 2024 and May 28, 2023, the fair value of the embedded derivative liability approximated $25.4 million and $64.9 million, respectively.

Imprecision in estimating unobservable market inputs can affect the amount of gain or loss recorded for a particular position. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	Fair Value at May 26, 2024						Fair Value at May 28, 2023
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3






Liabilities:
Debt derivative liability, related party(1)	$	—	$	—	$	25,400	$	—	$	—	$	64,900


Total liabilities	$	—	$	—	$	25,400	$	—	$	—	$	64,900

(1) As of May 26, 2024 and May 28, 2023, the fair value of the debt derivative liability, related party, is included in non-current liabilities in the Company’s Consolidated Balance Sheets.

The key inputs to the valuation models that were utilized to estimate the fair value of the debt derivative liability, related party, were (i) a weighted average probability related to the timing of a change in control over the remaining term of the debt; (ii) the estimated probability related to an event of default of the Alcon Supply Agreement, as amended, weighted as to 30 days from the reporting date and at the end of the term of the Term Loan agreement.; and (iii) a risk-adjusted discount rate. Beginning in the second quarter of fiscal year 2024 and continuing through the third quarter of fiscal year 2024, there were sequential declines in the change in control probabilities assumptions in connection with the Company’s review of the strategic alternatives initiative that significantly impacted the fair value of the debt derivative liability, related party. There was no change in the probability related to event of default of the Supply Agreement during fiscal year 2024.

Key inputs into the discount rate assumptions during the years ended May 26, 2024 and May 28, 2023 were as follows:


	Year Ended	As of
	May 26, 2024	May 28, 2023
Assumptions
Discount rate	21.3% — 23.5%	22.3% — 24.5%
Implied spread	16.8% — 17.9%	18.5%
Risk free rate	4.3% — 5.6%	3.8% — 6.0%

The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value (in thousands):


	Debt Derivative Liability
Balance as of May 29, 2022	$	—
Fair value on issuance	64,900
Balance as of May 28, 2023(1)	$	64,900
Decrease in fair value(2)	$	(39,500)
Balance as of May 26, 2024	$	25,400

(1) At May 28, 2023, the fair value of the embedded derivative liability, related party, approximated the fair value upon issuance on May 22, 2023.

(2)For the year ended May 26, 2024, the decrease in fair value is recorded within “Change in fair value of debt derivative liability, related party” within the consolidated statement of operations.

Reclassification

Accounting Pronouncements

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Derivative Liabilities Assumptions (Details) - Derivative	May 26, 2024	May 28, 2023
Discount rate \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.213	0.223
Discount rate \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.235	0.245
Implied spread
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions		0.185
Implied spread \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.168
Implied spread \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.179
Risk free rate \| Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.043	0.038
Risk free rate \| Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Assumptions	0.056	0.060

Subsequent Events	12 Months Ended
Subsequent Events	May 26, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Reduction in Workforce On July 8, 2024, the Company determined to implement a strategic reduction of the Company’s workforce (the “Workforce Reduction Plan”) to terminate 46 full-time employees of the Company, representing approximately 9% of the Company’s workforce, as part of an initiative to strategically optimize the Company’s cost structure. In connection with the Workforce Reduction Plan, the Company estimates that it will incur termination benefit costs of approximately $1.0 million, which primarily consist of one-time severance benefits. These costs are expected to be incurred in the first quarter of fiscal 2025 and paid during both the first and second quarters of fiscal 2025. Shareholder Cooperation Agreements On June 28, 2024, the Company entered into cooperation agreements (the “Cooperation Agreements”) with each of (i) the 22NW Investor Group, (ii) the Legion Investor Group, and (iii) the Wynnefield Investor Group, as defined in the respective cooperation agreement. Pursuant to the terms of the Cooperation Agreements, the Company, the 22NW Investor Group, the Legion Investor Group, and the Wynnefield Investor Group agreed to take certain actions with respect to board composition matters and agreed to certain customary standstill provisions. In connection with the Cooperation Agreements, the Company accrued $0.4 million in expenses during fiscal year 2024 and has estimated to incur an additional $1.5 million in costs during the first quarter of 2025, and which are expected to be paid during the second quarter of 2025. Class Action Complaint On July 29, 2024, a putative class action complaint was filed on behalf of shareholders of the Company in the United States District Court of Minnesota against the Company and certain of its named executive officers. The complaint generally alleges that statements made to the Company’s shareholders between October 7, 2020, and March 19, 2024 regarding the Company’s financial results, internal controls, remediation efforts, periodic reporting, and financial prospects were false and misleading in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the individual defendants are liable for such statements because they are controlling persons under Section 20(a) of the Exchange Act. The complaint seeks compensatory damages, court costs, and attorneys’ fees. The Company believes that the claims are without merit and intends to vigorously defend against them. Any potential loss arising from this claim is not currently probable or estimable. Amended Lease Agreement On August 9, 2024, the Company amended its finance lease agreement dated September, 3, 2015 with 1245, LLP, as lessor, related to office, manufacturing and warehouse space at 1245 Lakeview Drive in Chaska, MN. The primary terms of the amended lease agreement provide for approximately $2.4 million in cash to the Company in exchange for a revised rent payment schedule and an updated purchase option.

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	May 26, 2024	May 28, 2023	May 29, 2022
Pay vs Performance Disclosure
Net income (loss)	$ 12,013	$ (99,563)	$ (116,715)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Debt - Narrative (Details)						1 Months Ended	3 Months Ended	12 Months Ended
Debt - Narrative (Details)	May 10, 2024 USD ($)	May 28, 2023 USD ($)	May 22, 2023 USD ($)	Jan. 09, 2023 USD ($)	Dec. 31, 2020 USD ($)	Apr. 30, 2022 USD ($)	May 26, 2024 USD ($)	May 26, 2024 USD ($)	May 28, 2023 USD ($)	May 29, 2022 USD ($)	Feb. 07, 2023 USD ($)
Debt Instrument [Line Items]
Payments for debt issuance costs								$ 231,000	$ 6,050,000	$ 821,000
Loss on debt extinguishment								0	23,741,000	0
Embedded derivative liability							$ 64,900,000	64,900,000
Amortization of debt discount		$ 100,000						2,400,000
Debt derivative liability, related party		64,900,000					25,400,000	25,400,000	64,900,000
Total principal amount of long-term debt		150,233,000					164,463,000	164,463,000	150,233,000
Debt issuance costs, line of credit arrangements, net							1,600,000	1,600,000
Revolving credit facility		16,809,000					19,691,000	19,691,000	16,809,000
Proceeds from sales of property and equipment								0	0	$ 1,141,000
Other Current Assets
Debt Instrument [Line Items]
Debt issuance costs, line of credit arrangements, net		900,000							900,000
Other Noncurrent Assets
Debt Instrument [Line Items]
Debt issuance costs, line of credit arrangements, net		1,400,000							1,400,000
Recurring
Debt Instrument [Line Items]
Debt derivative liability, related party		64,900,000					25,400,000	25,400,000	64,900,000
Equipment Sale and Leaseback Agreements
Debt Instrument [Line Items]
Sale leaseback transaction, net book value			$ 10,000,000
Option to repurchase, term			7 years
Proceeds from sales of property and equipment									7,700,000
Sale leaseback transaction difference									2,300,000
Price at end of term			$ 1.00
Quarterly rental payment to be received			0.025
Rental payment, purchase price less cumulative paydown payments made			1.50%
Revolving Credit Facility \| Line of Credit
Debt Instrument [Line Items]
Line of credit, available borrowing capacity							$ 12,300,000	$ 12,300,000
Prior Term Loan Facility
Debt Instrument [Line Items]
Debt instrument, face amount					$ 170,000,000
Percent of prepayment penalty					3.00%
Debt prepayment cost			$ 12,900,000
Write off of deferred debt issuance costs			7,600,000
Extinguishment of debt, third party fees			3,300,000
Prior Term Loan Facility \| SOFR
Debt Instrument [Line Items]
Base spread on variable rate					2.00%
Refinanced Revolver
Debt Instrument [Line Items]
Percent of prepayment penalty				3.00%
Refinanced Revolver \| Third Parties
Debt Instrument [Line Items]
Debt issuance costs		62,500							62,500
Refinanced Revolver \| BMO
Debt Instrument [Line Items]
Debt issuance costs		4,200,000							4,200,000
Payments for debt issuance costs									1,100,000
Debt issuance costs, paid-in-kind		$ 3,100,000							$ 3,100,000
Refinanced Revolver \| SOFR
Debt Instrument [Line Items]
Base spread on variable rate				8.50%
Refinanced Revolver \| Base Rate
Debt Instrument [Line Items]
Base spread on variable rate				7.50%
Refinanced Revolver \| Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit, maximum capacity	$ 40,000,000		40,000,000	$ 60,000,000	$ 75,000,000						$ 40,000,000
Line of credit, additional capacity						$ 20,000,000
Debt issuance costs						$ 700,000
Base spread on variable rate	4.25%
Commitment fee percentage				0.375%
Effective interest rate		12.16%		2.00%			8.35%	8.35%	12.16%
Write off of deferred debt issuance costs									$ 1,200,000
Total principal amount of long-term debt		$ 16,800,000					$ 19,700,000	$ 19,700,000	16,800,000
Line of credit reduction			$ 4,000,000
Coverage ratio			1.00
Availability of line of credit			10.00%
Debt covenant, availability of line of credit, amount			$ 4,000,000
Fees paid to lenders			1,200,000
Incremental borrowing capacity	$ 2,500,000
Incremental interest expense	44,000
Payments of debt amendment fee	$ 50,000
Refinanced Revolver \| Revolving Credit Facility \| At Entry into the Revolving Loan Amendment
Debt Instrument [Line Items]
Fees paid to lenders			800,000
Refinanced Revolver \| Revolving Credit Facility \| Upon Full Repayment Or Change Of Control
Debt Instrument [Line Items]
Fees paid to lenders			400,000
Refinanced Revolver \| Revolving Credit Facility \| Minimum \| SOFR
Debt Instrument [Line Items]
Base spread on variable rate				2.00%
Refinanced Revolver \| Revolving Credit Facility \| Minimum \| Base Rate
Debt Instrument [Line Items]
Base spread on variable rate				1.00%
Refinanced Revolver \| Revolving Credit Facility \| Maximum \| SOFR
Debt Instrument [Line Items]
Base spread on variable rate				2.50%
Refinanced Revolver \| Revolving Credit Facility \| Maximum \| Base Rate
Debt Instrument [Line Items]
Base spread on variable rate				1.50%
Term Loan Credit Agreement
Debt Instrument [Line Items]
Debt instrument, face amount			$ 142,300,000
Debt instrument, interest rate, stated percentage			10.00%
Paid-in-cash interest			3.00%
Guarantor obligations			$ 4,000,000				$ 4,500,000
Term Loan \| Line of Credit
Debt Instrument [Line Items]
Effective interest rate							22.50%	22.50%
Total principal amount of long-term debt		$ 142,503,000					$ 157,313,000	$ 157,313,000	$ 142,503,000

