What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-07-29 compared with 2020-08-14 · 449 added, 489 removed, 1017 unchanged (48% of the section changed)

13 unchanged sentences

Changes in Internal Controls over Financial Reporting

During fiscal year 2019, the Company completed the acquisition of Yucatan Foods.

As permitted by the Securities and Exchange Commission, Yucatan Foods was excluded from the assessment of internal control over financial reporting for the fiscal year ended May 26, 2019.

During fiscal year 2020, the Company integrated Yucatan Foods into its control environment and performed an assessment of internal controls over all the key processes of Yucatan Foods.

Subject to the foregoing, no changes in our internal control over financial reporting have occurred as of May 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table o f Contents

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended May 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

Table o f Contents

Table of Conten ts

Directors, Executive Officers and Corporate Governance

8 unchanged sentences

This information required by this item will be contained in the Registrant’s definitive proxy statement or in an amendment to this Annual Report on Form 10-K to be filed with the Securities and Exchange Commission not later than September 27, 2021 (120 days after the Registrant’s fiscal year end covered by this Annual Report on Form 10-K) and is incorporated herein by reference.

Table o f Contents

Table of Conten ts

Exhibits and Financial Statement Schedules

2 unchanged sentences

Consolidated Balance Sheets at May 30, 2021 and May 31, 2020.

Consolidated Statements of Operat ions for the Years Ended May 31, 2020, May 26, 2019, and May 27, 2018.

Consolidated Statements of C omprehensive (Loss) Income for the Years Ended May 31, 2020, May 26, 2019, and May 27, 2018.

Consolidated Statements of Operations for the Years Ended May 30, 2021, May 31, 2020 and May 26, 2019.

Consolidated Statements of Comprehensive (Loss) Income for the Years Ended May 30, 2021, May 31, 2020 and May 26, 2019.

Consolidated Statements of Changes in Stockholders' Equity for the Years Ended May 30, 2021, May 31, 2020 and May 26, 2019.

4 unchanged sentences

The exhibits listed in the accompanying Index of Exhibits are filed or incorporated by reference as part of this report.

Table o f Contents

Table of Conten ts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

4 unchanged sentences

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of May 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 14, 2020 expressed an unqualified opinion thereon.

Adoption of New Accounting Standards

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases, effective at the beginning of the year ended May 31, 2020, using the modified retrospective approach upon adoption of Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842) .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of May 30, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated July 29, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Goodwill and Trademarks/tradenames with Indefinite lives

Description of the Matter

At May 30, 2021, the Company’s goodwill was $69.3 million and trademarks/tradenames with indefinite lives was $25.3 million.

The carrying values of the Company’s Yucatan reporting unit’s goodwill and trademarks/tradenames with indefinite lives were $20.0 million and $12.4 million, respectively at May 30, 2021.

As discussed in Note 1 of the consolidated financial statements, goodwill and trademarks/tradenames with indefinite lives are assessed by the Company’s management for impairment at least annually, in the fiscal fourth quarter, unless there are indications of impairment at other points throughout the year.

Goodwill is tested for impairment at the reporting unit level.

The Company measured the fair value of the goodwill using an income approach and the fair value of trademarks/tradenames using a royalty savings method.

Table of Conten ts

Auditing the Company’s annual impairment test related to the Yucatan reporting unit’s goodwill and trademarks/tradenames with indefinite lives is complex and highly judgmental and required the involvement of our valuation specialist due to the significant judgment in estimating their fair values.

In particular, the fair value estimate of the Yucatan reporting unit’s goodwill is sensitive to assumptions such as net sales growth rates, gross margins and discount rate.

The Yucatan reporting unit’s trademarks/tradenames with indefinite lives are sensitive to assumptions such as net sales growth rates, royalty rate and discount rate.

These assumptions are forward-looking and sensitive to and affected by expected future market or economic conditions and industry and company-specific qualitative factors.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s impairment review process related to the goodwill and trademarks/tradenames with indefinite lives.

This included evaluating controls over the Company’s budgetary and forecasting process used to develop the estimated future earnings and cash flows used in estimating the fair value of the Yucatan reporting unit and trademarks/tradenames with indefinite lives.

We also tested controls over management’s review of the data used in their valuation models and review of the significant assumptions described above.

To test the estimated fair value of the Yucatan reporting unit and trademarks/tradenames with indefinite lives, we performed audit procedures that included, among others, assessing the methodologies, testing the significant assumptions discussed above used to develop the estimates of future earnings and cash flows and testing the completeness and accuracy of the underlying data.

We compared the significant assumptions used by management to current industry and economic trends, the Company’s historical results and other guideline companies within the same industry and evaluated how changes in the Company’s business may affect the significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the change in the fair value of the Yucatan reporting unit and trademarks/tradenames with indefinite lives resulting from changes in these assumptions.

We involved our valuation specialists to assist in reviewing the valuation methodology and the royalty and discount rate assumptions.

In addition, for goodwill we also tested the Company’s calculation of implied multiples of the reporting units, compared them to guideline companies and evaluated the resulting premium.

For trademarks/tradenames with indefinite lives, where applicable, we also assessed whether the assumptions used were consistent with those used in the goodwill impairment review process.

/s/ Ernst & Young LLP

1 unchanged sentence

San Francisco, California

August 14, 2020

Table o f Contents

July 29, 2021

Table of Conten ts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

In our opinion, Landec Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of May 30, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 31, 2020 and May 26, 2019, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended May 31, 2020, and the related notes and our report dated August 14, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 30, 2021 and May 31, 2020, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended May 30, 2021, and the related notes and our report dated July 29, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

16 unchanged sentences

San Francisco, California

August 14, 2020

Table o f Contents

July 29, 2021

Table of Conten ts

LANDEC CORPORATION

4 unchanged sentences

Cash and cash equivalents $ 1,295 $ 360

Accounts receivable, less allowance for doubtful accounts 76,206 69,565

Accounts receivable, less allowance for credit losses 70,013 76,206

Inventories 69,663 66,311

3 unchanged sentences

Property and equipment, net 179,559 192,338

Operating leases 25,321 —

Operating lease right-of-use assets 20,827 25,321

Goodwill 69,386 69,386

12 unchanged sentences

Current portion of long-term debt, net — 11,554

Other current liabilities, discontinued operations — 65

Total Current Liabilities 101,888 164,388

10 unchanged sentences

Retained earnings 38,580 71,245

Accumulated other comprehensive (loss) income ( 2,808 ) 64

Accumulated other comprehensive loss ( 1,358 ) ( 2,808 )

Total Stockholders’ Equity 202,784 231,044

1 unchanged sentence

See accompanying notes to the consolidated financial statements.

Table o f Contents

Table of Conten ts

LANDEC CORPORATION

9 unchanged sentences

Impairment of goodwill and intangible assets — 12,953 2,000

Legal settlement charge 1,763 — —

Restructuring costs 17,621 17,285 —

4 unchanged sentences

Interest expense, net ( 15,344 ) ( 9,603 ) ( 5,230 )

Other (expense) income ( 4,395 ) 1,600 2,900

Loss on debt refinancing ( 1,110 ) — —

Other (expense) income, net ( 11,689 ) ( 4,395 ) 1,600

Net (loss) income from continuing operations before taxes ( 40,466 ) ( 51,307 ) 3,640

5 unchanged sentences

Loss from discontinued operations, net of tax — — ( 1,711 )

Consolidated net (loss) income ( 38,191 ) 411 24,923

Non-controlling interest expense — — ( 94 )

Net (loss) income applicable to common stockholders $ ( 38,191 ) $ 411 $ 24,829

Net (loss) income ( 32,665 ) ( 38,191 ) 411

Basic net (loss) income per share:

10 unchanged sentences

See accompanying notes to the consolidated financial statements.

Table o f Contents

Table of Conten ts

LANDEC CORPORATION

2 unchanged sentences

May 30, 2021 May 31, 2020 May 26, 2019

Net (loss) income applicable to common stockholders $ ( 38,191 ) $ 411 $ 24,829

Net (loss) income $ ( 32,665 ) $ ( 38,191 ) $ 411

Other comprehensive (loss) income, net of tax:

Net unrealized (losses) gains on interest rate swaps, net of tax effect of $ 878 , $ 282 , and $( 123 )

Net unrealized gains (losses) on interest rate swaps, (net of tax effect of ($ 445 ), $ 878 , and $ 282 )

1,450 ( 2,872 ) ( 1,084 )

Other comprehensive (loss) income, net of tax 1,450 ( 2,872 ) ( 1,084 )

Total comprehensive (loss) income $ ( 41,063 ) $ ( 673 ) $ 25,545

Total comprehensive loss $ ( 31,215 ) $ ( 41,063 ) $ ( 673 )

See accompanying notes to the consolidated financial statements.

Table o f Contents

Table of Conten ts

LANDEC CORPORATION

3 unchanged sentences

Comprehensive

(Loss) Income Total

Stockholders’

Balance at May 27, 2018 27,702 $ 28 $ 142,087 $ 109,299 $ 1,148 $ 252,562

27,499 $ 27 $ 141,680 $ 84,470 $ 432 $ 226,609 $ 1,543

Issuance of stock under stock plans 203 1 55 — — 56 —

Issuance of stock under stock plans, net of shares withheld 197 — 327 — — 327

Issuance of common stock in connection with Yucatan Foods acquisition 1,203 1 15,067 — — 15,068

Taxes paid by Company for employee stock plans — — ( 700 ) — — ( 700 )

Stock-based compensation — — 3,560 — — 3,560

Payments to NCI — — — — — — ( 115 )

Net income — — — 411 — 411

Purchase of NCI — — ( 2,573 ) — — ( 2,573 ) ( 1,522 )

Other comprehensive income, net of tax

— — — — 716 716 —

Other comprehensive loss, net of tax — — — — ( 1,084 ) ( 1,084 )

Balance at May 26, 2019 29,102 29 160,341 109,710 64 270,144

27,702 28 142,087 109,299 1,148 252,562 —

Issuance of stock under stock plans

197 — 327 — — 327 —

Issuance of common stock in connection with Yucatan Foods acquisition 1,203 1 15,067 — — 15,068 —

ASC 842 transition adjustment — — — ( 274 ) — ( 274 )

Issuance of stock under stock plans, net of shares withheld 122 — 30 — — 30

Taxes paid by Company for employee stock plans — — ( 212 ) — — ( 212 )

Stock-based compensation — — 2,419 — — 2,419

— — — 411 — 411 —

Net loss — — — ( 38,191 ) — ( 38,191 )

Other comprehensive loss, net of tax — — — — ( 2,872 ) ( 2,872 )

Balance at May 31, 2020 29,224 29 162,578 71,245 ( 2,808 ) 231,044

29,102 29 160,341 109,710 64 270,144 —

ASC 842 transition adjustment

— — — ( 274 ) — ( 274 ) —

Issuance of stock under stock plans 122 — 30 — — 30 —

Issuance of stock under stock plans, net of shares withheld 109 — — — — —

Taxes paid by Company for employee stock plans — — ( 405 ) — — ( 405 )

— — ( 212 ) — — ( 212 ) —

Stock-based compensation — — 3,360 — — 3,360

— — 2,419 — — 2,419 —

Net loss — — — ( 32,665 ) — ( 32,665 )

Other comprehensive loss, net of tax

— — — — ( 2,872 ) ( 2,872 ) —

Other comprehensive income, net of tax — — — — 1,450 1,450

Balance at May 30, 2021 29,333 $ 29 $ 165,533 $ 38,580 $ ( 1,358 ) $ 202,784

29,224 $ 29 $ 162,578 $ 71,245 $ ( 2,808 ) $ 231,044 $ —

See accompanying notes to the consolidated financial statements.

Table o f Contents

Table of Conten ts

LANDEC CORPORATION

3 unchanged sentences

Cash flows from operating activities:

Consolidated net (loss) income $ ( 38,191 ) $ 411 $ 24,923

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation, amortization of intangibles and amortization of debt costs 18,838 15,230 12,412

Net (loss) income $ ( 32,665 ) $ ( 38,191 ) $ 411

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Depreciation, amortization of intangibles, debt costs and right-of-use assets 19,867 18,838 15,230

Loss on debt refinancing 1,110 — —

Stock-based compensation expense 3,360 2,419 3,560

Provision (benefit) for expected credit losses 418 ( 284 ) 421

Deferred taxes ( 7,893 ) ( 5,440 ) 910

Change in investment in non-public company, fair value 11,800 4,200 ( 1,600 )

Net loss on disposal of property and equipment 143 188 157

Change in contingent consideration liability ( 500 ) ( 3,500 ) ( 1,900 )

Net loss on disposal of property and equipment held and used 61 143 188

Loss on disposal of property and equipment related to restructuring, net 10,143 14,802 —

Other, net ( 74 ) 195 —

Impairment of goodwill and intangible assets — 12,953 2,000

Restructuring costs and impairment of assets charges 14,802 — —

Change in contingent consideration liability — ( 500 ) ( 3,500 )

Pacific Harvest note receivable reserve — 1,202 —

Other, net 195 — —

Changes in current assets and current liabilities:

Accounts receivable, net 5,775 ( 6,357 ) ( 9,281 )

Inventories ( 12,179 ) ( 10,929 ) ( 6,529 )

Inventory ( 3,352 ) ( 12,179 ) ( 10,929 )

Prepaid expenses and other current assets 7,941 ( 6,815 ) 1,601

3 unchanged sentences

Deferred revenue 778 ( 147 ) ( 2,377 )

Net cash (used in) provided by operating activities ( 17,041 ) 16,020 19,779

Net cash provided by (used in) operating activities 15,017 ( 17,041 ) 16,020

Cash flows from investing activities:

1 unchanged sentence

Proceeds from sales of property and equipment 12,913 2,434 264

Proceeds from collections of note receivable 364 545 —

Acquisition of Yucatan Foods (Note 2), net of cash acquired — ( 59,872 ) —

Issuance of note receivable — — ( 2,099 )

Proceeds from collections of notes receivable — 364 545

Proceeds from sale of investment in non-public company — — 7,000

Acquisition of Yucatan Foods (Note 2), net of cash acquired — — ( 59,872 )

Net cash used in investing activities ( 10,856 ) ( 23,888 ) ( 96,797 )

Cash flows from financing activities:

Proceeds from sale of common stock 30 327 56

Taxes paid by Company for employee stock plans ( 212 ) ( 700 ) ( 1,478 )

Proceeds from long-term debt 170,000 27,500 60,000

3 unchanged sentences

Payments for debt issuance costs ( 10,484 ) ( 1,576 ) ( 509 )

Purchase of non-controlling interest — — ( 4,095 )

Payments to non-controlling interest — — ( 115 )

Net cash provided by financing activities 40,017 79,026 13,292

Net decrease in cash, cash equivalents and restricted cash ( 912 ) ( 1,751 ) ( 2,518 )

Taxes paid by Company for employee stock plans ( 405 ) ( 212 ) ( 700 )

Proceeds from sale of common stock — 30 327

Net cash (used in) provided by financing activities ( 3,419 ) 40,017 79,026

Net increase (decrease) in cash, cash equivalents and restricted cash 742 ( 912 ) ( 1,751 )

Cash, cash equivalents and restricted cash, beginning of period $ 553 $ 1,465 $ 3,216

6 unchanged sentences

See accompanying notes to the consolidated financial statements.

