UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT |
| For the quarterly period ended | |
| ☐ | TRANSITION REPORT |
| For the transition period from __________ to __________ |
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 October 25, 2021,April 26, 2022, there were 50,973,65451,820,425 shares of common stock outstanding.
RiceBran Technologies
Form 10-Q
PART I. FINANCIAL INFORMATION | Page |
PART II. OTHER INFORMATION |
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Cautionary Note about Forward-Looking Statements
This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Private Securities Litigation Reform Act of 1995.1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). 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 Current Reportquarterly 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 September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
Revenues | $ | 6,909 | $ | 5,160 | �� | $ | 23,088 | $ | 19,393 | $ | 10,559 | $ | 8,605 | |||||||||||
Cost of goods sold | 7,185 | 5,955 | 22,539 | 21,817 | 10,057 | 7,933 | ||||||||||||||||||
Gross profit (loss) | (276 | ) | (795 | ) | 549 | (2,424 | ) | |||||||||||||||||
Gross profit | 502 | 672 | ||||||||||||||||||||||
Selling, general and administrative expenses | 1,802 | 1,777 | 5,476 | 6,634 | 1,692 | 1,741 | ||||||||||||||||||
Loss (gain) on disposition and involuntary conversion of property and equipment | (1 | ) | 98 | 5 | 406 | |||||||||||||||||||
Loss on disposition of property and equipment | 0 | 7 | ||||||||||||||||||||||
Operating loss | (2,077 | ) | (2,670 | ) | (4,932 | ) | (9,464 | ) | (1,190 | ) | (1,076 | ) | ||||||||||||
Interest income | 0 | 0 | 1 | 19 | 1 | 1 | ||||||||||||||||||
Interest expense | (121 | ) | (70 | ) | (353 | ) | (195 | ) | (126 | ) | (112 | ) | ||||||||||||
Change in fair value of derivative warrant liability | (171 | ) | 0 | |||||||||||||||||||||
Gain on extinguishment of PPP loan | 0 | 0 | 1,792 | 0 | 0 | 1,792 | ||||||||||||||||||
Other expense | (18 | ) | (26 | ) | (55 | ) | (113 | ) | (34 | ) | (13 | ) | ||||||||||||
Other income | 3 | 0 | 3 | 5 | 4 | 0 | ||||||||||||||||||
Loss before income taxes | (2,213 | ) | (2,766 | ) | (3,544 | ) | (9,748 | ) | ||||||||||||||||
Income tax expense | 0 | (8 | ) | (1 | ) | (8 | ) | |||||||||||||||||
Net loss | $ | (2,213 | ) | $ | (2,774 | ) | $ | (3,545 | ) | $ | (9,756 | ) | ||||||||||||
Income (loss) before income taxes | (1,516 | ) | 592 | |||||||||||||||||||||
Income tax benefit | 0 | (1 | ) | |||||||||||||||||||||
Net income (loss) | $ | (1,516 | ) | $ | 591 | |||||||||||||||||||
Loss per common share: | ||||||||||||||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||
Basic | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.24 | ) | $ | (0.03 | ) | $ | 0.01 | |||||||
Diluted | $ | (0.05 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.24 | ) | $ | (0.03 | ) | $ | 0.01 | |||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||
Basic | 47,456,842 | 40,824,281 | 46,318,804 | 40,279,866 | 52,529,964 | 45,635,185 | ||||||||||||||||||
Diluted | 47,456,842 | 40,824,281 | 46,318,804 | 40,279,866 | 52,529,964 | 46,556,247 | ||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Comprehensive LossBalance Sheets
(Unaudited) (in thousands)thousands, except share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net loss | $ | (2,213 | ) | $ | (2,774 | ) | $ | (3,545 | ) | $ | (9,756 | ) | ||||
Derivative financial instruments designated as cash flow hedges: | ||||||||||||||||
Gains (losses) arising during the period | 0 | 43 | 0 | (57 | ) | |||||||||||
Reclassification of losses realized to cost of goods sold | 0 | 5 | 0 | 57 | ||||||||||||
Net other comprehensive income | 0 | 48 | 0 | 0 | ||||||||||||
Comprehensive loss | $ | (2,213 | ) | $ | (2,726 | ) | $ | (3,545 | ) | $ | (9,756 | ) | ||||
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,868 | $ | 5,825 | ||||
Accounts receivable, net of allowance for doubtful accounts of $20 and $18 | 4,629 | 4,136 | ||||||
Inventories | 2,482 | 2,444 | ||||||
Other current assets | 952 | 810 | ||||||
| Total current assets | 13,931 | 13,215 | ||||||
Property and equipment, net | 14,887 | 15,444 | ||||||
Operating lease right-of-use assets | 2,043 | 2,127 | ||||||
Intangible assets | 484 | 527 | ||||||
| Total assets | $ | 31,345 | $ | 31,313 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,672 | $ | 826 | ||||
Commodities payable | 2,291 | 1,702 | ||||||
Accrued salary, wages and benefits | 875 | 787 | ||||||
Accrued expenses | 522 | 683 | ||||||
Operating lease liabilities, current portion | 396 | 382 | ||||||
Due under insurance premium finance agreements | 283 | 128 | ||||||
Due under factoring agreement | 3,438 | 3,379 | ||||||
Finance lease liabilities, current portion | 82 | 86 | ||||||
Long-term debt, current portion | 1,217 | 1,183 | ||||||
| Total current liabilities | 10,776 | 9,156 | ||||||
Operating lease liabilities, less current portion | 1,794 | 1,948 | ||||||
Finance lease liabilities, less current portion | 86 | 100 | ||||||
Long-term debt, less current portion | 1,035 | 1,356 | ||||||
Derivative warrant liability | 429 | 258 | ||||||
| Total liabilities | 14,120 | 12,818 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
| 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, 51,820,425 shares and 51,589,674 shares, issued and outstanding | 326,525 | 326,279 | ||||||
Accumulated deficit | (309,375 | ) | (307,859 | ) | ||||
| Total shareholders' equity | 17,225 | 18,495 | ||||||
| Total liabilities and shareholders' equity | $ | 31,345 | $ | 31,313 | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands, except share amounts)
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,188 | $ | 5,263 | ||||
Accounts receivable, net of allowance for doubtful accounts of $22 and $9 | 2,825 | 2,819 | ||||||
Inventories | 2,173 | 1,878 | ||||||
Other current assets | 1,175 | 1,380 | ||||||
