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 | |
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| 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 April 26,November 3, 2022, there were 51,820,4256,242,077 shares of common stock outstanding.
RiceBran Technologies
Form 10-Q
PART I. FINANCIAL INFORMATION | Page | |
PART II. OTHER INFORMATION | ||
Item 1. |
| ||
Item 1A. |
| ||
Item 2. |
| ||
Item 3. |
| ||
Item 4. |
| ||
Item 5. |
| ||
Item 6. |
|
| ||
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 Securities Act of 1933, as amended (Securities Act)concerning our operations, economic performance and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).financial condition. 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 quarterly reportQuarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021. WeForward-looking statements speak only as of the date on which they are made, and we disclaim any obligation to update any forward-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 March 31, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Revenues | $ | 10,559 | $ | 8,605 | $ | 10,252 | $ | 6,909 | $ | 31,001 | $ | 23,088 | ||||||||||||
Cost of goods sold | 10,057 | 7,933 | 10,949 | 7,185 | 31,673 | 22,539 | ||||||||||||||||||
Gross profit | 502 | 672 | ||||||||||||||||||||||
Gross profit (loss) | (697 | ) | (276 | ) | (672 | ) | 549 | |||||||||||||||||
Selling, general and administrative expenses | 1,692 | 1,741 | 1,765 | 1,802 | 5,165 | 5,476 | ||||||||||||||||||
Loss on disposition of property and equipment | 0 | 7 | ||||||||||||||||||||||
Loss (gain) on involuntary conversion of property and equipment | - | (1 | ) | (147 | ) | 5 | ||||||||||||||||||
Operating loss | (1,190 | ) | (1,076 | ) | (2,462 | ) | (2,077 | ) | (5,690 | ) | (4,932 | ) | ||||||||||||
Interest income | 1 | 1 | 7 | - | 9 | 1 | ||||||||||||||||||
Interest expense | (126 | ) | (112 | ) | (152 | ) | (121 | ) | (396 | ) | (353 | ) | ||||||||||||
Change in fair value of derivative warrant liability | (171 | ) | 0 | 612 | - | 24 | - | |||||||||||||||||
Gain on extinguishment of PPP loan | 0 | 1,792 | - | - | - | 1,792 | ||||||||||||||||||
Other expense | (34 | ) | (13 | ) | (39 | ) | (18 | ) | (111 | ) | (55 | ) | ||||||||||||
Other income | 4 | 0 | - | 3 | 5 | 3 | ||||||||||||||||||
Income (loss) before income taxes | (1,516 | ) | 592 | |||||||||||||||||||||
Income tax benefit | 0 | (1 | ) | |||||||||||||||||||||
Net income (loss) | $ | (1,516 | ) | $ | 591 | |||||||||||||||||||
Loss before income taxes | (2,034 | ) | (2,213 | ) | (6,159 | ) | (3,544 | ) | ||||||||||||||||
Income tax expense | (8 | ) | - | (20 | ) | (1 | ) | |||||||||||||||||
Net loss | $ | (2,042 | ) | $ | (2,213 | ) | $ | (6,179 | ) | $ | (3,545 | ) | ||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||
Loss per common share: | ||||||||||||||||||||||||
Basic | $ | (0.03 | ) | $ | 0.01 | $ | (0.38 | ) | $ | (0.47 | ) | $ | (1.17 | ) | $ | (0.77 | ) | |||||||
Diluted | $ | (0.03 | ) | $ | 0.01 | $ | (0.38 | ) | $ | (0.47 | ) | $ | (1.17 | ) | $ | (0.77 | ) | |||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||
Basic | 52,529,964 | 45,635,185 | 5,332,308 | 4,745,684 | 5,290,780 | 4,631,880 | ||||||||||||||||||
Diluted | 52,529,964 | 46,556,247 | 5,332,308 | 4,745,684 | 5,290,780 | 4,631,880 | ||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial StatementsStatement
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands, except share amounts)
March 31, | December 31, | September 30, | December 31, | |||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 5,868 | $ | 5,825 | $ | 4,374 | $ | 5,825 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $20 and $18 | 4,629 | 4,136 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $123 and $18 | 4,995 | 4,136 | ||||||||||||||
Inventories | 2,482 | 2,444 | 2,687 | 2,444 | ||||||||||||
Other current assets | 952 | 810 | 1,148 | 810 | ||||||||||||
| Total current assets | 13,931 | 13,215 | 13,204 | 13,215 | ||||||||||||
Property and equipment, net | 14,887 | 15,444 | 14,629 | 15,444 | ||||||||||||
Operating lease right-of-use assets | 2,043 | 2,127 | 1,868 | 2,127 | ||||||||||||
Intangible assets | 484 | 527 | 411 | 527 | ||||||||||||
| Total assets | $ | 31,345 | $ | 31,313 | $ | 30,112 | $ | 31,313 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 1,672 | $ | 826 | $ | 1,450 | $ | 826 | ||||||||
Commodities payable | 2,291 | 1,702 | 1,960 | 1,702 | ||||||||||||
Accrued salary, wages and benefits | 875 | 787 | 908 | 787 | ||||||||||||
Accrued expenses | 522 | 683 | 941 | 683 | ||||||||||||
Operating lease liabilities, current portion | 396 | 382 | 417 | 382 | ||||||||||||
Due under bank line of credit | 1,846 | - | ||||||||||||||
Due under factoring agreement, including the Over-advance | 4,926 | 3,379 | ||||||||||||||
Due under insurance premium finance agreements | 283 | 128 | 429 | 128 | ||||||||||||
Due under factoring agreement | 3,438 | 3,379 | ||||||||||||||
Finance lease liabilities, current portion | 82 | 86 | 130 | 86 | ||||||||||||
Long-term debt, current portion | 1,217 | 1,183 | 1,333 | 1,183 | ||||||||||||
| Total current liabilities | 10,776 | 9,156 | 14,340 | 9,156 | ||||||||||||
Operating lease liabilities, less current portion | 1,794 | 1,948 | 1,613 | 1,948 | ||||||||||||
Finance lease liabilities, less current portion | 86 | 100 | 357 | 100 | ||||||||||||
Long-term debt, less current portion | 1,035 | 1,356 | 365 | 1,356 | ||||||||||||