Table o f Contents

Table of Conten ts

LANDEC CORPORATION

2 unchanged sentences

Landec Corporation and its subsidiaries (“Landec” or the “Company”) design, develop, manufacture, and sell differentiated products for food and biomaterials markets, and license technology applications to partners.

Landec’s biomedical company, Lifecore Biomedical, is a fully integrated contract development and manufacturing organization ("CDMO") that offers highly differentiated capabilities in the development, fill and finish of sterile, injectable pharmaceutical products in syringes and vials.

Landec’s biomedical company, Lifecore Biomedical, Inc.

("Lifecore"), is a fully integrated contract development and manufacturing organization ("CDMO") that offers highly differentiated capabilities in the development, fill and finish of sterile, injectable-grade pharmaceutical products in syringes and vials.

As a leading manufacturer of premium, injectable grade Hyaluronic Acid, Lifecore brings 36 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market.

Lifecore recognizes revenue in two different product categories, CDMO and Fermentation.

Landec’s natural food company, Curation Foods is focused on innovating and distributing plant-based foods with 100% clean ingredients to retail, club and foodservice channels throughout North America.

Landec’s natural food company, Curation Foods, Inc.

("Curation Foods"), is focused on innovating and distributing plant-based foods with 100% clean ingredients to retail, club and foodservice channels throughout North America.

Curation Foods is able to maximize product freshness through its geographically dispersed family of growers, refrigerated supply chain and patented BreatheWay packaging technology.

2 unchanged sentences

Included in the Curation Foods segment and fresh packaged salads and vegetables revenue disaggregation is O Olive Oil & Vinegar ( “ O ” ), which is a premier producer of California specialty olive oils and wine vinegars.

Also included in the Curation Foods segment are the dividends and Landec’s share of the change in the fair market value of the Company’s 26.9 % investment ownership of Windset, a leading edge grower of hydroponically-grown produce.

Also included in the Curation Foods segment are the dividends and Landec’s share of the change in the fair market value of the Company’s 26.9 % investment ownership of Windset Holdings 2010 Ltd.

(“Windset”), a leading edge grower of hydroponically-grown produce.

Basis of Presentation and Consolidation

5 unchanged sentences

A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters.

In May 2019, the Company discontinued the Now Planting business, and in May 2018, the Company discontinued the Food Export business.

As a result, the Now Planting business, which was launched during the second quarter of fiscal year 2019, and Food Export business were reclassified as a discontinued operation for all periods presented.

During fiscal year 2019, the Company re-packaged its GreenLine branded food service products to the Eat Smart brand, and wrote-off the remaining $ 2.0 million trademarks intangible assets.

In May 2019, the Company discontinued the Now Planting business.

As a result, the Now Planting business, which was launched during the second quarter of fiscal year 2019, was reclassified as a discontinued operation for all periods presented.

Arrangements that are not controlled through voting or similar rights are reviewed under the guidance for variable interest entities (“VIEs”).

3 unchanged sentences

(i) the power, through voting rights or similar rights to direct the activities of an entity that most significantly impact the entity’s economic performance, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity.

The Company reviewed the consolidation guidance and concluded that the partnership interest and equity investment in the non-public company by the Company are not VIEs.

Table o f Contents

The Company reviewed the consolidation guidance and concluded that the equity investment in the non-public company by the Company is not a VIE.

Reclassifications

Certain reclassifications have been made to prior year financial statements to conform to the current year presentation.

Table of Conten ts

Summary of Significant Accounting Policies

3 unchanged sentences

loss contingencies;

sales returns and allowances;

self-insurance liabilities;

sales returns and credit losses;

recognition and measurement of current and deferred income tax assets and liabilities;

the assessment of recoverability of long-lived and indefinite lived assets and inventory;

the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets), and inventory;

the valuation of investments;

11 unchanged sentences

Several of the raw materials the Company uses to manufacture its products are currently purchased from a single source, including some monomers used to synthesize Intelimer polymers, substrate materials for its breathable membrane products, and raw materials for its HA products.

The operations of Windset Holdings 2010 Ltd.

(“Windset”), in which the Company holds a 26.9 % minority investment, are predominantly located in British Columbia, Canada and Santa Maria, California.

Routinely, the Company evaluates the financial strength and ability for Windset to continue as a going concern.

During the fiscal year ended May 30, 2021, sales to the Company’s top five customers accounted for approximately 49 % of total revenue with the top two customers from the Curation Foods segment, Walmart, Inc.

(“Walmart”) and Costco Corporation (“Costco”) accounting for approximately 16 % and 15 %, respectively, of total revenues.

Lifecore did not have any individual customers that exceeded 5% of total revenues.

During the fiscal year ended May 31, 2020, sales to the Company’s top five customers accounted for approximately 48 % of total revenue with the top two customers from the Curation Foods segment, Walmart and Costco accounting for approximately 18 % and 15 %, respectively, of total revenues.

As of May 30, 2021, the top two customers, Walmart and Costco represented approximately 11 % and 8 %, respectively, of total accounts receivable.

Lifecore had one customer that represented 11 % of total accounts receivable at the end of fiscal year 2021.

During the fiscal year ended May 26, 2019, sales to the Company’s top five customers accounted for approximately 43 % of total revenue with the top two customers from the Curation Foods segment, Walmart and Costco accounting for approximately 16 % and 14 %, respectively, of total revenues.

Lifecore did not have any individual customers that exceeded 5% of total revenues.

As of May 31, 2020, the top two customers, Walmart and Costco represented approximately 13 % and 7 %, respectively, of total accounts receivable.

5 unchanged sentences

The Company regularly evaluates its long-lived assets for indicators of possible impairment.

Table o f Contents

Financial Instruments

2 unchanged sentences

The fair value of long-term debt and lines of credit approximates their carrying value.

Table of Conten ts

Cash Flow Hedges

4 unchanged sentences

The accounting for changes in the fair value of the derivative instrument depends on the intended use of the derivative instrument and the resulting designation.

Pursuant to the adoption of ASU 2017-12, for derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive (loss) income (“AOCI”) in Stockholders’ Equity.

Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statement of Operations as impacted by the hedge item when the hedged item affects earnings.

For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive loss (“AOCL”) in Stockholders’ Equity.

Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statement of Operations as impacted when the hedged item affects earnings.

To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions.

During the third quarter of fiscal year 2021, the Company discontinued its hedge accounting prospectively since it was determined that the derivatives are no longer highly effective in offsetting changes in the net investment.

The derivatives continue to be carried at fair value in the accompanying Consolidated Balance Sheets with changes in their fair values from the date of discontinued hedge accounting recognized in current period earnings in Other expense (income), net in the Consolidated Statements of Operations.

Amounts previously accumulated in AOCL during the period of effectiveness will continue to be realized over the remaining term of the underlying forecasted debt payments as a component of AOCL in Stockholders’ Equity.

Accumulated Other Comprehensive Loss

Comprehensive income consists of two components, net (loss) income 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) income.

The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments accounted for as a cash flow hedge.

The components of AOCI, net of tax, are as follows (in thousands):

Unrealized Losses on

Cash Flow Hedge

The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments.

The components of AOCL, net of tax, are as follows (in thousands):

Balance as of May 31, 2020 $ ( 2,808 )

1 unchanged sentence

Amounts reclassified from OCI 1,794

Other comprehensive loss, net ( 2,872 )

Other comprehensive (loss) income, net 1,450

Balance as of May 30, 2021 $ ( 1,358 )

1 unchanged sentence

Based on these assumptions, management believes the fair market values of the Company’s financial instruments are not significantly different from their recorded amounts as of May 30, 2021 and May 31, 2020.

Accounts Receivable and Sales Returns and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and doubtful accounts.

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.

Further, on a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts and estimated losses resulting from the inability of its customers to make required payments.

The allowance for doubtful accounts is determined based on review of the overall condition of accounts receivable balances and review of significant past due accounts.

The allowance for doubtful accounts is based on specific identification of past due amounts and for accounts over 90-days past due.

Table o f Contents

The changes in the Company’s allowance for sales returns and doubtful accounts are summarized in the following table (in thousands):

period Adjustments resulting from acquisitions Adjustments

expenses Write offs,

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 forecasts 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 pools 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 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

Table of Conten ts

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 changes in the Company’s allowance for sales returns and credit losses are summarized in the following table (in thousands):

period Adjustments resulting from acquisitions Provision (benefit) for expected credit losses Write offs,

recoveries Balance at

8 unchanged sentences

The Company’s contract liabilities as of May 30, 2021, and May 31, 2020, were $ 0.9 million and $ 0.0 million, respectively.

Revenue recognized during fiscal year 2020 that was included in the contract liability balance at the beginning of the fiscal 2020 period was $ 0.2 million.

No revenue was recognized during fiscal year 2021 that was included in the contract liability balance at the beginning of the fiscal 2021.

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 the Company has completed its performance obligations under a contract and control of the product is transferred to the customer.

Substantially all revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer.

Revenue for development service contracts are generally recognized based upon the labor hours expended relative to the total expected hours as a measure of progress to depict transfer of control of the service over time.

The services are not distinct and are accounted for as a single performance obligation for each customer.

The Company’s standard terms of sale are generally included in its contracts, purchase orders, and invoices.

As such, all revenue is considered revenue recognized from contracts with customers.

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.

Curation Foods

Curation Foods’ standard terms of sale are generally included in its contracts and purchase orders.

Revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer.

Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold.

The Company has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation.

The Company’s standard payment terms with its customers generally range from 30 days to 90 days.

Curation Foods has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation.

Curation Foods’ standard payment terms with its customers generally range from 30 days to 90 days.

Certain customers may receive cash-based incentives (including:

volume rebates, discounts, and promotions), which are accounted for as variable consideration to the Company’s performance obligations.

The Company estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenues recognized towards its performance obligations.

The Company does not anticipate significant changes in its estimates for variable consideration.

The Company disaggregates its revenue by segment product lines based on how it markets its products and reviews results of operations.

The following tables disaggregate segment revenue by major product lines (in thousands):

volume rebates, discounts, and promotions), which are accounted for as variable consideration to Curation Foods’ performance obligations.

Curation Foods estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenue recognized towards its performance obligations.

The Company has not historically had and does not anticipate significant changes in its estimates for variable consideration.

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.

Table of Conten ts

Lifecore provides aseptic formulation and filling of syringes and vials 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 or vials with our HA, the goods are not distinct in the context of the contract.

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.

Development Services

Lifecore provides product development services to assist its customers in obtaining regulatory approval for the commercial sale of their drug product.

These services include activities such as technology development, material component changes, analytical method development, formulation development, pilot studies, stability studies, process validation and production of materials for use within clinical studies.

The Company’s customers benefit from the expertise of its scientists who have extensive experience performing such tasks.

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.

Lifecore manufactures and sells pharmaceutical-grade sodium hyaluronate (“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.

The Company disaggregates its revenue by segment based on how it markets its products and services and reviews results of operations.

The following tables disaggregate segment revenue by major product lines and services (in thousands):

Curation Foods:

4 unchanged sentences

Total $ 446,074 $ 504,533 $ 481,686

Table o f Contents

May 30, 2021 May 31, 2020 May 26, 2019

Contract development and manufacturing organization ("CDMO")

Contract development and manufacturing organization

$ 75,297 $ 64,781 $ 54,439

1 unchanged sentence

Total $ 98,087 $ 85,833 $ 75,873

The Company includes in cost of sales all the costs related to the sale of products.

These costs include the following:

raw materials (including produce, packaging, syringes and fermentation and purification supplies), direct labor, overhead (including indirect labor, depreciation, and facility related costs) and shipping and shipping related costs.

Table of Conten ts

Shipping and Handling Costs

6 unchanged sentences

Reconciliation of Cash and Cash Equivalents and Cash as presented on the Statements of Cash Flows

The following table provides a reconciliation of cash, cash equivalents, and cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands):

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in thousands):

May 30, 2021 May 31, 2020 May 26, 2019

1 unchanged sentence

Restricted cash — 193 385

Cash, discontinued operations — — ( 8 )

Cash, cash equivalents and restricted cash $ 1,295 $ 553 $ 1,465

Restricted Cash

The Company was required to maintain restricted cash of $ 0.0 million as of May 30, 2021, $ 0.2 million as of May 31, 2020, and $ 0.4 million as of May 26, 2019 related to certain collateral requirements for obligations under its workers’ compensation programs.