Leases

12 Months Ended

May 26, 2024

Leases [Abstract]

Leases

Operating Leases

The Company has entered into various non-cancellable operating lease agreements for manufacturing and distribution facilities, equipment and office space. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company leases facilities and equipment under operating lease agreements with various terms and conditions, which expire at various dates through fiscal year 2033. Certain of these leases have renewal options. Variable lease payments include property taxes and common area maintenance fees and are recorded and paid based on the terms and conditions of the related invoices. The only active operating real estate lease relates to a 21,384 square foot building in Chanhassen, Minnesota, containing a warehouse and office space. The lease commenced on September 1, 2020 with an initial term of seven years, plus an option to extend for an additional five years. The extension period was included in the lease obligation at inception since it was reasonably certain to be exercised. The future lease payments under this lease, which extend through 2033, total $2.3 million as of May 26, 2024. The operating lease for office space of the Curation Foods former headquarters located in Santa Maria, California was terminated in December 2023. The ROU asset carrying value of approximately $1.4 million was written-off. The lease liability for the future estimated payments under this lease, approximated $3.6 million as of May 26, 2024.

Finance Leases

On September 3, 2015, Lifecore leased an 80,950 square foot building in Chaska, MN, two miles from its current facility. The initial term of the lease was seven years with two five-year renewal options. In December 2022, Lifecore exercised one of the options to renew the lease for an additional five years. The lease contains a buyout option at any time during the renewal period with the purchase price equal to the mortgage balance on the lessor’s loan secured by the building. The finance lease obligation at May 26, 2024 assumes the buyout option will be exercised during fiscal year 2028, which is estimated to be approximately $2.6 million. Gross assets recorded under finance leases, included in property and equipment, net, were $4.1 million and $3.9 million as of May 26, 2024 and May 28, 2023, respectively. Accumulated amortization associated with finance leases was $0.9 million and $0.8 million as of May 26, 2024 and May 28, 2023, respectively. The monthly lease payment was initially $34,000 and increases by 2.40% per year. Lifecore and the lessor made capital improvements prior to occupancy and thus the lease did not become effective until January 1, 2016. Lifecore is currently using the building for warehousing and final packaging.

The components of lease cost were as follows:


	Year Ended
(In thousands, except term and discount rate)	May 26, 2024			May 28, 2023
Finance lease cost:
Amortization of leased assets	$	137		$	119
Interest on lease liabilities	373			351
Operating lease cost	344			1,286
Variable lease cost	306			600
Sublease income	(148)			(53)
Total lease cost	$	1,012		$	2,303

Weighted-average remaining lease term:
Operating leases	8.53			7.69
Finance leases	3.67			4.57
Weighted-average discount rate:
Operating leases	3.04		%	4.60		%
Finance leases	11.10		%	11.40		%

The Company’s leases have original lease periods ending through 2033. The Company’s maturity analysis of operating and finance lease liabilities as of May 26, 2024 are as follows:


(in thousands)	Operating Leases		Finance Leases		Total
2025	$	4,020	$	529	$	4,549
2026	433		541		974
2027	416		553		969
2028	302		2,910		3,212
2029	146		36		182
Thereafter	585		9		594
Total lease payments	5,902		4,578		10,480
Less: interest	(211)		(1,192)		(1,403)
Present value of lease liabilities	5,691		3,386		9,077
Less: current obligation of lease liabilities	(3,962)		(171)		(4,133)
Total long-term lease liabilities	$	1,729	$	3,215	$	4,944

Supplemental cash flow information related to leases are as follows:


	Year Ended		Year Ended
(in thousands)	May 26, 2024		May 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	761	$	2,067
Operating cash flows from finance leases	373		351
Financing cash flows from finance leases	136		96
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	—	$	83

During the year ended May 26, 2024, the Company recorded ROU asset impairments related to the Curation Foods Santa Maria Office lease of $1.4 million. During the year ended May 28, 2023, the Company recorded impairments related to the Curation Foods Santa Maria office lease of $0.6 million, and our Curation Foods Los Angeles, California office lease of $0.1 million.

Leases

Operating Leases

Finance Leases

The components of lease cost were as follows:


	Year Ended
(In thousands, except term and discount rate)	May 26, 2024			May 28, 2023
Finance lease cost:
Amortization of leased assets	$	137		$	119
Interest on lease liabilities	373			351
Operating lease cost	344			1,286
Variable lease cost	306			600
Sublease income	(148)			(53)
Total lease cost	$	1,012		$	2,303

Weighted-average remaining lease term:
Operating leases	8.53			7.69
Finance leases	3.67			4.57
Weighted-average discount rate:
Operating leases	3.04		%	4.60		%
Finance leases	11.10		%	11.40		%

The Company’s leases have original lease periods ending through 2033. The Company’s maturity analysis of operating and finance lease liabilities as of May 26, 2024 are as follows:


(in thousands)	Operating Leases		Finance Leases		Total
2025	$	4,020	$	529	$	4,549
2026	433		541		974
2027	416		553		969
2028	302		2,910		3,212
2029	146		36		182
Thereafter	585		9		594
Total lease payments	5,902		4,578		10,480
Less: interest	(211)		(1,192)		(1,403)
Present value of lease liabilities	5,691		3,386		9,077
Less: current obligation of lease liabilities	(3,962)		(171)		(4,133)
Total long-term lease liabilities	$	1,729	$	3,215	$	4,944

Supplemental cash flow information related to leases are as follows:


	Year Ended		Year Ended
(in thousands)	May 26, 2024		May 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	761	$	2,067
Operating cash flows from finance leases	373		351
Financing cash flows from finance leases	136		96
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	—	$	83

Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Debt Instrument [Line Items]
Total principal amount of long-term debt	$ 164,463	$ 150,233
Total long-term debt, net of unamortized debt issuance costs	101,592	84,836
Less: current portion of long-term debt, net, related party	(773)	(580)
Long-term debt, net	100,819	84,256
Nonrelated Party
Debt Instrument [Line Items]
Less: unamortized debt discount	(504)	(605)
Related Party
Debt Instrument [Line Items]
Less: unamortized debt discount	(62,367)	(64,792)
Financial Liability
Debt Instrument [Line Items]
Total principal amount of long-term debt	7,150	7,730
Term Loan \| Line of Credit
Debt Instrument [Line Items]
Total principal amount of long-term debt	$ 157,313	$ 142,503

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023	May 29, 2022	May 30, 2021
Tax Credit Carryforward [Line Items]
Effective tax rate for the fiscal year, provision (benefit)	1.93%	0.48%	(25.19%)
Income tax (expense) benefit	$ (18)	$ 0	$ 690
Deferred tax asset valuation allowance (decrease)	46,173	52,510
Decrease in net operating loss carryforwards deferred tax asset	(40,806)	(44,618)
Decrease in other deferred tax assets	(2,492)	(3,216)
Increase in deferred tax liabilities	20,285	14,235
Unrecognized tax benefits	1,271	$ 1,173	$ 1,041	$ 958
Unrecognized tax benefits that would change the effect tax rate if recognized	1,100
Adjustments
Tax Credit Carryforward [Line Items]
Deferred tax asset valuation allowance (decrease)	(2,900)
Decrease in net operating loss carryforwards deferred tax asset	2,400
Decrease in other deferred tax assets	100
Increase in deferred tax liabilities	400
Domestic Tax Authority
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	171,000
Tax credit carryforward amount	$ 3,600
Tax credit carryforward, period	20 years
Deferred tax asset valuation allowance (decrease)	$ 38,200
State and Local Jurisdiction
Tax Credit Carryforward [Line Items]
Deferred tax asset valuation allowance (decrease)	8,000
State and Local Jurisdiction \| California
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	52,000
Tax credit carryforward amount	2,100
State and Local Jurisdiction \| Indiana
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	11,100
State and Local Jurisdiction \| Other state tax boards
Tax Credit Carryforward [Line Items]
Net operating loss carryforwards	15,800
State and Local Jurisdiction \| Minnesota
Tax Credit Carryforward [Line Items]
Tax credit carryforward amount	$ 1,900
Tax credit carryforward, period	15 years

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Revenues	$ 128,261	$ 103,269	$ 111,270
Cost of goods sold	86,411	75,284	72,204
Gross profit	41,850	27,985	39,066
Operating costs and expenses:
Research and development	8,575	8,736	7,839
Selling, general and administrative	40,463	38,969	34,659
Restructuring costs	1,656	4,184	8,359
Total operating costs and expenses	50,694	49,781	50,857
Operating loss	(8,844)	(21,796)	(11,791)
Transition services income	0	349	5,814
Loss on debt extinguishment	0	(23,741)	0
Other (expense) income, net	(3,052)	(1,159)	760
Change in fair value of debt derivative liability, related party	39,500	0	0
Net income (loss) from continuing operations before taxes	9,514	(63,928)	(20,687)
Provision for income tax (expense) benefit	(183)	(308)	5,211
Net income (loss) from continuing operations	9,331	(64,236)	(15,476)
Discontinued operations:
Income (loss) from discontinued operations, net of tax	2,700	(35,327)	(101,929)
Income tax (expense) benefit	(18)	0	690
Income (loss) from discontinued operations	2,682	(35,327)	(101,239)
Net income (loss)	$ 12,013	$ (99,563)	$ (116,715)
Basic net income (loss) per share:
Income (loss) from continuing operations (in dollars per share)	$ 0.31	$ (2.14)	$ (0.53)
Income (loss) from discontinued operations (in dollars per share)	0.09	(1.18)	(3.44)
Total basic net income (loss) per share (in dollars per share)	0.40	(3.32)	(3.97)
Diluted net income (loss) per share:
Income (loss) from continuing operations (in dollars per share)	0.25	(2.14)	(0.53)
Income (loss) from discontinued operations (in dollars per share)	0.07	(1.18)	(3.44)
Total diluted net income (loss) per share (in dollars per share)	$ 0.32	$ (3.32)	$ (3.97)
Shares used in per share computation:
Basic (in shares)	30,474	29,958	29,466
Diluted (in shares)	36,658	29,958	29,466
BreatheWay
Operating costs and expenses:
Gain on sale of divested business	$ 0	$ (2,108)	$ 0
Nonrelated Party
Revenues	77,674	99,247	111,270
Operating costs and expenses:
Interest expense, net	(3,428)	(17,229)	(15,470)
Related Party
Revenues	50,587	4,022	0
Operating costs and expenses:
Interest expense, net	$ (14,662)	$ (352)	$ 0

Stock-based Compensation and Stockholders’ Equity - Summary of Stock-based Compensation by Income Statement Line Item (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 6,201	$ 3,612	$ 2,608
Discontinued Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	0	0	(34)
Cost of sales \| Continuing Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	582	404	314
Research and development \| Continuing Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	168	193	202
Selling, general and administrative \| Continuing Operations
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation	$ 5,451	$ 3,015	$ 2,126

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 198,932	$ 191,396
Less accumulated depreciation and amortization	(50,334)	(57,006)
Property and equipment, net	148,598	134,390
Land
Property, Plant and Equipment [Line Items]
Gross property and equipment	3,739	3,739
Buildings
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 62,874	60,688
Buildings \| Minimum
Property, Plant and Equipment [Line Items]
Years of Useful Life	15 years
Buildings \| Maximum
Property, Plant and Equipment [Line Items]
Years of Useful Life	40 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 0	4,019
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Years of Useful Life	3 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Years of Useful Life	15 years
Computers, capitalized software, machinery, equipment and vehicles
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 69,303	75,181
Computers, capitalized software, machinery, equipment and vehicles \| Minimum
Property, Plant and Equipment [Line Items]
Years of Useful Life	3 years
Computers, capitalized software, machinery, equipment and vehicles \| Maximum
Property, Plant and Equipment [Line Items]
Years of Useful Life	25 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 1,631	2,182
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Years of Useful Life	3 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Years of Useful Life	7 years
Construction in process
Property, Plant and Equipment [Line Items]
Gross property and equipment	$ 61,385	$ 45,587

Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023
Intangible Assets [Line Items]
Total intangible assets	$ 7,900	$ 7,900
Accumulated Amortization	3,700	3,700
Trademarks/tradenames
Intangible Assets [Line Items]
Gross carrying amount, indefinite-lived	$ 4,200	4,200
Customer Relationships
Intangible Assets [Line Items]
Amortization Period (years)	12 years
Gross carrying amount, finite-lived	$ 3,700	3,700
Accumulated Amortization	$ 3,700	$ 3,700

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Inventory [Line Items]
Finished goods	$ 14,924	$ 13,141
Raw materials	14,555	17,735
Work in process	11,915	10,349
Inventory reserve	(1,415)	(384)
Total inventories	39,979	40,841
Inventory write-down, expense (income)	800	4,900
Cost of sales
Inventory [Line Items]
Inventory write-down, expense (income)	$ (4,100)	$ 300	$ 3,500

Goodwill and Intangible Assets - Narrative (Details) - USD ($)	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 13,881,000	$ 13,881,000
Goodwill, period increase (decrease)	0	0
Amortization expense related to finite-lived intangible assets	$ 0	$ 0	$ 300,000

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 49
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-49

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 24
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482548/350-20-55-24

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 4: http://www.xbrl.org/2003/role/exampleRef
-Topic 852
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481372/852-10-55-10

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(15))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480566/210-10-S99-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 45
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482598/350-20-45-1

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482573/350-20-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 210
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03(10)(1))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1

+ Details

Income Taxes - Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Income Tax Disclosure [Abstract]
Tax at U.S. statutory rate	$ 1,999	$ (13,932)	$ (4,344)
State income taxes, net of federal benefit	52	(1,805)	(638)
Change in valuation allowance	(5,773)	19,461	(1,065)
Tax credit carryforwards	(518)	(611)	(436)
Other compensation-related activity	418	283	234
Impairment of goodwill	0	0	2,347
Foreign rate differential	0	(2,749)	(496)
Net operating loss write-off from final state return filings	711	0	0
Provision to return	3,136	0	0
Other	158	(339)	(813)
Income tax provision (benefit)	$ 183	$ 308	$ (5,211)