Total current assets | 12,361 | 11,340 | ||||||
Property and equipment, net | 15,680 | 16,367 | ||||||
Operating lease right-of-use assets | 2,210 | 2,452 | ||||||
Goodwill | 3,915 | 3,915 | ||||||
Intangible assets | 573 | 722 | ||||||
Total assets | $ | 34,739 | $ | 34,796 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 911 | $ | 955 | ||||
Commodities payable | 1,444 | 825 | ||||||
Accrued salary, wages and benefits | 989 | 601 | ||||||
Accrued expenses | 636 | 536 | ||||||
Operating lease liabilities, current portion | 372 | 344 | ||||||
Due under insurance premium finance agreements | 411 | 126 | ||||||
Due under factoring agreement | 2,018 | 1,785 | ||||||
Finance lease liabilities, current portion | 86 | 82 | ||||||
Long-term debt, current portion | 1,436 | 572 | ||||||
Total current liabilities | 8,303 | 5,826 | ||||||
Operating lease liabilities, less current portion | 2,030 | 2,330 | ||||||
Finance lease liabilities, less current portion | 101 | 113 | ||||||
Long-term debt, less current portion | 47 | 3,107 | ||||||
| Warrant liability | 647 | 0 | ||||||
Total liabilities | 11,128 | 11,376 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated value $150, 150 shares and 225 shares, issued and outstanding | 75 | 112 | ||||||
Common stock, no par value, 150,000,000 shares authorized, 50,166,156 shares and 45,238,087 shares, issued and outstanding | 325,991 | 322,218 | ||||||
Accumulated deficit | (302,455 | ) | (298,910 | ) | ||||
Total shareholders' equity | 23,611 | 23,420 | ||||||
Total liabilities and shareholders' equity | $ | 34,739 | $ | 34,796 | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Nine Months Ended September 30, | Three Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net loss | $ | (3,545 | ) | $ | (9,756 | ) | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||||
Net income (loss) | $ | (1,516 | ) | $ | 591 | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||||||||||||||
Depreciation | 1,821 | 1,804 | 516 | 612 | ||||||||||||
Amortization | 150 | 173 | 43 | 53 | ||||||||||||
Stock and share-based compensation | 840 | 817 | 246 | 253 | ||||||||||||
Loss on diposition and involuntary conversion of property and equipment | 5 | 406 | ||||||||||||||
Change in fair value of derivative warrant liability | 171 | 0 | ||||||||||||||
Gain on extinguishment of PPP loan | (1,792 | ) | 0 | 0 | (1,792 | ) | ||||||||||
Other | 67 | (18 | ) | (48 | ) | (18 | ) | |||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (18 | ) | 1,360 | (493 | ) | (808 | ) | |||||||||
Inventories | (295 | ) | (767 | ) | (39 | ) | 384 | |||||||||
Accounts payable and accrued expenses | 594 | (651 | ) | 884 | 508 | |||||||||||
Commodities payable | 619 | (275 | ) | 589 | 556 | |||||||||||
Other | (431 | ) | (321 | ) | (163 | ) | (340 | ) | ||||||||
Net cash used in operating activities | (1,985 | ) | (7,228 | ) | ||||||||||||
Net cash provided by (used in) operating activities | 190 | (1 | ) | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment | (1,187 | ) | (1,060 | ) | (157 | ) | (325 | ) | ||||||||
Proceeds from insurance on involuntary conversion | 638 | 250 | 109 | 0 | ||||||||||||
Proceeds from sale of property | 0 | 15 | ||||||||||||||
Net cash used in investing activities | (549 | ) | (795 | ) | (48 | ) | (325 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Advances on factoring agreement | 22,135 | 20,584 | 8,856 | 7,407 | ||||||||||||
Payments on factoring agreement | (21,970 | ) | (20,663 | ) | (8,797 | ) | (6,883 | ) | ||||||||
Advances on insurance premium finance agreements | 962 | 802 | 374 | 279 | ||||||||||||
Payments on insurance premium finance agreements | (677 | ) | (591 | ) | (219 | ) | (157 | ) | ||||||||
Advances on long-term debt and finance lease liabilities | 0 | 2,792 | ||||||||||||||
Payments on long-term debt and finance lease liabilities | (534 | ) | (124 | ) | ||||||||||||
Proceeds from issuances of common stock and warrants, net of costs | 3,372 | 657 | ||||||||||||||
Proceeds from common stock warrant exercises | 171 | 12 | ||||||||||||||
Net cash provided by financing activities | 3,459 | 3,469 | ||||||||||||||
Payments of debt and finance lease liabilities | (313 | ) | (165 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (99 | ) | 481 | |||||||||||||
Net change in cash and cash equivalents | $ | 925 | $ | (4,554 | ) | $ | 43 | $ | 155 | |||||||
Cash and cash equivalents, beginning of period | 5,263 | 8,444 | 5,825 | 5,263 | ||||||||||||
Cash and cash equivalents, end of period | 6,188 | 3,890 | 5,868 | 5,418 | ||||||||||||
Net change in cash and cash equivalents | $ | 925 | $ | (4,554 | ) | $ | 43 | $ | 155 | |||||||
Supplemental disclosures: | ||||||||||||||||
Cash paid for interest | $ | 267 | $ | 126 | $ | 118 | $ | 85 | ||||||||
Cash paid for income taxes | $ | 15 | $ | 7 | $ | 0 | $ | 1 | ||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION
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 (the "SEC")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 4 locations: 2 facilities located within supplier-owned rice mills in Arbuckle and West Sacramento, California; 1 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 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, mills a variety of traditional, and ancient, small grains. Given the integrated nature of these facilities, we have 1 reporting unit and 1 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.
Recently adopted accounting standards
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). Among other things, the new guidance eliminates some of the conditions that must be met for equity classification of freestanding warrants under ASC 815-40-25. We adopted ASU 2020-06 effective January 1, 2021, using the modified retrospective method. Adoption of the standard had no impact on our results of operations, financial position, or cash flows.