1 unchanged sentence

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

As of May 31, 2020 and May 26, 2019, inventories consisted of (in thousands):

As of May 30, 2021 and May 31, 2020, inventories consisted of the following (in thousands):

May 30, 2021 May 31, 2020

3 unchanged sentences

Total inventories $ 69,663 $ 66,311

Table o f Contents

If the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value.

The Company also records a provision for slow moving and obsolete inventories based on the estimate of demand for its products.

Table of Conten ts

Advertising Expense

1 unchanged sentence

Advertising expense for the Company for fiscal years 2021, 2020 and 2019 was $ 0.9 million, $ 1.8 million and $ 1.3 million, respectively.

Notes and Advances Receivable

Curation Foods issues notes and makes advances to produce growers for their crop and harvesting costs primarily for the purpose of sourcing crops for Curation Foods’ business.

Notes and advances receivable are generally recovered during the growing season (less than one year) using proceeds from the crops sold to Curation Foods.

Notes are interest bearing obligations, evidenced by contracts and notes receivable.

These notes and advances receivable are secured by perfected liens on crops, have terms that range from three to nine months, and are reviewed at least quarterly for collectability.

A reserve is established for any note or advance deemed to not be fully collectible based upon an estimate of the crop value or the fair value of the security for the note or advance.

Notes or advances outstanding at May 31, 2020 and May 26, 2019, were $ 0.0 million and $ 2.0 million, respectively and are recorded in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets.

Related Party Transactions

21 unchanged sentences

The Company tests its indefinite-lived intangible assets for impairment at least annually.

Application of the impairment tests for indefinite-lived intangible assets requires significant judgment by management, including identification of

Table o f Contents

reporting units, assignment of assets and liabilities to reporting units, assignment of intangible assets to reporting units, which judgments are inherently uncertain.

Application of the impairment tests for indefinite-lived intangible assets requires significant judgment by management, including identification of reporting units, assignment of assets and liabilities to reporting units, assignment of intangible assets to reporting units, which judgments are inherently uncertain.

During fiscal year 2020, the Company recorded impairment charges of $ 1.3 million and $ 0.5 million related to O property and equipment, and finite-lived intangible assets (customer relationships), respectively.

2 unchanged sentences

The impairment charge of the customer relationships intangible asset impairment charge is included in the line item “impairment of goodwill and intangible assets” on the Consolidated Statements of Operations, and is in the Curation Foods business segment.

Table of Conten ts

Impairment Review of Goodwill and Indefinite-Lived Intangible Asset

7 unchanged sentences

The Company determines the fair value using both an income approach and a market approach.

Under the income approach, fair value is determined based on estimated future cash flows, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of the Company and the rate of return an outside investor could expect to earn.

Under the market-based approach, information regarding the Company is utilized along with publicly available industry information to determine earnings multiples that are used to value the Company.

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.

To determine the fair value of a reporting unit as part of its quantitative test, the Company uses a discounted cash flow ("DCF") method under the 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.

Under this approach, which requires significant judgments, the Company estimates the future cash flows of each reporting unit 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.

1 unchanged sentence

Changes in such estimates or the application of alternative assumptions could produce different results.

Under the market-based approach, information regarding the Company is utilized along with publicly available industry information to determine earnings multiples that are used to value the Company.

For trademarks and other intangible assets with indefinite lives, the Company performs a quantitative analysis to test for impairment.

7 unchanged sentences

The O impairment charges were primarily a result of the recently updated (lowered) financial outlook for the O reporting unit, related to a recent shift in strategic focus within the Curation Foods business segment.

The Yucatan Foods' impairment charges were primarily a result of an increase in the Yucatan Foods carrying value and in increase in discount rate, as a result of uncertainty in forecasting the effects of COVID-19 and general economic uncertainties.

The Yucatan Foods impairment charges were primarily a result of an increase in the Yucatan Foods carrying value and an increase in the discount rate, as a result of uncertainty in forecasting the effects of COVID-19 and general economic uncertainties.

These impairment charges are included in the line item “impairment of goodwill and intangible assets” on the Consolidated Statements of Operations, and both are in the Curation Foods business segment.

Table o f Contents

During fiscal year 2019, the Company re-packaged its GreenLine branded food service products to the Eat Smart brand, and recorded an impairment charge for the remaining $ 2.0 million trademarks intangible assets.

Subsequent to the 2020 annual impairment test, there have been no significant events or circumstances affecting the valuation of goodwill or intangibles that indicate a need for goodwill or intangibles to be further tested for impairment.

Other than the goodwill attributable to the Food Export business segment, which was written off pursuant to the Company discontinuing its operations during fiscal 2018, and the goodwill write-offs discussed above, there were no other impairment losses for goodwill during fiscal years 2020, 2019, and 2018.

Other than the goodwill write-offs discussed above, there were no other impairment losses for goodwill during fiscal years 2021, 2020 and 2019.

Table of Conten ts

Investment in Non-Public Company

2 unchanged sentences

See Note 3 – Investment in Non-public Company for further information.

Partial Self-Insurance on Employee Health and Workers Compensation Plans

The Company provides health insurance benefits to eligible employees under self-insured plans whereby the Company pays actual medical claims subject to certain stop loss limits and self-insures its workers compensation claims.

The Company records self-insurance liabilities based on actual claims filed and an estimate of those claims incurred but not reported.

Any projection of losses concerning the Company’s liability is subject to a high degree of variability.

Among the causes of this variability are unpredictable external factors such as inflation rates, changes in severity, benefit level changes, medical costs, and claims settlement patterns.

This self-insurance liability is included in accrued liabilities in the accompanying Consolidated Balance Sheets and represents management’s best estimate of the amounts that have not been paid as of May 31, 2020 and May 26, 2019.

It is reasonably possible that the expense the Company ultimately incurs could differ and adjustments to future reserves may be necessary.

Subsequent to fiscal year end, 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., see Note 15 - Subsequent Events.

Business Interruption Insurance Recoveries

5 unchanged sentences

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

Non-Controlling Interest

The Company reports all non-controlling interests as a separate component of stockholders’ equity.

The non-controlling interest’s share of the income or loss of the consolidated subsidiary is reported as a separate line item in our Consolidated Statements of Operations, following the consolidated net (loss) income caption.

During the fiscal fourth quarter of 2018, the Company purchased the remaining 40 % non-controlling interest of its subsidiary, Apio Cooling, LP (“Apio Cooling”), for approximately $ 4.7 million in cash.

The increase in the Company’s ownership interest in Apio Cooling was accounted for as an equity transaction.

The Company recorded a decrease in additional paid-in capital of approximately $ 2.6 million, which represents the difference between the cash paid and the book value of the Apio Cooling non-controlling interest account, which was approximately $ 1.5 million, immediately preceding the purchase.

Table o f Contents

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.

18 unchanged sentences

Diluted common equivalent shares consist of stock options and restricted stock units, calculated using the treasury stock method.

Table of Conten ts

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

(in thousands, except per share amounts) May 30, 2021 May 31, 2020 May 26, 2019

Net (loss) income applicable to common stockholders $ ( 38,191 ) $ 411 $ 24,829

Net (loss) income $ ( 32,665 ) $ ( 38,191 ) $ 411

Weighted average shares for basic net (loss) income per share 29,294 29,162 28,359

3 unchanged sentences

Diluted net (loss) income per share $ ( 1.12 ) $ ( 1.31 ) $ 0.01

Due to the Company’s net loss in fiscal year 2020, the net loss per share for fiscal year 2020 includes only the weighted average shares outstanding and thus excludes 0.2 million of outstanding RSUs as such impact would be antidilutive.

Options to purchase 1.7 million, 1.6 million, and 1.5 million shares of Common Stock at a weighted average exercise price of $ 12.71 , $ 13.74 , and $ 13.80 per share were outstanding during fiscal years ended May 31, 2020, May 26, 2019, and May 27, 2018, respectively, but were not included in the computation of diluted net income per share because the options’ exercise price was greater than the average market price of the common stock and, therefore, their inclusion would be antidilutive.

Table o f Contents

Due to the Company’s net loss in fiscal years 2021 and 2020, the net loss per share for fiscal years 2021 and 2020 includes only the weighted average shares outstanding and thus excludes 0.3 million and 0.2 million of outstanding restricted stock unit awards ("RSUs"), respectively, as such impact would be antidilutive.

Options to purchase 1.7 million, 1.7 million, and 1.6 million shares of Common Stock at a weighted average exercise price of $ 11.36 , $ 12.71 , and $ 13.74 per share during the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019, respectively, were not included in the computation of diluted net (loss) income per share due to the net loss in fiscals years 2021 and 2020, or because the options’ exercise price was greater than the average market price of the common stock and, therefore, their inclusion would be antidilutive.

Research and Development Expenses

2 unchanged sentences

Accounting for Stock-Based Compensation

The Company’s stock-based awards include stock option grants and restricted stock unit awards (“RSUs”).

The Company’s stock-based awards include stock option grants and RSUs.

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.

13 unchanged sentences

The Company has not elected the fair value option for any of its other eligible financial assets or liabilities.

Table of Conten ts

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

4 unchanged sentences

The fair value of the Company’s interest rate swap contracts is determined based on model inputs that can be observed in a liquid market, including yield curves, and is categorized as a Level 2 fair value measurement and is included in Other assets or Other non-current liabilities in the accompanying Consolidated Balance Sheets.

As of May 26, 2019, the fair value of the Company’s contingent consideration liability from the acquisition of O utilized significant unobservable inputs, including projected earnings before interest, taxes, depreciation and amortization (“EBITDA”), and discount rates.

As a result, the Company’s contingent consideration liability associated with the O acquisition was considered a Level 3 measurement liability and is included in Other non-current liabilities in the accompanying Consolidated Balance Sheets.

The earn-out period ended during fiscal 2020 and, as such, there is no contingent consideration liability as of May 31, 2020.

Table o f Contents

In determining the fair value of the Company’s contingent consideration liability, the Company utilized the following significant unobservable inputs in the discounted cash flow models:

Cost of debt 5.1 % to 5.5 %

Market price of risk adjustment 14 %

EBITDA volatility 28 %

As of May 30, 2021, related to Curation Foods’ distribution facility in Rock Hill, South Carolina we have $ 0.5 million in prepaid expenses and other current assets within the Consolidated Balance Sheets meeting the criteria of assets held for sale.

As of May 31, 2020, related to Curation Foods’ salad dressing plant in Ontario, California we have $ 2.6 million of property and equipment, net included in property and equipment, net within the Consolidated Balance Sheets meeting the criteria of assets held for sale.

These assets are recognized at the lower of cost or fair value less cost to sell using market approach.

The fair value of these assets are classified as level 3 in the fair value hierarchy due to mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participants.

See Note 4 and Note 14 for additional information.

The Company has elected the fair value option of accounting for its investment in Windset.

1 unchanged sentence

As a result, the Company’s investment in Windset is considered to be a Level 3 measurement investment.

The change in the fair value of the Company’s investment in Windset for the twelve months ended May 31, 2020, was due to the Company’s 26.9 % minority interest in the change in the fair market value of Windset during the period.

In determining the fair value of the investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models:

May 31, 2020 May 26, 2019

Revenue growth rates 6 % to 7 %

In determining the fair value of the Company's investment in Windset, the Company utilizes the following significant unobservable inputs in the discounted cash flow models:

May 30, 2021 Range (Weighted Average) May 31, 2020 Range (Weighted Average)

Revenue growth rates 7 % ( 6.9 )%

6 % to 7 % ( 6.4 )%

Expense growth rates 0 % to 8 % ( 5.5 )%

Income tax rates 15 % 15 %

6 % to 8 % ( 6.6 )%

Discount rates 10 % 12 %

The revenue growth, expense growth, and income tax rate assumptions are considered the Company’s best estimate of the trends in those items over the discount period.

The revenue growth and expense growth rate assumptions are considered the Company’s best estimate of the trends in those items over the discount period.

The discount rate assumption takes into account the risk-free rate of return, the market equity risk premium, and the Company’s specific risk premium and then applies an additional discount for lack of liquidity of the underlying securities.

5 unchanged sentences

10% increase in expense growth rates $ ( 3,200 )

10% increase in income tax rates $ ( 300 )

10% increase in discount rates $ ( 1,300 )

1 unchanged sentence

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):

Table of Conten ts

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

Fair Value at May 30, 2021 Fair Value at May 31, 2020

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Interest rate swap contracts $ — $ — $ — $ — $ 644 $ —

Assets held for sale - nonrecurring $ — $ — $ 515 $ — $ — $ 2,607

Investment in non-public company — — 45,100 — — 56,900

1 unchanged sentence

Interest rate swap contracts $ — $ 1,736 $ — $ — $ 3,578 $ —

Contingent consideration liability — — — — — 500

Total liabilities $ — $ 1,736 $ — $ — $ 3,578 $ —

Table o f Contents

The following table reflects the fair value roll forward reconciliation of Level 3 assets and liabilities measured at fair value for the twelve months ended May 30, 2021 (in thousands):

Windset Investment Contingent Consideration Liability

Windset Investment

Balance as of May 31, 2020 $ 56,900

1 unchanged sentence

Balance as of May 30, 2021 $ 45,100

As of May 31, 2020, related to Curation Foods’ salad dressing plant in Ontario, California we have $ 2.6 million of property and equipment, net included in Property and equipment, net within the Consolidated Balance Sheets meeting the criteria of assets held for sale.

These assets are recognized at the lower of cost or fair value less cost to sell using market approach, and are categorized as level 3.