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Summary of Contract Liabilities (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023	May 29, 2022
Revenue from External Customer [Line Items]
Non-current deferred revenues	$ 4,703	$ 2,940
Total contract liabilities	7,100	7,000	$ 900
Nonrelated Party
Revenue from External Customer [Line Items]
Current deferred revenues	1,088	552	300
Nonrelated Party \| Other Noncurrent Liabilities
Revenue from External Customer [Line Items]
Non-current deferred revenues	300	0	0
Related Party
Revenue from External Customer [Line Items]
Current deferred revenues	1,025	3,503	600
Non-current deferred revenues	$ 4,700	$ 2,900	$ 0

Debt

12 Months Ended

May 26, 2024

Debt Disclosure [Abstract]

Debt

Long-term debt consists of the following as of May 26, 2024 and May 28, 2023 (in thousands):


	May 26, 2024		May 28, 2023
Term loan credit facility, related party	$	157,313	$	142,503
Equipment sale finance liability, related party	7,150		7,730
Total principal amount of long-term debt	164,463		150,233
Less: unamortized debt discount	(504)		(605)
Less: debt discount, related party	(62,367)		(64,792)
Total long-term debt, net of unamortized debt issuance costs	101,592		84,836
Less: current portion of long-term debt, net, related party	(773)		(580)
Long-term debt, net	$	100,819	$	84,256



Fiscal year 2025	$	773
Fiscal year 2026	773
Fiscal year 2027	773
Fiscal year 2028	773
Fiscal year 2029	773
Thereafter	160,598
Total	$	164,463

Prior Term Loan Facility and Revolving Credit Facility

On December 31, 2020, the Company refinanced its previously existing term loan and revolving credit facility by entering into (i) a credit agreement with Goldman Sachs Specialty Lending Group, L.P. (“Goldman”) and Guggenheim Credit Services, LLC, as lenders, which provided the Company, Curation Foods and Lifecore, as co-borrowers, with term loan borrowings of up to $170.0 million (the “Prior Term Loan Facility”), and (ii) a credit agreement with BMO Harris Bank, N.A. (“BMO”) as lender, which provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $75.0 million revolving line of credit (the “Revolving Credit Facility” and together with Prior Term Loan Facility, the “Prior Credit Facilities”). The Revolving Credit Facility is, and the Prior Term Loan Facility was, guaranteed, and secured by, substantially all of the Company’s and the Company’s direct and indirect subsidiaries’ assets.

In April 2022, the Company amended the Prior Credit Facilities to make available an additional $20.0 million of term debt that had been previously repaid. In connection with this amendment, the Company incurred debt issuance costs from the lender of $0.7 million.

On January 9, 2023, the Company entered into further amendments to the Prior Credit Facilities to, among other things, provide for the limited waiver from events of default under the Prior Credit Facilities related to certain financial covenant requirements, as well as a waiver of certain existing terms and covenants under the Prior Term Loan Facility, including with respect to the fixed coverage ratio leverage ratio and minimum liquidity covenants, 2% increase of annual interest rate, which was payable in kind, and a one-time amendment fee in an amount equal to 3% of the principal amount as of January 9, 2023. This amendment also reduced the maximum commitment under the Revolving Credit Facility from $75.0 million to $60.0 million, which was further reduced to $40.0 million upon the sale of Yucatan.

The Prior Term Loan Facility would have matured on December 31, 2025. The Revolving Credit Facility matures on December 31, 2025.

Interest on the Revolving Credit Facility is based upon the Company’s average availability, at a per annum rate of either (i) SOFR rate plus a spread of between 2.00% and 2.50% or (ii) base rate plus a spread of between 1.00% and 1.50%, plus a

commitment fee, as applicable, of 0.375% and plus (iii) for the period from December 1, 2022 until January 31, 2023, additional 2% per annum. Interest on the Prior Term Loan Facility was at a per annum rate based on either (i) the base rate plus a spread of 7.50% or (ii) the SOFR rate plus a spread of 8.50%. The Prior Term Loan Facility also provided that in the event of a prepayment of any amount other than the scheduled installments within twelve months after the closing date, a penalty will be assessed equal to the aggregate amount of interest that would have otherwise been payable from date of prepayment event until twelve months after the closing date plus 3% of the amount prepaid.

The Revolving Credit Facility contains, and the Prior Term Loan Facility contained, customary financial covenants and events of default under which the obligations thereunder could be accelerated and/or the interest rate increased in specified circumstances.

In connection with the January 2023 amendments to the Prior Credit Facilities, the Company incurred debt issuance costs from the lender and third parties of $4.2 million (comprised of $1.1 million in cash and $3.1 million PIK) and $62.5 thousand, respectively, during the year ended May 28, 2023.

Refinancing Transactions

Loss on Debt Extinguishment

On May 22, 2023, the Company entered into the New Term Loan Credit Facility (as defined below) with Alcon. The proceeds of this New Term Loan Credit Facility were used to repay the Prior Term Loan Facility in its entirety. In connection with the New Term Loan Facility, the Company recorded a loss on debt extinguishment in the consolidated statement of operations for the year ended May 28, 2023, amounting to $23.7 million, comprised of a prepayment penalty of $12.9 million, write-off unamortized deferred financing fees related to the Prior Term Loan Credit Facility of $7.6 million and third-party fees of $3.3 million.

Term Loan Credit Facility

On May 22, 2023, the Company and Alcon entered into a Credit and Guaranty Agreement (the “Term Loan Credit Facility”). The Term Loan Credit Facility refinanced in full all obligations of the Company and their subsidiaries under its prior term loan credit facility. Upon entry into the Term Loan Credit Facility, the Prior Term Loan Facility was terminated and all noncompliance with debt covenants were thereby cured.

The Term Loan Credit Facility provides for up to $142.3 million in term loans, subject to certain adjustments based on the post-closing adjustments to the Purchase Price (as defined in the Equipment Sale and Leaseback Agreement, defined below), which were funded in full on May 22, 2023. The obligations under the Term Loan Credit Facility mature on May 22, 2029. The Term Loan Credit Facility is secured by the same collateral that secures the Revolving Credit Facility, with relative priorities in respect thereof, as set forth in the Intercreditor Agreement (as defined below).

The loans under the Term Loan Credit Facility have a fixed interest rate equal to 10% per annum. Interest is payable-in-kind until the third anniversary of the closing date and following the third anniversary of the closing date is payable at a rate equal to 3% per annum in cash with the remainder payable-in-kind, in each case, unless otherwise elected by the Borrowers to pay a greater proportion in cash. The Term Loan Credit Facility contains customary affirmative covenants including, but not limited to, financial reporting requirements and maintenance of existence requirements and negative covenants, including, but not limited to, limitations on the incurrence of debt, liens, investments, restricted payments, restricted debt payments, and affiliate transactions. The Term Loan Credit Facility contains one financial covenant, a minimum liquidity covenant, requiring $4.0 million of Consolidated Liquidity (as defined in the Term Loan Credit Facility) as of May 28, 2023 and as of the end of the first, second and third fiscal quarters of 2024 of the Company. During the fourth quarter of fiscal year 2024, the minimum liquidity covenant was increased to $4.5 million.

The Company identified a number of embedded derivatives that require bifurcation from the Term Loan Credit Facility that were separately accounted for in the consolidated financial statements as one debt derivative liability. Certain of these embedded features include change in control provisions, events of default and contingent rate increases and were determined to qualify as an embedded derivative under ASC 815-40. The embedded derivative and the Term Loan Credit Facility obligation have been bifurcated to result in a net embedded derivative liability and is classified as a Level 3 financial liability in the fair value hierarchy as of May 26, 2024 and May 28, 2023. The fair value of the embedded derivative liabilities associated with the term loans was estimated using the discounted cash flow method under the income approach. This involves significant Level 3 inputs and assumptions including an estimated probability and timing of a change in control and events of default. The Company will re-evaluate this assessment each reporting period and record any gains or losses in other income (expense). The initial recognition of the embedded derivative liability upon issuance of the Term Loan Credit Facility on May 22, 2023 was

$64.9 million and is recorded as a debt derivative liability, related party in the condensed Consolidated Balance Sheets. The bifurcation of the embedded debt derivative fair value of $64.9 million is accounted for as a discount to the Term Loan Credit Facility. Amortization of the debt discount is based on the effective interest method over the term of the debt. The amortization of the debt discount between the issuance of May 22, 2023 and May 28, 2023 amounted to $0.1 million, and for the year ended May 26, 2024 was $2.4 million. At May 26, 2024 and May 28, 2023, the fair value of the embedded derivative liability approximated $25.4 million and $64.9 million, respectively.