NOTE 4. CASH AND CASH EQUIVALENTS
As of September 30, 2021,March 31, 2022, we have $4.5$3.8 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 months ended March 31, 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 | E | ||||||||||||||||
% of revenues, three months ended September 30, 2021 | 21 | % | 9 | % | 7 | % | 5 | % | 2 | % | ||||||||||
% of revenues, three months ended September 30, 2020 | 0 | % | 0 | % | 6 | % | 12 | % | 4 | % | ||||||||||
% of revenues, nine months ended September 30, 2021 | 10 | % | 11 | % | 11 | % | 5 | % | 2 | % | ||||||||||
% of revenues, nine months ended September 30, 2020 | 1 | % | 3 | % | 11 | % | 10 | % | 3 | % | ||||||||||
% of accounts receivable, as of September 30, 2021 | 15 | % | 4 | % | 9 | % | 8 | % | 6 | % | ||||||||||
% of accounts receivable, as of December 31, 2020 | 10 | % | 7 | % | 1 | % | 17 | % | 10 | % | ||||||||||
Customer | ||||||||
A | B | |||||||
% of revenue, three months ended March 31, 2022 | 11 | % | 11 | % | ||||
% of revenue, three months ended March 31, 2021 | 5 | % | 10 | % | ||||
% of accounts receivable, as of March 31, 2022 | 4 | % | 18 | % | ||||
% of accounts receivable, as of December 31, 2021 | 15 | % | 8 | % | ||||
The following table presents revenues by geographic area shipped to (in thousands).
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
United States | $ | 10,246 | $ | 8,196 | ||||
Other countries | 313 | 409 | ||||||
Revenues | $ | 10,559 | $ | 8,605 | ||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
The following table presents revenues by geographic area shipped to (in thousands).
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
United States | $ | 6,450 | $ | 4,714 | $ | 21,867 | $ | 18,214 | ||||||||
Other countries | 459 | 446 | 1,221 | 1,179 | ||||||||||||
Revenues | $ | 6,909 | $ | 5,160 | $ | 23,088 | $ | 19,393 | ||||||||
NOTE 6. INVENTORIES
The following table details the components of inventories (in thousands).
September 30, | December 31, | March 31, | December 31, | |||||||||||||
2021 | 2020 | 2022 | 2021 | |||||||||||||
Finished goods | $ | 1,461 | $ | 1,512 | $ | 1,728 | $ | 1,679 | ||||||||
Raw materials | 558 | 236 | 637 | 599 | ||||||||||||
Packaging | 154 | 130 | 117 | 166 | ||||||||||||
Inventories | $ | 2,173 | $ | 1,878 | $ | 2,482 | $ | 2,444 | ||||||||
NOTE 7. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
September 30, | December 31 | March 31, | 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 | 265 | 265 | 5 | - | 10 years | |||||||||||||||
Plant | 10,044 | 9,377 | 20 | - | 40 years, or life of lease | 10,554 | 10,457 | 20 | - | 40 years, or life of lease | |||||||||||||||
Computer and software | 1,095 | 1,060 | 3 | - | 5 years | 452 | 452 | 3 | - | 5 years | |||||||||||||||
Leasehold improvements | 1,880 | 1,880 | 4 | - | 15 years, or life of lease | 1,828 | 1,828 | 4 | - | 15 years, or life of lease | |||||||||||||||
Machinery and equipment | 16,811 | 16,402 | 5 | - | 15 years | 14,977 | 15,115 | 5 | - | 15 years | |||||||||||||||
Property and equipment, cost | 30,836 | 29,725 | 28,806 | 28,847 | |||||||||||||||||||||
Less accumulated depreciation | 15,156 | 13,358 | 13,919 | 13,403 | |||||||||||||||||||||
Property and equipment, net | $ | 15,680 | $ | 16,367 | $ | 14,887 | $ | 15,444 | |||||||||||||||||
Amounts payable for property and equipment included in accounts payable oftotaled less than $0.1 million at September 30, 2021,March 31, 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 $0.8 million at September 30, 2021,March 31, 2022, and $0.6$0.9 million at December 31, 2020.2021.
Involuntary ConversionNOTE 8. LEASES
In 2020, we wrote down assets, consisting primarilyThe components of a building, machinerylease expense 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 and nine months ended September 30, 2021, we received $0.4 million and $0.6 million of proceedscash flows from the insurer. The insurance proceeds receivable included in other current assets on our consolidated balance sheet was $0.1 million at September 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 September 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.leases (in thousands) follow.
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Finance lease cost: | ||||||||
Amortization of right-of use assets, included in cost of goods sold | $ | 20 | $ | 21 | ||||
Interest on lease liabilities | 2 | 3 | ||||||
Operating lease cost, included in selling, general and administrative expenses: | ||||||||
Fixed leases cost | 129 | 129 | ||||||
Variable lease cost | 46 | 38 | ||||||
Short-term lease cost | 7 | 0 | ||||||
Total lease cost | $ | 204 | $ | 191 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating cash flows from finance leases | $ | 2 | $ | 4 | ||||
Operating cash flows from operating leases | $ | 129 | $ | 129 | ||||
Financing cash flows from finance leases | $ | 24 | $ | 26 | ||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 8. LEASES
The components of lease expense and cash flows from leases (amounts in thousands) follow.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Finance lease cost: | ||||||||||||||||
Amortization of right-of use assets, included in cost of goods sold | $ | 24 | $ | 20 | $ | 67 | $ | 41 | ||||||||
Interest on lease liabilities | 2 | 4 | 8 | 8 | ||||||||||||
Operating lease cost, included in selling, general and administrative expenses: | ||||||||||||||||
Fixed leases cost | 129 | 131 | 387 | 261 | ||||||||||||
Variable lease cost | 37 | 33 | 112 | 48 | ||||||||||||
Short-term lease cost | 21 | 0 | 60 | 3 | ||||||||||||
Total lease cost | $ | 213 | $ | 188 | $ | 634 | $ | 361 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
Operating cash flows from finance leases | $ | 2 | $ | 4 | $ | 8 | $ | 8 | ||||||||
Operating cash flows from operating leases | $ | 129 | $ | 131 | $ | 387 | $ | 261 | ||||||||
Financing cash flows from finance leases | $ | 23 | $ | 20 | $ | 73 | $ | 46 | ||||||||
As of September 30, 2021,March 31, 2022, variable lease payments do not depend on a rate or index. As of September 30,March 31, 2022 and December 31, 2021, property and equipment, net, includes $0.2 million of finance lease right-of-use-assets, with an original cost of $0.5 million. During the three months ended March 31, 2022 and 2021, we financed the purchase of less than $0.1 million of property and equipment in noncash finance lease transactions.
