SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022 |
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto |
Commission File Number 001-36245
RiceBran Technologies
(Exact Name of Registrant as Specified in its Charter)
California (State or other jurisdiction of incorporation or organization) | 87-0673375 (I.R.S. Employer Identification No.) |
25420 Kuykendahl Rd., Suite B300 Tomball, TX (Address of Principal Executive Offices) | 77375 (Zip Code) |
(281) 675-2421
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol | Name of each exchange on which registered | ||
Common Stock, no par value per share | RIBT | The NASDAQ Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☒ |
| Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule l2b-2 of the Exchange Act). Yes ☐ No ☒
As of July 30, 2021,August 11, 2022, there were 45,487,60952,310,304 shares of common stock outstanding.
Form 10-Q
| PART I. FINANCIAL INFORMATION | Page | ||
Item 1. | |||
Condensed Consolidated Balance Sheets as of June 30, | 4 | ||
| 5 | |||
Notes to Unaudited Condensed Consolidated Financial Statements | 6 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. | |||
Item 4. | |||
| PART II. OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
| Signatures | |||
Cautionary Note about Forward-Looking Statements
This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, liquidity or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services, products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. The forward-looking statements contained herein reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those projected in such forward-looking statements due to a number of factors, risks and uncertainties, including the factors that may affect future results set forth in this CurrentQuarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020.2021. We disclaim any obligation to update any forward lookingforward-looking statements as a result of developments occurring after the date of this quarterly report.
Unless the context requires otherwise, references to “we,” “us,” “our” and “the Company” refer to RiceBran Technologies and its consolidated subsidiaries.
PART I. FINANCIAL INFORMATION
Condensed Consolidated Statements of Operations
(Unaudited) (in thousands, except share and per share amounts)
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Revenues | $ | 7,574 | $ | 5,903 | $ | 16,179 | $ | 14,233 | $ | 10,190 | $ | 7,574 | $ | 20,749 | $ | 16,179 | ||||||||||||||||
Cost of goods sold | 7,421 | 7,127 | 15,354 | 15,862 | 10,667 | 7,421 | 20,724 | 15,354 | ||||||||||||||||||||||||
Gross profit (loss) | 153 | (1,224 | ) | 825 | (1,629 | ) | (477 | ) | 153 | 25 | 825 | |||||||||||||||||||||
Selling, general and administrative expenses | 1,933 | 2,307 | 3,674 | 4,857 | 1,708 | 1,933 | 3,400 | 3,674 | ||||||||||||||||||||||||
(Gain) Loss on disposition and involuntary conversion of property and equipment | (1 | ) | 308 | 6 | 308 | |||||||||||||||||||||||||||
Loss (gain) on involuntary conversion of property and equipment | (147 | ) | (1 | ) | (147 | ) | 6 | |||||||||||||||||||||||||
Operating loss | (1,779 | ) | (3,839 | ) | (2,855 | ) | (6,794 | ) | (2,038 | ) | (1,779 | ) | (3,228 | ) | (2,855 | ) | ||||||||||||||||
Interest income | 0 | 8 | 1 | 19 | 1 | 0 | 2 | 1 | ||||||||||||||||||||||||
Interest expense | (120 | ) | (76 | ) | (232 | ) | (125 | ) | (118 | ) | (120 | ) | (244 | ) | (232 | ) | ||||||||||||||||
Change in fair value of derivative warrant liability | (417 | ) | 0 | (588 | ) | 0 | ||||||||||||||||||||||||||
Gain on extinguishment of PPP loan | 0 | 0 | 1,792 | 0 | 0 | 0 | 0 | 1,792 | ||||||||||||||||||||||||
Other expense | (24 | ) | (42 | ) | (37 | ) | (87 | ) | (38 | ) | (24 | ) | (72 | ) | (37 | ) | ||||||||||||||||
Other income | 0 | 0 | 0 | 5 | 1 | 0 | 5 | 0 | ||||||||||||||||||||||||
Loss before income taxes | (1,923 | ) | (3,949 | ) | (1,331 | ) | (6,982 | ) | (2,609 | ) | (1,923 | ) | (4,125 | ) | (1,331 | ) | ||||||||||||||||
Income tax expense | 0 | 0 | (1 | ) | 0 | (12 | ) | 0 | (12 | ) | (1 | ) | ||||||||||||||||||||
Net loss | $ | (1,923 | ) | $ | (3,949 | ) | $ | (1,332 | ) | $ | (6,982 | ) | $ | (2,621 | ) | $ | (1,923 | ) | $ | (4,137 | ) | $ | (1,332 | ) | ||||||||
Loss per common share: | ||||||||||||||||||||||||||||||||
Basic | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.03 | ) | ||||||||
Diluted | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.03 | ) | $ | (0.17 | ) | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.03 | ) | ||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||||||||||
Basic | 45,864,385 | 40,052,163 | 45,749,785 | 40,007,660 | 52,861,638 | 45,864,385 | 52,696,717 | 45,749,785 | ||||||||||||||||||||||||
Diluted | 45,864,385 | 40,052,163 | 45,749,785 | 40,007,660 | 52,861,638 | 45,864,385 | 52,696,717 | 45,749,785 | ||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited) (in thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss | $ | (1,923 | ) | $ | (3,949 | ) | $ | (1,332 | ) | $ | (6,982 | ) | ||||
Derivative financial instruments designated as cash flow hedges: | ||||||||||||||||
Losses arising during the period | 0 | (100 | ) | 0 | (100 | ) | ||||||||||
Reclassification of losses realized to cost of goods sold | 0 | 52 | 0 | 52 | ||||||||||||
Net other comprehensive loss | 0 | (48 | ) | 0 | (48 | ) | ||||||||||
Comprehensive loss | $ | (1,923 | ) | $ | (3,997 | ) | $ | (1,332 | ) | $ | (7,030 | ) | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements
RiceBran Technologies
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands, except share amounts)
June 30, | December 31, | June 30, | December 31, | ||||||||||||||
2021 | 2020 | 2022 | 2021 | ||||||||||||||
| ASSETS | ASSETS | ||||||||||||||||
Current assets: | Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 4,010 | $ | 5,263 | Cash and cash equivalents | $ | 5,124 | $ | 5,825 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $9 and $9 | 2,556 | 2,819 | |||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $136 and $18 | Accounts receivable, net of allowance for doubtful accounts of $136 and $18 | 4,038 | 4,136 | ||||||||||||||
Inventories | 1,836 | 1,878 | Inventories | 2,312 | 2,444 | ||||||||||||
Other current assets | 1,844 | 1,380 | Other current assets | 1,227 | 810 | ||||||||||||
Total current assets | 10,246 | 11,340 | Total current assets | 12,701 | 13,215 | ||||||||||||
Property and equipment, net | 15,588 | 16,367 | Property and equipment, net | 14,815 | 15,444 | ||||||||||||
Operating lease right-of-use assets | 2,291 | 2,452 | Operating lease right-of-use assets | 1,956 | 2,127 | ||||||||||||
Goodwill | 3,915 | 3,915 | |||||||||||||||
Intangible assets | 620 | 722 | Intangible assets | 446 | 527 | ||||||||||||
Total assets | $ | 32,660 | $ | 34,796 | Total assets | $ | 29,918 | $ | 31,313 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
Current liabilities: | Current liabilities: | ||||||||||||||||
Accounts payable | $ | 796 | $ | 955 | Accounts payable | $ | 1,368 | $ | 826 | ||||||||
Commodities payable | 869 | 825 | Commodities payable | 1,712 | 1,702 | ||||||||||||
Accrued salary, wages and benefits | 963 | 601 | Accrued salary, wages and benefits | 743 | 787 | ||||||||||||
Accrued expenses | 347 | 536 | Accrued expenses | 737 | 683 | ||||||||||||
Operating lease liabilities, current portion | 362 | 344 | Operating lease liabilities, current portion | 407 | 382 | ||||||||||||
Due under bank line of credit | Due under bank line of credit | 1,800 | 0 | ||||||||||||||
Due under factoring agreement | Due under factoring agreement | 3,165 | 3,379 | ||||||||||||||
Due under insurance premium finance agreements | 756 | 126 | Due under insurance premium finance agreements | 530 | 128 | ||||||||||||
Due under factoring agreement | 1,805 | 1,785 | |||||||||||||||
Finance lease liabilities, current portion | 87 | 82 | Finance lease liabilities, current portion | 86 | 86 | ||||||||||||
Long-term debt, current portion | 1,598 | 572 | Long-term debt, current portion | 1,251 | 1,183 | ||||||||||||
Total current liabilities | 7,583 | 5,826 | Total current liabilities | 11,799 | 9,156 | ||||||||||||
Operating lease liabilities, less current portion | 2,112 | 2,330 | Operating lease liabilities, less current portion | 1,705 | 1,948 | ||||||||||||
Finance lease liabilities, less current portion | 109 | 113 | Finance lease liabilities, less current portion | 109 | 100 | ||||||||||||
Long-term debt, less current portion | 49 | 3,107 | Long-term debt, less current portion | 708 | 1,356 | ||||||||||||
Derivative warrant liability | Derivative warrant liability | 846 | 258 | ||||||||||||||
Total liabilities | 9,853 | 11,376 | Total liabilities | 15,167 | 12,818 | ||||||||||||
Commitments and contingencies | Commitments and contingencies | ||||||||||||||||
Shareholders' equity: | Shareholders' equity: | ||||||||||||||||
Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated value $225, 225 shares, issued and outstanding | 112 | 112 | |||||||||||||||
Common stock, no par value, 150,000,000 shares authorized, 45,487,609 shares and 45,238,087 shares, issued and outstanding | 322,937 | 322,218 | |||||||||||||||
| Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated value $150, 150 shares, issued and outstanding | Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated value $150, 150 shares, issued and outstanding | 75 | 75 | ||||||||||||||
Common stock, no par value, 150,000,000 shares authorized, 52,310,304 shares and 51,589,674 shares, issued and outstanding | Common stock, no par value, 150,000,000 shares authorized, 52,310,304 shares and 51,589,674 shares, issued and outstanding | 326,672 | 326,279 | ||||||||||||||
Accumulated deficit | (300,242 | ) | (298,910 | ) | Accumulated deficit | (311,996 | ) | (307,859 | ) | ||||||||
Total shareholders' equity | 22,807 | 23,420 | Total shareholders' equity | 14,751 | 18,495 | ||||||||||||
Total liabilities and shareholders' equity | $ | 32,660 | $ | 34,796 | Total liabilities and shareholders' equity | $ | 29,918 | $ | 31,313 | ||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net loss | $ | (1,332 | ) | $ | (6,982 | ) | $ | (4,137 | ) | $ | (1,332 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||||
Depreciation | 1,219 | 1,157 | 1,046 | 1,219 | ||||||||||||
Amortization | 102 | 117 | 81 | 102 | ||||||||||||
Stock and share-based compensation | 548 | 664 | 393 | 548 | ||||||||||||
Loss on diposition and involuntary conversion of property and equipment | 6 | 308 | ||||||||||||||
Change in fair value derivative warrant liability | 588 | 0 | ||||||||||||||
Loss (gain) on involuntary conversion of property and equipment | (147 | ) | 6 | |||||||||||||
Gain on extinguishment of PPP loan | (1,792 | ) | 0 | 0 | (1,792 | ) | ||||||||||
Provision for bad debts | 118 | 0 | ||||||||||||||
Other | 15 | (107 | ) | (32 | ) | 15 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 262 | 1,090 | (20 | ) | 262 | |||||||||||
Inventories | 42 | (1,111 | ) | 132 | 42 | |||||||||||
Accounts payable and accrued expenses | 197 | (201 | ) | 647 | 197 | |||||||||||
Commodities payable | 44 | (631 | ) | 10 | 44 | |||||||||||
Other | (727 | ) | (675 | ) | (417 | ) | (727 | ) | ||||||||
Net cash used in operating activities | (1,416 | ) | (6,371 | ) | (1,738 | ) | (1,416 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment | (540 | ) | (843 | ) | (421 | ) | (540 | ) | ||||||||
Proceeds from insurance on involuntary conversion | 263 | 0 | 109 | 263 | ||||||||||||
Net cash used in investing activities | (277 | ) | (843 | ) | (312 | ) | (277 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Advances on factoring agreement | 15,660 | 15,131 | 18,173 | 15,660 | ||||||||||||
Payments on factoring agreement | (15,685 | ) | (14,946 | ) | (18,387 | ) | (15,685 | ) | ||||||||
Advances on bank line of credit | 1,800 | 0 | ||||||||||||||
Advances on insurance premium finance agreements | 962 | 506 | 794 | 962 | ||||||||||||
Payments on insurance premium finance agreements | (332 | ) | (316 | ) | (392 | ) | (332 | ) | ||||||||
Advances on long-term debt and finance lease liabilities | 0 | 1,792 | ||||||||||||||
Payments on long-term debt and finance lease liabilities | (336 | ) | (62 | ) | (639 | ) | (336 | ) | ||||||||
Proceeds from common stock warrant exercises | 171 | 12 | 0 | 171 | ||||||||||||
Net cash provided by financing activities | 440 | 2,117 | 1,349 | 440 | ||||||||||||
Net change in cash and cash equivalents | $ | (1,253 | ) | $ | (5,097 | ) | $ | (701 | ) | $ | (1,253 | ) | ||||
Cash and cash equivalents, beginning of period | 5,263 | 8,444 | $ | 5,825 | $ | 5,263 | ||||||||||
Cash and cash equivalents, end of period | 4,010 | 3,347 | 5,124 | 4,010 | ||||||||||||
Net change in cash and cash equivalents | $ | (1,253 | ) | $ | (5,097 | ) | $ | (701 | ) | $ | (1,253 | ) | ||||
Supplemental disclosures: | ||||||||||||||||
Cash paid for interest | $ | 179 | $ | 79 | $ | 229 | $ | 179 | ||||||||
Cash paid for income taxes | $ | 16 | $ | 0 | $ | 19 | $ | 16 | ||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
In the opinion of management, the accompanying unaudited condensed consolidated financial statements (interim financial statements) of RiceBran Technologies and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP")(GAAP) and the rules and regulations of the Securities and Exchange Commission ("SEC")(the SEC) for reporting on Form 10-Q; therefore, they do not include all of the information and notes required by GAAP for complete financial statements. The interim financial statements contain all adjustments necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented of a normal and recurring nature necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented.
These interim financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, which included all disclosures required by generally accepted accounting principles.
The results reported in these interim financial statements are not necessarily indicative of the results to be expected for the full fiscal year, or any other future period, and have been prepared based on the realization of assets and the satisfaction of liabilities in the normal course of business.
NOTE 2. BUSINESS
We are a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small grains. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing consumer demand for all natural, non-GMO and organic products. We believe our products arecan become valuable alternatives to traditional food ingredients.
Notably, we apply our proprietary technologies to convert raw rice bran into stabilized rice bran ("SRB")(SRB), and high value-added derivative products including: RiBalance, a rice bran nutritional package derived from SRB; RiSolubles, a nutritious, carbohydrate and lipid rich fraction of RiBalance; RiFiber, a fiber rich insoluble derivative of RiBalance and ProRyza, a rice bran protein-based product; as well asand a variety of other valuable derivatives extracted from these core products.
In granular form, SRB is an ingredienta food additive used in products for human and animal consumption. We believe SRB has certain qualities that make it more attractive than ingredientsadditives based on the by-products of other agricultural commodities, includingsuch as corn, soybeans, wheat, and yeast. Our SRB products and SRB derivatives support the production of healthy, natural, hypoallergenic, gluten free, and non-genetically modified ingredients and supplements for use in meats, baked goods, cereals, coatings, health foods, and high-end animal nutrition. Our target customers are food and animal nutrition manufacturers, wholesalers and retailers, both domestically and internationally.
We manufacture and distribute SRB from four4 locations: two2 facilities located within supplier-owned rice mills in Arbuckle and West Sacramento, California; one1 company-owned facility in Mermentau, Louisiana; and our own rice mill in Wynne, Arkansas. At our Dillon, Montana facility, we produce SRB-based products and derivatives through proprietary processes. Our rice mill in Wynne, Arkansas also(Golden Ridge) supplies grades U.S. No. 1 and No. 2 premium long and medium white rice, and our grain processing facility in East Grand Forks, Minnesota (MGI) mills a variety of traditional, and ancient, small grains. Given the integrated nature of these facilities, we have one1 reporting unit and one1 operating segment, specialty ingredients.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent accounting standards not yet adopted
The following discusses the accounting standard(s) not yet adopted that will, or are expected to, result in a significant change in practice and/or have a significant financial impact on our financial position, results of operations or cash flows.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
In June 2016, the Financial Accounting Standards Board ("FASB")(FASB) issued guidance ASU No. 2016-13 Financial Instruments— - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which changes the accounting for credit losses for certain instruments, including trade receivables, from an incurred loss method to a current expected loss method. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The guidance, and subsequent guidance related to the topic, is effective for our annual and interim periods beginning in 2023 and must be adopted on a modified retrospective approach through cumulative-effect adjustment to retained earnings as of January 1, 2023. Based on the nature of our current receivables and our credit loss history, we do not expect the adoption of the guidance to have a significant impact on our results of operations, financial position, or cash flows.