As of May 26, 2024 and May 28, 2023, the Company had $157.3 million and $142.5 million in borrowings outstanding under the Term Loan Credit Facility, with an effective annual interest rate of 22.5%.

As of May 26, 2024, except for the requirements to deliver certain historical financial statements, the Company was in compliance with all financial covenants under the Term Loan Credit Facility, related party, and Revolving Credit Facility. In December 2023, the Company entered into limited waivers and amendments to credit agreements, as discussed in the “Limited Waivers and Amendments to Credit Agreements” section below.

Pledge and Security Agreement, Related Party

Also on May 22, 2023, the Borrowers and certain of the Company’s other subsidiaries, as grantors (collectively, the “Grantors”), entered into that certain Pledge and Security Agreement (the “Term Loan Security Agreement”), dated as of May 22, 2023, with Alcon, as collateral agent. Pursuant to the Term Loan Security Agreement, the Grantors secured their obligations under the Term Loan Credit Facility by granting to Alcon, as collateral agent, a first priority security interest in certain collateral, including but not limited to equipment, fixtures, real property, intellectual property and inventory. The security interest granted by the Grantors under the Term Loan Security Agreement continues in effect until the payment in full of all of the secured obligations under the Term Loan Credit Facility.

Amendment to Revolving Credit Facility

On May 22, 2023, the Borrowers and certain of the Company’s other subsidiaries, as guarantors, entered into a Limited Waiver, Consent and Fifth Amendment (the “Revolving Loan Amendment”) to the credit agreement with BMO, as lender (the “Revolving Credit Facility”).

The Revolving Loan Amendment provides for, among other things, (i) a waiver of all known existing defaults under a revolving credit agreement as of the date of the Revolving Loan Amendment, (ii) the reduction of the maximum amount available under a revolving credit agreement to up to the lesser of (x) $40.0 million, less a reserve for certain secured credit products, if any, and (y) the borrowing base (which, pursuant to the Revolving Loan Amendment, was modified to include a further reduction of the borrowing base by an additional $4.0 million), (iii) the modification of the springing minimum fixed charge coverage ratio of 1.00 to 1.00, with such covenant not tested until the fiscal quarter ending on or about February 28, 2024 and, on or thereafter, upon the earlier of the occurrence of an event of default or availability being less than the greater of 10% of the maximum borrowing amount and $4.0 million, (iv) cash dominion at all times the Revolving Credit Facility remains outstanding, and (v) certain other revisions to align with the terms of the New Term Loan Credit Facility and address the relative priorities and credit for borrowings related to the Company’s commercial relationships with Alcon.

In connection with the entry into the Revolving Loan Amendment, the Company also agreed to pay to BMO an amendment fee of $1.2 million, $0.8 million of which is paid concurrently with the Company’s entry into the Revolving Loan Amendment. The remaining $0.4 million obligation is payable at the earlier of (i) repayment in full of the Company’s obligations, and termination of all commitments, under the Revolving Credit Facility and (ii) the occurrence of a Change of Control (as defined in the Revolving Credit Facility). The Company will accrete the remaining amendment fee over the life of the credit facility. In connection with the entry into the Revolving Loan Amendment, the Company recorded $1.2 million of debt origination costs.

The Company records its Revolving Credit Facility deferred finance costs as an asset; as such, $1.6 million were recorded as other assets in the accompanying consolidated balance sheet as of May 26, 2024. As of May 28, 2023, $0.9 million and $1.4 million were recorded as other current assets and other long-term assets, respectively.

As of May 26, 2024 and May 28, 2023, the Company has $19.7 million and $16.8 million in borrowings outstanding under the Revolving Credit Facility, at an effective annual interest rate of 8.35% and 12.16%, respectively.

As the Company's borrowings under the Revolving Credit Facility for the next twelve months will increase to above the $19.7 million as of the balance sheet date, and scheduled repayments is not due until December 31, 2025, we have determined the line of credit to be classified as a long-term liability as of May 26, 2024.

As of May 26, 2024, we had approximately $12.3 million available for borrowing under our revolving credit facility.

BMO and Alcon also entered into an intercreditor agreement regarding their relative rights, as lenders, in the assets of the Company and its subsidiaries that serve as collateral for their respective credit facilities (the “Intercreditor Agreement”).

On May 10, 2024, the Company also entered into the Seventh Amendment to the ABL Loan Agreement with its ABL lender to execute a “first-in, last-out” tranche of revolving loans under the ABL Loan Agreement (the “FILO Amendment”). While not increasing the overall revolver commitment of $40 million, the FILO Amendment provides for up to approximately $2.5 million of incremental revolving loan capacity to the Company, subject to a variable cap, without changing the collateral. In connection with the FILO Amendment, the margin rate applicable to the borrowings pursuant to the FILO Amendment was increased to SOFR plus 4.25%, which is expected to increase annual cash interest expense by approximately $44,000 assuming $2.5 million in FILO tranche borrowings thereunder. The maximum capacity of permitted borrowings pursuant to the FILO Amendment will be reduced on a monthly basis commencing October 1, 2025. The Company paid a fee of $50,000 to BMO in connection with the FILO Amendment.

Limited Waivers and Amendments to Credit Agreements

On December 31, 2023, the Company entered into (i) a Limited Waiver and First Amendment to Credit and Guaranty Agreement (the “Term Loan Amendment”), which amended the Term Loan Credit Facility, and (ii) the Limited Waiver and Sixth Amendment to Credit Agreement (the “Revolving Credit Amendment” and, together with the Term Loan Amendment, the “Credit Agreement Amendments”) which amended the Revolving Credit Facility.

The Alcon Amendment provides for, among other things, (i) a waiver of the specified defaults listed therein under the Term Loan Credit Facility as of the date of the Term Loan Amendment, (ii) a waiver of the requirement to deliver certain historical financial statements, (iii) the inclusion of a requirement that the Company notify the term lender in advance of any layoff(s) by the Company and/or its subsidiaries that would result in a reduction in the overall headcount of the Company’s full-time manufacturing and support personnel by more than 20 persons in the aggregate, and (iv) an amendment to the financial reporting requirements under the Term Loan Credit Facility providing additional time for the Company’s delivery of its financials for the quarter ended November 26, 2023.

The Revolving Credit Amendment provides for, among other things, (i) a waiver of the specified defaults listed therein under the Revolving Credit Facility as of the date of the Revolving Credit Amendment, (ii) a waiver of the requirement to deliver certain historical financial statements, (iii) an amendment to the definition of “Applicable Margin” with respect to loans under the Revolving Credit Facility from December 31, 2023 until the “Specified Adjustment Date” (as defined in the Revolving Credit Facility as amended by the Revolving Credit Amendment) (i.e., the date on which 2024 audited annual financial statements and certain other materials are delivered by the Company to the revolving credit lender), and (iv) an amendment to the definition of “Eligible Accounts” thereunder in respect of certain accounts.

The Company was not required to pay any fees in connection with the Credit Agreement Amendments.

On August 8, 2024, the Company received limited waivers under its Credit Agreements relating to not timely providing (i) notice of the occurrence of a default; and (ii) the Lifecore financial plan for the fiscal year ending May 25, 2025.

Equipment Sale and Leaseback Agreements, Related Party

On May 22, 2023, the Company entered into that certain Equipment Sale and Leaseback Agreement (the “Equipment Sale and Leaseback Agreement”), dated May 22, 2023, with Alcon, wherein the Company sold $10.0 million (subject to certain post-closing adjustments) (the “Purchase Price”) of certain equipment, machinery, and other property associated with the production of sodium hyaluronate (the “Equipment”) to Alcon. The Equipment Sale Leaseback Agreement contains an option for the Company to repurchase the Equipment upon the earlier of (i) seven (7) years and (ii) the expansion of the Company’s existing production capacity with respect to sodium hyaluronate, for a purchase price equal to the Purchase Price, less the aggregate of all Paydown Payments (as defined in the Equipment Lease Agreement). The Purchase Price was subsequently reduced to $7.7 million based on the fair value of the equipment, as required by the terms of the Equipment Sale and Leaseback Agreement. The difference of $2.3 million between the initial sales value of $10.0 million and the $7.7 million was added to the term loan agreement, which resulted in a term loan amount of $142.3 million and the proceeds to Lifecore across the two agreements did not change.