As of September 30, 2021,March 31, 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 leases as of September 30, 2021,March 31, 2022, follows.
Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||||||
Remaining leases terms (in years) | 2.1 | - | 11.4 | 0.2 | - | 4.9 | 1.6 | - | 10.9 | 0.2 | - | 4.6 | ||||||||
Weighted average remaining lease terms (in years) | 6.4 | 2.4 | 5.9 | 2.4 | ||||||||||||||||
Discount rates | 6.3% | - | 9.0 | % | 2.8% | - | 7.3 | % | 6.3% | - | 9.0 | % | 2.8% | - | 7.3 | % | ||||
Weighted average discount rate | 7.7 | % | 5.1 | % | 7.7 | % | 4.8 | % | ||||||||||||
Maturities of lease liabilities as of September 30, 2021,March 31,2022,follows (in thousands).
Operating | Finance | Operating | Finance | |||||||||||||
Leases | Leases | Leases | Leases | |||||||||||||
2021 (three months ended December 31, 2021) | $ | 119 | $ | 26 | ||||||||||||
2022 | 548 | 88 | ||||||||||||||
2022 (nine months ended December 31, 2022) | $ | 364 | $ | 67 | ||||||||||||
2023 | 528 | 57 | 528 | 65 | ||||||||||||
2024 | 429 | 18 | 429 | 25 | ||||||||||||
2025 | 439 | 4 | 439 | 10 | ||||||||||||
2026 | 451 | 7 | ||||||||||||||
Thereafter | 1,028 | 2 | 578 | 0 | ||||||||||||
Total lease payments | 3,091 | 195 | 2,789 | 174 | ||||||||||||
Amounts representing interest | (689 | ) | (8 | ) | (599 | ) | (6 | ) | ||||||||
Present value of lease obligations | $ | 2,402 | $ | 187 | $ | 2,190 | $ | 168 | ||||||||
NOTE 9. DEBT
We finance certain amounts owed for annual insurance premiums under financing agreements. As of September 30, 2021,March 31, 2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through FebruaryMay 2022, at an average interest raterates of 3.7% to 4.0% per year.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
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. In October 2021, the initial two-year term expired. As no written notice of cancellation was submitted by the Company, the term was automatically extended for a successive period of one year.
Due under factoring agreement consists of the following (in thousands).
September 30, | December 31, | |||||||
2021 | 2020 | |||||||
Borrowings outstanding | $ | 2,026 | $ | 1,860 | ||||
Debt issuance costs, net | (8 | ) | (75 | ) | ||||
Due under factoring agreement | $ | 2,018 | $ | 1,785 | ||||
Additional information related to our factoring obligation follows.
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
Average borrowings outstanding (in thousands) | $ | 1,522 | $ | 1,670 | $ | 1,324 | $ | 1,900 | $ | 2,822 | $ | 879 | ||||||||||||
Amortization of debt issuance costs (in thousands) | $ | 23 | $ | 23 | $ | 68 | $ | 68 | $ | 23 | $ | 23 | ||||||||||||
Fees paid, as a percentage of average outstanding borrowings | 2.0 | % | 1.4 | % | 5.0 | % | 6.0 | % | ||||||||||||||||
Fees paid, as a percentage of average oustanding borrowings | 1.2 | % | 1.5 | % | ||||||||||||||||||||
Interest paid, as a percentage of average outstanding borrowings | 1.6 | % | 1.5 | % | 5.0 | % | 5.0 | % | 1.5 | % | 1.8 | % | ||||||||||||
Long-term debt consists of the following (in thousands).
September 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 $20 and $26 debt issuance costs at September 30, 2021 and December 31, 2020. | $ | 1,404 | $ | 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 acquisition, 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. | 15 | 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. | 28 | 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. | 36 | 0 | ||||||
Total long term debt, net | $ | 1,483 | $ | 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, 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 September 30, 2021, the note bore interest at an annual rate of 14.3%.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Long-term debt consists of the following (in thousands).
March, 31 | 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% (10.3% at March 31, 2022) payable in monthly installments through December 2023. Net of $25 debt issuance costs at March 31, 2022. Face amount $2.5 million. Interest accrued at the effective discount rate 11.5%. Secured by certain real property in Wynn, Arkansas. | $ | 2,190 | $ | 2,469 | ||||
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. | 31 | 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. | 24 | 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. | 7 | 11 | ||||||
Total long term debt, net | $ | 2,252 | $ | 2,539 | ||||
Future principal maturities of long-term debt outstanding as of September 30, 2021,March 31, 2022, follow (in thousands).
2021 (three months ended December 31, 2021) | $ | 155 | ||||||
2022 | 1,306 | |||||||
2022 (nine months ended December 31, 2022) | $ | 920 | ||||||
2023 | 18 | 1,332 | ||||||
2024 | 19 | 20 | ||||||
2025 | 5 | 5 | ||||||
Principal maturities | 1,503 | 2,277 | ||||||
Debt issuance costs | (20 | ) | (25 | ) | ||||
Total long term debt, net | $ | 1,483 | $ | 2,252 | ||||
NOTE 10. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS
A summary of equity activity for the three months ended March 31, 2022 and 2021, follows (in thousands, except share amounts).