NOTE 4. CASH AND CASH EQUIVALENTS
As of June 30, 2021,2022, we have $2.4$2.7 million of cash and cash equivalents invested in a money market fund with net assets invested in U.S. Dollar denominated money market securities of domestic and foreign issuers, U.S. Government securities and repurchase agreements. We consider all liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
We have cash on deposit in excess of federally insured limits at a bank. We do not believe that maintaining substantially all such assets with the bank or investing in a liquid mutual fund represent material risks.
NOTE 5. ACCOUNTS RECEIVABLE AND REVENUES
Amounts billed and due from our customers are classified as accounts receivablesreceivable on our consolidated balance sheets and require payment on a short-term basis. Invoices are generally issued at the point control transfers and substantially all of our invoices are due within 30 days or less, however certain customers have terms of up to 120 days. For substantially all of our contracts, control of the ordered product(s) transfers at our location. Periodically, we require payment prior to the point in time we recognize revenue. Amounts received from customers prior to revenue recognition on a contract are contract liabilities, are classified as customer prepayments liability on our consolidated balance sheets and are typically applied to an invoice within 30 days of the prepayment. Revenues in the three and six months ended June 30, 2022 and 2021, include $0.1 million, or less, in unearned revenue as of the end of the prior year.
Our accounts receivable potentially subject us to significant concentrations of credit risk. Revenues and accounts receivable from significant customers (customers with revenue or accounts receivable in excess of 10% of consolidated totals) are stated below as a percent of consolidated totals.
Customer | ||||||||||||||||
A | B | C | D | |||||||||||||
% of revenues, three months ended June 30, 2021 | 15 | % | 15 | % | 3 | % | 2 | % | ||||||||
% of revenues, three months ended June 30, 2020 | 8 | % | 4 | % | 10 | % | 3 | % | ||||||||
% of revenues, six months ended June 30, 2021 | 12 | % | 11 | % | 5 | % | 2 | % | ||||||||
% of revenues, six months ended June 30, 2020 | 13 | % | 5 | % | 9 | % | 2 | % | ||||||||
% of accounts receivable, as of June 30, 2021 | 13 | % | 11 | % | 7 | % | 8 | % | ||||||||
% of accounts receivable, as of December 31, 2020 | 1 | % | 7 | % | 17 | % | 10 | % | ||||||||
Customer | ||||||||||||
A | B | C | ||||||||||
% of revenues, three months ended June 30, 2022 | 13 | % | 10 | % | 1 | % | ||||||
% of revenues, three months ended June 30, 2021 | 6 | % | 15 | % | 15 | % | ||||||
% of revenues, six months ended June 30, 2022 | 12 | % | 10 | % | 3 | % | ||||||
% of revenues, six months ended June 30, 2021 | 6 | % | 12 | % | 11 | % | ||||||
% of accounts receivable, as of June 30, 2022 | 8 | % | 9 | % | 1 | % | ||||||
% of accounts receivable, as of December 31, 2021 | 15 | % | 8 | % | 9 | % | ||||||
The following table presents revenues by geographic area shipped to (in thousands).
Three Months Ended June 30 | Six Months Ended June 30 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
United States | $ | 7,221 | $ | 5,532 | $ | 15,417 | $ | 13,500 | $ | 9,912 | $ | 7,221 | $ | 20,158 | $ | 15,417 | ||||||||||||||||
Other countries | 353 | 371 | 762 | 733 | 278 | 353 | 591 | 762 | ||||||||||||||||||||||||
Revenues | $ | 7,574 | $ | 5,903 | $ | 16,179 | $ | 14,233 | $ | 10,190 | $ | 7,574 | $ | 20,749 | $ | 16,179 | ||||||||||||||||
NOTE 6. INVENTORIES
The following table details the components of inventories (in thousands).
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Finished goods | $ | 1,364 | $ | 1,512 | ||||
Raw materials | 351 | 236 | ||||||
Packaging | 121 | 130 | ||||||
Inventories | $ | 1,836 | $ | 1,878 | ||||
NOTE 7.6. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
June 30, | December 31 | June 30, | December 31 | |||||||||||||||||||||
2021 | 2020 | Estimated Useful Lives | 2022 | 2021 | Estimated Useful Lives | |||||||||||||||||||
Land | $ | 730 | $ | 730 | $ | 730 | $ | 730 | ||||||||||||||||
Furniture and fixtures | 276 | 276 | 5 | - | 10 years | 259 | 265 | 5 | - | 10 years | ||||||||||||||
Plant | 9,438 | 9,377 | 20 | - | 40 years, or life of lease | 10,082 | 10,457 | 20 | - | 40 years, or life of lease | ||||||||||||||
Computer and software | 1,095 | 1,060 | 3 | - | 5 years | 450 | 452 | 3 | - | 5 years | ||||||||||||||
Leasehold improvements | 1,880 | 1,880 | 4 | - | 15 years, or life of lease | 1,838 | 1,828 | 4 | - | 15 years, or life of lease | ||||||||||||||
Machinery and equipment | 16,741 | 16,402 | 5 | - | 15 years | 15,266 | 15,115 | 5 | - | 15 years | ||||||||||||||
Property and equipment, cost | 30,160 | 29,725 | 28,625 | 28,847 | ||||||||||||||||||||
Less accumulated depreciation | 14,572 | 13,358 | 13,810 | 13,403 | ||||||||||||||||||||
Property and equipment, net | $ | 15,588 | $ | 16,367 | $ | 14,815 | $ | 15,444 | ||||||||||||||||
Amounts payable for property and equipment included in accounts payable oftotaled $0.1 million at June 30, 2021,2022, and $0.3$0.2 million at December 31, 2020.2021. Assets which had not yet been placed in service, included in property and equipment, totaled $0.9$0.8 million at June 30, 2021,2022, and $0.6$0.9 million at December 31, 2020.2021.
Involuntary Conversion
In 2020, we wrote down assets, consisting primarily of a building, machinery and equipment, in the amount of $0.9 million and incurred other costs of $0.1 million as a result of hurricane damage that occurred in August 2020 to our Lake Charles, Louisiana property. Operations at this facility have been shut down since September 2020, while this facility is being repaired. We currently expect insurance recoveries will cover our asset loss to the extent it exceeds our $0.1 million deductible under our insurance policy. In September 2020, we received an advance on the insurance settlement of $0.3 million and we accrued a receivable for the additional $0.7 million of expected insurance proceeds related to our asset loss. The resulting $0.1 million net loss on involuntary conversion of assets was included in selling, general and administrative expenses in our consolidated financial statements in the third quarter of 2020. During the three months ended June 30, 2021, we received $0.3 million of proceeds from the insurer. The insurance proceeds receivable included in other current assets on our consolidated balance sheet was $0.5 million at June 30, 2021, and $0.7 million as of December 31, 2020. The final settlement with the insurer on this matter will likely differ from the total proceeds we have estimated as of June 30, 2021. We accrue estimated insurance proceeds receivable when the proceeds are estimable and probable of collection. Given the nature of recoveries of lost profits under business interruption insurance we have not accrued insurance proceeds receivable for any potential recoveries of lost profits.
NOTE 8.7. LEASES
The components of lease expense and cash flows from leases (amounts in(in thousands) follow.