Concurrently with the entry into the Equipment Sale and Leaseback Agreement, the Company entered into that certain Equipment Lease Agreement (the “Equipment Lease Agreement” and, together with the Equipment Sale Leaseback Agreement, the New Term Loan Credit Facility, the Term Loan Security Agreement, and the Revolving Loan Amendment, collectively, the “Refinancing Transactions”), dated May 22, 2023, with Alcon, wherein Alcon leased the Equipment back to the Company. The

Equipment Lease Agreement expires upon the earlier of (i) May 22, 2033, and (ii) the date that the Equipment is repurchased by the Company pursuant to the terms of the Equipment Lease Agreement. Upon the expiration of the Equipment Lease Agreement on May 22, 2033, the Company shall automatically repurchase the Equipment for $1.00 (if not previously repurchased pursuant to the option under the Equipment Sale and Leaseback Agreement).

During the lease term, the Company is obligated to make quarterly rental payments to Alcon equal to (i) 1/40th of the Purchase Price (the “Paydown Payments”), plus (ii) 1.5% times the Purchase Price less cumulative Paydown Payments made. The Company concluded that the Equipment Sale and Leaseback Agreement did not meet the requirements for sale-leaseback accounting, therefore the carrying value of the equipment remains on the balance sheet and the $7.7 million Purchase Price (as adjusted) of the equipment sale finance obligation (the “Equipment Sale Finance Liability”) has been classified in Long Term debt.

The Equipment Lease Agreement contains terms and provisions (including representations, covenants and conditions) that are generally customary for a commercial lease of this nature, including obligations relating to the use, operation and maintenance of the Equipment. During the term of the lease, Alcon is not permitted to sell or encumber the Equipment. Alcon is only entitled to cancel the Equipment Lease Agreement in the event of insolvency, liquidation or bankruptcy, and its remedies for other breaches of the Equipment Lease Agreement are otherwise limited to monetary damages.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481544/470-10-50-6

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 1
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-URI https://asc.fasb.org/1943274/2147477092/405-40-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1B

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1C

Reference 18: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

+ Details

Debt - Future Minimum Principal Payments of Debt (Details) - USD ($) $ in Thousands	May 26, 2024	May 28, 2023
Debt Disclosure [Abstract]
Fiscal year 2025	$ 773
Fiscal year 2026	773
Fiscal year 2027	773
Fiscal year 2028	773
Fiscal year 2029	773
Thereafter	160,598
Total	$ 164,463	$ 150,233

Restructuring Costs - Restructuring Costs Liability Roll-Forward (Details) $ in Thousands	12 Months Ended
	May 26, 2024 USD ($)
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	$ 2,997
Expense	$ 1,207
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring costs
Payments	$ (3,008)
Other	3,575
Restructuring reserve, ending balance	4,771
Employee severance and benefit costs
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	1,600
Expense	234
Payments	(1,617)
Other	0
Restructuring reserve, ending balance	217
Lease costs
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	257
Expense	587
Payments	(129)
Other	3,575
Restructuring reserve, ending balance	4,290
Other restructuring costs
Restructuring Reserve [Roll Forward]
Restructuring reserve, beginning balance	1,140
Expense	386
Payments	(1,262)
Other	0
Restructuring reserve, ending balance	$ 264

Restructuring Costs - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Feb. 25, 2024	May 26, 2024	May 28, 2023	May 29, 2022
Restructuring Cost and Reserve [Line Items]
Sublease income		$ 148	$ 53
Santa Maria office
Restructuring Cost and Reserve [Line Items]
Impairment of leasehold				$ 5,300
Impairment of long-lived assets to be disposed of				3,700
Operating lease, impairment loss	$ 1,400	$ 1,400	$ 600	$ 1,600
Sublease income	700
Accrual of lease related liabilities	$ 600

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Leases - Schedule of Lease Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022
Leases [Abstract]
Amortization of leased assets	$ 137	$ 119	$ 100
Interest on lease liabilities	373	351
Operating lease cost	344	1,286
Variable lease cost	306	600
Sublease income	(148)	(53)
Total lease cost	$ 1,012	$ 2,303
Weighted-average remaining lease term:
Operating leases	8 years 6 months 10 days	7 years 8 months 8 days
Finance leases	3 years 8 months 1 day	4 years 6 months 25 days
Weighted-average discount rate:
Operating leases	3.04%	4.60%
Finance leases	11.10%	11.40%

Stock-based Compensation and Stockholders’ Equity - Narrative (Details)					3 Months Ended	12 Months Ended
	May 20, 2024 tranche shares	May 19, 2024 $ / shares shares	Nov. 01, 2022 shares	Oct. 16, 2019 USD ($) shares	May 26, 2024 USD ($) shares	May 26, 2024 USD ($) $ / shares shares	May 28, 2023 USD ($) $ / shares shares	May 29, 2022 USD ($) $ / shares shares	Mar. 20, 2024 shares	Jul. 14, 2010 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option exercise price range, lower range limit (in dollars per share) \| $ / shares		$ 9.76
Stock option exercise price range, upper range limit (in dollars per share) \| $ / shares		$ 12.14
Stock-based compensation, incremental cost \| $					$ 600,000
Fair value of options vested in period \| $						$ 1,000,000.0	$ 1,500,000	$ 1,100,000
Aggregate intrinsic Value (in thousands) \| $						115,000	0	300,000
Amount of unrecognized compensation expense related to unvested equity compensation \| $					$ 14,300,000	14,300,000
Stock-based compensation, income tax benefit \| $						0
Stock-based compensation, amount capitalized \| $						$ 28,000	$ 0	$ 0
Preferred stock authorized (in shares)					2,000,000	2,000,000
Preferred stock outstanding (in shares)					42,460	42,460	39,420
Maximum repurchase amount of common stock \| $										$ 10,000,000.0
Stock repurchased during period (in shares)						0	0	0
RSU and PSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation, incremental cost \| $						$ 300,000
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accelerated vesting, number of shares		270,000
Award granted (in shares)						1,584,005
Unrecognized compensation amount \| $					$ 3,100,000	$ 3,100,000
Award outstanding (in shares)					1,622,004	1,622,004	336,791
Fair value of equity instruments other than options vested in period \| $						$ 1,300,000	$ 1,900,000	$ 1,600,000
Granted (in dollars per share) \| $ / shares						$ 7.48	$ 9.59	$ 11.98
Vested (in dollars per share) \| $ / shares						$ 7.74	$ 10.79	$ 11.41
Total expense expected to be recognized over the weighted-average period						2 years 4 months 6 days
PSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)						1,500,000
Unrecognized compensation amount \| $					$ 7,000,000	$ 7,000,000
Award outstanding (in shares)					1,500,000	1,500,000	0
Granted (in dollars per share) \| $ / shares						$ 4.66
Vested (in dollars per share) \| $ / shares						$ 0
Total expense expected to be recognized over the weighted-average period						1 year 7 months 28 days
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accelerated vesting, number of shares		92,545
Total expense expected to be recognized over the weighted-average period						1 year 7 days
Equity Inducement Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Capital stock reserved for future issuance (in shares)									3,500,000
Award outstanding (in shares)					1,475,000	1,475,000
Equity Inducement Plan \| RSU \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)	525,000
Equity Inducement Plan \| RSU \| Chief Executive Officer \| Vesting, tranche one
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)	25,000
Equity Inducement Plan \| RSU \| Chief Executive Officer \| Vesting, tranche two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)	100,000
Award vesting period	5 years
Equity Inducement Plan \| PSU \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)	1,500,000
Number of tranches \| tranche	10
Performance period	5 years
Equity Inducement Plan \| PSU \| Chief Executive Officer \| Vesting, tranche one
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award granted (in shares)	150,000
Award vesting period	1 year
Award vesting percentage	50.00%
Equity Inducement Plan \| PSU \| Chief Executive Officer \| Vesting, tranche two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage	50.00%
Stock Incentive Plan 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock initially available under stock award plan (in shares)				2,000,000
Number of additional shares authorized			759,797
Number of shares available for award under stock incentive plan (in shares)					725,747	725,747
Stock Incentive Plan 2019 \| Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum amount of award within a fiscal year (in shares)				500,000
Stock Incentive Plan 2019 \| Stock Grants and Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum amount of award within a fiscal year (in shares)				250,000
Stock Incentive Plan 2019 \| Stock Appreciation Rights (SARs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum amount of award within a fiscal year (in shares)				500,000
Maximum award for a non-employee direct within a fiscal year \| $				$ 120,000