Derivative warrant liability | 429 | 258 | 234 | 258 | ||||||||||||
| Total liabilities | 14,120 | 12,818 | 16,909 | 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 | 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 | ||||||||||||||
Common stock, no par value, 15,000,000 shares authorized, 5,242,077 shares and 5,158,967 shares, issued and outstanding | 327,166 | 326,279 | ||||||||||||||
Accumulated deficit | (309,375 | ) | (307,859 | ) | (314,038 | ) | (307,859 | ) | ||||||||
| Total shareholders' equity | 17,225 | 18,495 | 13,203 | 18,495 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 31,345 | $ | 31,313 | $ | 30,112 | $ | 31,313 | ||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
Three Months Ended March 31, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Cash flow from operating activities: | ||||||||||||||||
Net income (loss) | $ | (1,516 | ) | $ | 591 | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | ||||||||||||||||
Net loss | $ | (6,179 | ) | $ | (3,545 | ) | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||||
Depreciation | 516 | 612 | 1,575 | 1,821 | ||||||||||||
Amortization | 43 | 53 | 116 | 150 | ||||||||||||
Stock and share-based compensation | 246 | 253 | 887 | 840 | ||||||||||||
Change in fair value of derivative warrant liability | 171 | 0 | ||||||||||||||
Change in fair value derivative warrant liability | (24 | ) | - | |||||||||||||
Loss (gain) on involuntary conversion of property and equipment | (147 | ) | 5 | |||||||||||||
Gain on extinguishment of PPP loan | 0 | (1,792 | ) | - | (1,792 | ) | ||||||||||
Provision for bad debts | 105 | 13 | ||||||||||||||
Other | (48 | ) | (18 | ) | 1 | 54 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (493 | ) | (808 | ) | (964 | ) | (18 | ) | ||||||||
Inventories | (39 | ) | 384 | (243 | ) | (295 | ) | |||||||||
Accounts payable and accrued expenses | 884 | 508 | 1,094 | 594 | ||||||||||||
Commodities payable | 589 | 556 | 258 | 619 | ||||||||||||
Other | (163 | ) | (340 | ) | (338 | ) | (431 | ) | ||||||||
Net cash provided by (used in) operating activities | 190 | (1 | ) | |||||||||||||
Net cash used in operating activities | (3,859 | ) | (1,985 | ) | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property and equipment | (157 | ) | (325 | ) | (411 | ) | (1,187 | ) | ||||||||
Proceeds from insurance on involuntary conversion | 109 | 0 | 109 | 638 | ||||||||||||
Net cash used in investing activities | (48 | ) | (325 | ) | (302 | ) | (549 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Advances on factoring agreement | 8,856 | 7,407 | ||||||||||||||
Advances on factoring agreement, including the Over-advance | 28,964 | 22,135 | ||||||||||||||
Payments on factoring agreement | (8,797 | ) | (6,883 | ) | (27,417 | ) | (21,970 | ) | ||||||||
Advances on bank line of credit | 2,725 | - | ||||||||||||||
Payments on bank line of credit | (900 | ) | - | |||||||||||||
Advances on insurance premium finance agreements | 374 | 279 | 928 | 962 | ||||||||||||
Payments on insurance premium finance agreements | (219 | ) | (157 | ) | (627 | ) | (677 | ) | ||||||||
Payments of debt and finance lease liabilities | (313 | ) | (165 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (99 | ) | 481 | |||||||||||||
Payments on long-term debt and finance lease liabilities | (963 | ) | (534 | ) | ||||||||||||
Proceeds from issuances of common stock and warrants, net of costs | - | 3,372 | ||||||||||||||
Proceeds from common stock warrant exercises | - | 171 | ||||||||||||||
Net cash provided by financing activities | 2,710 | 3,459 | ||||||||||||||
Net change in cash and cash equivalents | $ | 43 | $ | 155 | $ | (1,451 | ) | $ | 925 | |||||||
Cash and cash equivalents, beginning of period | 5,825 | 5,263 | $ | 5,825 | $ | 5,263 | ||||||||||
Cash and cash equivalents, end of period | 5,868 | 5,418 | 4,374 | 6,188 | ||||||||||||
Net change in cash and cash equivalents | $ | 43 | $ | 155 | $ | (1,451 | ) | $ | 925 | |||||||
Supplemental disclosures: | ||||||||||||||||
Cash paid for interest | $ | 118 | $ | 85 | $ | 354 | $ | 267 | ||||||||
Cash paid for income taxes | $ | 0 | $ | 1 | $ | 19 | $ | 15 | ||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
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) and the rules and regulations of the Securities and Exchange Commission (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, 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.
In August 2022, our board of directors approved a 1 for 10 reverse split of our common stock. Our common stock began trading on a post-split basis on August 26, 2022. All share and per share information has been retrospectively adjusted for all prior periods presented giving retroactive effect to the reverse stock split. Such adjustments include calculations of our weighted average number of shares outstanding and loss per share, as well as disclosures regarding our share-based compensation and warrants.
Certain reclassifications have been made to amounts reported for the prior periods to achieve consistent presentation with the current period. Such reclassifications had no impact on previously reported net loss or shareholders’ equity.
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 can become valuable alternatives to traditional food ingredients.
Notably, we apply our proprietary technologies to convert raw rice bran into stabilized rice bran (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; and a variety of other valuable derivatives extracted from these core products.