Three Months Ended June 30, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Finance lease cost: | ||||||||||||||||||||||||||||||||
Amortization of right-of use assets, included in cost of goods sold | $ | 22 | $ | 20 | $ | 43 | $ | 41 | $ | 19 | $ | 22 | $ | 39 | $ | 43 | ||||||||||||||||
Interest on lease liabilities | 3 | 4 | 6 | 8 | 3 | 3 | 5 | 6 | ||||||||||||||||||||||||
Operating lease cost, included in selling, general and administrative expenses: | ||||||||||||||||||||||||||||||||
Fixed leases cost | 128 | 131 | 257 | 261 | 129 | 128 | 258 | 257 | ||||||||||||||||||||||||
Variable lease cost | 37 | 33 | 75 | 48 | 40 | 37 | 86 | 75 | ||||||||||||||||||||||||
Short-term lease cost | 0 | 0 | 0 | 3 | 14 | 0 | 21 | 0 | ||||||||||||||||||||||||
Total lease cost | $ | 190 | $ | 188 | $ | 381 | $ | 361 | $ | 205 | $ | 190 | $ | 409 | $ | 381 | ||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||||||||||||||
Operating cash flows from finance leases | $ | 3 | $ | 4 | $ | 6 | $ | 8 | $ | 3 | $ | 3 | $ | 5 | $ | 6 | ||||||||||||||||
Operating cash flows from operating leases | $ | 128 | $ | 131 | $ | 257 | $ | 261 | $ | 129 | $ | 128 | $ | 258 | $ | 257 | ||||||||||||||||
Financing cash flows from finance leases | $ | 24 | $ | 20 | $ | 50 | $ | 46 | $ | 22 | $ | 24 | $ | 46 | $ | 50 | ||||||||||||||||
As of June 30, 2021,2022, variable lease payments do not depend on a rate or index. As of June 30, 2022, and December 31, 2021, property and equipment, net, includes $0.3 million and $0.2 million of finance lease right-of-use-assets, with an original cost of $0.4$0.5 million. During the 2021,three months and six months ended June 30, 2022, we financed the purchase of $0.1 million of property and equipment in noncash finance lease transactions. During the three months and six months ended June 30, 2021, we financed the purchase of less than $0.1 million of property and equipment in noncash finance lease transactions.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
As of June 30, 2021,2022, we do not believe it is certain that we will exercise any renewal options. The remaining terms of our leases and the discount rates used in the calculation of the fair value of our leaseslease liabilities as of June 30, 2021,2022, follows.
Operating Leases | Finance Leases | Operating | Finance | |||||||||||||||||
Remaining leases terms (in years) | 2.3 | - | 11.7 | 0.4 | - | 3.8 | 1.3 | - | 10.7 | 0.3 | - | 4.9 | ||||||||
Weighted average remaining lease terms (in years) | 6.5 | 2.3 | 5.8 | 3.0 | ||||||||||||||||
Discount rates | 6.3% | - | 9.0 | % | 2.8% | - | 7.3 | % | 6.3% | - | 9.0% | 2.8% | - | 9.0% | ||||||
Weighted average discount rate | 7.7 | % | 5.2 | % | 7.8% | 5.9% | ||||||||||||||
Maturities of lease liabilities as of June 30, 2021,2022, follows (in thousands).
Operating | Finance | Operating | Finance | |||||||||||||
Leases | Leases | Leases | Leases | |||||||||||||
2021 (six months ended December 31, 2021) | $ | 238 | $ | 50 | ||||||||||||
2022 | 548 | 84 | ||||||||||||||
2022 (six months ended December 31, 2022) | $ | 244 | $ | 74 | ||||||||||||
2023 | 528 | 54 | 528 | 79 | ||||||||||||
2024 | 429 | 14 | 429 | 38 | ||||||||||||
2025 | 439 | 1 | 439 | 23 | ||||||||||||
2026 | 451 | 20 | ||||||||||||||
Thereafter | 1,029 | 0 | 578 | 5 | ||||||||||||
Total lease payments | 3,211 | 203 | 2,669 | 239 | ||||||||||||
Amounts representing interest | (737 | ) | (7 | ) | (557 | ) | (44 | ) | ||||||||
Present value of lease obligations | $ | 2,474 | $ | 196 | $ | 2,112 | $ | 195 | ||||||||
NOTE 9.8. DEBT
We finance certain amounts owed for annual insurance premiums under financing agreements. As of June 30, 2021,2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through February 2022,March 2023, at an average interest raterates of 3.7 %3.5% to 3.9% per year.
In October 2019, we entered intoWe borrow under a factoring agreement with a lender, which provides for a $7.0 million credit facility with a lender.facility. We may only borrow to the extent we have qualifying accounts receivable as defined in the agreement. The facility hashad an initial two-year term and automatically renews for successive annual periods, unless proper termination notice is given. The facility term has automatically extended to October 2022. We paid a $0.2 million facility fee upon inception of the agreement which is amortizingamortized to interest expense on a straight-line basis over the two years. years ending in October 2021. We incur recurring fees under the agreement, including a funding fee of 0.5% above the prime rate, in no event to be less than 5.5%, on any advances and a service fee on average net funds borrowed. The lender has the right to demand repayment of the advances at any time. The lender has a security interest in personal property assets.
Due underAdditional information related to our factoring agreement consists of the following (in thousands).obligation follows.
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Borrowings outstanding | $ | 1,835 | $ | 1,860 | ||||
Debt issuance costs, net | (30 | ) | (75 | ) | ||||
Due under factoring agreement | $ | 1,805 | $ | 1,785 | ||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Average borrowings outstanding (in thousands) | $ | 3,131 | $ | 1,564 | $ | 2,977 | $ | 1,223 | ||||||||
Amortization of debt issuance costs (in thousands) | $ | 0 | $ | 23 | $ | 0 | $ | 45 | ||||||||
Interest paid, as a percentage of average outstanding borrowings | 1.5 | % | 1.6 | % | 1.4 | % | 3.4 | % | ||||||||
Fees paid, as a percentage of average outstanding borrowings | 0.9 | % | 1.5 | % | 1.2 | % | 2.9 | % | ||||||||
As of June 30, 2022, we had $1.8 million outstanding under a line of credit with a bank. The borrowing is secured by our cash on deposit with the bank and bears interest at prime (4.8% at June 30, 2022). There are no stipulated repayment terms for the line as long as we maintain sufficient cash collateral. Our borrowings under the line of credit averaged $0.1 million in the three months ended June 30, 2022, and less than $0.1 million for the six months ended June 30, 2022.
RiceBran Technologies
Additional information related to our factoring obligation follows.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Average borrowings outstanding (in thousands) | $ | 1,564 | $ | 2,879 | $ | 1,223 | $ | 2,016 | ||||||||
Amortization of debt issuance costs (in thousands) | $ | 23 | $ | 23 | $ | 45 | $ | 45 | ||||||||
Fees paid, as a percentage of average oustanding borrowings | 1.5 | % | 1.5 | % | 2.9 | % | 4.3 | % | ||||||||
Interest paid, as a percentage of average outstanding borrowings | 1.6 | % | 1.5 | % | 3.4 | % | 3.1 | % | ||||||||
Long-term debt consists of the following (in thousands).
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Mortgage promissory note - Dated September 2020. Interest accrues at an annual rate which is the greater of 11.0% above the lender's prime rate and 14.3%. Payable in monthly installments through June 2022. Net of $18 and $26 debt issuance costs at June 30, 2021 and December 31, 2020. | $ | 1,550 | $ | 1,817 | ||||
Payroll Protection Program note - Dated April 2020. Interest accrued at an annual rate of 1.0%. Forgiven in January 2021. | 0 | 1,792 | ||||||
Equipment notes - Initially recorded in November 2018, in an aquisition, at the present value of future payments using a discount rate of 4.8% per year. Payable in monthly installments through expiry dates ranging from May 2022 to August 2022. | 30 | 37 | ||||||
Equipment note - Dated December 2019. Due in monthly installments through December 2024. Interest accrues at the effective discount rate of 9.3% per year. | 30 | 33 | ||||||
Equipment note - Dated May 2021. Original principal $46. Due in monthly installments through June 2025. Interest accrues at the effective discount rate of 3.6% per year. | 37 | 0 | ||||||
Total long term debt, net | $ | 1,647 | $ | 3,679 | ||||
In April 2020, we received $1.8 million on a Small Business Administration ("SBA") Payroll Protection Program ("PPP") loan as provided for in the Coronavirus Aid, Relief and Economic Security Act ("CARES"), enacted into U.S. law in March 2020. Under certain conditions, the loan and accrued interest were forgivable, if the loan proceeds were used for maintaining workforce levels. As of December 31 2020, payments on the PPP loan were deferred under the terms of the program. Interest accrued at an annual rate of 1.0%. The loan proceeds were used for maintaining workforce levels and the entire loan and related accrued interest was forgiven, in its entirety in January 2021. As discussed further in Note 14, our compliance with the loan program is subject to potential audit by the SBA.
In July 2020, we entered into a mortgage agreement with a lender pursuant to a promissory note. In September 2020, we borrowed $1.0 million on the note and, in October 2020, we borrowed the remaining $1.0 million available on the note. Interest on this note accrues at an annual rate which is the greater of 11.0% above the lender’s prime rate and 14.3%. In addition, we incurred a facility fee equal to 1.0% of the amount of each advance under the promissory note. The principal amount of the note must be repaid in monthly installments ending in June 2022. The note is secured by certain real property and personal property assets located in Wynne, Arkansas. As of June 30, 2021, the note bore interest at an annual rate of 14.3%.