Audit Information	12 Months Ended
Audit Information	May 26, 2024
Audit Information [Abstract]
Auditor Name	BDO USA, P.C.
Auditor Location	Minneapolis, Minnesota
Auditor Firm ID	243

Income Taxes

12 Months Ended

May 26, 2024

Income Tax Disclosure [Abstract]

Income Taxes

All of the Company’s pre-tax income (loss) from continuing operations for fiscal years 2024, 2023 and 2022 is derived from its domestic operations. The (benefit) provision for income taxes from continuing operations consisted of the following:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Current:
Federal	$	(10)	$	(1)	$	—
State	37		55		23
Foreign	—		—		356
Total	27		54		379

Deferred:
Federal	173		234		(4,936)
State	(17)		20		(654)
Total	156		254		(5,590)
Income tax provision (benefit)	$	183	$	308	$	(5,211)

The actual (benefit) provision for income taxes from continuing operations differs from the statutory U.S. federal income tax rate as follows:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Tax at U.S. statutory rate (1)	$	1,999	$	(13,932)	$	(4,344)
State income taxes, net of federal benefit	52		(1,805)		(638)

Change in valuation allowance	(5,773)		19,461		(1,065)
Tax credit carryforwards	(518)		(611)		(436)
Other compensation-related activity	418		283		234
Impairment of goodwill	—		—		2,347
Foreign rate differential	—		(2,749)		(496)
Net operating loss write-off from final state return filings	711		—		—

Provision to return	3,136		—		—
Other	158		(339)		(813)
Income tax provision (benefit)	$	183	$	308	$	(5,211)

(1) Statutory rate was 21.0% for all fiscal years presented.

The effective tax rate for fiscal year 2024 changed from a tax provision of 0.48% to a tax provision expense of 1.93% in comparison to fiscal year 2023. The decrease in the income tax expense for fiscal year 2024 was primarily due to a valuation allowance decrease resulting from net operating loss utilization and increase of deferred tax liabilities such as debt discount.

The effective tax rate for fiscal year 2024 differs from the statutory federal income tax rate of 21.0% as a result of several factors, including a significant increase in the Company's profit before tax, the change in valuation allowance related to federal and state deferred balances, changes in the blended state tax rate, and the benefit of federal and state research and development credits.

The effective tax rate for fiscal year 2023 changed from a tax benefit of 25.19% to a tax provision of 0.48% in comparison to fiscal year 2022. The decrease in the effective tax rate for fiscal year 2023 was primarily due to a significant valuation allowance increase and the impairment of Yucatan goodwill.

The income tax (provision) benefit from discontinued operations for fiscal years 2024, 2023, and 2022 of (18.0) thousand, 0.0 thousand, and 690.0 thousand, respectively, are not included in the above income tax benefit from continuing operations.

Significant components of deferred tax assets and liabilities reported in the accompanying Consolidated Balance Sheets consisted of the following:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023
Deferred tax assets:

Net operating loss carryforwards	$	40,806	$	44,618

Limitations on business interest expense	11,783		8,614
Research credit carryforwards	6,700		6,269
Amortization of research development expenses	2,916		1,805
Lease liability	1,218		1,843


Other	2,492		3,216
Gross deferred tax assets	65,915		66,365

Valuation allowance	(46,173)		(52,510)
Net deferred tax assets	19,742		13,855

Deferred tax liabilities:
Depreciation and amortization	(11,809)		(13,208)

Debt Derivative/Debt Discount	(7,911)		—
Right-of-use asset	(565)		(1,027)
Deferred tax liabilities	(20,285)		(14,235)

Net deferred tax liabilities	$	(543)	$	(380)

As of May 26, 2024, the Company had Federal, California, Indiana, and other state net operating loss carryforwards (pre-tax, post-apportionment) of approximately $171.0 million, $52.0 million, $11.1 million, and $15.8 million respectively. The Federal losses expire starting in 2028, if not utilized; and the state losses expire starting in 2025, if not utilized. The Company acquired additional net operating losses through the acquisition of Greenline Logistics, Inc. Utilization of these acquired net operating losses in a specific year is limited due to the “change in ownership” provision of the Internal Revenue Code of 1986 and similar state provisions. The net operating losses presented above for federal and state purposes is net of any such limitation.

As of May 26, 2024, the Company has federal, California, and Minnesota research and development tax credits carryforwards, net of any uncertain tax position and before federal tax benefit of state tax attributes of approximately $3.6 million, $2.1 million, and $1.9 million respectively. The research and development tax credit carryforwards have an unlimited carryforward period for California purposes, 20 year carryforward for federal purposes (begin to expire in fiscal year 2033), and 15 year carryforward for Minnesota purposes (begin to expire in fiscal year 2029).

Valuation allowances are reviewed each period on a tax jurisdiction by jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. Based on this analysis and considering all positive and negative evidence, we determined that as of May 26, 2024, a valuation allowance of federal $38.2 million, and state $8.0 million should be recorded as a result of uncertainty around the utilization of federal and state net operating losses, federal capital loss carryforwards, and Section 163(j) interest limitation carryfowards.

The accounting for uncertainty in income taxes recognized in an enterprise’s financial statements prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and the derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition.

During the year ended May 26, 2024 the Company recorded an adjustment to reduce the net operating loss carryforwards deferred tax asset, valuation allowance, and other deferred tax assets by $2.4 million, $2.9 million and $0.1 million respectively and increased deferred tax liabilities by $0.4 million. The Company has recorded the adjustments noted above in 2024 as an out-of-period adjustment and concluded that the adjustments were not material to the 2023 consolidated financial statements.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


(in thousands)	Year Ended
	May 26, 2024		May 28, 2023		May 29, 2022
Unrecognized tax benefits – beginning of the period	$	1,173	$	1,041	$	958
Gross increases – prior-period tax positions	—		16		—

Gross increases – current-period tax positions	98		116		83


Unrecognized tax benefits – end of the period	$	1,271	$	1,173	$	1,041

As of May 26, 2024, the total amount of net unrecognized tax benefits is $1.3 million, of which, $1.1 million, if recognized, would affect the effective tax rate. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. No interest and penalties have been accrued as of May 26, 2024. The Company does not expect its unrecognized tax benefits to increase or decrease within the next twelve months.

Due to tax attribute carryforwards, the Company is subject to examination for tax years 2012 forward for U.S. tax purposes. The Company was also subject to examination in various state jurisdictions for tax years 2012 forward.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-13

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/740/tableOfContent

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-21

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-17

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value Reconciliation of Level 3 (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Feb. 26, 2023	May 26, 2024	May 28, 2023	May 29, 2022
Investments [Abstract]
Decrease in fair value		$ (39,500)	$ 0	$ 0
Derivative Financial Instruments, Liabilities
Investments [Abstract]
Beginning Balance	$ 0	64,900	0
Fair value on issuance	$ 64,900
Decrease in fair value		(39,500)
Ending Balance		$ 25,400	$ 64,900	$ 0