The fair value of these assets are classified as Level 3 in the fair value hierarchy due to mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participant.

See Note 4 and Note 14 for additional information

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”).

ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for incomes taxes.

ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 20, 2020.

The Company early adopted this guidance in the third quarter of fiscal year 2020, which had a favorable impact of $ 0.4 million.

This early adoption had no impact to the Company’s prior year financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use-assets.

Effective May 27, 2019, the Company adopted the ASU on a modified retrospective basis.

Prior period amounts were not adjusted and continue to be reported in accordance with historical accounting policies under ASC 840:

Leases (Topic 840).

The Company elected the package of practical expedients under which the Company has not reassessed prior conclusions about lease classification and initial direct costs.

The Company elected the hindsight expedient to evaluate lease terms, and made a policy election that does not recognize right-of-use assets and lease liabilities related to short-term leases.

Upon adoption of ASU 2016-02, the Company recorded a transitional adjustment of $ 0.3 million to opening retained earnings to write off the difference in deferred rent balances from prior periods for operating leases with non-level rent.

The difference arises from recalculation of deferred rent after applying updated lease terms as a result of applying hindsight.

Additionally, the adoption of the standard had a significant impact in the Consolidated Balance Sheets where at the time of the adoption at the beginning of fiscal year 2020, the Company recorded $ 31.1 million of operating lease liabilities, along with $ 30.0 million of operating lease right-of-use assets.

This change had no impact on the Company’s ability to meet its loan covenants as the impact from the adoption of ASU 2016-02 was taken into consideration when determining its loan covenants.

Stock based Compensation

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting (“ASU 2018-07”).

ASU 2018-07 primarily expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees.

ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.

We adopted ASU 2018-07 on May 27, 2019, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

Table o f Contents

Cash Flow Hedges

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) :

Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”).

ASU 2017-12 better aligns hedge accounting with the Company’s risk management activities, simplifies the application of hedge accounting, and improves transparency as to the scope and results of hedging programs.

ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.

We adopted ASU 2017-12 on May 27, 2019, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

ASU 2020-04 provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR).

The guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020.

The new guidance provides optional expedients and exceptions to apply generally accepted accounting principles to contract modifications and hedging relationships, subject to certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The Company has elected the optional expedients for its cash flow hedges to allow it to continue applying hedge accounting and not apply certain modification accounting requirements as debt and interest rate swaps transition from the LIBOR reference rate, if certain criteria are met.

Such expedients are allowed in order to reduce the operational burden likely to arise in accounting for contract modification and hedge accounting resulting from reference rate reform.

Companies can adopt the ASU immediately, however the guidance will only be available through December 31, 2022.

We adopted ASU 2020-04 on March 12, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

Recently Issued Pronouncements to be Adopted

Cloud Computing Arrangements

3 unchanged sentences

Early application is permitted.

The Company is currently assessing the future impact of this update on its consolidated financial statements and related disclosures.

The Company adopted ASU 2018-15 on June 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

Fair Value Measurement

3 unchanged sentences

ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company is currently assessing the future impact of this update on its consolidated financial statements and related disclosures.

The Company adopted ASU 2018-13 on June 1, 2020, and the adoption of this standard did not have an impact on the Company’s consolidated financial statements.

As required by ASU 2018-13, the Company included additional disclosures in the Fair Value Measurement section related to the range and weighted average rates used to develop significant inputs for the Level 3 investment.

Financial Instruments – Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments —Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

ASU 2016-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The standard will replace the previous “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost which will generally result in the earlier recognition of allowances for credit losses.

This ASU will be effective for the Company beginning June 1, 2020.

The Company will adopt this ASU using a modified-retrospective approach, and will recognize a cumulative-effect adjustment to the opening balance of retained earnings as of the date of adoption.

The Company is in the preliminary stages of our implementation

Table o f Contents

initiatives including identifying the financial assets that are within the scope of the standard, developing an approach for estimating our expected credit losses for these assets, and evaluating the disclosures required under the standard.

The Company is continuing its analysis of certain aspects of the standard and currently does not anticipate the adoption of this ASU will have a material impact on the Company's financial position, results of operations and cash flows;

however, the Company's assessment will be finalized during the first quarter of 2021.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, and Topic 825, Financial Instruments , which provides practical expedients and policy elections related to the presentation and disclosure of accrued interest and the related allowance for credit losses and clarifies how to disclose line-of-credit arrangements that are converted to term loans.

ASU 2019-04 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company is currently assessing the future impact of this update on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments —Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13” or "ASC 326"), which requires measurement and recognition of expected credit losses for financial assets held.

Effective June 1, 2020, the Company adopted ASC 326 using the transition method introduced by ASU 2016-13.

The adoption of ASC 326 did not have a material impact on our consolidated financial statements.

Under ASC 326, the Company changed its policy for assessing credit losses to include consideration of a broader range of information to estimate credit losses over the life of its financial assets.

As of May 30, 2021 the financial assets of the

Table of Conten ts

Company within the scope of the assessment comprised of trade accounts receivable, contract assets, and deposits.

See the Accounts Receivable and Sales Returns and Allowance for Credit Losses section within Note 1 for further discussion of the Company's accounting for credit losses.

Yucatan Foods Acquisition

19 unchanged sentences

The following is a summary of the amounts recognized in accounting for the Yucatan Foods acquisition:

Table o f Contents

Table of Conten ts

(In thousands)

33 unchanged sentences

The earn out period expired in March 2020, with no payments made under the contractual provisions of the earn out arrangement.

As of May 31, 2020, May 26, 2019, and May 27, 2018, the contingent consideration liability was $ 0.0 million, $ 0.5 million, and $ 4.0 million, respectively, representing the present value of the expected earn out payments.

As of May 30, 2021 and May 31, 2020, there was no contingent consideration liability.

The reduction in the contingent consideration liability was $ 0.5 million and $ 3.5 million for fiscal years 2020 and 2019, respectively, and is recorded as a reduction to selling, general, and administrative expense in the accompanying Consolidated Statements of Operations.

The $ 3.5 million reduction during fiscal year 2019 was due to a very poor olive harvest in California during 2018

Table o f Contents

resulting in substantially lower volumes of olive oil available for sale over the next twelve months.

The $ 3.5 million reduction during fiscal year 2019 was due to a very poor olive harvest in California during 2018 resulting in

Table of Conten ts

substantially lower volumes of olive oil available for sale over the next twelve months.

This, combined with a slower than anticipated apple cider vinegar sales reduced the current projected EBITDA through fiscal year 2020.

3 unchanged sentences

On July 15, 2014, Curation Foods increased its investment in Windset by purchasing from the Newell Capital Corporation an additional 68 common shares and 51,211 junior preferred shares of Windset for $ 11.0 million.

After this purchase, the Company’s common shares represent a 26.9 % ownership interest in Windset.

The Senior A preferred shares yield a cash dividend of 7.5 % annually.

The dividend is payable within 90 days of each anniversary of the execution of the Windset Purchase Agreement.

The non-voting junior preferred stock does not yield a dividend unless declared by the Board of Directors of Windset and no such dividend has been declared.

The Shareholders’ Agreement between Curation Foods and Windset, as amended on March 15, 2017, includes a put and call option (the “Put and Call Option”), which can be exercised on or after March 31, 2022, whereby Curation Foods can exercise the put to sell its common, Senior A preferred shares, and junior preferred shares to Windset, or Windset can exercise the call to purchase those shares from Curation Foods, in either case, at a price equal to 26.9 % of the fair market value of Windset’s common shares, plus the liquidation value of the preferred shares of $ 20.1 million ($ 15.0 million for the Senior A preferred shares and $ 5.1 million for the junior preferred shares).

Under the terms of the arrangement with Windset, the Company is entitled to designate one of five members on the Board of Directors of Windset.

After this purchase, the Company’s common shares represented a 26.9 % ownership interest in Windset.

The Senior A preferred shares yielded a cash dividend of 7.5 % annually.

The dividend was payable within 90 days of each anniversary of the execution of the Windset Purchase Agreement.

The non-voting junior preferred stock did not yield a dividend unless declared by the Board of Directors of Windset and no such dividend has been declared.

The Shareholders’ Agreement between Curation Foods and Windset, as amended on March 15, 2017, included a put and call option (the “Put and Call Option”), which was exercisable on or after March 31, 2022, whereby Curation Foods could exercise the put to sell its common, Senior A preferred shares, and junior preferred shares to Windset, or Windset could exercise the call to purchase those shares from Curation Foods, in either case, at a price equal to 26.9 % of the fair market value of Windset’s common shares, plus the liquidation value of the preferred shares of $ 20.1 million ($ 15.0 million for the Senior A preferred shares and $ 5.1 million for the junior preferred shares).

Under the terms of the arrangement with Windset, the Company was entitled to designate one of five members on the Board of Directors of Windset.

On October 29, 2014, Curation Foods further increased its investment in Windset by purchasing 70,000 shares of Senior B preferred shares for $ 7.0 million.

The Senior B preferred shares pay an annual dividend of 7.5 % on the amount outstanding at each anniversary date of the Windset Purchase Agreement.

The Senior B preferred shares purchased by Curation Foods have a put feature whereby Curation Foods can sell back to Windset the Senior B preferred shares for $ 7.0 million at any time after October 29, 2017.

The Senior B preferred shares paid an annual dividend of 7.5 % on the amount outstanding at each anniversary date of the Windset Purchase Agreement.

The Senior B preferred shares purchased by Curation Foods had a put feature whereby Curation Foods could sell back to Windset the Senior B preferred shares for $ 7.0 million at any time after October 29, 2017.

During the fourth quarter of fiscal year 2019, the Company exercised its put feature and sold the 70,000 shares of Senior B preferred shares back to Windset for $ 7.0 million.

The investment in Windset does not qualify for equity method accounting as the investment does not meet the criteria of in-substance common stock due to returns through the annual dividend on the non-voting senior preferred shares that are not available to the common stock holders.

As the put and call options require all of the various shares to be put or called in equal proportions, the Company has deemed that the investment, in substance, should be treated as a single security for purposes of accounting.

As the put and call options required all of the various shares to be put or called in equal proportions, the Company has deemed that the investment, in substance, should be treated as a single security for purposes of accounting.

The fair value of the Company’s investment in Windset was determined utilizing the Windset Purchase Agreement’s put/call calculation for value and a discounted cash flow model based on projections developed by Windset that were reviewed by Landec, and considers the put and call conversion options.

1 unchanged sentence

These two discounted cash flow models' estimate for fair value are then weighted.

Assumptions included in these discounted cash flow models will be evaluated quarterly based on Windset’s actual and projected operating results to determine the change in fair value.

The Company recorded $ 1.1 million in dividend income for the fiscal year ended May 31, 2020, and $ 1.7 million for each of the fiscal years ended May 26, 2019 and May 27, 2018.

The decrease in the fair market value of the Company’s investment in Windset for the fiscal year ended May 31, 2020 and was $ 4.2 million which is included in Other income (expense) in the accompanying Consolidated Statements of Operations.

The increase in the fair market value of the Company’s investment in Windset for the fiscal years ended May 26, 2019 and May 27, 2018 was $ 1.6 million and $ 2.9 million, respectively, and is included in Other income (expense) in the accompanying Consolidated Statements of Operations.

Table o f Contents

Assumptions included in these discounted cash flow models are evaluated quarterly based on Windset’s actual and projected operating results to determine the change in fair value.

The Company recorded $ 1.1 million in dividend income for the fiscal years ended May 30, 2021 and May 31, 2020, respectively, and $ 1.7 million for the fiscal year ended May 26, 2019.

The decrease in the fair market value of the Company’s investment in Windset for the fiscal years ended May 30, 2021 and May 31, 2020 was $ 11.8 million and $ 4.2 million, respectively, and is included in Other income (expense) in the accompanying Consolidated Statements of Operations.

The increase in the fair market value of the Company’s investment in Windset for the fiscal year ended May 26, 2019 was $ 1.6 million and is included in Other income (expense) in the accompanying Consolidated Statements of Operations.

Subsequent to fiscal year end, on June 1, 2021, the Company and Curation Foods entered into and closed a Share Purchase Agreement (the “Purchase Agreement”) with Newell Capital Corporation and Newell Brothers Investment 2 Corp., as Purchasers (the “Purchasers”) and Windset, pursuant to which Curation Foods sold all of its equity interests of Windset to the Purchasers in exchange for an aggregate purchase price of $ 45.1 million.

See Note 15 - Subsequent Events.

Table of Conten ts

Property and Equipment

2 unchanged sentences

May 30, 2021 May 31, 2020

Land and buildings 15 - 40 $ 102,704 $ 108,428

Land $ 15,027 $ 13,212

Buildings 15 - 40 79,927 89,492

Leasehold improvements 3 - 20 6,879 6,834

4 unchanged sentences

Less accumulated depreciation and amortization ( 102,598 ) ( 94,916 )

Net property and equipment $ 192,338 $ 200,027

Property and equipment, net $ 179,559 $ 192,338

Depreciation and amortization expense for property and equipment for the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019 was $ 16.0 million, $ 16.3 million and $ 13.1 million, respectively.

6 unchanged sentences

Assets Held for Sale

In January 2020, the Company decided to seek to divest its Curation Foods’ salad dressing plant in Ontario, California.

During the fiscal year ended May 31, 2020, the Company (1) designated the fixed assets of its office and manufacturing space located in Ontario, California, as assets held for sale, and (2) recognized a $ 10.9 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Operations for the Curation Foods segment.

The remaining net carrying value of $ 2.6 million is included in Property and equipment, net within the Consolidated Balance Sheets as of May 31, 2020.

Liabilities of $ 0.3 million and $ 2.9 million related to these assets are included in Current portion of lease liabilities and Long-term lease liabilities, respectively, within the Consolidated Balance Sheet.