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Mortgage promissory note - Originally dated July 2020 and modified in December 2021. As modified, interest accrues at an annual rate which is the greater of 7.0% above the lender's prime rate and 10.3% (11.8% at June 30, 2022) payable in monthly installments through December 2023. Net of $17 debt issuance costs at June 30, 2022. | $ | 1,906 | $ | 2,469 | ||||
Face amount $2.5 million. Interest accrued at the effective discount rate 11.5%. Secured by certain real property in Wynn, Arkansas. | ||||||||
Equipment note - Dated May 2021. Original principal $46. Due in monthly installments through June 2025. | ||||||||
Interest accrues at the effective discount rate of 3.6% per year. | 28 | 33 | ||||||
Equipment note - Dated December 2019. Original principal $40. Due in monthly installments through December 2024. | ||||||||
Interest accrues at the effective discount rate of 9.3% per year. | 22 | 26 | ||||||
Equipment notes - Initially recorded in November 2018, in an acquisition, at the present value of future payments using a discount rate of 4.8% per year. Due in monthly installments through August 2022. | 3 | 11 | ||||||
Total long term debt, net | $ | 1,959 | $ | 2,539 | ||||
Future principal maturities of long-term debt outstanding as of June 30, 2021,2022, follow (in thousands).
2021 (six months ended December 31, 2021) | $ | 317 | ||
2022 | 1,306 | |||
2023 | 18 | |||
2024 | 19 | |||
2025 | 5 | |||
Principal maturities | 1,665 | |||
Debt issuance costs | (18 | ) | ||
Total long term debt, net | $ | 1,647 |
2022 (six months ended December 31, 2022) | $ | 620 | ||
2023 | 1,332 | |||
2024 | 19 | |||
2025 | 5 | |||
Principal maturities | 1,976 | |||
Debt issuance costs | (17 | ) | ||
Total long term debt, net | $ | 1,959 |
NOTE 10.9. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS
A summary of equity activity follows (in thousands, except share amounts).
Shares |
| Shares | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Equity | Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 225 | 45,238,087 | $ | 112 | $ | 322,218 | $ | (298,910 | ) | $ | 23,420 | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | 150 | 51,589,674 | $ | 75 | $ | 326,279 | $ | (307,859 | ) | $ | 18,495 | |||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 29,943 | 0 | 250 | 0 | 250 | 0 | 224,751 | 0 | 241 | 0 | 241 | ||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 3 | 0 | 3 | 0 | 6,000 | 0 | 5 | 0 | 5 | ||||||||||||||||||||||||||||||||||||
Other | - | - | 0 | (3 | ) | 0 | (3 | ) | ||||||||||||||||||||||||||||||||||||||||
Net income | - | - | 0 | 0 | 591 | 591 | - | - | 0 | 0 | (1,516 | ) | (1,516 | ) | ||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 225 | 45,274,030 | 112 | 322,468 | (298,319 | ) | 24,261 | |||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | 150 | 51,820,425 | 75 | 326,525 | (309,375 | ) | 17,225 | |||||||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 29,643 | 0 | 290 | 0 | 290 | 0 | 483,879 | 0 | 146 | 0 | 146 | ||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 5 | 0 | 5 | 0 | 6,000 | 0 | 1 | 0 | 1 | ||||||||||||||||||||||||||||||||||||
Exercise of common stock warrants | 0 | 177,936 | 0 | 171 | 0 | 171 | ||||||||||||||||||||||||||||||||||||||||||
Other | - | - | 0 | 3 | 0 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | 0 | 0 | (1,923 | ) | (1,923 | ) | - | - | 0 | 0 | (2,621 | ) | (2,621 | ) | ||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 225 | 45,487,609 | $ | 112 | $ | 322,937 | $ | (300,242 | ) | $ | 22,807 | |||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | 150 | 52,310,304 | $ | 75 | $ | 326,672 | $ | (311,996 | ) | $ | 14,751 | |||||||||||||||||||||||||||||||||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Shares | Accumulated Other | Shares |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | Comprehensive | Preferred | Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Loss | Equity | Series G | Common | Stock | Stock | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | 225 | 40,074,483 | $ | 112 | $ | 318,811 | $ | (287,180 | ) | $ | 0 | $ | 31,743 | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 | 225 | 45,238,087 | $ | 112 | $ | 322,218 | $ | (298,910 | ) | $ | 23,420 | |||||||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 17,534 | 0 | 312 | 0 | 0 | 312 | 0 | 29,943 | 0 | 250 | 0 | 250 | |||||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 3 | 0 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | 0 | (3 | ) | 0 | (3 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net income | - | - | 0 | 0 | 591 | 591 | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | 225 | 45,274,030 | 112 | 322,468 | (298,319 | ) | 24,261 | |||||||||||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 29,643 | 0 | 290 | 0 | 290 | ||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 5 | 0 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock warrants | 0 | 177,936 | 0 | 171 | 0 | 171 | ||||||||||||||||||||||||||||||||||||||||||||||
Other | - | - | 0 | 3 | 0 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | 0 | 0 | (3,033 | ) | 0 | (3,033 | ) | - | - | 0 | 0 | (1,923 | ) | (1,923 | ) | |||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | 225 | 40,092,017 | $ | 112 | $ | 319,123 | $ | (290,213 | ) | $ | 0 | $ | 29,022 | |||||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 16,500 | 0 | 316 | 0 | 0 | 316 | |||||||||||||||||||||||||||||||||||||||||||||
Common stock issued to vendors | 0 | 31,304 | 0 | 36 | 0 | 0 | 36 | |||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock warrants | 0 | 67,577 | 0 | 12 | 0 | 0 | 12 | |||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | - | - | 0 | 0 | 0 | (48 | ) | (48 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | 0 | 0 | (3,949 | ) | 0 | (3,949 | ) | |||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | 225 | 40,207,398 | $ | 112 | $ | 319,487 | $ | (294,162 | ) | $ | (48 | ) | $ | 25,389 | ||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2021 | 225 | 45,487,609 | $ | 112 | $ | 322,937 | $ | (300,242 | ) | $ | 22,807 | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation by type of award follows (in thousands).
Three Months Ended | Three Months Ended | |||||||||||||||
June 30, 2021 | March 31, 2021 | June 30, 2022 | March 31, 2022 | |||||||||||||
Common stock, vested at issuance and nonvested at issuance | $ | 32 | $ | 28 | ||||||||||||
Stock options | 35 | 36 | $ | 21 | $ | 29 | ||||||||||
Restricted stock units | 223 | 186 | 125 | 212 | ||||||||||||
Compensation expense related to common stock awards issued under equity incentive plan | $ | 290 | $ | 250 | $ | 146 | $ | 241 | ||||||||
In the three months ended March 31, 2021,June 30, 2022, we issuedholders forfeited options for the purchase of up to an employee 29,94344,547 shares of common stock (average $0.94 grant date fair value$2.14 per share) which were vested at issuance.share exercise price, average 6.8 years remaining life). In the three months ended June 30, 2021,March 31, 2022, we issuedholders forfeited options for the purchase of up to an employee 29,6439,703 shares of common stock (average $1.09 grant date fair value$1.85 per share) which were vested at issuance.share exercise price, average 7.7 years remaining life).
In the three months ended March 31, 2021,2022, holders forfeited optionswarrants for the purchase of up to 18,9056,142,980 shares of common stock (average $11.54($0.96 per share exercise price, average 7.5-year remaining life). In the three months ended June 30, 2021, holders forfeited options for the purchase of up to 8,216 shares of common stock (average $1.90 per share exercise price, average 8.5-year remaining life).price) expired.
Summaries of nonvested and vested restricted stock unit (RSU) activity follow.