In granular form, SRB is a food additive used in products for human and animal consumption. We believe SRB has certain qualities that make it more attractive than additives based on the by-products of other agricultural commodities, such 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 4four locations: 2two facilities located within supplier-owned rice mills in Arbuckle and West Sacramento, California; 1one 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 1one reporting unit and 1one 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) 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 we must be adoptedadopt the guidance 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 March 31,September 30, 2022, we have $3.8$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 receivable 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. AmountsWe classify 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 aresheets. We typically appliedapply customer prepayments to an invoice within 30 days of the prepayment. Revenues in the three and ninemonths ended March 31,September 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 | |||||||
% 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 | % | ||||
Customer | ||||||||||||||||
A | B | C | D | |||||||||||||
% of revenues, three months ended September 30, 2022 | 15 | % | 5 | % | 11 | % | - | % | ||||||||
% of revenues, three months ended September 30, 2021 | 21 | % | 7 | % | - | % | 9 | % | ||||||||
% of revenues, nine months ended September 30, 2022 | 13 | % | 8 | % | 5 | % | 2 | % | ||||||||
% of revenues, nine months ended September 30, 2021 | 10 | % | 11 | % | 1 | % | 11 | % | ||||||||
% of accounts receivable, as of September 30, 2022 | 13 | % | 7 | % | 17 | % | - | % | ||||||||
% 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 March 31, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
United States | $ | 10,246 | $ | 8,196 | $ | 9,876 | $ | 6,450 | $ | 30,034 | $ | 21,867 | ||||||||||||
Other countries | 313 | 409 | 376 | 459 | 967 | 1,221 | ||||||||||||||||||
Revenues | $ | 10,559 | $ | 8,605 | $ | 10,252 | $ | 6,909 | $ | 31,001 | $ | 23,088 | ||||||||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 6. INVENTORIES
The following table details the components of inventories (in thousands).
March 31, | December 31, | |||||||
2022 | 2021 | |||||||
Finished goods | $ | 1,728 | $ | 1,679 | ||||
Raw materials | 637 | 599 | ||||||
Packaging | 117 | 166 | ||||||
Inventories | $ | 2,482 | $ | 2,444 | ||||
NOTE 7. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
March 31, | December 31, | September 30, | December 31 | |||||||||||||||||||||
2022 | 2021 | Estimated Useful Lives | 2022 | 2021 | Estimated Useful Lives | |||||||||||||||||||
Land | $ | 730 | $ | 730 | $ | 730 | $ | 730 | ||||||||||||||||
Furniture and fixtures | 265 | 265 | 5 | - | 10 years | 259 | 265 | 5 | - | 10 years | ||||||||||||||
Plant | 10,554 | 10,457 | 20 | - | 40 years, or life of lease | 10,094 | 10,457 | 20 | - | 40 years, or life of lease | ||||||||||||||
Computer and software | 452 | 452 | 3 | - | 5 years | 450 | 452 | 3 | - | 5 years | ||||||||||||||
Leasehold improvements | 1,828 | 1,828 | 4 | - | 15 years, or life of lease | 1,838 | 1,828 | 4 | - | 15 years, or life of lease | ||||||||||||||
Machinery and equipment | 14,977 | 15,115 | 5 | - | 15 years | 15,598 | 15,115 | 5 | - | 15 years | ||||||||||||||
Property and equipment, cost | 28,806 | 28,847 | 28,969 | 28,847 | ||||||||||||||||||||
Less accumulated depreciation | 13,919 | 13,403 | 14,340 | 13,403 | ||||||||||||||||||||
Property and equipment, net | $ | 14,887 | $ | 15,444 | $ | 14,629 | $ | 15,444 | ||||||||||||||||
Amounts payable for property and equipment included in accounts payable totaled less than $0.1 million at March 31,September 30, 2022, and $0.2 million at December 31, 2021. Assets which had not yet been placed in service, included in property and equipment, totaled $0.8$1.1 million at March 31,September 30, 2022, and $0.9 million at December 31, 2021.
NOTE 8.7. LEASES
The components of lease expense and cash flows from 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
Three Months Ended September 30, | Nine Months Ended Setepmber 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Finance lease cost: | ||||||||||||||||
Amortization of right-of use assets, included in cost of goods sold | $ | 20 | $ | 24 | $ | 59 | $ | 67 | ||||||||
Interest on lease liabilities | 6 | 2 | 11 | 8 | ||||||||||||
Operating lease cost, included in selling, general and administrative expenses: | ||||||||||||||||
Fixed leases cost | 129 | 129 | 387 | 387 | ||||||||||||
Variable lease cost | 39 | 37 | 125 | 112 | ||||||||||||
Short-term lease cost | 41 | 21 | 62 | 60 | ||||||||||||
Total lease cost | $ | 235 | $ | 213 | $ | 644 | $ | 634 | ||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
Operating cash flows from finance leases | $ | 6 | $ | 2 | $ | 11 | $ | 8 | ||||||||
Operating cash flows from operating leases | $ | 129 | $ | 129 | $ | 387 | $ | 387 | ||||||||
Financing cash flows from finance leases | $ | 22 | $ | 23 | $ | 68 | $ | 73 | ||||||||
As of March 31,September 30, 2022, variable lease payments do not depend on a rate or index. As of March 31,September 30, 2022, and December 31, 2021, property and equipment, net, includes $0.6 million and $0.2 million of finance lease right-of-use-assets, with an original cost of $0.9 million as of September 30, 2022, and $0.5 million. million as of December 31, 2021. During the three months and nine months ended March 31,September 30, 2022, we financed the purchase of $0.1 million and $0.3 million of property and equipment in noncash finance lease transactions. During the three months and 2021,nine months ended September 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 March 31,September 30, 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 March 31,September 30, 2022, follows.
Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||||||||
Remaining leases terms (in years) | 1.6 | - | 10.9 | 0.2 | - | 4.6 | 1.0 | - | 10.4 | 0.4 | - | 5.0 | ||||||||||
Weighted average remaining lease terms (in years) | 5.9 | 2.4 | 5.7 | 3.0 | ||||||||||||||||||
Discount rates | 6.3% | - | 9.0 | % | 2.8% | - | 7.3 | % | 6.3% | - | 9.0% | 2.8% | - | 10.4% | ||||||||
Weighted average discount rate | 7.7 | % | 4.8 | % | 7.8% | 8.1% | ||||||||||||||||
Maturities of lease liabilities as of MarchSeptember 30, 2022, 31,2022,follows (in thousands).