The Company currently expects to complete this divestiture within the first half of fiscal year 2021.

In June 2019, the Company designated the Santa Maria office as the Curation Foods headquarters, and decided to close and put up for sale the Curation Foods office in San Rafael, California.

The San Rafael property, included in land and buildings, was designated as held for use within the Consolidated Balance Sheets as of May 26, 2019, as no finalized plan for disposition existed at such time.

During the fiscal year ended May 31, 2020, the Company closed escrow on the San Rafael property and recognized a $ 0.4 million impairment loss, which is included in restructuring costs within the Consolidated Statements of Operations.

The Company received net cash proceeds of $ 2.4 million in connection with the sale.

Table o f Contents

In January 2020, the Company decided to seek to divest its Curation Foods salad dressing plant in Ontario, California.

During the fiscal year ended May 31, 2020, the Company (1) designated the fixed assets of its office and manufacturing space located in Ontario, California, as assets held for sale, and (2) recognized a $ 10.9 million impairment loss, which is included in restructuring costs within the Consolidated Statements of Operations for the Curation Foods segment.

The remaining net carrying value of $ 2.6 million is included in property and equipment, net within the Consolidated Balance Sheets as of May 31, 2020.

In the first quarter of fiscal year 2021, the Company sold its interest in Ontario.

The Company received net cash proceeds of $ 4.9 million in connection with the sale and recorded a gain of $ 2.8 million during the fiscal year ended May 30, 2021, which is included in restructuring costs within the Consolidated Statements of Operations.

On June 25, 2020 the Board of Directors approved a plan to close Curation Foods’ underutilized manufacturing operations in Hanover, Pennsylvania (“Hanover”), sell the building and assets related thereto, and consolidate its operations into its manufacturing facilities in Guadalupe, California and Bowling Green, Ohio.

The $ 17.2 million carrying value of these assets was included in property and equipment, net on the consolidated Balance Sheets as of May 31, 2020, and was not classified as assets held for sale as the plan to sell was not finalized until subsequent to fiscal year end 2020.

In the first quarter of fiscal year 2021, the Company recognized an $ 8.8 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Operations.

During the second quarter of fiscal year 2021, the Company sold the Hanover building and assets related thereto for net proceeds of $ 8.0 million, no gain or loss was recorded upon sale.

Table of Conten ts

In May 2021 the Board of Directors approved a plan to sell Curation Foods’ Rock Hill, South Carolina distribution facility.

The $ 0.5 million carrying value of this asset is included in prepaid expenses and other current assets on the Consolidated Balance Sheets as of May 30, 2021, and was classified as an asset held for sale.

There was no impairment recorded in fiscal year 2021.

The asset was sold subsequent to fiscal year end on June 9, 2021 for gross proceeds of $ 1.1 million.

Goodwill and Intangible Assets

1 unchanged sentence

Balance at beginning of year $ 69,386 $ 76,742

Acquisition of Yucatan Foods (Note 2) — 22,232

Yucatan Foods measurement period adjustment — 504

11 unchanged sentences

Eat Smart (Curation Foods) 13 $ 7,500 $ 5,240 $ 7,500 $ 4,663

O (Curation Foods)

13 — — 700 143

Yucatan Foods (Curation Foods) 12 11,000 2,750 11,000 1,650

4 unchanged sentences

O (Curation Foods)

500 — 1,600 —

Yucatan Foods (Curation Foods) 12,400 — 12,400 —

3 unchanged sentences

Amortization expense related to finite-lived intangible assets was $ 2.0 million, $ 2.0 million, and $ 1.5 million in fiscal 2021, 2020 and 2019, respectively.

The amortization expense for the next five fiscal years is estimated to be $ 1.8 million per year.

Table of Conten ts

The amortization expense for each year presented are as follows (in thousands):

Fiscal year 2022 $ 1,959

Fiscal year 2023 1,677

Fiscal year 2024 1,677

Fiscal year 2025 1,629

Fiscal year 2026 1,100

Total $ 8,042

As discussed in Note 1, the Company recognized an impairment of the customer relationships in the Curation Foods business segment (in the O reporting unit) of $ 0.5 million during the year ended May 31, 2020.

In addition, the Company recognized an impairment of the trademarks in the Curation Foods business segment for O and Yucatan Foods of $ 1.1 million and $ 3.5 million, respectively during the year ended May 31, 2020.

Table o f Contents

Stock-based Compensation and Stockholders’ Equity

21 unchanged sentences

On October 19, 2017, 1.0 million shares were added to the 2013 Plan following stockholder approval at the 2017 Annual Meeting of Stockholders.

As of May 31, 2020, 128,500 options to purchase shares and RSUs were outstanding.

As of May 30, 2021, there were options to purchase shares or RSUs outstanding under the 2009 Plan.

At May 30, 2021, the Company had 4.2 million common shares reserved for future issuance under Landec stock incentive plans.

1 unchanged sentence

The Company has authorized 2.0 million shares of preferred stock, and as of May 30, 2021 has no outstanding preferred stock.

Table of Conten ts

Grant Date Fair Value

2 unchanged sentences

As of May 30, 2021, May 31, 2020 and May 26, 2019, the fair value of stock option grants was estimated using the following weighted average assumptions:

Table o f Contents

May 30, 2021 May 31, 2020 May 26, 2019

Options granted 435,000 368,264 498,000

Weighted-average exercise price $ 10.42 $ 11.85 $ 12.93

Weighted-average grant date fair value $ 2.37 $ 2.55 $ 2.80

9 unchanged sentences

Options exercised ( 116,834 ) $ 11.82 $ 265,911

Options forfeited and canceled ( 23,334 ) $ 12.55

Options forfeited ( 71,669 ) $ 13.75

Options expired ( 135,000 ) $ 14.18

2 unchanged sentences

Options exercised ( 163,333 ) $ 11.16 $ 169,066

Options forfeited and canceled ( 71,669 ) $ 13.75

Options forfeited ( 55,806 ) $ 13.08

Options expired ( 499,599 ) $ 14.04

2 unchanged sentences

Options exercised — $ —

Options forfeited and canceled ( 55,806 ) $ 13.08

Options forfeited ( 127,714 ) $ 9.93

Options expired ( 437,227 ) $ 13.42

1 unchanged sentence

Options exercisable at May 30, 2021 1,011,265 $ 12.02 2.67 $ 747,977

Table o f Contents

Table of Conten ts

A summary of the Company’s restricted stock unit award activity as of May 30, 2021 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, 2017 509,355 $ 13.53

Restricted stock units/awards outstanding at May 27, 2018 408,037 $ 12.99

Granted 333,486 $ 13.15

1 unchanged sentence

Forfeited ( 75,150 ) $ 13.92

Restricted stock units outstanding at May 27, 2018 408,037 $ 12.99

Restricted stock units/awards outstanding at May 26, 2019 428,427 $ 12.80

Granted 296,527 $ 9.79

1 unchanged sentence

Forfeited ( 131,361 ) $ 12.49

Restricted stock units outstanding at May 26, 2019 428,427 $ 12.80

Restricted stock units/awards outstanding at May 31, 2020 469,548 $ 11.24

Granted 188,225 $ 10.13

1 unchanged sentence

Forfeited ( 31,180 ) $ 10.60

Restricted stock units outstanding at May 31, 2020 469,548 $ 11.24

Restricted stock units/awards outstanding at May 30, 2021 480,396 $ 10.71

Stock-Based Compensation Expense

14 unchanged sentences

On September 23, 2016, the Company entered into a Credit Agreement with JPMorgan, BMO, and City National Bank, as lenders (collectively, the “Lenders”), and JPMorgan as administrative agent, pursuant to which the Lenders provided the Company with a $ 100.0 million revolving line of credit (the “Revolver”) and a $ 50.0 million term loan facility (the “Term Loan”), guaranteed by each of the Company’s direct and indirect subsidiaries and secured by substantially all of the Company’s assets, with the exception of the Company’s investment in Windset.

Table of Conten ts

On November 30, 2018, the Company entered into the Fourth Amendment to the Credit Agreement, which increased the Term Loan to $ 100.0 million and the Revolver to $ 105.0 million.

Table o f Contents

On October 25, 2019, the Company entered into the Sixth Amendment to the Credit Agreement, which increased the Term Loan to $ 120.0 million and decreased the revolver to $ 100.0 million.

4 unchanged sentences

Interest on both the Revolver and the Term Loan continues to be based upon the Company’s Total Leverage Ratio, at a per annum rate of either (i) the prime rate plus a spread of between 0.25 % and 3.00 % or (ii) the Eurodollar rate plus a spread of between 1.25 % and 4.00 %.

Subsequent to fiscal year end 2020, on July 15, 2020, the Company entered into the Eighth Amendment to the Credit Agreement (the “Eighth Amendment”), which among other things, (i) modified the definition of EBITDA to increase the limit on permitted exclusions for certain unusual, extraordinary or one-time cash items for each fiscal quarter ending on or after February 28, 2021, to a maximum of 20 % of EBITDA, and (ii) restricted the Company from making Capital Expenditures over certain thresholds.

Interest continues to be based on the Company’s Total Leverage Ratio, now at a revised per annum Applicable Rate of either (i) the prime rate plus a spread of between 0.75 % and 3.50 % or (ii) the Eurodollar rate plus a spread of between 1.75 % and 4.50 %, plus, in each case, a commitment fee, as applicable, of between 0.15 % and 0.55 %, as further described in the Eighth Amendment.

The Credit Agreement provides the Company the right to increase the Revolver commitments and/or the Term Loan commitments by obtaining additional commitments either from one or more of the Lenders or another lending institution at an amount of up to $ 10.0 million.

The Credit Agreement continues to contain customary financial covenants and events of default under which the obligation could be accelerated and/or the interest rate increased.

As of May 31, 2020, the Company was in compliance with all financial covenants under the Credit Agreement, other than the maximum Total Leverage Ratio covenant, which noncompliance was waived by the Lenders pursuant to the Eighth Amendment.

As of May 31, 2020, $ 77.4 million was outstanding on the Revolver, at an interest rate of 4.38 % under the Eurodollar option.

On July 15, 2020, the Company entered into the Eighth Amendment to the Credit Agreement (the “Eighth Amendment”), which among other things, (i) modified the definition of EBITDA to increase the limit on permitted exclusions for certain unusual, extraordinary or one-time cash items for each fiscal quarter ending on or after February 28, 2021, to a maximum of 20 % of EBITDA, and (ii) restricted the Company from making Capital Expenditures over certain thresholds.

Interest continues to be based on the Company’s Total Leverage Ratio, at a revised per annum Applicable Rate of either (i) the prime rate plus a spread of between 0.75 % and 3.50 % or (ii) the Eurodollar rate plus a spread of between 1.75 % and 4.50 %, plus, in each case, a commitment fee, as applicable, of between 0.15 % and 0.55 %, as further described in the Eighth Amendment.

On December 31, 2020, the Company refinanced its existing Term Loan and Revolver by entering into two separate Credit Agreements (the "New Credit Agreements") with BMO and Goldman Sachs Specialty Lending Group, L.P.

(“Goldman”) and Guggenheim Credit Services, LLC ("Guggenheim"), as lenders (collectively, the “Refinance Lenders”).

Pursuant to the credit agreement related to the revolving credit facility, BMO has provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $ 75.0 million revolving line of credit (the “Refinance Revolver”) and serves as administrative agent of the Refinance Revolver.

Pursuant to the credit agreement related to the term loan, Goldman and Guggenheim have provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $ 170.0 million term loan facility (split equally between Goldman and Guggenheim) (the “Refinance Term Loan”) and Goldman serves as administrative agent of the Refinance Term Loan.

The Refinance Revolver and Refinance Term Loan are guaranteed, and secured by, substantially all of the Company’s and the Company's direct and indirect subsidiaries' assets.

The Refinance Term Loan matures on December 31, 2025.

The Refinance Revolver matures on December 31, 2025 or, if the Refinance Term Loan remains outstanding on such date, ninety (90) days prior to the maturity date of the Refinance Term Loan (on October 2, 2025).

The Refinance Term Loan provides for principal payments by the Company of 5 % per annum, payable quarterly in arrears in equal installments, commencing on March 30, 2023, with the remainder due at maturity.

Interest on the Refinance Revolver is based upon the Company’s average availability, at a per annum rate of either (i) LIBOR 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 %.

Interest on the Refinance Term Loan is at a per annum rate based on either (i) the base rate plus a spread of 7.50 % or (ii) the LIBOR rate plus a spread of 8.50 %.

The Refinance Term Loan Credit Agreement also states 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 New Credit Agreements provide the Company the right to increase the revolver commitments under the Refinance Revolver, subject to the satisfaction of certain conditions (including consent from BMO), by obtaining additional commitments from either BMO or another lending institution at an amount of up to $ 15.0 million.

The New Credit Agreements contain customary financial covenants and events of default under which the obligations thereunder could be accelerated and/or the interest rate increased in specified circumstances.

Table of Conten ts

In connection with the New Credit Agreements, the Company incurred debt issuance costs from the lender and third-parties of $ 10.2 million.

Concurrent with the close of the New Credit Agreements, the Company repaid all outstanding borrowings under the current Credit Agreement, and terminated the Credit Agreement.

In connection with the repayment of borrowings under the Credit Agreement, the Company recognized a loss in fiscal year 2021 of $ 1.1 million, as a result of the non-cash write-off of unamortized debt issuance costs related to the refinancing under the New Credit Agreements.

As of May 30, 2021, $ 29.0 million was outstanding on the Refinance Revolver, at an interest rate of 3.00 %.

As of May 30, 2021, the Refinance Term Loan had an interest rate of 9.5 %.

As of May 30, 2021, the Company was in compliance with all financial covenants and had no events of default under the New Credit Agreements.