Number of | Unrecognized | Weighted | ||||||||||
Nonvested at December 31, 2021 | 1,266,033 | $ | (658 | ) | 0.9 | |||||||
Granted | 370,000 | (153 | ) | 2.0 | ||||||||
Forfeited | (10,000 | ) | 7 | 0.7 | ||||||||
Vested with Service | (224,751 | ) | - | 0.0 | ||||||||
Expensed | - | 212 | ||||||||||
Nonvested at March 31, 2022 | 1,401,282 | (592 | ) | 0.9 | ||||||||
Impact of Modification: | ||||||||||||
Before modification | (114,680 | ) | 125 | |||||||||
After modification | 114,680 | (60 | ) | |||||||||
Forfeited | (94,535 | ) | 55 | 0.0 | ||||||||
Vested with Service | (344,040 | ) | - | 0.0 | ||||||||
Expensed | - | 125 | ||||||||||
Nonvested at June 30, 2022 | 962,707 | $ | (347 | ) | 0.9 | |||||||
RiceBran Technologies
Number of | ||||
Vested at December 31, 2021 | 865,052 | |||
Vested with Service | 224,751 | |||
Issued at Vesting | (224,751 | ) | ||
Vested at March 31, 2022 | 865,052 | |||
Vested with Service | 344,040 | |||
Issued at Termination of Service | (483,879 | ) | ||
Vested at June 30, 2022 | 725,213 | |||
A summaryEach RSU represents a contingent right to receive one share of restricted stock unit (RSU) activity follows.
RSU Shares Issued | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | ||||||||||
Nonvested at December 31, 2020 | 1,495,400 | $ | 730 | 1.4 | ||||||||
Granted | 452,400 | 412 | 2.0 | |||||||||
Expensed | - | (186 | ) | |||||||||
Nonvested at March 31, 2021 | 1,947,800 | 956 | 1.4 | |||||||||
Granted | 344,040 | 375 | 1.0 | |||||||||
Vested | (450,400 | ) | - | |||||||||
Expensed | - | (223 | ) | |||||||||
Nonvested at June 30, 2021 | 1,841,440 | $ | 1,108 | 1.4 | ||||||||
common stock. The RSUs granted in the firstthree months of 2022 vest within two years of the grant. As of June 30, 2022, issuance of 725,213 shares of common stock subject to the vested RSUs granted in 2021 vest within two years of grant. The 2021 RSU grants are not subject to any market conditions and were valued using the market price of our common stock on the date of grant.
As of June 30, 2021, issuance of 1,180,843 shares of common stock subject to certain RSUs, 836,803 of which are vested, is deferred to the date the holder is no longer providing service to RiceBran Technologies.our company.
In April 2022, we modified 114,680 RSUs held by resigning directors such that the awards vested on the date of their termination of service. Prior to the modification, the unvested RSUs would have been forfeited on the date of the resignations. As a result of the modifications, we adjusted cumulative expense on the RSUs to equal the fair value of the awards on the date of the threeApril 28, 2022, months ended March 31, 2021, warrants for the purchase of up to 25,000 shares of common stockmodification ($5.250.52 per share exercise price) expired.unit), in accordance with applicable accounting guidance.
In the three months ended June 30, 2021,2022, we issued a warrant holder cash exercised a warrant for the purchasetotal of 177,936483,879 shares of common stock pursuant to the terms of vested RSUs, which included the114,680 modified RSUs discussed in the preceding paragraph. Issuance of the shares of common stock subject to these RSUs was deferred to the date the holder was no longer providing service to our company. In the three months ended March 31, 2022, we issued a total of 224,751 shares of common stock upon the vesting of RSUs.
On July 14, 2022, shareholders approved a 6,000,000 share increase in the number of shares of common stock authorized for issuance under our Amended and Restated 2014 Equity Incentive Plan (2014 Plan). On July 14, 2022, we granted RSUs with a total grant date fair value of $1.4 million ($0.960.38 per share exercise price)unit). The grants are listed below.
● | 2,781,498 RSUs, the issuance of which was subject to shareholder approval of the increase in the shares of common stock authorized for issuance under the 2014 Plan. The RSUs vest over an average of forty-nine months from the July 14, 2022, grant date. |
● | 657,895 RSUs to our directors which vest on July 14, 2023, or one day prior to the next annual meeting of our shareholders. |
● | 190,024 RSUs to our directors which were immediately vested, in lieu of paying board fees in cash. |
As of the date of this filing, 2,645,122 shares of common stock remain available for issuance under the 2014 Plan
NOTE 11.10. INCOME TAXES
Our tax expense for the three and six months ended June 30, 20212022 and 2020,2021, differs from the tax expense computed by applying the U.S. statutory tax rate to net loss from continuing operations before income taxes as no tax benefits were recorded for tax losses generated in the U.S. As of June 30, 2021,2022, we had deferred tax assets primarily related to U.S. federal and state tax loss carryforwards. We provided a full valuation allowance against our deferred tax assets as future realization of such assets is not more likely than not to occur.
NOTE 12.11. LOSS PER SHARE (EPS)
BasicWe calculate basic EPS is calculated under the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to receive dividends. Our outstanding convertible preferred stock are considered participating securities as the holders may participate in undistributed earnings with holders of common shares and are not obligated to share in our net losses.
DilutedWe calculate diluted EPS is computed by dividing the net lossincome attributable to RiceBran Technologies common shareholders by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if the impact of assumed exercises and conversions is dilutive. TheWe calculate the dilutive effects of outstanding options, warrants, nonvested shares of common stock and nonvested restricted stock unitsRSUs that vest solely on the basis of a service condition are calculated using the treasury stock method. TheWe calculate the dilutive effects of the outstanding preferred stock are calculated using the if-converted method.
RiceBran Technologies
Below are reconciliationsReconciliations of the numerators and denominators in the EPS.EPS computations follow.
Three Months Ended June 30 | Six Months Ended June 30 | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
NUMERATOR (in thousands): | ||||||||||||||||||||||||||||||||
Denominator for basic and diluted EPS - net loss | $ | (1,923 | ) | $ | (3,949 | ) | $ | (1,332 | ) | $ | (6,982 | ) | ||||||||||||||||||||
Numerator for basic and diluted EPS - net loss | $ | (2,621 | ) | $ | (1,923 | ) | $ | (4,137 | ) | $ | (1,332 | ) | ||||||||||||||||||||
DENOMINATOR: | ||||||||||||||||||||||||||||||||
Weighted average number of shares of shares of common stock outstanding | 45,398,791 | 40,041,888 | 45,323,786 | 40,002,522 | 52,082,641 | 45,398,791 | 51,874,930 | 45,323,786 | ||||||||||||||||||||||||
Weighted average number of shares of common stock underlying vested RSUs | 465,594 | 10,275 | 425,999 | 5,138 | 778,997 | 465,594 | 821,787 | 425,999 | ||||||||||||||||||||||||
Denominator for basic and diluted EPS - weighted average number of shares outstanding | 45,864,385 | 40,052,163 | 45,749,785 | 40,007,660 | 52,861,638 | 45,864,385 | 52,696,717 | 45,749,785 | ||||||||||||||||||||||||
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for the three and six months ended June 30, 20212022 and 2020,2021, because to do so would be antidilutive as a result of our net loss. Potentially dilutive securities outstanding during the three and six months ended June 30, 20212022 and 2020,2021, included our outstanding convertible preferred stock, options, warrants nonvested restricted stock units and nonvested stock. Those potentially dilutive securities still outstanding could potentially dilute EPS in the future.RSUs.
NOTE 13.12. FAIR VALUE MEASUREMENTS
The fair value of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and accountscommodities payable approximates their carrying value due to shorter maturities. As of June 30, 2021,2022, the fair values of our operating lease liabilities were approximately $0.3$0.4 million higher than their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements). As of June 30, 2021,2022, the fair values of our debt and finance lease liabilities approximated their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements).
The following tables summarize the fair values by input hierarchy of items measured at fair value on a recurring basis on our consolidated balance sheets (in thousands):
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Total liabilities at fair value as of June 30, 2022 - Derivative warrant liability | $ | 0 | $ | 0 | $ | 846 | $ | 846 | ||||||||
Total liabilities at fair value as of December 31, 2021 - Derivative warrant liability | $ | 0 | $ | 0 | $ | 258 | $ | 258 | ||||||||
The following tables summarize the changes in level 3 items measured at fair value on a recurring basis for the three and six months ended June 30, 2022 (in thousands):
Fair Value | Total | Issuance of New | Net | Fair Value, | Change in | |||||||||||||||||||
Three months ended June 30, 2022 | ||||||||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | 429 | $ | (417 | ) | $ | 0 | $ | 0 | $ | 846 | $ | (417 | ) | ||||||||||
Six months ended June 30, 2022: | ||||||||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | 258 | $ | (588 | ) | $ | 0 | $ | 0 | $ | 846 | $ | (588 | ) | ||||||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
The derivative warrant liability relates to a warrant issued in September 2021, for the purchase of up to 2,307,693 shares of common stock (Warrant A), The initial $1.00 per share exercise price of Warrant A is subject to adjustment in September 2022, and again in September 2023, if 110% of the 5-day volume weighted average price of our common stock is less than the then-current exercise price. Warrant A is carried in our consolidated balance sheets as derivative warrant liability because the holder may elect cash settlement of this warrant in the event of a change of control. We estimated the fair value of Warrant A as of June 30, 2022, and December 31, 2021, using the Black-Scholes value of a warrant with an exercise price of $1.00 per share. The changes in the estimated fair value of Warrant A are included in other income (loss) in our consolidated statements of operations. The assumptions used in valuing Warrant follows.
June 30, 2022 | December 31, 2021 | |||||||
Assumed volatility | 82.9 | % | 69.5 | % | ||||
Assumed risk free interest rate | 2.8 | % | 0.8 | % | ||||
Expected life of options (in years) | 4.2 | 4.8 | ||||||
Expected dividends | 0 | 0 | ||||||
The fair value of Warrant A approximates the cash settlement the holder could elect to be paid in the event of a change in control. At June 30, 2022, a $0.10 increase in our stock price would have resulted in an approximate $0.2 million increase in the Black Scholes fair value of Warrant A.
NOTE 14.13. COMMITMENTS AND CONTINGENCIES
PPP Audit Contingency
As discussedIn April 2020, we received $1.8 million on a Small Business Administration (SBA) Payroll Protection Program (PPP) loan as provided for in Notethe Coronavirus Aid, Relief and Economic Security Act (CARES), enacted into U.S. law in 9,March 2020. Under certain conditions, the outstanding principalloan and accrued interest were forgivable, if the loan proceeds were used for maintaining workforce levels. The loan proceeds were used for maintaining workforce levels and the entire loan, and related accrued interest, on our PPP loan were completelywas forgiven, in its entirety in January 2021. The SBA may audit any PPP loan at its discretion through January 2027, six years after the date the SBA forgave the loan. The SBA may review any or all of the following when auditing a PPP loan: whether the borrower qualified for the PPP loan, whether the PPP loan amount was appropriately calculated and the proceeds used for allowable purposes, and whether the loan forgiveness amount was appropriately determined. We could be deemed ineligible for the PPP loan received in 2020 upon audit by the SBA. We believe the SBA’s stated intention is to focus its reviews on borrowers with loans greater than $2 million, thereby mitigating our future risk of an audit. The SBA continues to develop and issue new and updated guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program.
Employment Contracts and Severance Payments
In the normal course of business, we periodically enter into employment agreements which incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be reasonably estimated, we maintain insurance coverage, which we believe will effectively mitigate our obligations under these indemnification provisions. No amounts have been recorded in our financial statements with respect to any obligations under such agreements.
We have employment contracts with certain officers and key management that include provisions for potential severance payments in the event of without-cause terminations or terminations under certain circumstances after a change in control. In addition, vesting of outstanding nonvested equity grants would accelerate following a change in control.
Legal Matters
From time to time, we are involved in litigation incidental to the conduct of our business. These matters may relate to employment and labor claims, patent and intellectual property claims, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position or results of operations. We expense defense as incurred. Defense costs, are expensed aswhen incurred, and are included in professional fees.selling, general and administrative expense.
NOTE 15. RELATED PARTY TRANSACTIONS
Our director, Ari Gendason, is an employee and senior vice president and chief investment officer of Continental Grain Company ("CGC"). As of the date of this filing, CGC owns approximately 23.4% of our outstanding common stock. We have agreed that in connection with each annual or special meeting of our shareholders at which members of our board of directors are to be elected, or any written consent of our shareholders pursuant to which members of the board of directors are to be elected, CGC shall have the right to designate one nominee to our board of directors.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 14. FAILURE TO COMPLY WITH NASDAQ LISTING REQUIREMENTS
On September 15, 2021, we received a notification letter from The Nasdaq Stock Market LLC (Nasdaq) indicating that we have failed to comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a)(2) requires that companies listed on the Nasdaq Capital Market maintain a minimum bid price of $1.00. To regain compliance with this listing rule, the closing bid price of our common stock has to be at least $1.00 for a period of Nasdaq’s discretion, of at least 10, but not to exceed 20, consecutive business days. As of the date of this filing, we have not regained compliance with the minimum bid price requirement, however, we were eligible for and obtained from Nasdaq an additional 180-day compliance period, which extends through September 12, 2022. We are committed to taking actions that would enable us to regain compliance, including, if necessary, completing a reverse split of our common stock to increase its share price above the $1.00 minimum bid price. On July 14, 2022, our shareholders approved amendments to our articles of incorporation that would effect a reverse stock split, pursuant to which either five, ten, fifteen, twenty, or twenty-five outstanding shares of our common stock would be combined into one share of such stock, and to authorize our board of directors, at its discretion, to select and file one such amendment which would effect the reverse stock split at one of these five reverse split ratios on or before July 14, 2023, if deemed appropriate.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
- Three Months Ended June 30, 2021,2022, Compared to Three Months Ended June 30, 20202021
Revenue was $7.6Revenues of $10.2 million in the second quarter of 2021, up $1.72022 increased $2.6 million, or 34.5%, compared to the second quarter of 2021. This year-over-year increase was due to higher core-SRB sales and strong growth from $5.9our MGI and Golden Ridge milling operations, offset in part by lower value-added SRB derivative product revenues due to continued production issues.
Gross loss was $0.5 million in the second quarter of 2020. This 28% year-over-year increase2022, a $0.6 million decrease in gross profit compared to the second quarter of 2021. The decline in gross profit was supported by growth in all areas ofattributable to lower sales and significant cost overruns for our businesses, with notable strength invalue-added SRB derivatives business versus a year ago, with profits from our core-SRB business flat with a year ago and 50%-plus year-over-year increases in revenueslower losses from Golden Ridge our Arkansas-based rice mill, andoffset by a decline in profitability at MGI our Minnesota-based oats and barley mill.due to efforts to work around capital improvements.
Gross profit was $0.2Selling, general and administrative (SG&A) expenses were $1.7 million in the second quarter of 2021,2022, a $1.4 million improvement1.6% decline from a gross loss of $1.2 million in the second quarter of 2020. The year-over-year improvement in gross profit was driven by improvements in profitability for every facility, compared to the second quarter of 2020, with notable improvements at Golden Ridge and our Dillon, Montana SRB derivative facility.
Selling, general and administrative ("SG&A") expenses were $1.9 million in the second quarter of 2021, compared to $2.3 million in the second quarter of 2020, a decrease of $0.4 million. This reduction was achieved through cutsas reductions in corporate support headcount and outside professional services. Asservices were offset in part by higher wage rates and insurance expenses.
We recognized a resultgain on the involuntary conversion of higherassets of $0.1 million in the second quarter of 2022, when we finalized our insurance claim for hurricane damage that occurred in August 2020 to our Lake Charles, Louisiana property.
Due to the decline in gross profits, and lower SG&A, operating losses were $2.0 million in the second quarter of 2022, up from $1.8 million in the second quarter of 2021, down from $3.82021. In June of 2022, we recognized a $0.4 million charge for the change in the second quarterfair value of 2020.
Interest expense in the second quartera warrant liability. As a result of 2021 was over $0.1 million compared to under $0.1 million in the second quarter of 2020 due to higher average borrowings in the comparable 2021 period.
Netoperating losses and this charge, net loss in the second quarter of 20212022 was $2.6 million, or $0.05 per share, compared to a net loss of $1.9 million, or $0.04 per share, compared to $3.9 million, or $0.10 per share, in the second quarter of 2020. The year-over-year reduction in net losses was a result of lower operating losses in the second quarter of 2020.2021.
Results of Operations – Six Months Ended June 30, 2021,2022, Compared to Six Months Ended June 30, 20202021
Revenue was $16.2Revenues of $20.7 million in the first half of 2022 increased $4.6 million, or 28.2%, compared to the first half of 2021. This year-over-year increase was due to higher core-SRB sales and strong growth from our MGI and Golden Ridge milling operations, offset in part by lower value-added SRB derivative product revenues due to production issues.
The $0.8 million decrease in gross profit in the first half of 2022 compared to the first half of 2021, up $1.9 millionwas primarily attributable to lower gross profits from $14.3our value-added SRB derivative products and a modest decline in gross profits from our core-SRB business, offset by lower losses from Golden Ridge and a modest increase in gross profits at MGI.
SG&A expenses were $3.4 million in the first half of 2020. This 14% year-over-year increase was due2022, a 7.5% decline from the first half of 2021, as reductions in corporate support headcount and outside professional services were offset in part by higher wage rates and insurance expenses.