Convertible Preferred Stock (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Jan. 09, 2023 USD ($) trading_day $ / shares shares	May 26, 2024 USD ($) $ / shares shares	May 28, 2023 USD ($) $ / shares shares	May 29, 2022 USD ($) shares	May 30, 2021 USD ($) shares
Class of Stock [Line Items]
Proceeds of convertible preferred stock, net of issuance costs (in shares) \| shares			39,000
Temporary equity, par value (usd per share) \| $ / shares		$ 0.001	$ 0.001
Convertible preferred stock		$ 42,587	$ 39,318	$ 0	$ 0
Unaccrued monetary penalties		3,500	500
Proceeds from sale of convertible preferred stock, net of issuance costs		0	38,082	0
Proceeds from Convertible Preferred Stock, net of issuance costs			38,082
Convertible Preferred Stock PIK dividend		$ 3,078	$ 1,163	$ 0
Temporary equity, shares issued (in shares) \| shares		42,000	39,000
Temporary equity, shares outstanding (in shares) \| shares		42,000	39,000	0	0
Series A Preferred Stock
Class of Stock [Line Items]
Proceeds of convertible preferred stock, net of issuance costs (in shares) \| shares	38,750
Temporary equity, par value (usd per share) \| $ / shares	$ 0.001
Payments of stock issuance costs	$ 700		$ 700
Dividend percentage rate	7.50%
Contingent Interest	1.00%
Convertible preferred stock		$ 43,000	39,300
Liquidation preference per share (usd per share) \| $ / shares	$ 7.00
Exchange limit	19.99%
Conversion limit	9.99%
Mandatory conversion right, threshold trading days \| trading_day	20
Mandatory conversion right minimum	150.00%
Proceeds from sale of convertible preferred stock, net of issuance costs	$ 38,800		38,800
Proceeds from Convertible Preferred Stock, net of issuance costs			$ 38,100
Convertible Preferred Stock PIK dividend		$ 3,100
Temporary equity, shares issued (in shares) \| shares		42,460	39,420
Temporary equity, shares outstanding (in shares) \| shares		42,460	39,420

Stock-based Compensation and Stockholders’ Equity - Schedule of PSU Fair Value Assumptions (Details) - PSU	May 20, 2024 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Price (in dollars per share)	$ 5.94
Expected life (in years)	5 years
Volatility	77.86%
Risk-free interest rate	4.41%
Dividend yield	0.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Restructuring Costs - Schedule of Costs (Details) - USD ($) $ in Thousands	12 Months Ended			60 Months Ended
	May 26, 2024	May 28, 2023	May 29, 2022	May 26, 2024
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 1,656	$ 4,184	$ 8,359	$ 31,612
Asset write-off costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0	0	3,127	13,893
Employee severance and benefit costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	234	2,542	405	4,333
Lease costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	1,036	96	2,072	5,150
Other restructuring costs
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 386	$ 1,546	$ 2,755	$ 8,236

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

Goodwill and Intangible Assets

12 Months Ended

May 26, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

Goodwill was $13.9 million as of both May 26, 2024 and May 28, 2023. There were no changes in goodwill during fiscal years 2024 and 2023. We have determined that Lifecore is the appropriate reporting unit for testing goodwill for impairment.

Intangible Assets

As of May 26, 2024 and May 28, 2023, the Company's intangible assets consisted of the following (in thousands):


		May 26, 2024				May 28, 2023
	Amortization Period (years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization

Customer relationships	12	$	3,700	$	3,700	$	3,700	$	3,700


Trademarks/tradenames		4,200		—		4,200		—

Total intangible assets		$	7,900	3,700		$	7,900	$	3,700

Amortization expense related to finite-lived intangible assets was $0.3 million for fiscal year 2022. As the finite-lived intangible assets were fully amortized as of May 29, 2022, there was no amortization expense during fiscal years 2023 and 2024 and there is no future amortization expense.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	May 26, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal Contingencies In the ordinary course of business, the Company is involved in various legal proceedings and claims. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal fees are expensed in the period in which they are incurred. Because recovery of amounts is contingent upon a legal settlement, no amounts have been recorded as recoverable costs through May 26, 2024. Confidential Settlement Agreement and Release On August 24, 2023, the Company reached a confidential settlement and release agreement with a third-party insurance underwriter as a result of a claim filed by the Curation business. In connection with this settlement agreement, the Company received a cash payment of $1.9 million on September 19, 2023, which is recorded as discontinued operations. SEC Subpoena On February 16, 2024, the Chicago Regional Office of the SEC issued a subpoena to the Company seeking documents and information concerning the Restatement. The Company is in the process of responding to the subpoena and intends to cooperate with the SEC. We cannot predict the duration or outcome of this matter at this time. Landlord Complaints On January 12, 2024, the landlord for a property leased by Curation filed a complaint of unlawful detainer against the Company in Santa Barbara County Superior Court, seeking possession of the building and alleging past due rent of approximately $0.2 million. On February 29, 2024, Curation surrendered possession of the premises to the landlord. The unlawful detainer action has thus been converted to an ordinary civil action. Landlord has filed an amended complaint against both Curation and the Company seeking to recover all rent which will accrue through the expiration of the lease, less any sums landlord collects from a replacement tenant. No trial date has been set yet. On January 12, 2024, a landlord for a different property leased by Curation delivered to the Company a pay or quit notice related to such property, seeking payment of past due rent of approximately $0.1 million or requesting Curation to vacate the property. The Company has accrued past due rents, but the ultimate exposure to loss will depend on future events and is not reasonably certain at this time. Other Litigation Matters In June of 2021, a complaint was filed against the company alleging multiple wage and hour claims. On June 6, 2022 the Company reached an agreement to settle all causes of action alleged by the Plaintiff under the California Labor Code, the California Business and Professionals Code, the applicable Wage Order, and the Private Attorneys General Act (the “PAGA”). In connection with the settlement agreement the Company recorded a $0.5 million charge, which is included in Loss from discontinued operations costs in the Consolidated Statements of Operations for the fiscal year ended May 28, 2023. Compliance Matters On December 1, 2018, the Company acquired all of the voting interests and substantially all of the assets of Yucatan (the “Yucatan Acquisition”), which owns a guacamole manufacturing plant in Mexico called Procesadora Tanok, S de RL de C.V. (“Tanok”). On October 21, 2019, the Company retained Latham & Watkins, LLP to conduct an internal investigation relating to potential environmental and Foreign Corrupt Practices Act (“FCPA”) compliance matters associated with regulatory permitting at the Tanok facility in Mexico. The Company subsequently voluntarily self-disclosed to the SEC and the U.S. Department of Justice (“DOJ”) the conduct under investigation, and these agencies commenced an investigation. The Company also disclosed the conduct under investigation to the Office of the Attorney General in Mexico, which in December 2021 decided (a) that Curation Foods, Inc., did not commit or participate in the criminal conduct disclosed, (b) no criminal action would be taken against Curation Foods, Inc., (c) that no criminal liability was established against Tanok and Yucatan after they were acquired by Curation Foods, Inc., and (d) the decisions do not apply to any individuals who may be responsible for misconduct. The Company also disclosed the misconduct to other regulators in Mexico. The conduct at issue began prior to the Yucatan Acquisition, and the agreement for the Yucatan Acquisition provides the Company with certain indemnification rights that may allow the Company to recover the cost of a portion of the liabilities that have been and may be incurred by the Company in connection with these compliance matters. On September 2, 2020, one of the former owners of Yucatan filed a lawsuit against the Company in Los Angeles County Superior Court for breach of employment agreement, breach of contract, breach of holdback agreement, declaratory relief and accounting, and related claims. The Plaintiff seeks over $10 million in damages, including delivery of shares of his stock held in escrow for the indemnification claims described above. On November 3, 2020, the Company filed an answer and cross-complaint against the Plaintiff and other former equity holders of Yucatan for fraud, indemnification, and other claims, and seeking no less than $80 million in damages. In fiscal 2022 and 2023, the Company reached settlements with several of the cross-defendants, pursuant to which the settling cross-defendants agreed that certain of the shares of stock they received when the Company acquired Yucatan be sold and the proceeds paid to the Company. The matter is proceeding against the Plaintiff and the remaining cross-defendants. On November 16, 2023, the Company and the U.S. Department of Justice (the “DOJ”) executed a letter (“Declination Letter”) in which the DOJ has declined to prosecute the Company for violations of the Foreign Corrupt Practices Act (the “FCPA”) involving the Company’s formerly-held subsidiary, Yucatan Foods L.P. (“Yucatan”). Pursuant to the Declination Letter, in connection with the DOJ’s declination to prosecute, in fiscal 2023 the Company agreed to pay disgorgement in the amount of $406,505, and to continue to fully cooperate with any ongoing government investigations and any prosecutions that might result in the future. The Company paid the disgorgement amount in full in fiscal 2024. At this stage, the ultimate outcome of these or any other investigations, legal actions, or potential claims that may arise from the matters under investigation is uncertain and the Company cannot reasonably predict the timing or outcomes, or estimate the amount of net loss after indemnification, or its effect, if any, on its financial statements. Separately, there are indemnification provisions in the purchase agreement that may allow the Company to recover costs for breach of the purchase agreement from the seller. Because recovery of amounts is contingent upon a legal settlement, no amounts have been recorded as recoverable costs through May 26, 2024.