Long-term debt consists of the following as of May 30, 2021 and May 31, 2020 (in thousands):

9 unchanged sentences

Fiscal year 2023 2,125

Fiscal year 2024 8,469

Fiscal year 2025 8,422

Fiscal year 2026 150,984

Total $ 170,000

Table o f Contents

Derivative Instruments

On November 1, 2016, the Company entered into an interest rate swap contract (the “2016 Swap”) with BMO at a notional amount of $ 50.0 million.

The 2016 Swap has the effect of changing the Company’s Term Loan obligation from a variable interest rate to a fixed 30-day LIBOR rate of 1.22 %.

The 2016 Swap had the effect of changing the Company’s previous Term Loan obligation from a variable interest rate to a fixed 30-day LIBOR rate of 1.22 %.

On June 25, 2018, the Company entered into an interest rate swap contract (the “2018 Swap”) with BMO at a notional amount of $ 30.0 million.

The 2018 Swap has the effect of converting the first $ 30.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 2.74 %.

The 2018 Swap had the effect on our previous debt of converting the first $ 30.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 2.74 %.

On December 2, 2019, the Company entered into an interest rate swap contract (the “2019 Swap”) with BMO at a notional amount of $ 110.0 million which decreases quarterly.

The 2019 Swap has the effect of converting primarily all of the $ 110.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 1.53 %.

The 2019 Swap had the effect on our previous debt of converting primarily all of the $ 110.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 1.53 %.

Table of Conten ts

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

8 unchanged sentences

Total ( 7,893 ) ( 5,374 ) 1,439

Income tax expense (benefit) $ ( 13,116 ) $ 1,518 $ ( 9,363 )

Income tax (benefit) expense $ ( 7,801 ) $ ( 13,116 ) $ 1,518

The actual (benefit) provision for income taxes from continuing operations differs from the statutory U.S.

11 unchanged sentences

Other ( 86 ) 51 ( 68 )

Income tax expense (benefit) $ ( 13,116 ) $ 1,518 $ ( 9,363 )

(1) Statutory rate was 21.0 % for fiscal year 2020 and 2019, 29.4 % for fiscal year 2018.

Income tax (benefit) expense $ ( 7,801 ) $ ( 13,116 ) $ 1,518

(1) Statutory rate was 21.0% for fiscal year 2021, 2020 and 2019.

The effective tax rate for fiscal year 2021 changed from a tax provision benefit of 25.56 % to a tax provision benefit of 19.29 % in comparison to fiscal year 2020.

The decrease in the income tax benefit for fiscal year 2021 was primarily due to significant decrease in the Company's loss before tax, and the increase in change in valuation allowance which offsets federal and state research and development credits, and $ 2.8 million of NOL carryback benefit applied only for fiscal year 2020.

The effective tax rate for fiscal year 2020 changed from a tax provision expense of 70.66 % to tax provision benefit of 25.56 % in comparison to fiscal year 2019.

The decrease in the income tax expense for fiscal year 2020 was primarily due to a decrease in

Table o f Contents

the Company’s profit before tax, carryback of net operating losses, and the benefit of federal and state research and development credits which is offset by the change in valuation allowance, and impairment of goodwill.

The effective tax rate for fiscal year 2019 changed from a benefit of 64 % to expense of 71 % in comparison to fiscal year 2018.

The increase in the income tax expense for fiscal year 2019 was primarily due to the Company’s acquisition of Yucatan Foods and the change in valuation allowance related to the foreign deferred balances, the change in ending state deferred blended rate, the limitation of deductibility of executive compensation, and partially offset by the benefit of the foreign rate differential and the federal and state research and development credits, all primarily as a result of the TCJA.

The decrease in the income tax expense for fiscal year 2020 was primarily due to a decrease in the Company’s profit before tax, carryback of net operating losses, and the benefit of federal and state research and development credits which is offset by the change in valuation allowance, and impairment of goodwill.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act includes, among other items, provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

Table of Conten ts

The CARES Act allows losses incurred in tax years 2018, 2019, and 2020 to be carried back to each of the five preceding tax years and to offset 100% of regular taxable income.

Additionally, the CARES Act accelerates the Company’s ability to receive refunds of alternative minimum tax credits generated in prior tax years.

As a result of the CARES Act, the Company is able to benefit net operating losses generated in fiscal years 2019 and 2020 at the 21% federal statutory rate in effect for those years and carry back to tax years with a 35% federal statutory rate thus recognizing a tax benefit of $ 2.8 million during the year ended May 31, 2020.

In fiscal year 2020, the Company was able to benefit net operating losses generated in fiscal year 2019 and fiscal year 2020 at the 21% federal statutory rate in effect for those years and carried back to tax years with a 35% federal statutory rate thus recognizing a tax provision benefit of $ 2.8 million during the year ended May 31, 2020.

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

19 unchanged sentences

Net deferred tax liabilities $ ( 6,140 ) $ ( 13,588 )

The effective tax rates for fiscal year 2020 differ from the blended statutory federal income tax rate of 21 % percent as a result of several factors, including a decrease in the Company’s profit before tax, carryback of net operating losses, the change in valuation allowance related to state and foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, impairment of goodwill and fixed assets, and the benefit of federal and state research and development credits.

Table o f Contents

The effective tax rates for fiscal year 2019 differ from the blended statutory federal income tax rate of 21 % percent as a result of several factors, including Yucatan acquisition, the change in valuation allowance related with foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, limitation of deductibility of executive compensation, and the benefit of federal and state research and development credits.

The effective tax rates for fiscal year 2018 differ from the statutory federal blended income tax rate of 29.4 % as a result of several factors, including change in ending federal and state deferred blended rate, one-time transition tax due to the repatriation of foreign earnings, the change in valuation allowance, limitation of deductibility of executive compensation, and the benefit of federal and state research and development credits.

During the fiscal years ended May 31, 2020 and May 26, 2019, excess tax deficits related to stock-based compensation of $ 0.4 million and $ 0.2 million, respectively, were reflected in the Consolidated Statements of Operations as a component of Income tax expense (benefit), specifically related to the prospective application of excess tax deficits and tax deficiencies related to stock-based compensation.

The effective tax rates for fiscal year 2021 differ from the blended statutory federal income tax rate of 21% as a result of several factors, including a significant decrease in the Company's loss before tax, the change in valuation allowance related to federal, state and foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, fixed assets, and the benefit of federal and state research and development credits.

The effective tax rates for fiscal year 2020 differ from the blended statutory federal income tax rate of 21% as a result of several factors, including a decrease in the Company's profit before tax, carryback of net operating losses, the change in valuation allowance related with state and foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, impairment of goodwill and fixed assets, and the benefit of federal and state research and development credits.

The effective tax rates for fiscal year 2019 differ from the statutory federal blended income tax rate of 21% as a result of several factors, including Yucatan acquisition, the change in valuation allowance related with foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, limitation of deductibility of executive compensation, and the benefit of federal and state research and development credits.

As of May 30, 2021, the Company had federal, foreign, California, Indiana, and other state net operating loss carryforwards of approximately $ 68.1 million, $ 14.8 million, $ 24.2 million, $ 10.4 million, and $ 16.7 million respectively.

These losses expire in different periods ranging from 2027 through 2038, if not utilized.

Federal net operating loss of $ 35.6 million have an indefinite life.

These losses expire in different periods through 2042, if not utilized.

The Company acquired additional net operating losses through the acquisition of Greenline.

1 unchanged sentence

The net operating losses presented above for federal and state purposes is net of any such limitation.

Table of Conten ts

The Company has federal, California, and Minnesota research and development tax credit carryforwards of approximately $ 2.6 million, $ 2.0 million, and $ 1.2 million, respectively.

1 unchanged sentence

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 a valuation allowance of $ 0.4 million, $ 2.8 million, and $ 3.5 million should be recorded against federal, state, and foreign deferred tax assets as a result of uncertainty around the utilization of net operating losses, and federal capital loss carryforward.

Based on this analysis and considering all positive and negative evidence, we determined that a valuation allowance of $ 1.4 million, $ 4.2 million, and $ 4.9 million should be recorded as a result of uncertainty around the utilization of federal, state, and foreign net operating losses, and federal capital loss carryforward.

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.

6 unchanged sentences

Gross increases – current-period tax positions 115 121 133

Settlements — — ( 95 )

Lapse of statute of limitations — — ( 25 )

Unrecognized tax benefits – end of the period $ 942 $ 827 $ 616

As of May 31, 2020 the total amount of net unrecognized tax benefits is $ 0.8 million, of which, $ 0.7 million, if recognized, would change the effective tax rate.

As of May 30, 2021 the total amount of net unrecognized tax benefits is $ 0.9 million, of which, $ 0.8 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.

The total amount of penalties and interest is not material as of May 30, 2021.

Additionally, the Company does not expect its unrecognized tax benefits to decrease within the next 12 months.

The Company does not expect its unrecognized tax benefits to decrease within the next twelve months.

Due to tax attribute carryforwards, the Company is subject to examination for tax years 2013 forward for U.S.

1 unchanged sentence

The Company was also subject to examination in various state jurisdictions for tax years 2012 forward, none of which were individually material.

Table o f Contents

Operating Leases

11 unchanged sentences

The monthly lease payment was initially $ 34,000 and increases by 2.4 % per year.

Lifecore and the lessor made capital improvements prior to occupancy and thus the lease did not become effective until January 1, 2016.

Table of Conten ts

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:

(In thousands, except term and discount rate) May 31, 2020

Year Ended Year Ended

(In thousands, except term and discount rate) May 30, 2021 May 31, 2020

Finance lease cost:

3 unchanged sentences

Variable lease cost and other 792 1,951

Sublease income ( 90 ) —

Total lease cost $ 6,955 $ 8,768

19 unchanged sentences

Total long-term lease liabilities $ 20,305 $ 3,306 $ 23,611

The future minimum annual lease payments required under the Company’s existing operating lease agreements as of May 26, 2019 prior to the adoption of ASC 842 were as follows:

Table o f Contents

(in thousands) Operating Leases

Fiscal year 2020 $ 5,056

Fiscal year 2021 4,044

Fiscal year 2022 3,589

Fiscal year 2023 3,350

Fiscal year 2024 3,047

Thereafter 9,335

Total $ 28,421

Rent expense for operating leases, including month to month arrangements was $ 7.3 million and $ 6.1 million for the fiscal years 2019 and 2018, respectively, and is recorded in Selling, general, and administrative expenses.

The future minimum annual lease payments required under the Company’s existing capital lease agreements as of May 26, 2019, prior to the adoption of ASC 842 were as follows:

(in thousands) Capital Leases

Fiscal year 2020 $ 486

Fiscal year 2021 489

Fiscal year 2022 460

Fiscal year 2023 3,490

Fiscal year 2024 —

Total minimum lease payment 4,925

amounts representing interest and taxes ( 1,291 )

current portion included in other accrued liabilities ( 102 )

Long-term capital lease obligation $ 3,532

Supplemental cash flow information related to leases are as follows:

(in thousands) May 31, 2020

Year Ended Year Ended

(in thousands) May 30, 2021 May 21, 2020

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Operating leases $ 4,294 $ 3,752

Table of Conten ts

During May 2021 we entered into a transportation management, warehousing, and transportation services agreement with Castellini Company, LLC to outsource Curation Foods’ fresh packaged salads and vegetables logistics management, including transportation, warehousing and distribution.

In connection with this arrangement, during the fiscal year ended May 30, 2021 we recorded a $ 1.7 million impairment of our operating lease right-of-use assets related to certain vehicle leases, which is included in restructuring costs within the Consolidated Statements of Operations.

Commitments and Contingencies

5 unchanged sentences

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

Table o f Contents

adjusted to reflect the impacts of negotiations, estimate settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.

These provisions are reviewed at least each fiscal quarter and adjusted to reflect the impacts of negotiations, estimate 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.

Claims Alleging Unfair Labor Practices

Curation Foods has been the target of a union organizing campaign which has included 3 unsuccessful attempts to unionize Curation Foods’ Guadalupe, California processing plant.

Curation Foods has been the target of a union organizing campaign which has included three unsuccessful attempts to unionize Curation Foods’ Guadalupe, California processing plant.

The campaign has involved a union and over 100 former and current employees of Pacific Harvest, Inc.

11 unchanged sentences

The Company's conclusion regarding collectability changed as a result of Pacific Harvest communicating their refusal to pay combined with their brining claims against the Company.

As of May 31, 2020, the reserve balance remained at $ 1.2 million.

During the fiscal year ended May 30, 2021, the Company agreed to discharge Pacific Harvest from the $ 1.2 million receivable as part of a settlement agreement with Pacific Harvest (see other litigation matters section below for additional information).

Compliance Matters

As previously disclosed, on December 1, 2018, the Company acquired all of the voting interests and substantially all of the assets of Yucatan Foods (the “Yucatan Acquisition”), which owns a guacamole manufacturing plant in Mexico called Procesadora Tanok, S de RL de C.V.

On December 1, 2018, the Company acquired all of the voting interests and substantially all of the assets of Yucatan Foods (the “Yucatan Acquisition”), which owns a guacamole manufacturing plant in Mexico called Procesadora Tanok, S de RL de C.V.

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.

5 unchanged sentences

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.

At this stage, the ultimate outcome of these or any other investigations 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 insurance recovery, or its effect, if any, on its financial statements.

Separately, there are indemnification provisions in the purchase agreement that allow the Company to recover costs for breach of warranty, etc.

from the seller.

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

Table of Conten ts

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 parties for fraud, indemnification, and other claims, and seeking no less than $ 80 million in damages.

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 fraud or breach of the purchase agreement from the seller.

Because recovery of amounts are contingent upon a legal settlement, no amounts have been recorded as recoverable costs through May 30, 2021.

