Question

BEYOND MEAT, INC.
Notes to Unaudited Condensed Financial Statements

Note 1. Introduction

The Company

Beyond Meat, Inc., a Delaware corporation (the “Company”), is one of the fastest growingfood companies in the United States, offering a portfolio of revolutionary plant-based meats. The Company builds meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products whileenjoying the nutritional and environmental benefits of eating the Company’s plant-based meatproducts. The Company’s brand commitment, “Eat What You Love,” represents a strong belief that by eating the Company’s plant-based meats, consumers can enjoy more, not less, of their favorite meals, and by doing so, help address concerns related to human health, climate change, resource conservation and animal welfare.

The Company’s primary production facilities are located in Columbia, Missouri, and researchand development and administrative offices are located in El Segundo, California. In addition to its own production facilities, the Company uses co-manufacturers in various locations in the United States to manufacture its products. In May 2019, the Company partnered with one of its distributors to co-manufacture the Company’s products at a new manufacturing facility being constructed by this distributor in the Netherlands for estimated completion in 2020.

Fiscal Year

The Company operates on a fiscal calendar year, and each interim quarter is comprised of one 5-week period and two 4-week periods, with each week ending on a Saturday. TheCompany’s fiscal year always begins on January 1 and ends on December 31. As a result, theCompany’s first and fourth fiscal quarters may have more or fewer days included than atraditional 91-day fiscal quarter.

Note 4:

Major classes of inventory were as follows:

In thousands	June 29 2019	December 31 2018
raw materials and packaging	$ 25,047	$ 13,756
work in process	5,635	2,517
finished goods	12,013	13,984
total	$ 42,695	$ 30,257

Ingredient Risk

Our profitability is dependent on, among other things, our ability to anticipate and react to raw material and food costs. Currently, the main ingredient in our products is pea protein, which we source from Canada and France. The prices of pea protein and other ingredients we use are subject to many factors beyond our control, such as the number and size of farms that grow Canadian and European yellow peas, the vagaries of these farming businesses, including poor harvests due to adverse weather conditions, natural disasters and pestilence, and changes in national and world economic conditions. In addition, we purchase some ingredients and other materials offshore, and the price and availability of such ingredients and materials may be affected by political events or other conditions in these countries or tariffs or trade wars.

BEYOND MEAT, INC.
Condensed Statements of Operations
(In thousands, except share and per share data) (unaudited)

Three months ended Six months ended

	June 29 2019	June 30 2018	June 29 2019	June 30 2018
Net revenues	$ 67, 251	$ 17,367	$ 107,457	$ 30,143
Cost of goods sold	44,510	14,755	73,945	25,474
Gross profit	22,741	2,612	33,512	4,669
Research and development expenses	4,212	2,497	8,710	4,102
selling, general and administrative expenses	15,515	7,043	26,692	12,780
restructuring expenses	847	348	1,241	642
total operating expenses	20,574	9,888	36,643	17,534
income (loss) from operations	2,167	(7,276)	(3,131)	(12,855)
other expenses, net:
interest expense	(741)	(28)	(1,474)	(75)
re-measurement of warrant liability	(11,744)	(130)	(12,503)	(259)
other income, net	898	38	1039	97
total other expenses, net	(11,587)	(120)	(12,938)	(237)
Loss before taxes	(9,420)	(7,396)	(16,069)	(13,092)
income tax expense	21	-----	21	-----
net loss	$ (9,441)	$ (7,396)	$ (16,090)	(13,092)
net loss per common share - basic and diluted	$ (0.24)	$ (1.22)	$ (0.69)	$ (2.21)
weighted average common shares outstanding - basic and diluted	39,081,359	6,072,319	23,206,203	5,933,806

Using this information, answer the following questions.

1. In your own words, describe what Beyond Meat, Inc. produces.

2. Provide the beginning and ending dates for the Beyond Meat, Inc.'s most recent 6 month period.

3. The Beyond Meat, Inc. inventory footnote lists the three classifications of inventory that we studied: Raw Materials, Work in Process and Finished Goods. Pea Protein is the only ingredient in the report. Look up the ingredients for Beyond Meat and list two more here: A. B.

4. In your own words, describe what would be included in work-in-process. Note that work in process represents incomplete goods.

5. In your own words, describe what would be included in finished goods.

6. Beyond Meat, Inc. has concerns regarding the purchasing and maintaining of its raw materials inventory. Describe two issues. Use at least two complete sentences that make sense.

7. Using the information from the previous financial information table, fill in the inventory balances, compute the amount of Cost of goods manufactured. Cost of goods sold for the six months ended June 29, 2019. is filled in for you.

Beyond Meat, Inc. Summary of cost of goods sold for the six months ended June 29, 2019 (amounts in thousands)
cost of goods manufactured
Add: beginning finished goods inventory (Dec. 31, 2018)
Cost of goods available for sale
Less: Ending finished goods inventory (June 29, 2019)
Cost of goods sold	$ 73, 945

8. Using the cost of goods manufactured amount you computed in #7 above and the inventory balances for work in process from Beyond Meat, Inc. financial information table, compute Total manufacturing costs for the year.

Beyond Meat, Inc. Schedule of cost of goods manufactured for the six months ended June 29, 2019 (amounts in thousands)
total manufacturing costs for the year
Add: beginning work in process inventory (Dec. 31, 2018)
total cost of work in process during the year
Less: ending work in process inventory
Cost of goods manufactured	$ 71,974

Answer 1

Requirement 1: The Company produces a portfolio of meat products using the non-animal and plant based ingredients that mimic the taste and flavor of natural meat products.

Requirement 2: The beginning date of the most recent 6 month period is January 1, 2019 and its ending date is June 29, 2019.

Requirement 3: The Company also uses other ingredients like mung beans, sunflower seeds, canola oil, rice, and coconut oil etc in addition to pea protein to create the meat-flavored vegetarian products.

Requirement 4: The work-in-process inventory of the company contains under production woven protein and other ingredients like lipids, flavor, trace minerals and vitamins.

Requirement 5: The finished inventory of the company contains packaged woven protein in the form of burgers and sausages.

Requirement 6: The profitability of company depends on the prices of primary ingredients that it sources. The prices of the primary ingredients depend on many factors like farm sizes and numbers, weather conditions, trade wars, political and economic events.

Requirement 7: Compute cost of goods manufactured as follows

BM Inc
Summary of Cost of Goods Sold
For the Six Months Ended June 29, 2019
Particulars	Amount (in thousands)
Cost of Goods Manufactured	$71,974
Add: Beginning Finished Goods Inventory	$13,984
Cost of Goods Available for Sale	$85,958
Deduct: Ending Finished Goods Inventory	$12,013
Cost of Goods Sold	$73,945

Cost of goods available for sale = $12,013 + $73,945

Cost of goods manufactured = $85,958 − $13,984.

Requirement 8: Compute total manufacturing costs as follows

BM Inc
Schedule of Cost of Goods Manufactured
For the Six Months Ended June 29, 2019
Particulars	Amount         (in thousands)
Total Manufacturing Costs for the Year	$75,092
Add: Beginning Work in Process Inventory	$2,517
Total Cost of Work in Process During the Year	$77,609
Deduct: Ending Work in Process Inventory	$5,635
Cost of Goods Manufactured	$71,974

Total cost of work in process during the year = $71,974 + $5,635

Total manufacturing costs for the year = $77,609 − $2,517