We recognized a gain on the involuntary conversion of assets of $0.1 million in the first half of 2022, when we finalized our insurance claim for hurricane damage that occurred in August 2020 to sales growth for allour Lake Charles, Louisiana property.
Operating losses were $3.2 million in the first half of our businesses. Notably, sales of SRB and SRB derivatives grew over 20%2022, up from $2.9 million in the first half of 2021, due to a doubling of SRB derivative sales, MGI experiencing double-digit growth in revenue, and Golden Ridge revenue growing modestly inlower gross profits. In the first half of 2021 from2022, we recognized a $0.6 million charge for the first half of 2020, despite significant weather-related downtime in February 2021.
Gross profit was $0.8 millionchange in the first halffair value of 2021, compared to a gross loss of $1.6 millionwarrant liability, and in the first half of 2020. The $2.5 million increase in gross profit was primarily attributable to an increase in commodity margins, higher milling yields and growth in hourly throughput from our Arkansas rice mill. The transition to gross profit in the first half of 2021 was also supported by the increase in sales of higher-margin SRB derivatives sales compared to the first half of 2020.
SG&A expenses were $3.7 million in the first half of 2021, compared to $4.9 million in the first half of 2020, a decrease of $1.2 million. This reduction was achieved through cuts in corporate support headcount and outside professional services, supported by process improvement and modest investments in technical support infrastructure. As a result of higher gross profits and lower SG&A, operating losses were $2.9 million in the first half of 2021, down from $6.8 million in the first half of 2020.
Interest expense in the first half of 2021 was $0.2 million compared to $0.1 million in the first half of 2020 due to higher average borrowings in the 2021 period. In January 2021, we recognized a $1.8 million gain on extinguishment of our Small Business Administration ("SBA")(SBA) Paycheck Protection Program ("PPP")(PPP) loan (see Notes 9 and 14Note 13 of the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of the loan).
Net As a result of higher operating losses and these charges, and the nonrecurring gain on the extinguishment of debt in the first half of 2021, net loss in the first half of 20212022 was $4.1 million, or $0.08 per share, compared to a net loss of $1.3 million, or $0.03 per share, compared to net losses of $7.0 million, or $0.17 per share, in the first half of 2020. The year-over-year reduction in net losses was a result of lower operating losses and the nonrecurring gain on extinguishment of debt in the second half of 2021 compared to the second half of 2021.
COVID-19 Assessment
The COVID-19 pandemic is a worldwide health crisis that is adversely affecting the business and financial markets of many countries.countries, disrupting global supply chains, and creating volatility in the financial markets. The pandemic could adversely affect the demand for our products, and it poses the risk that we, or our customers, suppliers, and other business partners may be disrupted or prevented from conducting business for an uncertain period of time. The extent to which this would impact our financial results is unknown as it is dependent on future developments, which are highly uncertain.uncertain and cannot be predicted. As such, it is difficult to estimate the exact magnitude of the COVID-19 pandemic on our business.
We have not had, and we do not expect, any of our facilities to be closed subject to government-mandated closures, and we have informed our customers that we anticipate operating throughout the COVID-19 outbreak. Disruption in the supply chain of raw materials used to produce our products, as a result of the COVID-19 outbreak, has not caused us to close any of our facilities, and to date, our employees have been reporting to work, either remotely or in-person without any material change in attendance or productivity. However, we cannot ensure that the COVID-19 outbreak will not cause disruptions to our business in the future.
Liquidity ,Going Concern and Capital Resources
We had $4.0$5.1 million in cash and equivalents as of June 30, 2021,2022, a decrease of $1.3$0.7 million from $5.3$5.8 million on DecemberMarch 31, 2020.2022. During the first half of 2021,2022, we were able to offset higher operating losses and negative working capital management with increased borrowing.
Cash used in operating activities in the first six months of 2022 was $1.7 million, up from $1.4 million in the first six months of cash to fund our operating loss.2021, driven principally by higher net losses. Cash used forin investing activities consisted of $0.5$0.4 million in capital expenditures, primarily for the purchase and installation of capital equipment at our Arkansas and Minnesota facilities,MGI facility offset by proceeds received$0.1 million in insurance proceeds. Cash from an insurance company for hurricane damaged sustainedfinancing activities was $1.3 million, which included the $1.8 million borrowing on a line of credit, offset in part by $0.2 million in net payments on debt and financing agreements and a $0.2 million reduction in borrowing under our factoring facility.
Management believes that despite the multi-year history of operating losses and negative operating cash flows from continuing operations, there is no substantial doubt about our ability to our Lake Charles facilitycontinue as a going concern within one year after the date that these financial statements included in 2020. Thethis Quarterly Report are issued. Factors alleviating this concern include the reduction in historical operating and investing uses of cash were offset by $0.4losses beginning in 2021, $5.1 million in cash generated from financing activities, where increases in borrowings under premium finance agreements and the proceeds fromcash equivalents as of June 30, 2022, and our ability to procure additional capital if needed through a warrant exercise more than offset principal payments on our premium finance agreements, long-term debt and leases.variety of sources.
On March 30, 2020, we entered into a sales agreement with respect to an at-the-market ("ATM")(ATM) offering program, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $6.0 million. In April 2020,million, which we were approved for a $1.8currently have $2.8 million SBA Payroll Protection Program loan as discussed further in Note 9remaining. Under the terms of the Notessecurities purchase agreement related to Unaudited Condensed Consolidated Financial Statements. In the first half ofSeptember 2021 offering, we did not raiseare prohibited from entering into an agreement to effect any funds from the sale of shares under our ATM program, and the $1.8 million SBA Payment Protection Program loan was completely forgiven, which contributed to reducing total long-term debt to $1.6 million at June 30, 2021, compared to $3.7 million at December 31, 2020. As of the date of this filing, management believes we have sufficient capital reserves to fund the operations of the business through the company’s expected transition to profitability or positive cash flow, and with our expected future ability to obtain debt or raise equity capital, we will be able to obtain sufficient cash to operate our business in both the short and long-term.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, other than operating leases with original terms of less than a year and employee contracts, that have or are likely to have a current or future material effect on our financial condition, changes in financial condition, revenue, expenses, results of operations, liquidity, capital expenditures, or capital resources.at-the-market issuance until September 13, 2023.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures on the date of the financial statements. On an ongoing basis, we evaluate the estimates, including, but not limited to, those related to revenue recognition.recognition, inventory valuation, and long-lived asset impairment. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. As of June 30, 2021, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our 2021 Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 3 in the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicableWe are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures. As of June 30, 2022, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our 2021 Annual Report on Form 10-K.
We evaluated, with the participation of our executive chairman, and chief financial officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our executive chairman and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are involved in or subject to, or may become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position, results of operations or cash flows. We record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated.
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020,2021, which could materially affect our business, financial condition, liquidity or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended June 30, 2021,2022, we issued the securities described below without registration under the Securities Act. The description below does not include issuances that were disclosed previously on Current Reports on Form 8-K. Unless otherwise indicated below, the securities were issued pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended. All issuances below were made without any public solicitation, to a limited number of sophisticated persons and were acquired for investment purposes only.
OnDuring the quarter ended June 30, 2021,2022, we issued 6,000 shares of common stock to a service provider, thatwhich is not a natural person, as compensation for service provided. The shares were valued at an aggregate of $5,460.
On April 28, 2021, we issued 177,936 shares of common stock to warrant holder upon the cash exercise of a warrant with an exercise price of $0.96 per share.$2,100.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
None
The following exhibits are attached hereto and filed herewith:
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit Number | Filing/Effective Date | Filed Here-with | ||||||
31.1 | X | |||||||||||
31.2 | X | |||||||||||
32.1 | X | |||||||||||
101.INS (1) | Inline XBRL Instance Document | X | ||||||||||
101.SCH (1) | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||
101.CAL (1) | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
101.DEF (1) | Inline XBRL Taxonomy Extension Calculation Definition Linkbase Document | X | ||||||||||
101.LAB (1) | Inline XBRL Taxonomy Extension Calculation Label Linkbase Document | X | ||||||||||
101.PRE (1) | Inline XBRL Taxonomy Extension Calculation Presentation Linkbase Document | X | ||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||
(1) | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
Pursuant to the requirements 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.
Dated: August | RiceBran Technologies | ||
/s/ Peter G. Bradley | |||
Peter G. Bradley | |||
Director and Executive Chairman | |||
/s/ Todd T. Mitchell | ||
Todd T. Mitchell | ||
Chief Financial Officer and Chief Operating Officer | ||