Nor are there any insurance claims recorded as they are similarly contingent.

During the third quarter of fiscal year 2021 the Company reached a resolution with its insurance carrier that resulted in a recovery of $ 1.6 million which is recorded as a reduction of selling, general and administrative in the Consolidated Statements of Operations for the fiscal year ended May 30, 2021.

Absent further material developments in the investigation, the Company does not expect additional material recovery from the insurance carrier.

Other Litigation Matters

5 unchanged sentences

This dismisses the case against the Company with no other further legal action required.

On February 14, 2020, a complaint was filed against the Company, Curation Foods, the Company’s current CEO Albert Bolles, the Company’s former Chief Financial Officer Gregory Skinner, and other defendants (collectively, the "Landec Parties") in Santa Barbara County Superior Court, entitled Pacific Harvest, Inc., et al.

On February 14, 2020, a complaint was filed against the Company, Curation Foods, the Company's current CEO Albert Bolles, and the Company’s former CFO Gregory Skinner (collectively, the “Landec Parties”), and other defendants in Santa Barbara County Superior Court, entitled Pacific Harvest, Inc., et al.

Curation Foods, Inc., et al.

3 unchanged sentences

Among other things, Pacific and Rancho allege that Curation Foods wrongfully decreased its use of Pacific’s staffing services and misappropriated Pacific’s trade secrets when Curation Foods increased its use of another staffing company and transitioned Pacific’s employees to the other staffing company.

Table o f Contents

Rancho also allege that Curation Foods breached agreements between the parties related to a loan from Curation Foods.

Based on this alleged breach, Pacific and Rancho have ceased making payments.

Plaintiffs assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with contracts and potential economic advantage, misappropriation of trade secrets under California’s Uniform Trade Secrets Act, business practices in violation of California Unfair Competition Law, fraud, defamation, violation of California Usury Law, breach of fiduciary duty, and declaratory relief regarding the parties’ rights and obligations under certain of the parties’ contracts.

The Landec Parties have not yet appeared in this action.

Given the preliminary stage of the litigation, at this time the Company is unable to determine whether any loss is probable or reasonably estimate a range of such loss, and accordingly has not accrued any liability associated with these matters.

The Company intends to defend and pursue its interests in this case vigorously.

Pacific and Rancho also allege that Curation Foods breached agreements between the parties related to a loan from Curation Foods, on which Pacific and Rancho have ceased making payments.

Pacific Harvest and Rancho asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with contracts and potential economic advantage, misappropriation of trade secrets under California’s Uniform Trade Secrets Act, business practices in violation of California Unfair Competition Law, fraud, defamation, violation of California Usury Law, breach of fiduciary duty, and declaratory relief regarding the parties’ rights and obligations under certain of the parties’ contracts.

On March 15, 2021, the Company executed a settlement agreement related to this matter.

In connection with the settlement agreement, the Company recorded a $ 1.8 million charge after considering the total settlement amount and insurance recoveries, and this amount is included in Legal settlement charge in the Consolidated Statements of Operations for the fiscal year ended May 30, 2021.

The final settlement amount was paid to the plaintiffs by Curation Foods, its co-defendants, and insurers on April 14, 2021.

Pursuant to the settlement agreement, the case was dismissed with prejudice on April 23, 2021.

Business Segment Reporting

1 unchanged sentence

the Curation Foods segment, the Lifecore segment, and the Other segment.

The Curation Foods business includes (i) four natural food brands, including Eat Smart, O Olive Oil & Vinegar, Yucatan Foods, and Cabo Fresh, (ii) BreatheWay® activities, and (iii) activity related to our 26.9 % investment in Windest.

The Curation Foods segment includes activities to market and pack specialty packaged whole and fresh-cut fruit and vegetables, the majority of which incorporate the BreatheWay specialty packaging for the retail grocery, club store and food services industry and are sold primarily under the Eat Smart brand and various private labels.

The Curation Foods segment also includes sales of BreatheWay packaging to partners for fruit and vegetable products, sales of olive oils and wine vinegars under the O brand, sales of avocado products under the brands Yucatan Foods and Cabo Fresh, and activity related to our investment in Windset.

Table of Conten ts

The Lifecore segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets.

11 unchanged sentences

Belgium $ 13.7 $ 13.8 $ 15.1

Switzerland $ 4.7 $ 1.7 $ 1.2

Czech Republic $ 3.5 $ 1.4 $ 0.0

Ireland $ 2.0 $ 4.0 $ 5.0

All Other Countries $ 5.1 $ 4.7 $ 3.9

Table o f Contents

Table of Conten ts

Operations by segment consisted of the following (in thousands):

10 unchanged sentences

Income tax (benefit) expense ( 8,918 ) 4,568 ( 3,451 ) ( 7,801 )

Corporate overhead allocation 5,734 4,773 ( 10,507 ) —

Year Ended May 31, 2020

9 unchanged sentences

Income tax (benefit) expense ( 13,028 ) 3,346 ( 3,434 ) ( 13,116 )

Corporate overhead allocation 5,908 4,190 ( 10,098 ) —

Year Ended May 26, 2019

9 unchanged sentences

Income tax (benefit) expense ( 1,373 ) 4,024 ( 1,133 ) 1,518

Table o f Contents

Corporate overhead allocation 5,837 3,901 ( 9,738 ) —

Table of Conten ts

Quarterly Consolidated Financial Information (unaudited)

1 unchanged sentence

Fiscal Year 2021 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual

Revenues $ 138,714 $ 142,593 $ 152,928 $ 156,131 $ 590,366

Product sales $ 135,643 $ 130,904 $ 137,782 $ 139,832 $ 544,161

Gross profit 16,347 20,637 19,689 24,801 81,474

Net income (loss) from continuing operations ( 4,784 ) ( 6,740 ) ( 11,518 ) ( 15,149 ) ( 38,191 )

Net income (loss) applicable to common stockholders ( 4,784 ) ( 6,740 ) ( 11,518 ) ( 15,149 ) ( 38,191 )

Net income (loss) per basic share from continuing operations $ ( 0.16 ) $ ( 0.23 ) $ ( 0.39 ) $ ( 0.52 ) $ ( 1.31 )

Net income (loss) per diluted share from continuing operations $ ( 0.16 ) $ ( 0.23 ) $ ( 0.39 ) $ ( 0.52 ) $ ( 1.31 )

Net (loss) income from continuing operations ( 11,000 ) ( 13,301 ) ( 5,498 ) ( 2,866 ) ( 32,665 )

Net (loss) income per basic share from continuing operations $ ( 0.38 ) $ ( 0.45 ) $ ( 0.19 ) $ ( 0.14 ) $ ( 1.12 )

Net (loss) income per diluted share from continuing operations $ ( 0.38 ) $ ( 0.45 ) $ ( 0.19 ) $ ( 0.14 ) $ ( 1.12 )

Fiscal Year 2020 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Annual

Revenues $ 124,668 $ 124,557 $ 155,554 $ 152,780 $ 557,559

Product sales $ 138,714 $ 142,593 $ 152,928 $ 156,131 $ 590,366

Gross profit 15,336 15,514 20,047 24,091 74,988

Net income (loss) from continuing operations 335 ( 113 ) 1,533 367 2,122

Net (loss) income from continuing operations ( 4,784 ) ( 6,740 ) ( 11,518 ) ( 15,149 ) ( 38,191 )

Net income (loss) applicable to common stockholders ( 4,784 ) ( 6,740 ) ( 11,518 ) ( 15,149 ) ( 38,191 )

Net income (loss) per basic share from continuing operations $ 0.01 $ — $ 0.05 $ 0.01 $ 0.07

Net income (loss) per diluted share from continuing operations $ 0.01 $ — $ 0.05 $ 0.01 $ 0.07

Net (loss) income per basic share from continuing operations $ ( 0.16 ) $ ( 0.23 ) $ ( 0.39 ) $ ( 0.52 ) $ ( 1.31 )

Net (loss) income per diluted share from continuing operations $ ( 0.16 ) $ ( 0.23 ) $ ( 0.39 ) $ ( 0.52 ) $ ( 1.31 )

Discontinued Operations

Now Planting and Food Export

During the fourth quarter of fiscal year 2019, the Company discontinued its Now Planting business, which resided in its Curation Foods segment.

During the fourth quarter of fiscal year 2018, the Company discontinued its Food Export business segment.

As a result, the Company met the requirements to report the results of Now Planting and Food Export as discontinued operations and to classify any assets and liabilities as held for abandonment.

The carrying amounts of the major classes of assets and liabilities of Now Planting and Food Export business segment included in assets and liabilities of discontinued operations are as follows (in thousands):

May 31, 2020 May 26, 2019

Current and other assets, discontinued operations:

Cash and cash equivalents $ — $ —

Accounts receivable — —

Inventory — —

Other assets — —

Total assets, discontinued operations $ — $ —

Other current liabilities, discontinued operations:

Accounts payable $ — $ 51

Accrued expenses and other current liabilities — 14

Total other current liabilities, discontinued operations $ — $ 65

Table o f Contents

Once Now Planting and Food Export businesses were discontinued, the operations associated with these businesses qualified for reporting as discontinued operations.

Accordingly, the operating results, net of tax, from discontinued operations are presented separately in the Company’s Consolidated Statements of Operations and the Notes to the Consolidated Financial Statements have been adjusted to exclude Now Planting in fiscal year 2019 and Food Export in fiscal year 2018.

As a result, the Company met the requirements to report the results of Now Planting as discontinued operations and to classify any assets and liabilities as held for abandonment.

As of May 30, 2021 and May 31, 2020 there were no assets or liabilities of the Now Planting business segment included in assets and liabilities of discontinued operations.

Once the Now Planting businesses was discontinued, the operations associated with these business qualified for reporting as discontinued operations.

Components of amounts reflected in (loss) income from discontinued operations, net of tax are as follows (in thousands):

May 30, 2021 May 31, 2020 May 26, 2019

Revenues $ — $ 548 $ 29,222

Cost of sales — ( 1,649 ) ( 27,619 )

Product sales $ — $ — $ 548

Cost of product sales — — ( 1,649 )

Research and development — — ( 102 )

Selling, general and administrative — — ( 1,035 )

Other — — ( 269 )

Loss from discontinued operations before taxes — — ( 2,238 )

1 unchanged sentence

Loss from discontinued operations, net of tax $ — $ — $ ( 1,711 )

Table of Conten ts

Cash provided by (used in) operating activities by the Now Planting business totaled $ 0.0 million, $ 0.0 million, and $( 1.3 ) million for the fiscal years ended May 30, 2021, May 31, 2020 and May 26, 2019, respectively.

Cash provided by (used in) operating activities by the Food Export business totaled $ 0.0 million, $ 0.0 million, and $ 0.6 million for the fiscal years ended May 31, 2020, May 26, 2019, and May 27, 2018, respectively.

Restructuring Costs

1 unchanged sentence

This includes a reduction-in-force, a reduction in leased office spaces and the sale of non-strategic assets.

In January 2020, the Company decided to divest its salad dressing plant in Ontario, California.

In the third quarter of fiscal year 2020, the Company (1) designated the fixed assets of its office and manufacturing space located in Ontario, California, as assets held for sale, and (2) recognized a $ 10.9 million impairment loss, which is included in Restructuring costs within the Consolidated Statements of Operations.

The remaining net carrying value of $ 2.6 million is included in Property and equipment, net within the Consolidated Balance Sheets as of May 31, 2020.

The Company expects to complete this divestiture within the first half of fiscal year 2021.

The Company will also close its leased Santa Clara, California and Los Angeles, California offices.

During the fiscal year ended May 31, 2020, the Company decided to modify BreatheWay's primary business model and redesigned and re-engineered equipment used in the BreatheWay business.

As a result of this re-engineering, during the fiscal year ended May 31, 2020 the Company recorded a $ 1.9 million impairment loss.

The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Operations, by Business Segment:

The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Operations, by Business Segment for the fiscal year ended May 30, 2021:

(In thousands)

5 unchanged sentences

1,765 — — 1,765

1,774 — — 1,774

Other restructuring costs

2 unchanged sentences

$ 15,770 $ — $ 1,851 $ 17,621

Table o f Contents

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.

These costs are included in restructuring costs within the Consolidated Statements of Operations.

See the Assets Held for Sale section within Note 1 for additional information.

In the first quarter of fiscal year 2021, the Company sold its interest in Ontario.

The Company received net cash proceeds of $ 4.9 million in connection with the sale and recorded a gain of $ 2.8 million.

In the first quarter of fiscal year 2021, the Company recognized an $ 8.8 million impairment loss related to its Hanover building and related assets which were sold in the second quarter of fiscal year 2021.

In the third quarter of fiscal year 2021, the Company recognized a $ 1.9 million impairment loss related to BreatheWay equipment as a result of a strategic shift in our BreatheWay business model driven by our restructuring plan.

In the fourth quarter of fiscal year 2021, the Company recognized a $ 0.5 million impairment loss related to nonoperational internal use software as a result of a strategic shift in our logistics strategy driven by our restructuring plan and our transportation management, warehousing, and transportation services agreement with Castellini Company, LLC.

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 the closure of our San Rafael, California office, Santa Clara, California office, Los Angeles, California office, the sale of our Hanover manufacturing facility, and our transportation management, warehousing, and transportation services agreement with Castellini Company, LLC.

In August 2020, the Company closed its leased Santa Clara, California office and entered into a sublease agreement.

In the fourth quarter of fiscal year 2020 the Company closed its leased Los Angeles, California office and plans to sublease the office.

Table of Conten ts

Other restructuring costs

For the fiscal year ended May 30, 2021, 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.