Shares |
| |||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||
Balance, December 31, 2020 | 225 | 45,238,087 | $ | 112 | $ | 322,218 | $ | (298,910 | ) | $ | 23,420 | |||||||||||||
Common stock awards under equity incentive plans | 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 warrant | 0 | 177,936 | 0 | 171 | 0 | 171 | ||||||||||||||||||
Other | - | - | 0 | 3 | 0 | 3 | ||||||||||||||||||
Net loss | - | - | 0 | 0 | (1,923 | ) | (1,923 | ) | ||||||||||||||||
Balance, June 30, 2021 | 225 | 45,487,609 | 112 | 322,937 | (300,242 | ) | 22,807 | |||||||||||||||||
Common stock awards under equity incentive plans | 0 | 38,978 | 0 | 287 | 0 | 287 | ||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 5 | 0 | 5 | ||||||||||||||||||
Sale of common stock and common stock warrants, net of costs | 0 | 3,062,395 | 0 | 2,725 | 0 | 2,725 | ||||||||||||||||||
Exercise of common stock warrant | 0 | 1,500,000 | 0 | 0 | 0 | 0 | ||||||||||||||||||
Conversion of preferred stock into common stock | (75 | ) | 71,174 | (37 | ) | 37 | 0 | 0 | ||||||||||||||||
Net loss | - | - | 0 | 0 | (2,213 | ) | (2,213 | ) | ||||||||||||||||
Balance, September 30, 2021 | 150 | 50,166,156 | $ | 75 | $ | 325,991 | $ | (302,455 | ) | $ | 23,611 | |||||||||||||
Shares | ||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||
Balance, December 31, 2021 | 150 | 51,589,674 | $ | 75 | $ | 326,279 | $ | (307,859 | ) | $ | 18,495 | |||||||||||||
Common stock awards under equity incentive plans | 0 | 224,751 | 0 | 241 | 0 | 241 | ||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 5 | 0 | 5 | ||||||||||||||||||
Net income | - | - | 0 | 0 | (1,516 | ) | (1,516 | ) | ||||||||||||||||
Balance, March 31, 2022 | 150 | 51,820,425 | $ | 75 | $ | 326,525 | $ | (309,375 | ) | $ | 17,225 | |||||||||||||
Shares | Other | |||||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | Comprehensive | ||||||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Loss | Equity | ||||||||||||||||||||||
Balance, December 31, 2019 | 225 | 40,074,483 | $ | 112 | $ | 318,811 | $ | (287,180 | ) | $ | 0 | $ | 31,743 | |||||||||||||||
Common stock awards under equity incentive plans | 0 | 17,534 | 0 | 312 | 0 | 0 | 312 | |||||||||||||||||||||
Net loss | - | - | 0 | 0 | (3,033 | ) | 0 | (3,033 | ) | |||||||||||||||||||
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 | |||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 129,404 | 0 | 153 | 0 | 0 | 153 | |||||||||||||||||||||
Sale of common stock, net of costs | 0 | 1,635,792 | 0 | 657 | 0 | 0 | 657 | |||||||||||||||||||||
Other comprehensive income | - | - | 0 | 0 | 0 | 48 | 48 | |||||||||||||||||||||
Net loss | - | - | 0 | 0 | (2,774 | ) | 0 | (2,774 | ) | |||||||||||||||||||
Balance, September 30, 2020 | 225 | 41,972,594 | $ | 112 | $ | 320,297 | $ | (296,936 | ) | $ | 0 | $ | 23,473 | |||||||||||||||
Shares | ||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||
Balance, December 31, 2020 | 225 | 45,238,087 | $ | 112 | $ | 322,218 | $ | (298,910 | ) | $ | 23,420 | |||||||||||||
Common stock awards under equity incentive plans | 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 | |||||||||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Share-based compensation under equity incentive plans, by type of award follows (in thousands).
Three Months Ended | ||||||||||||
September 30, 2021 | June 30, 2021 | March 31, 2021 | ||||||||||
Common stock, vested at issuance and nonvested at issuance | $ | 29 | $ | 32 | $ | 28 | ||||||
Stock options | 35 | 35 | 36 | |||||||||
Restricted stock units | 223 | 223 | 186 | |||||||||
Compensation expense related to common stock awards issued under equity incentive plans | $ | 287 | $ | 290 | $ | 250 | ||||||
In September 2021, we issued and sold 2,307,500 shares of common stock, a warrant for the purchase of up to 2,307,693 shares (the "Warrant"), and a prefunded warrant (the "Prefunded Warrant") for the purchase of up to 2,307,855 shares of common stock pursuant to our effective “shelf” registration statement on Form S-3. The initial $1.00 per share exercise price of the Warrant 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. The Prefunded Warrant has an exercise price of $0.0001 (net of the $0.6499 per share prefunded). We determined that the Prefunded Warrant qualified for equity accounting, however, the other Warrant did not qualify for equity accounting because the holder may elect cash settlement of this warrant in the event of a change of control. Therefore, we must carry the Warrant as a liability at fair value in our consolidated balance sheets. We estimated the fair value of the Warrant using the Black-Scholes methodology. The Warrant will be valued using the Black-Scholes model each reporting period and the resultant change in fair value recorded in our consolidated statements of operations. The net proceeds from the offering of $2.8 million, after deducting commissions and other cash offering expenses of $0.2 million were allocated to the Warrant, in an amount equal the $0.6 million estimated fair value of the Warrant as of September 13, 2021, with the remainder of the proceeds recorded in equity. We determined the exercise price of the Prefunded Warrant is nominal and, as such, have considered the 2,307,855 shares initially underlying the Prefunded Warrant to be outstanding effective September 13, 2021, for the purposes of calculating basic earnings per share ("EPS"). We intend to use the net proceeds from the September 2021 offering for general corporate purposes, which may include funding capital expenditures and working capital and repaying indebtedness.
Under the terms of the securities purchase agreement related to the September 2021 offering, we are prohibited from making sales pursuant to the at-the-market ("ATM") issuance sales agreement with B. Riley FBR, Inc., as sales agent (discussed in the next paragraph), or from entering into any agreement to effect a variable rate transaction until March 12, 2022. We are also prohibited from entering into an agreement to effect any at-the-market issuance involving a variable rate transaction until September 13, 2023.
During the three months ended September 30, 2021,March 31, 2022, we issued and sold 754,895 shares of common stock under an at market issuance sales agreement, at an average price of $0.80 per share. Proceeds from those sales of $0.5 million are recorded in equity, net of $0.1 million of stock issuance costs. We entered into the at-the-market issuance sales agreement with respect to an at-the-market 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 through B. Riley FBR, Inc, as sales agent, in March 2020. The issuances and sales of our common stock under the agreement are made pursuant to our effective “shelf” registration statement on Form S-3.follows (in thousands).
Stock options | $ | 29 | ||
Restricted stock units | 212 | |||
Compensation expense related to common stock awards issued under equity incentive plan | $ | 241 |
In the three months ended September 30, 2021, we issued to an employee 38,978 shares of common stock (average $0.75 grant date fair value per share) which were vested at issuance. In the three months ended June 30, 2021, we issued to an employee 29,643 shares of common stock (average $1.09 grant date fair value per share) which were vested at issuance. In the three months ended March 31, 2021, we issued to an employee 29,943 shares of common stock (average $0.94 grant date fair value per share) which were vested at issuance.
In the three months ended September 30, 2021,2022, holders forfeited options for the purchase of up to 1,8349,703 shares of common stock (average $1.23$1.85 per share exercise price, average 8.5-year7.7-year remaining life). In the three months ended June 30, 2021, holders forfeited options
Restricted stock unit (RSU) activity 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). In the three months ended March 31, 2021,2022, holders forfeited options for the purchase of up to 18,905 shares of common stock (average $11.54 per share exercise price, average 7.5-year remaining life).
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
A summary of restricted stock unit ("RSU") activity follows.
RSU Shares Issued | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | RSU Shares Issued to Employees | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | |||||||||||||||||||
Nonvested at December 31, 2020 | 1,495,400 | $ | 730 | 1.4 | ||||||||||||||||||||
Nonvested at December 31, 2021 | 1,266,033 | $ | (658 | ) | 0.9 | |||||||||||||||||||
Granted | 452,400 | 412 | 2.0 | 370,000 | (153 | ) | 2.0 | |||||||||||||||||
Expensed | - | (186 | ) | |||||||||||||||||||||
Nonvested at March 31, 2021 | 1,947,800 | 956 | 1.4 | |||||||||||||||||||||
Granted | 344,040 | 375 | 1.0 | |||||||||||||||||||||
Forfeited | (10,000 | ) | 7 | 0.7 | ||||||||||||||||||||
Vested | (450,400 | ) | - | (224,751 | ) | - | 0.0 | |||||||||||||||||
Expensed | - | (223 | ) | - | 212 | |||||||||||||||||||
Nonvested at June 30, 2021 | 1,841,440 | 1,108 | 1.4 | |||||||||||||||||||||
Forfeited | (2,907 | ) | (3 | ) | ||||||||||||||||||||
Expensed | - | (223 | ) | |||||||||||||||||||||
Nonvested at September 30, 2021 | 1,838,533 | $ | 882 | 1.1 | ||||||||||||||||||||
Nonvested at March 31, 2022 | 1,401,282 | $ | (592 | ) | 0.9 | |||||||||||||||||||
The shares of common stock subject to the RSUs granted in 20212022 vest within two years of the 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 September 30, 2021,March 31, 2022, issuance of 1,180,8431,209,092 shares of common stock subject to certain RSUs, 836,803865,052 of which are vested, is deferred to the date the holder is no longer providing service to RiceBran Technologies.
In the three months ended September 30, 2021,March 31, 2022, we issued 1,500,0002,957,545 RSUs to employees that are subject to our shareholders approving an increase in the total shares of common stock to a warrant holder uponauthorized for issuance under the cashless exercise of 1,500,427 shares underlying the Prefunded Warrant. As ofAmended and Restated September 30, 2021, the Prefunded Warrant is outstanding and exercisable as to 807,638 underlying shares of common stock.
In the three2014 months ended June 30, 2021, we issued 177,936Equity Incentive Plan. The shares of common stock subject to a warrant holder upon the cash exerciseRSUs will vest over an average of a warrant with an exercise price of $0.96 per share.four years from the date shareholders approve the increase and are not included in the table above.
In the three months ended March 31, 2021,2022, warrants for the purchase of up to 25,0006,142,980 shares of common stock ($5.250.96 per share exercise price) expired.
InOn October 2021,April 28, 2022, we issued 807,498a total of 348,721 shares of common stock to a warrant holder upontwo resigning directors pursuant to the cashless exerciseterms of their vested RSUs. Issuance of the remaining 807,638 shares underlyingof common stock subject to these RSUs had been deferred to the Prefunded Warrant.date the holder was no longer providing service to RiceBran Technologies.
NOTE 11. INCOME TAXES
Our tax expense for the three and ninemonths ended September 30, 2021March 31, 2022 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 September 30, 2021,March 31, 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. LOSSEARNINGS PER SHARE (EPS)
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.
Diluted EPS is computed by dividing the net lossincome attributable to RiceBran Technologiesour 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. The dilutive effects of outstanding options, warrants, nonvested shares of common stock and nonvested restricted stock units that vest solely on the basis of a service condition are calculated using the treasury stock method. The dilutive effects of the outstanding preferred stock are calculated using the if-converted method.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Below are reconciliationsReconciliations of the numerators and denominators in the EPS.EPS computations follow.
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended March 31, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2022 | 2021 | |||||||||||||||||||
NUMERATOR (in thousands): | ||||||||||||||||||||||||
Denominator for basic and diluted EPS - net loss | $ | (2,213 | ) | $ | (2,774 | ) | $ | (3,545 | ) | $ | (9,756 | ) | ||||||||||||
Net income (loss) | $ | (1,516 | ) | $ | 591 | |||||||||||||||||||
Allocation of earnings to participating convertible preferred stock | 0 | (3 | ) | |||||||||||||||||||||
Numerator for basic EPS - income (loss) available to common shareholders | (1,516 | ) | 588 | |||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Add back - allocation of earnings to participating convertible preferred stock | 0 | 3 | ||||||||||||||||||||||
Reallocation of earnings to participating convertible preferred stock considering potentially dilutive securities | 0 | (3 | ) | |||||||||||||||||||||
Numerator for diluted EPS - adjusted income (loss) available to common shareholders | $ | (1,516 | ) | $ | 588 | |||||||||||||||||||
DENOMINATOR: | ||||||||||||||||||||||||
Weighted average number of shares of shares of common stock outstanding | 46,620,039 | 40,691,824 | 45,755,871 | 40,232,289 | 51,664,912 | 45,248,782 | ||||||||||||||||||
Weighted average number of shares of common stock underlying vested RSUs | 836,803 | 132,457 | 562,933 | 47,577 | ||||||||||||||||||||
Denominator for basic and diluted EPS - weighted average number of shares outstanding | 47,456,842 | 40,824,281 | 46,318,804 | 40,279,866 | ||||||||||||||||||||
Weighted average number of shares of common stock underlying vested restricted stock units | 865,052 | 386,403 | ||||||||||||||||||||||
Denominator for basic EPS - weighted average number of shares outstanding | 52,529,964 | 45,635,185 | ||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Nonvested restricted stock units | 0 | 845,893 | ||||||||||||||||||||||
Stock options | 0 | 9,626 | ||||||||||||||||||||||
Warrants | 0 | 65,543 | ||||||||||||||||||||||
Denominator for diluted EPS - adjusted weighted average number of shares outstanding | 52,529,964 | 46,556,247 | ||||||||||||||||||||||
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for the three and ninemonths ended September 30, 2021March 31, 2022, and 2020,because to do so would be antidilutive as a result of our net loss. Potentially dilutive securities outstanding during the three and ninemonths ended September 30, 2021March 31, 2022, and 2020,included our outstanding convertible preferred stock, options, warrants nonvested restricted stock units and nonvested stock. ThoseRSUs. The effects of the following potentially dilutive securities, still outstanding could potentially dilute EPSat March 31, 2021, were not included in the future.computation of diluted EPS for the three months ended March 31, 2021, because to do so would have been antidilutive: stock options for the purchase of 578,121 shares of our common stock and warrants for the purchase of 50,000 shares of our common stock.
NOTE 13. FAIR VALUE MEASUREMENTS
The fair value of cash and cash equivalents, restricted cash, accounts and other receivables, and accounts payable and commodities approximates their carrying value due to shorter maturities. As of September 30, 2021, the fair values of our operating lease liabilities were approximately $0.3 million higher than their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements). As of September 30, 2021,March 31, 2022, the fair values of our debt and finance lease liabilities and operating lease liabilities approximated their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements).
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
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 | ||||||||||||||
Warrant liability (1) | $ | 0 | $ | 0 | $ | 647 | $ | 647 | |||||||||
Total liabilities at fair value | $ | 0 | $ | 0 | $ | 647 | $ | 647 | |||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Total liabilities at fair value as of March 31, 2022 - Derivative warrant liability | $ | 0 | $ | 0 | $ | 429 | $ | 429 | ||||||||
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 both the three and nine months ended September 30, 2021March 31, 2022 (in thousands):
Fair Value as of Beginning of Period | Total and Unrealized | Issuance of New Instruments | Net | Fair Value, at End of Period | Change in Unrealized Gains (Losses) on Instruments Still Held | |||||||||||||||||||
Warrant liability (1) | $ | 0 | $ | 0 | $ | 647 | $ | 0 | $ | 647 | $ | 0 | ||||||||||||
Total Level 3 fair value | $ | 0 | $ | 0 | $ | 647 | $ | 0 | $ | 647 | $ | 0 | ||||||||||||
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Fair Value as of Beginning of Period | Total and Unrealized | Issuance of New Instruments | Net of | Fair Value, at End of Period | Change in Unrealized Gains (Losses) on Instruments Still Held | |||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | 258 | $ | (171 | ) | $ | 0 | $ | 0 | $ | 429 | $ | (171 | ) | ||||||||||
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 March 31, 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.
March 31, 2022 | December 31, 2021 | |||||||
Assumed volatility | 75.1 | % | 69.5 | % | ||||
Assumed risk free interest rate | 1.7 | % | 0.8 | % | ||||
Expected life of options (in years) | 4.5 | 4.8 | ||||||
Expected dividends | 0 | 0 | ||||||
RiceBran Technologies
NotesThe fair value of Warrant A approximates the cash settlement the holder could elect to Unaudited Condensed Consolidated Financial Statements
be paid in the event of a change in control. At March 31, 2022, a $0.10 increase in our stock price would have resulted in an approximate $151 thousand increase in the Black Scholes fair value of Warrant A.
NOTE 14. 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.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
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. Defense costs are expensed as incurred and are included in professional fees.
NOTE 15. RELATED PARTY TRANSACTIONS
Our former director, Ari Gendason, is an employee and senior vice president and chief investment officer of Continental Grain Company ("CGC")(CGC). As of the date of this filing, CGC owns approximately 21.2%17.7% 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 1 nominee to our board of directors. CGC permanently waived this right effective April 28, 2022.
NOTE16. 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. In accordance with Nasdaq Marketplace Rules and 5810(c)(3)(A), we have a periodAs of180 calendar days from the date of notification, or untilthis filing, we have March 14, 2022, notto regain regained compliance with the minimum bid price requirement. We may be eligible forrequirement, however, we obtained from Nasdaq an additional 180-day compliance period, if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement. 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.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Three Months Ended September 30, 2021, Compared to Three Months Ended September 30, 2020
Revenue was $6.9 million in the third quarter of 2021, up $1.7 million from $5.2 million in the third quarter of 2020. This 34% year-over-year increase was underpinned by strong year-over-year increases in revenues from Golden Ridge, our Arkansas-based rice mill. Year-over-year revenue growth for the quarter was negatively impacted by logistical challenges in our core-SRB operations and unplanned downtime at MGI, our Minnesota-based oats and barley mill.
Gross loss was $0.3 million in the third quarter of 2021, a $0.5 million improvement from a gross loss of $0.8 million in the third quarter of 2020. The year-over-year improvement in gross loss was driven by improvements in profitability at Golden Ridge and our Dillon, Montana SRB derivative facility. Gross profits in the quarterRevenues were negatively impacted by higher raw material and freight costs, as well as losses at MGI due to unplanned downtime.
Selling, general and administrative (SG&A) expenses were $1.8 million in the third quarter of 2021 and approximately equal to $1.8 million in the third quarter of 2020. Due to reduced gross losses, SG&A remaining flat, and the absence of $0.1 million in impairments present in last year’s results, operating losses were $2.1 million in the third quarter of 2021, down from $2.7 million in the third quarter of 2020.
Interest expense in the second quarter of 2021 was approximately $0.1 million, which was in-line with $0.1 million in the third quarter of 2020. Due to the reduction in operating losses, net losses in the third quarter of 2021 were $2.2 million, or $0.05 per share, compared to $2.8 million, or $0.07 per share, in the third quarter of 2020.
Nine Months Ended September 30, 2021, Compared to Nine Months Ended September 30, 2020
Revenue was $23.1$10.6 million in the first nine monthsquarter of 2021, up $3.72022, an increase of $2.0 million, from $19.4 millionor 23%, compared to revenues in the first nine monthsquarter of 2020.2021. This 19%year-over-year increase year-over-year was due to higher core-SRB sales and strong growth for all businesses. Sales of SRBfrom our MGI Grain Incorporated (MGI) and SRB derivatives grew over 11%Golden Ridge Rice Mills, LLC (Golden Ridge) milling businesses, offset in the first nine months of 2021 due to 45% growth inpart by lower Value-Add SRB derivative sales while both MGI and Golden Ridge generated double-digit growth in revenue indue to the first nine monthstiming of 2021 from the first nine months of 2020.large customer deliveries versus a year ago.
Gross profit was $0.5 million in the first nine monthsquarter of 2021,2022, compared to a gross loss of $2.4$0.7 million in the first nine monthsquarter of 2020.2021. The $2.9$0.2 million increasedecrease in gross profit reflected improved profitability for all businesses, with a notable reduction in gross losses for Golden Ridge. The transitionwas primarily attributable to gross profit in the first nine months of 2021 was also supported by the increase inlower sales of higher-marginValue-Add SRB derivatives sales compared to the first nine months of 2020.versus a year ago and higher input and logistics costs at our core-SRB business, offset by strong growth in profitability at MGI, and lower losses from Golden Ridge.
SG&ASelling, general and administrative (SG&A) expenses were $5.5$1.7 million in the first nine monthsquarter of 2022, a 3% reduction from the first quarter of 2021, compared to $6.6 million in the first nine months of 2020, a decrease of $1.1 million. This reduction was achieved through cutsas reductions in corporate support headcount and outside professional services supportedwere offset in part by process improvementhigher wage rates and modest investments in technical support infrastructure. As a result of higher gross profits and lower SG&A, operatinginsurance expenses. Operating losses were $4.9$1.2 million in the first nine monthsquarter of 2021, down2022, up from $9.5$1.1 million in the first nine monthsquarter of 2020.2021, due to lower gross profits.
Interest expenseIn March 2022, we recognized a $0.2 million charge for the change in the first nine monthsfair value of 2021 was $0.4 million compared to $0.2 milliona warrant liability, and in the first nine months 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) Paycheck Protection Program (PPP) loan (see Notes 9 andNote 14 of the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of the loan).
Net loss in the first nine months of 2021 was $3.5 million, or $0.08 per share, compared to net losses of $9.8 million, or $0.24 per share, in the first nine months of 2020. The year-over-year reduction in net losses wasAs a result of lowerhigher operating losses and the nonrecurring gain on the extinguishment of debt in the first nine monthsquarter of 2021, net loss in the first quarter of 2022 was $1.5 million, or $0.03 per share, compared to net income of $0.6 million, or $0.01 per share, in the first nine monthsquarter of 2020.2021.
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 and Capital Resources
We had $6.2$5.9 million in cash and equivalents as of September 30, 2021,March 31, 2022, an increase of $0.9$0.1 million from $5.3$5.8 million on December 31, 2020.2021. During the first nine monthsquarter of 2021,2022, we were able to offset cash operating losses with improved working capital management neutralizing cash used $2.0 million of cash to fund ourin operating loss. Weactivities. Cash used $0.5 million in cash for investing activities which consisted of $1.2$0.2 million in capital expenditures, primarily for the purchase and installation of capital equipment at our ArkansasGolden Ridge and MinnesotaMGI facilities, which was offset by $0.6$0.1 million in proceeds received from an insurance company for hurricane damaged sustained to our Lake Charles facility in 2020. The operating and investing uses of cash were offset by $3.5 million in cash generated from financing activities, where proceeds from sales of common stock and warrants more than offset principal payments on our premium finance agreements, long-term debt and leases.involuntary conversion.
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. We aremillion, which we currently prohibited from making sales pursuant tohave $2.8 million remaining. Under the ATM until 180 days after the closing dateterms of the September 2021 offering. In April 2020, we were approved for a $1.8 million SBA PPP loan as discussed further in Note 9 of the Notessecurities purchase agreement related to Unaudited Condensed Consolidated Financial Statements. In the third quarter of 2021, we raised $0.5 million, net of $0.1 million of stock issuance costs, from the sale of shares under our ATM program and $2.8 million, net of offering costs, from the September 2021 offering, and the $1.8 million PPP loan that was completely forgiven in the first quarter of 2021 all contributedwe are prohibited from entering into an agreement to reducing total long-term debt to $1.5 million ateffect any at-the-market issuance until September 30, 2021, compared to $3.7 million at December 31, 2020.13, 2023. As of the date of this filing, management believes we have sufficient capital reserves to fund the operations of the business through the Company’scompany’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.flow.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements, other than operating leases with original terms
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 September 30, 2021,March 31, 2022, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our 20202021 Annual Report on Form 10-K.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
We are a smaller reporting company as defined byin Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are not required to provide the information otherwise required under 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.
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 Reportquarterly 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.
PART II. OTHER INFORMATION
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,quarterly report on Form 10-Q, 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 September 30, 2021,March 31, 2022, we issued the securities described below without registration under the Securities Act of 1933, as amended (the "Securities Act").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.
On September 30, 2021,During the quarter ended March 31, 2022, we issued 6,000 shares of common stock to a service provider, that is not a natural person, as compensation for service provided. The shares were valued at an aggregate of $5,460.$2,100.
Item 3. Defaults Upon Senior Securities
None.None
Item 4. Mine Safety Disclosures
None.None
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 | ||||||
4.1 | 8-K |
| 001-36245 | 4.1 | September 13, 2021 | |||||||
4.2 | 8-K | 001-36245 | 4.2 | September 13, 2021 | ||||||||
10.1 | 8-K | 001-36245 | 10.1 | September 13, 2021 | ||||||||
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) | |||||||||||
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: | - RiceBran Technologies | |
/s/ Peter G. Bradley | ||
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/s/ Todd T. Mitchell | ||
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