Operating | Finance | |||||||
Leases | Leases | |||||||
2022 (nine months ended December 31, 2022) | $ | 364 | $ | 67 | ||||
2023 | 528 | 65 | ||||||
2024 | 429 | 25 | ||||||
2025 | 439 | 10 | ||||||
2026 | 451 | 7 | ||||||
Thereafter | 578 | 0 | ||||||
Total lease payments | 2,789 | 174 | ||||||
Amounts representing interest | (599 | ) | (6 | ) | ||||
Present value of lease obligations | $ | 2,190 | $ | 168 | ||||
Operating | Finance | |||||||
Leases | Leases | |||||||
2022 (three months ended December 31, 2022) | $ | 122 | $ | 52 | ||||
2023 | 528 | 158 | ||||||
2024 | 429 | 117 | ||||||
2025 | 440 | 102 | ||||||
2026 | 450 | 100 | ||||||
Thereafter | 578 | 60 | ||||||
Total lease payments | 2,547 | 589 | ||||||
Amounts representing interest | (517 | ) | (102 | ) | ||||
Present value of lease obligations | $ | 2,030 | $ | 487 | ||||
NOTE 9.8. DEBT
We finance certain amounts owed for annual insurance premiums under financing agreements. As of March 31,September 30, 2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through May 2022,March 2023, at interest rates of 3.7%3.5% to 4.0%3.9% per year.
We borrow under a factoring agreement with a lender (the Lender), which provides a $7.0 million credit facility. We may only borrow to the extent we have qualifying accounts receivable as defined in the agreement. The facility had an initial two-year term and automatically renews for successive annual periods unlessuntil delivery of a proper termination notice is given.notice. The facility term has automatically extended to October 2022.2023. We paid a $0.2 million facility fee upon inception of the agreement which amortized to interest expense on a straight-line basis over the two 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 lenderLender has a security interest in our personal property assets.
The Lender advanced us $0.9 million effective September 30, 2022 (the Over-advance), pending restructuring of our mortgage promissory note with the Lender. The Over-advance accrues interest at an annual rate which is the greater of 7.0% above the Lender's prime rate and 10.3% (13.3% at September 30, 2022). The Over-advance is due the earlier of the completion of the restructuring of the mortgage promissory note or December 29, 2022.
Additional information related to our factoring obligation (exclusive of the Over-advance) follows.
Three Months Ended March 31, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
Average borrowings outstanding (in thousands) | $ | 2,822 | $ | 879 | $ | 3,150 | $ | 1,522 | $ | 3,036 | $ | 1,324 | ||||||||||||
Amortization of debt issuance costs (in thousands) | $ | 23 | $ | 23 | $ | - | $ | 23 | $ | - | $ | 68 | ||||||||||||
Fees paid, as a percentage of average oustanding borrowings | 1.2 | % | 1.5 | % | ||||||||||||||||||||
Interest paid, as a percentage of average outstanding borrowings | 1.5 | % | 1.8 | % | 1.6 | % | 2.0 | % | 1.4 | % | 5.0 | % | ||||||||||||
Fees paid, as a percentage of average outstanding borrowings | 1.6 | % | 1.6 | % | 1.2 | % | 5.0 | % | ||||||||||||||||
As of September 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 (6.3% at September 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 $1.5 million in the three months ended September 30, 2022, and $0.5 million for the nine months ended September 30, 2022.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Long-term debt consists of the following (in thousands).
September 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% (13.3% at September 30, 2022) payable in monthly installments through December 2023. Net of $11 debt issuance costs at September 30, 2022. Face amount $2.5 million. Secured by certain real property in Wynne, Arkansas. | $ | 1,614 | $ | 2,469 | ||||
Progress payment agreement - Dated August 2022. Original principal $37. Interest is payable monthly at the rate of 25.2% per year. Due in November 2022, unless a finance lease is executed with the lender before that date for the related equipment. | 37 | - | ||||||
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. | 27 | 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. | 20 | 26 | ||||||
| Equipment note - 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. | - | 11 | ||||||
Total long-term debt, net | $ | 1,698 | $ | 2,539 | ||||
Future principal maturities of long-term debt outstanding as of September 30, 2022, follow (in thousands).
2022 (three months ended December 31, 2022) | $ | 347 | ||
2023 | 1,337 | |||
2024 | 19 | |||
2025 | 5 | |||
Principal maturities | 1,708 | |||
Debt issuance costs | (10 | ) | ||
Total long-term debt, net | $ | 1,698 |
NOTE 9. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS
In August 2022, our board of directors approved a 1 for 10 reverse split of our common stock. Our common stock began trading on a post-split basis on August 26, 2022. All share and per share information has been retrospectively adjusted for all prior periods presented giving retroactive effect to the reverse stock split. Such adjustments include calculations of our weighted average number of shares outstanding and loss per share, as well as disclosures regarding our share-based compensation and warrants.
On July 14, 2022, shareholders approved a 600,000 share increase in the number of shares of common stock authorized for issuance under our Amended and Restated 2014 Equity Incentive Plan (the 2014 Plan). As of September 30, 2022, 228,201 shares of common stock remained available for issuance under the 2014 Plan.
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 March 31, 2022, follow (in thousands).
2022 (nine months ended December 31, 2022) | $ | 920 | ||
2023 | 1,332 | |||
2024 | 20 | |||
2025 | 5 | |||
Principal maturities | 2,277 | |||
Debt issuance costs | (25 | ) | ||
Total long term debt, net | $ | 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 | 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, 2021 | 150 | 51,589,674 | $ | 75 | $ | 326,279 | $ | (307,859 | ) | $ | 18,495 | 150 | 5,158,967 | $ | 75 | $ | 326,279 | $ | (307,859 | ) | $ | 18,495 | ||||||||||||||||||||||||||
Common stock awards under equity incentive plans | 0 | 224,751 | 0 | 241 | 0 | 241 | - | 22,475 | - | 241 | - | 241 | ||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | 0 | 6,000 | 0 | 5 | 0 | 5 | - | 600 | - | 5 | - | 5 | ||||||||||||||||||||||||||||||||||||
Net income | - | - | 0 | 0 | (1,516 | ) | (1,516 | ) | - | - | - | - | (1,516 | ) | (1,516 | ) | ||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | 150 | 51,820,425 | $ | 75 | $ | 326,525 | $ | (309,375 | ) | $ | 17,225 | 150 | 5,182,042 | 75 | 326,525 | (309,375 | ) | 17,225 | ||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | - | 48,388 | - | 146 | - | 146 | ||||||||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | - | 600 | - | 1 | - | 1 | ||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (2,621 | ) | (2,621 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | 150 | 5,231,030 | 75 | 326,672 | (311,996 | ) | 14,751 | |||||||||||||||||||||||||||||||||||||||||
Common stock awards under equity incentive plans | - | - | 492 | - | 492 | |||||||||||||||||||||||||||||||||||||||||||
Common stock issued to vendor | - | 600 | - | 2 | - | 2 | ||||||||||||||||||||||||||||||||||||||||||
Other | - | 10,447 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | (2,042 | ) | (2,042 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | 150 | 5,242,077 | $ | 75 | $ | 327,166 | $ | (314,038 | ) | $ | 13,203 | |||||||||||||||||||||||||||||||||||||
Shares | ||||||||||||||||||||||||
Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||
Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||
Balance, December 31, 2020 | 225 | 4,523,809 | $ | 112 | $ | 322,218 | $ | (298,910 | ) | $ | 23,420 | |||||||||||||
Common stock awards under equity incentive plans | - | 2,994 | - | 250 | - | 250 | ||||||||||||||||||
Common stock issued to vendor | - | 600 | - | 3 | - | 3 | ||||||||||||||||||
Other | - | - | - | (3 | ) | - | (3 | ) | ||||||||||||||||
Net income | - | - | - | - | 591 | 591 | ||||||||||||||||||
Balance, March 31, 2021 | 225 | 4,527,403 | 112 | 322,468 | (298,319 | ) | 24,261 | |||||||||||||||||
Common stock awards under equity incentive plans | - | 2,964 | - | 290 | - | 290 | ||||||||||||||||||
Common stock issued to vendor | - | 600 | - | 5 | - | 5 | ||||||||||||||||||
Exercise of common stock warrants | - | 17,794 | - | 171 | - | 171 | ||||||||||||||||||
Other | - | - | - | 3 | - | 3 | ||||||||||||||||||
Net loss | - | - | - | - | (1,923 | ) | (1,923 | ) | ||||||||||||||||
Balance, June 30, 2021 | 225 | 4,548,761 | 112 | 322,937 | (300,242 | ) | 22,807 | |||||||||||||||||
Common stock awards under equity incentive plans | - | 38,978 | - | 287 | - | 287 | ||||||||||||||||||
Common stock issued to vendor | - | 600 | - | 5 | - | 5 | ||||||||||||||||||
Sale of common stock and common stock warrants, net of costs | - | 3,062,395 | - | 2,725 | - | 2,725 | ||||||||||||||||||
Exercise of common stock warrant | - | 1,500,000 | - | - | - | - | ||||||||||||||||||
Conversion of preferred stock into common stock | (75 | ) | 71,174 | (37 | ) | 37 | - | - | ||||||||||||||||
Net loss | - | - | - | - | (2,213 | ) | (2,213 | ) | ||||||||||||||||
Balance, September 30, 2021 | 150 | 9,221,908 | $ | 75 | $ | 325,991 | $ | (302,455 | ) | $ | 23,611 | |||||||||||||
Share-based compensation by type of award follows (in thousands).
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 | |||||||||||||
Three Months Ended | ||||||||||||
September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
Stock options | $ | 28 | $ | 21 | $ | 29 | ||||||
Restricted stock units | 464 | 125 | 212 | |||||||||
Compensation expense related to common stock awards issued under equity incentive plan | $ | 492 | $ | 146 | $ | 241 | ||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Options
Share-based compensation by type of award forIn the three months ended March 31,September 30, 2022, follows (in thousands)holders forfeited options for the purchase of up to 2,901 shares of common stock (average $19.30 per share exercise price, average 6.9 years remaining life).
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 June 30, 2022, holders forfeited options for the purchase of up to 4,455 shares of common stock (average $21.42 per share exercise price, average 6.8 years remaining life). In the three months ended March 31, 2022, holders forfeited options for the purchase of up to 9,703970 shares of common stock (average $1.85$18.48 per share exercise price, average 7.7-year7.7 years remaining life).
RestrictedStock Units
We have outstanding (i) restricted stock units (RSUs) issued under the 2014 Plan to employees and directors and (ii) other stock units (SUs) issued to a service provider. Each RSU and SU represents a contingent right to receive one share of common stock. Summaries of nonvested and vested stock unit (RSU)and activity for the three months ended March 31, 2022, follows.follow.
Restricted Stock Units (Issued under 2014 Plan) | Stock Units Issued to Vendors | |||||||||||||||||||||||||||||||||||
RSU Shares Issued to Employees | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | Number of Units | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | Number of Units | Unrecognized Stock Compensation (in thousands) | Weighted Average Expense Period (Years) | ||||||||||||||||||||||||||||
Nonvested at December 31, 2021 | 1,266,033 | $ | (658 | ) | 0.9 | 126,603 | $ | (658 | ) | 0.9 | - | $ | - | - | ||||||||||||||||||||||
Granted | 370,000 | (153 | ) | 2.0 | 37,000 | (153 | ) | 2.0 | - | - | - | |||||||||||||||||||||||||
Forfeited | (10,000 | ) | 7 | 0.7 | (1,000 | ) | 7 | 0.7 | - | - | - | |||||||||||||||||||||||||
Vested | (224,751 | ) | - | 0.0 | ||||||||||||||||||||||||||||||||
Vested with service | (22,475 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
Expensed | - | 212 | - | 212 | - | - | - | - | ||||||||||||||||||||||||||||
Nonvested at March 31, 2022 | 1,401,282 | $ | (592 | ) | 0.9 | 140,128 | (592 | ) | 0.9 | - | - | - | ||||||||||||||||||||||||
Impact of Modification: | - | - | - | |||||||||||||||||||||||||||||||||
Before modification | (11,468 | ) | 125 | - | - | - | - | |||||||||||||||||||||||||||||
After modification | 11,468 | (60 | ) | - | - | - | - | |||||||||||||||||||||||||||||
Forfeited | (9,454 | ) | 55 | - | - | - | - | |||||||||||||||||||||||||||||
Vested with Service | (34,404 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
Expensed | - | 125 | - | - | - | - | ||||||||||||||||||||||||||||||
Nonvested at June 30, 2022 | 96,270 | (347 | ) | 0.9 | - | - | - | |||||||||||||||||||||||||||||
Granted | 402,276 | (1,458 | ) | 2.8 | 38,968 | (65 | ) | 3.0 | ||||||||||||||||||||||||||||
Vested with Service | (63,607 | ) | - | - | - | - | - | |||||||||||||||||||||||||||||
Expensed | - | 464 | - | - | - | - | ||||||||||||||||||||||||||||||
Nonvested at September 30, 2022 | 434,939 | $ | (1,341 | ) | 2.5 | 38,968 | $ | (65 | ) | 3.0 | ||||||||||||||||||||||||||
Number of RSUs | ||||
Vested at December 31, 2021 | 86,505 | |||
Vested with service | 22,475 | |||
Issued at vesting | (22,475 | ) | ||
Vested at March 31, 2022 | 86,505 | |||
Vested with service | 34,404 | |||
Issued at termination of service | (48,386 | ) | ||
Vested at June 30, 2022 | 72,523 | |||
Vested with service | 63,607 | |||
Vested at September 30, 2022 | 136,130 | |||
TheAs of September 30, 2022, issuance of 136,130 shares of common stock subject to the vested RSUs granted in 2022 vest within two years of the grant. As of March 31, 2022, issuance of 1,209,092 shares of common stock subject to certain RSUs, 865,052 of which are vested, is deferred to the date the holder is no longer providing service to RiceBran Technologies.our company.
In the three months ended September 30, 2022, we issued the following under the 2014 Plan:
● | 278,151 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. |
● | 65,790 RSUs to our directors which vest on July 14, 2023, or one day prior to the next annual meeting of our shareholders. |
● | 19,003 RSUs to our directors on July 14, 2022, which were immediately vested, in lieu of paying board fees in cash for the quarter ended June 30, 2022. |
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
● | 30,279 RSUs to our directors on September 30, 2022, which were immediately vested, in lieu of paying board fees in cash for the quarter ended September 30, 2022. |
● | 9,053 RSUs to employees. The RSUs vest over an average of 8 months from the date of grant. |
We issued 38,968 SUs to a service provider in September 2022 and an additional 121,032 SUs in November 2022, which the service provider elected to purchase with a $0.2 million cash signing fee. The SUs vest in three annual installments ending in September 2025, and we are expensing the fair value of the SUs over three years. The service provider may also earn performance-based cash compensation beginning October 1, 2022, if certain performance criteria are met. The performance compensation will be paid quarterly in an amount of cash which may then be used to purchase, at the election of the service provider, a number of fully vested SUs equal to (a) the performance compensation, divided by (b) the volume weighted average closing price of our common stock over the 90 consecutive trading days ending on the last day of the applicable performance period. The aggregate number of SUs purchased by the service provider, including the initial 38,968 units and 121,032 units may not exceed 1,000,000.
In April 2022, we modified 11,468 RSUs held by resigning directors such that the awards vested on the date of their termination of service. Prior to the modification, the resigning directors would have forfeited the unvested RSUs 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 April 28, 2022, modification ($5.20 per unit), in accordance with applicable accounting guidance.
In the three months ended June 30, 2022, we issued a total of 48,386 shares of common stock pursuant to the terms of vested RSUs, which included the 11,468 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 2,957,545 RSUs to employees that are subject to our shareholders approving an increase in thea total of 22,475 shares of common stock authorizedupon the vesting of RSUs.
Warrants
In the three months ended September 30, 2022, warrants for issuance under the Amended and Restated 2014 Equity Incentive Plan. Thepurchase of up to 25,000 shares of common stock subject($9.60 per share exercise price) expired and as further discussed in Note 12, the exercise price of an outstanding liability warrant (Warrant A) for the purchase of up to the RSUs will vest over an average of four years230,769 shares adjusted to $2.72 per share from the date shareholders approve the increase and are not included in the table above.
$10.00 per share. In the three months ended March 31, 2022, warrants for the purchase of up to 6,142,980614,298 shares of common stock ($0.969.60 per share exercise price) expired.
OnSubsequent Offering
In April 28,October 2022, we issued a total of 348,721and sold 675,000 shares of our common stock for $1.50 per share and prefunded warrants (the Prefunded Warrants) exercisable into 325,000 shares of our common stock for $1.4999 per warrant, in a registered direct offering. The Prefunded Warrants had an exercise price of $0.0001 per share and were exercised in full after the offering. In a concurrent private placement, we issued and sold warrants for the purchase up to 2,000,000 shares of our common stock at an exercise price of $1.60 per share, which are exercisable April 20, 2023, and expire October 20, 2025. The net proceeds from the offering totaled $1.2 million, after deducting placement agent fees and other cash offering expenses of $0.3 million. We determined the exercise price of the Prefunded Warrants was nominal and, as such, we will consider the shares underlying those warrants to be outstanding effective October 20, 2022, for the purposes of calculating basic EPS. We intend to use the net proceeds from the offering for general corporate purposes, which may include funding capital expenditures, working capital and repaying indebtedness.
In addition, we issued warrants for the purchase of up to 63,000 shares of our common stock to two resigning directors pursuant to the termsplacement agent at an exercise price of their vested RSUs. Issuance of the shares of common stock subject to these RSUs had been deferred to the date the holder was$1.875 per share, which expire noOctober 20, 2027. longer providing service to RiceBran Technologies.
NOTE 11.10. INCOME TAXES
Our tax expense for the three and ninemonths ended March 31,September 30, 2022 and 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 March 31,September 30, 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.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 12.11. EARNINGSLOSS 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 income attributable to ourRiceBran 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 units 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
Notes to Unaudited Condensed Consolidated Financial Statements
Reconciliations of the numerators and denominators in the EPS computations follow.
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
NUMERATOR (in thousands): | ||||||||
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 | 51,664,912 | 45,248,782 | ||||||
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 | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
NUMERATOR (in thousands): | ||||||||||||||||
Numerator for basic and diluted EPS - net loss | $ | (2,042 | ) | $ | (2,213 | ) | $ | (6,179 | ) | $ | (3,545 | ) | ||||
DENOMINATOR: | ||||||||||||||||
Weighted average number of shares of shares of common stock outstanding | 5,235,005 | 4,662,004 | 5,203,504 | 4,575,587 | ||||||||||||
Weighted average number of shares of common stock underlying vested RSUs | 97,303 | 83,680 | 87,276 | 56,293 | ||||||||||||
Denominator for basic and diluted EPS - weighted average number of shares outstanding | 5,332,308 | 4,745,684 | 5,290,780 | 4,631,880 | ||||||||||||
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for the three and ninemonths ended March 31,September 30, 2022 and 2021,because to do so would be antidilutive as a result of our net loss. Potentially dilutive securities outstanding during the three and ninemonths ended March 31,September 30, 2022 and 2021,included our outstanding convertible preferred stock, options, warrants and nonvested RSUs. The effects of the following potentially dilutive securities, outstanding at March 31, 2021, were not included in the 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.
units.
NOTE 13.12. FAIR VALUE MEASUREMENTS
The fair value of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and commodities payable approximates their carrying value due to shorter maturities. As of March 31,September 30, 2022, the fair values of our operating lease liabilities were approximately $0.5 million lower than their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements). As of September 30, 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 | 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 September 30, 2022 - Derivative warrant liability | $ | - | $ | - | $ | 234 | $ | 234 | ||||||||||||||||||||||||
Total liabilities at fair value as of December 31, 2021 - Derivative warrant liability | $ | 0 | $ | 0 | $ | 258 | $ | 258 | $ | - | $ | - | $ | 258 | $ | 258 | ||||||||||||||||
Total liabilities at fair value as of September 30, 2021 - Derivative warrant liability | $ | - | $ | - | $ | 647 | $ | 647 | ||||||||||||||||||||||||
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
The following tables summarize the changes in level 3 items measured at fair value on a recurring basis for the three and ninemonths ended March 31,September 30, 2022 (inand 2021 (in thousands):
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 | ) | ||||||||||
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 | |||||||||||||||||||
Three months ended September 30, 2022 | ||||||||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | 846 | $ | 612 | $ | - | $ | - | $ | 234 | $ | 612 | ||||||||||||
Nine months ended September 30, 2022: | ||||||||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | 258 | $ | 24 | $ | - | $ | - | $ | 234 | $ | 24 | ||||||||||||
Three and nine months ended September 30, 2021 | ||||||||||||||||||||||||
Total Level 3 fair value - Derivative warrant liability | $ | - | $ | - | $ | 647 | $ | - | $ | 647 | $ | - | ||||||||||||
The derivative warrant liability relates to a warrant issued in September 2021, for the purchase of up to 2,307,693230,769 shares of common stock (Warrant A),. The initial $1.00current $2.72 per share exercise price of Warrant A is subject to adjustment in September 2022, and again in September 2023 ifto 110% of the 5-day volume weighted average price of our common stock, if that price is less than the then-currentthan $2.72 per share. The initial $10.00 per share exercise price.price of Warrant A is carriedadjusted in September 2022 to $2.72 per share. We classify Warrant A 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,September 30, 2022, using the Black-Scholes value of a warrant with an exercise price of $2.72 per share. We estimated the fair value of Warrant A as of and December 31, 2021, using the Black-Scholes value of a warrant with an exercise price of $1.00$10.00 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.A follow.
March 31, 2022 | December 31, 2021 | September 30, 2022 | December 31, 2021 | |||||||||||||
Assumed volatility | 75.1 | % | 69.5 | % | 88.3 | % | 69.5 | % | ||||||||
Assumed risk free interest rate | 1.7 | % | 0.8 | % | 3.2 | % | 0.8 | % | ||||||||
Expected life of options (in years) | 4.5 | 4.8 | 4.0 | 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 March 31,September 30, 2022, a $0.10an $0.18 (approximate 10%) increase in our stock price would have resulted in an approximate $151$32 thousand increase in the Black Scholes fair value of Warrant A.
NOTE 14.13. COMMITMENTS AND CONTINGENCIES
PPP Audit Contingency
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 we used the loan proceeds were used for maintaining workforce levels. TheWe used the loan proceeds were used for maintaining workforce levels and the SBA forgave the entire loan, and related accrued interest was 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. WeThe SBA could be deemeddeem us 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. 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 former 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 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.
NOTE 16.14. 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 hashad to be at least $1.00 for a period of Nasdaq'sNasdaq’s discretion, of at least 10, but not to exceed 20, consecutive business days. As of the date of this filing,On September 12, 2022, Nasdaq notified us that we have nothad regained compliance with the minimum bid price requirement however, we 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 aboveand the $1.00 minimum bid price.matter was closed.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations - Three Months Ended September 30, 2022, Compared to Three Months Ended September 30, 2021
Revenues were $10.6of $10.3 million in the firstthird quarter of 2022 an increase of $2.0increased $3.3 million, or 23%48.3%, compared to revenues in the firstthird quarter of 2021. This year-over-year increase was due to higher core-SRB sales and strong growth from our MGI Grain Incorporated (MGI) and Golden Ridge Rice Mills, LLC (Golden Ridge) milling businesses,operations.
Gross loss was $0.7 million in the third quarter of 2022, a $0.4 million increase in gross loss compared to the third quarter of 2021. The increase in gross loss was attributable to lower sales and cost overruns for our value-added SRB derivatives business and higher gross losses at our Golden Ridge milling operation versus a year ago, offset in part by lower Value-Add SRB derivative sales due to the timing of large customer deliveries versus a year ago.
Gross profit was $0.5 million in the first quarter of 2022, compared to $0.7 million in the first quarter of 2021. The $0.2 million decrease in gross profit was primarily attributable to lower sales of Value-Add SRB derivatives versus a year ago and higher input and logistics costs atimproved profitability from our core-SRB business offset by strong growth in profitability atand MGI and lower losses from Golden Ridge.milling operation.
Selling, general and administrative (SG&A) expenses were $1.7$1.8 million in the firstthird quarter of 2022 a 3% reduction fromand the firstthird quarter of 2021 as reductions in corporate support headcount and outside professional services were offset in part by higher wage rates and higher contract employee expense, as well as a double-digit increase in insurance expenses. Operatingpremiums.
Due to the increase in gross losses, operating losses were $1.2$2.5 million in the firstthird quarter of 2022, up from $1.1$2.1 million in the firstthird quarter of 2021, due to lower gross profits.
2021. In Marchthe third quarter of 2022, we recognized a $0.2$0.6 million chargegain for the change in the fair value of a warrant liability,liability. As a result of higher operating losses being offset by this gain, net loss in the third quarter of 2022 was $2.0 million, or $0.38 per share, compared to a net loss of $2.2 million, or $0.47 per share, in the third quarter of 2021.
Results of Operations – Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021
Revenues of $31.0 million in the first nine months of 2022 increased $8.0 million, or 34.7%, compared to the nine months 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 in the second quarter of 2022.
The $1.2 million decrease in gross profit in the first nine months of 2022, compared to the first nine months of 2021, was primarily attributable to lower gross profits from our value-added SRB derivative products and a modest increase in gross losses from Golden Ridge, offset in part by a modest increase in gross profits for our core-SRB business and MGI.
SG&A expenses of $5.2 million in the first nine months of 2022 decreased $0.3 million, or 5.7%, compared to the first nine months of 2021, as reductions in corporate support headcount and outside professional services were offset in part by higher wage rates and insurance premiums.
We recognized a gain on the involuntary conversion of assets of $0.1 million in the first nine months of 2022, when we finalized our insurance claim for hurricane damage that occurred in August 2020 to our Lake Charles, Louisiana property.
Operating losses were $5.7 million in the first nine months of 2022, up from $5.0 million in the first nine months of 2021, due to lower gross profits. In January 2021, we recognized a $1.8 million gain on extinguishment of our Small Business Administration (SBA) Paycheck Protection Program (PPP) loan (see Note 1413 of the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of the loan).
As a result of higher operating losses, lower SG&A, the impact of the gain on involuntary conversion of assets and the nonrecurring gain on the extinguishment of debt in the first quarternine months of 2021, net loss in the first quarternine months of 2022 was $1.5$6.2 million, or $0.03$1.17 per share, compared to a net incomeloss of $0.6$3.5 million, or $0.01$0.38 per share, in the first quarternine months of 2021.
COVID-19 Assessment
The COVID-19 pandemic is a worldwide health crisis that is adversely affecting the business and financial markets
Liquidity, Going Concern and Capital Resources
We had $5.9$4.4 million in cash and equivalents as of March 31,September 30, 2022, an increasea decrease of $0.1$1.5 million from $5.8 million on December 31, 2021. During the first quarternine months of 2022, we were able to offset cashhigher operating losses with improved working capital management neutralizing cashincreased borrowing.
Cash used in operating activities.activities in the first nine months of 2022 was $3.9 million, up from $2.0 million in the first nine months of 2021, driven principally by higher net losses. Cash used forin investing activities in the 2022 period consisted of $0.2$0.4 million in capital expenditures, primarily for the purchase and installation of capital equipment at our Golden Ridge and MGI facilities, which wasfacility offset by $0.1 million in proceedsinsurance proceeds. Cash from insurancefinancing activities in the 2022 period was $2.7 million, which included the $1.8 million net borrowings on involuntary conversion.a line of credit and a $0.9 million over-advance on our factoring facility (see Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion of the over-advance).
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 continue as a going concern within one year after the date that these financial statements included in this Quarterly Report are issued. Factors alleviating this concern include $4.4 million in cash and cash equivalents as of September 30, 2022, and our ability to procure additional capital if needed through a variety of sources. Most notably, subsequent to the end of the third quarter of 2022, we were able to raise approximately $1.2 million, net of costs, through a direct placement of our common stock, and common stock equivalents, and in late September 2022, we received a $0.9 million over-advance on our factoring facility, pending a restructuring of our mortgage promissory note secured by our real property in Wynne, Arkansas.
On March 30, 2020, we entered into a sales agreement with respect to an at-the-market (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, which we currently have $2.8 million remaining. Under the terms of the securities purchase agreement related to the September 2021 offering, we are prohibited from entering into an agreement to effect any at-the-market issuance until September 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’s expected transition to profitability or positive cash flow.
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, 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 March 31, 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
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 in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required underby 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 September 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 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 on Form 10-Q,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, 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 March 31,September 30, 2022, we issued the securities described below without registration under the Securities Act. The description below does not include issuances that werewe 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 issuancesamended (the Securities Act). We made the issuance below were made without any public solicitation, to a limited number of sophisticated persons and were acquired for investment purposes only.
During the quarter ended March 31,On September 30, 2022, we issued 6,000600 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 $2,100.
Item 3. Defaults Uponupon Senior Securities
None
Item 4. Mine Safety Disclosures
None
NoneItem 3.02 Unregistered Sales of Equity Securities
On November 1, 2022, we amended the terms of our engagement of Gander Foods, LLC, a New Jersey limited liability company (the Operator), to perform services in connection with our rice milling operations and those of Golden Ridge Rice Mills, Inc., our wholly owned subsidiary. The engagement was described in our Current Report on Form 8-K filed on September 29, 2022 (the Original 8-K).
As amended, the Operator’s initial cash compensation of $200,000 (the Initial Compensation) will be used by the Operator to purchase an aggregate of 160,000 (rather than 38,968) unvested restricted stock units (SUs), each representing the contingent right to receive one share of our common stock. All other terms of the engagement remain the same and are unchanged, and the total amount of SUs that may be purchased by the Operator with the Initial Compensation or the Performance Compensation (as defined in the Original 8-K) may still not exceed 1,000,000.
The SUs are being offered and sold in a private placement to an eligible investor pursuant to Section 4(a)(2) of the Securities Act. The SUs and underlying shares of our common stock have not been registered under the Securities Act, or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration under or an applicable exemption from registration under the Securities Act and any applicable state securities laws.
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 | ||||||
3.1 | 8-K | 001-36245 | 3.1 | August 25, 2022 | ||||||||
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 | |||
Peter G. Bradley | |||
Director and Executive Chairman | |||
/s/ Todd T. Mitchell | ||
Todd T. Mitchell | ||
Chief Financial Officer and Chief Operating Officer | ||