The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Operations by Business Segment, since inception of the restructuring plan in fiscal year 2020 through the fiscal year ended

May 30, 2021:

Curation Foods

(In thousands)

Asset write-off costs

$ 21,032 $ — $ 418 $ 21,450

Employee severance and benefit costs

3,233 — 784 4,017

2,166 — 26 2,192

Other restructuring costs

4,885 — 2,362 7,247

Total restructuring costs

$ 31,316 $ — $ 3,590 $ 34,906

The total expected cost related to the restructuring plan is approximately $ 37.0 million.

Table of Conten ts

Subsequent Events

Debt Covenant Amendment

As disclosed in Note 7 - Debt, on July 15, 2020, the Company entered into the Eighth Amendment, which among other things, (i) in relation to the covenant calculations modified the definition of EBITDA to increase the limit on permitted exclusions for certain unusual, extraordinary or one-time cash items for each fiscal quarter ending on or after February 28, 2021, to a maximum of 20 % of EBITDA, and (ii) restricted the Company from making Capital Expenditures over certain thresholds.

In connection with the execution of the Eighth Amendment, the Company paid $ 0.3 million in fees to the Lenders.

Ontario, California Salad Dressing Plant

On August 7, 2020 the Company assigned the lease and sold the corresponding assets related to its salad dressing plant in Ontario, California.

The net carrying amount of these assets of $ 2.6 million are classified as assets held for sale and are included in Property and equipment, net within the Consolidated Balance Sheets as of May 31, 2020.

The Company received net cash proceeds of $ 4.6 million in connection with the sale.

The Company estimates that it will record a $ 2.6 million gain on disposal subsequent to fiscal year end 2020 in connection with this transaction.

Hanover, Pennsylvania Manufacturing Facility

In connection with the Company’s strategic initiative, Project SWIFT, on June 25, 2020 the Board of Directors approved a plan to close Curation Foods’ underutilized manufacturing operations in Hanover, Pennsylvania (“Hanover”), sell the building and assets related thereto, and consolidate its operations into its manufacturing facilities in Guadalupe, California and Bowling Green, Ohio.

The $ 17.2 million carrying value of these assets are included in Property and equipment, net on the consolidated Balance Sheets as of May 31, 2020 and were not classified as assets held for sale as the plans to sell were not finalized until subsequent to fiscal year end 2020.

The Company is in the process of marketing Hanover for sale and assessing the Hanover assets’ fair value in relation to their carrying value and anticipates recording an impairment based on the current strategic plans for the assets.

The Company expects to complete its analysis by the end of its first quarter of fiscal year 2021.

The Company expects to complete the sale of its Hanover assets during its second quarter of fiscal year 2021.

COVID-19 Pandemic

2 unchanged sentences

The Company expects to continue to assess the evolving impact of the COVID-19 pandemic, and intends to continue to make adjustments to its responses accordingly.

Table o f Contents

Sale of Windset Investment

On June 1, 2021, the Company and Curation Foods entered into and closed a Share Purchase Agreement (the “Purchase Agreement”) with Newell Capital Corporation and Newell Brothers Investment 2 Corp., as Purchasers (the “Purchasers”) and Windset, pursuant to which Curation Foods sold all of its equity interests of Windset to the Purchasers in exchange for an aggregate purchase price of $ 45.1 million (the “Sale”).

The Purchase Agreement included various representations, warranties and covenants of the parties generally customary for a transaction of this nature.

Concurrent with the consummation of the Sale, the Company used the net proceeds from the Sale, and net of $ 3.6 million of prepaid interest and prepayment penalties (as required by the Refinance Term Loan), to pay down the Company's long-term debt by $ 41.4 million.

Table of Conten ts

(b) Index of Exhibits.

1 unchanged sentence

3.1 Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2008.

3.2 Amended and Restated By - L aws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2012.

3.2 Amended and Restated By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2012.

3.3 Amendment No.

1 to By - L aws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 7, 2019.

1 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 7, 2019.

3.4 Amendment No.

2 to By - L aws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 24, 2019.

2 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 24, 2019.

3.5 Amendment No.

3 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 19, 2020.

4.1+ Description of Capital Stock.

10.1 Form of Indemnification Agreement incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 17, 2018.

10.2 Agreement and Plan of Merger between Landec Corporation, a California corporation, and the Registrant, dated as of November 6, 2008, incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2008.

10.2* Landec Corporation Nonqualified Deferred Compensation Plan, incorporated herein by reference to the Registrant’s Annual Report on Form 10-K filed on August 7, 2013.

10.3* Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.4* First Amendment to the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on October 23, 2017.

10.5* Form of Stock Grant Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.6* Form of Notice of Stock Option Grant and Stock Option Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.6* Form of Stock Unit Agreement for the Land ec Corporation 2009 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.4 to the Registrant's Current Report on Form 8-K filed on October 19, 2009.

10.7* Form of Stock Unit Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.8* Form of Notice of Grant of Stock Appreciation Right and Stock Appreciation Right Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.8* Landec Corporation Nonqualified Deferred Compensation Plan, incorporated herein by reference to the Registrant’s Annual Report on Form 10 -K filed on August 7 , 2013.

10.9* Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.10* First Amendment to the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on October 23, 2017.

10.11* Form of Stock Grant Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.

1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.12* Form of Notice of Stock Option Grant and Stock Option Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.

1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.13* Form of Stock Unit Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.

1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

Table o f Contents

Number Exhibit Title

10.14* Form of Notice of Grant of Stock Appreciation Right and St ock Appreciation Right Agreement for the Landec Corporation 2013 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.

1 to the Registrant's Current Report on Form 8-K filed on October 11, 2013.

10.9* Landec Corporation 2019 Stock Incentive Plan, including the forms of awards attached thereto, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on October 21, 2019.

2019 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 to the Registrant's Current Report on Form 8-K dated October 21, 2019.

10.16* Employment Agreement between the Registrant and Gregory S.

Skinner effective as of January 31, 2019, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 5 , 2019.

10.17 Loan Agreement dated February 26, 2016 among the Registrant, Apio, Inc., Apio Cooling LP and CF Equipment Loans LLC (successor-in-interest to General Electric Capital Corporation) incorporated herein by reference to Exhibit 10 .1 to the Registrant’s Current Report on Form 8-K filed on March 3, 2016.

10.18 Promissory Note dated February 26, 2016 issued by Apio to CF Equipment Loans, LLC, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 3, 2016.

10.19 Promissory Note dated February 26, 2016 issued by Apio to CF Equipment Loans, LLC, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 3, 2016.

10.20 Guaranty dated February 26, 2016 between the Registrant and CF Equipment Loans, LLC, incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on March 3, 2016.

10.21 Credit Agreement, dated September 23, 2016, by and among the Registrant, the other loan parties party thereto, JPMorgan Chase Bank, N.A., BMO Harris Bank N.A., and City National Bank, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 29, 2016.

10.22 Pledge and Security Agreement, dated September 23, 2016, by and among the Registrant, the other grantors party thereto, and JPMorgan Chase Bank, N.A., incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on September 29, 2016.

10.23 Fourth Amendment and Joinder to the Credit Agreement and Other Loan Documents dated November 30, 2018 by and among the Registrant, the other loan parties and new loan parties party thereto, BMO Harris Bank N.A., City National Bank, and JPMorgan Chase Bank, N.A, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 6, 2018.

10.24 Sixth Amendment to Credit Agreement, dated October 25, 2019, by and among the Registrant, the other loan parties party thereto, BMO Harris Bank N.A., City National Bank, and JPMorgan Chase Bank, N.A., incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 30, 2019.

10.25 Seventh Amendment to Credit Agreement, dated March 19, 2020, by and among the Registrant, the other loan parties party thereto, BMO Harris Bank N.A., City National Bank and JPMorgan Chase Bank, N.A (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 25, 2020).

10.26 Limited Waiver and Eighth Amendment to Credit Agreement, dated July 15, 2020, by and among the Registrant, the other loan parties party thereto, BMO Harris Bank, N.A and JPMorgan Chase Bank, N.A.

(incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 17, 2020).

10.10* Long-Term Incentive Plan for Fiscal Year 2020, incorporated herein by reference to Registrant’s Current Report on Form 8-K filed on July 24, 2017.

10.11* Long-Term Incentive Plan for Fiscal Year 2021, incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed on July 30, 2018.

Table o f Contents

Number Exhibit Title

10.12 Settlement Agreement amongst the Registrant, Apio, Inc., Rancho Harvest, Inc.

1 unchanged sentence

and the plaintiffs named therein and Addendum to the Settlement Agreement effective as of May 5, 2017, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 10, 2017.

Table of Conten ts

Number Exhibit Title

10.13 Purchase Agreement dated as of April 26, 2018, by and between Apio, Inc.

Mills, San Ysidro Farms, Inc., B&D Farms, Mahoney Brothers, and RCM Farms, LLC, incorporated here in by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 2, 2018.

Mills, San Ysidro Farms, Inc., B&D Farms, Mahoney Brothers, and RCM Farms, LLC, incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 2, 2018.

10.14 Letter Agreement dated May 22, 2018 among the Registrant, Nelson Obus and Wynnefield Capital, Inc.

2 unchanged sentences

10.16 Landec Corporation Executive Change in Control Severance Plan.

10.17 Credit and Guaranty Agreement, dated December 31, 2020, by and among Landec Corporation, Curation Foods, Inc.

and Lifecore Biomedical, Inc., as borrowers, certain other subsidiary parties thereto, as guarantors, Goldman Sachs Specialty Lending Group, L.P., as lender, administrative agent and collateral agent, and certain affiliates of Guggenheim Credit Services, LLC, as lenders, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 5, 2021.

10.18 Credit Agreement, dated December 31, 2020, by and among Landec Corporation, Curation Foods, Inc.

and Lifecore Biomedical, Inc., as borrowers, certain other subsidiary parties thereto, as guarantors, and BMO Harris Bank., N.A., a slender and administrative agent, incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on January 5, 2021.

10.19 Pledge and Security Agreement, dated December 31, 2020, by and among Landec Corporation, Curation Foods, Inc., Lifecore Biomedical, Inc.

and certain other subsidiary parties thereto, as grantors, and Goldman Sachs Specialty Lending Group, L.P., as collateral agent, incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on January 5, 2021

10.2 Pledge and Security Agreement, dated December 31, 2020, by and among Landec Corporation, Curation Foods, Inc., Lifecore Biomedical, Inc.

and certain other subsidiary parties thereto, as grantors, and BMO Harris Bank., N.A., as administrative agent, incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on January 5, 2021.

10.21 Employment Agreement, dated January 18, 2021, by and between Landec Corporation and John Morberg, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 20, 2021.

10.22 Separation and General Release by and between Landec Corporation and Brian McLaughlin, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 2, 2021.

10.23 Separation and General Release by and between Landec Corporation and Dawn Kimball, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 8, 2021

10.24 Share Share Purchase Agreement, dated June 1, 2021, by and among the Company, Curation Foods, Newell Capital Corporation, Newell Brothers Investment 2 Corp., and Windset Holdings 2010 Ltd., incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 2, 2021.

10.25 Amended and Restated Employment Agreement between the Registrant and Albert D.

Bolles, Ph.D., effective as of July 23, 2020 , incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on October 7, 2020.

21.1+ Subsidiaries of the Registrant

23.1+ Consent of Independent Registered Public Accounting Firm

Table of Conten ts

Number Exhibit Title

24.1+ Power of Attorney – See signature page

12 unchanged sentences

+ Filed herewith.

# Confidential treatment requested as to certain portions.

The term “confidential treatment” and the mark “*” as used throughout the indicated Exhibit means that material has been omitted.

Table o f Contents

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Maria, State of California, on August 14, 2020.

Table of Conten ts

LANDEC CORPORATION

/s/ Brian McLaughlin

Brian McLaughlin

Chief Financial Officer and

Vice President of Finance and Administration

/s/ John Morberg

Chief Financial Officer

(Principal Financial and Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Albert D.

Bolles and Brian McLaughlin, and each of them, as his or her attorney-in-fact, with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney-in-fact to any and all amendments to said Report on Form 10-K.

Bolles and John Morberg, and each of them, as his or her attorney-in-fact, with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney-in-fact to any and all amendments to said Report on Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed by the following persons in the capacities and on the dates indicated:

3 unchanged sentences

Bolles, Ph.D.

President and Chief Executive Officer (Principal Executive Officer) and Director August 14, 2020

/s/ Brian McLaughlin

Brian McLaughlin Chief Financial Officer and Vice President of Finance and Administration

(Principal Financial Officer and Principal Accounting Officer) August 14, 2020

President and Chief Executive Officer (Principal Executive Officer) and Director July 29, 2021

/s/ John Morberg

John Morberg Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) July 29, 2021

/s/ Craig Barbarosh

Craig Barbarosh Director August 14, 2020

Craig Barbarosh Director July 29, 2021

/s/ Deborah Carosella

Deborah Carosella Director August 14, 2020

/s/ Frederick Frank

Frederick Frank Director August 14, 2020

Deborah Carosella Director July 29, 2021

/s/ Jeffrey Edwards

Jeffrey Edwards Director July 29, 2021

/s/ Katrina Houde

Katrina Houde Director August 14, 2020

/s/ Charles Macaluso

Charles Macaluso Director August 14, 2020

Katrina Houde Director July 29, 2021

/s/ Nelson Obus

Nelson Obus Director August 14, 2020

Nelson Obus Director July 29, 2021

/s/ Tonia Pankopf

Tonia Pankopf Director August 14, 2020

Tonia Pankopf Director July 29, 2021

/s/ Andrew K.

Powell Director August 14, 2020

Powell Director July 29, 2021

/s/ Joshua E Schechter

Schechter Director July 29, 2021

/s/ Catherine A.

Sohn Director August 14, 2020

Sohn Director July 29, 2021

/s/ Patrick D.

Walsh Director July 29, 2021

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures