Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Statements
On June 23, 2023, RiceBran Technologies (“the Company”) completed the sale of certain assets exclusively related to the Company’s production of stabilized rice bran and processing of stabilized rice bran into stabilized rice bran derivatives at its facilities located in West Sacramento, California, Mermentau, Louisiana, Lake Charles, Louisiana and Dillon, Montana (the “Business” and such transaction, the “Transaction”) pursuant to an asset purchase agreement (the “Agreement”) reported in the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 28, 2023.
The buyer acquired the Purchased Assets (as defined in the Agreement), which include, but are not limited to, all of the tangible and intangible assets, real properties leased and/or owned by the Company located in Louisiana, Montana and California, intellectual property, books and records and rights of every kind and nature and wherever located that exclusively relate to, or are exclusively used or held for the operation of and the use in connection with, the Business (other than excluded assets, including all accounts receivable) for total consideration of approximately $3.5 million, consisting of $1.8 million in cash and the assumption of $1.7 million of the Company’s real estate lease obligations on two operating facilities.
The unaudited pro forma condensed consolidated financial statements have been developed by applying pro forma adjustments to the Company’s historical consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and give effect to the Transaction. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2023, and for the year ended December 31, 2022, assume that the Transaction occurred as of January 1, 2022. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2023, assumes that the Transaction occurred on that date. The unaudited pro forma condensed consolidated financial statements are presented based on currently available information and are intended for informational purposes only.
These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of what the Company’s results of operations or financial condition would have been had the Transaction been completed on the dates assumed. In addition, they are not necessarily indicative of the Company’s future results of operations or financial condition. Beginning in the second quarter of 2023, the historical financial results of the Business for periods prior to the Transaction will be reflected in the Company’s consolidated financial statements as discontinued operations.
The unaudited pro forma condensed consolidated financial statements have been derived from historical financial statements prepared in accordance with US GAAP and are presented based on assumptions, adjustments, and currently available information described in the accompanying notes. They are intended for informational purposes only and are not intended to represent the Company’s financial position or results of operations had the disposition occurred on the dates indicated, or to project the Company’s financial performance for any future period. Pro forma adjustments have been made for events that are directly attributable to the disposition and factually supportable.
Article 11 of Regulation S-X requires that pro forma financial information include the following pro forma adjustments to the historical financial statements of the registrant as follows:
| | ● | Transaction Accounting Adjustments – Adjustments that reflect only the application of required accounting to the acquisition, disposition, or other transaction. |
| | ● | Autonomous Entity Adjustments – Adjustments that are necessary to reflect the operations and financial position of the registrant as an autonomous entity when the registrant was previously part of another entity. |
In addition, Regulation S-X permits registrants to reflect adjustments that depict synergies and dis-synergies of the acquisitions and dispositions for which pro forma effect is being given in our disclosures as management adjustments.
The transaction accounting adjustments to reflect the business in the unaudited pro forma condensed consolidated financial statements include:
| | ● | The sale of the assets and liabilities of the business pursuant to the Agreement |
| | ● | Estimated impact of the cash proceeds received in connection with the transaction, net of transaction costs and income taxes |
There are no autonomous entity adjustments included in the pro forma financial information. Additionally, the unaudited pro forma condensed consolidated financial statements do not include management adjustments to reflect any potential synergies that may be achievable, or dis-synergy costs that may occur, in connection with the Transaction.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with (i) the accompanying notes to the unaudited pro forma condensed consolidated financial statements, (ii) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Form 10-K as of December 31, 2022, and for the year then ended, filed with the SEC on March 16, 2023, and (iii) the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” included in the Company’s Form 10-Q as of March 31, 2023, and for the three months then ended, filed with the SEC on May 11, 2023.
RiceBran Technologies
Pro Forma Condensed Consolidated Statement of Operations
Unaudited Three Months Ended March 31, 2023
(in thousands, except share and per share amounts)
| | | As Reported | | | Pro Forma Adjustments | | | Notes | | | Pro Forma | |
| | | | | | | | | | | | | | | | |
Revenues | | $ | 9,269 | | | $ | (3,425 | ) | | (a) | | | $ | 5,844 | |
Cost of goods sold | | | 9,551 | | | | (3,649 | ) | | (a) | | | | 5,902 | |
Gross loss | | | (282 | ) | | | 224 | | | | | | | (58 | ) |
Selling, general and administrative expenses | | | 1,731 | | | | (316 | ) | | (b) | | | | 1,415 | |
Operating loss | | | (2,013 | ) | | | 540 | | | | | | | (1,473 | ) |
Other income (expense): | | | | | | | | | | | | | | | |
Interest expense | | | (196 | ) | | | 1 | | | (c) | | | | | |
| | | | | | | | 16 | | | (f) | | | | (179 | ) |
Interest income | | | 19 | | | | - | | | | | | | 19 | |
Change in fair value of derivative warrant liability | | | (28 | ) | | | - | | | | | | | (28 | ) |
Other income | | | 256 | | | | - | | | | | | | 256 | |
Other expense | | | (60 | ) | | | - | | | | | | | (60 | ) |
Loss before income taxes | | | (2,022 | ) | | | 557 | | | | | | | (1,465 | ) |
Income tax expense | | | (6 | ) | | | - | | | (d) | | | | (6 | ) |
Net loss | | $ | (2,028 | ) | | $ | 557 | | | | | | $ | (1,471 | ) |
| | | | | | | | | | | | | | | | |
Loss per common share: | | | | | | | | | | | | | | | |
Basic | | $ | (0.31 | ) | | | | | | | | | $ | (0.22 | ) |
Diluted | | $ | (0.31 | ) | | | | | | | | | $ | (0.22 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of shares outstanding: | | | | | | | | | | | | | | | |
Basic | | | 6,567,978 | | | | | | | | | | | 6,567,978 | |
Diluted | | | 6,567,978 | | | | | | | | | | | 6,567,978 | |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
RiceBran Technologies
Pro Forma Condensed Consolidated Statement of Operations
Unaudited Year ended December 31, 2022
(in thousands, except share and per share amounts)
| | | As Reported | | | Pro Forma Adjustments | | | Notes | | | Pro Forma | |
| | | | | | | | | | | | | | | | |
Revenues | | $ | 41,617 | | | $ | (14,970 | ) | | (a) | | | $ | 26,647 | |
Cost of goods sold | | | 42,376 | | | | (14,966 | ) | | (a) | | | | 27,410 | |
Gross loss | | | (759 | ) | | | (4 | ) | | | | | | (763 | ) |
Selling, general and administrative expenses | | | 6,690 | | | | (1,393 | ) | | (b) | | | | 5,297 | |
Gain on involuntary conversion of property and equipment | | | (147 | ) | | | 147 | | | (b) | | | | - | |
Operating loss | | | (7,302 | ) | | | 1,242 | | | | | | | (6,060 | ) |
Other income (expense): | | | | | | | | | | | | | | | |
Interest expense | | | (572 | ) | | | 3 | | | (c) | | | | | |
| | | | | | | | 53 | | | (j) | | | | (516 | ) |
Interest income | | | 22 | | | | - | | | | | | | 22 | |
Change in fair value of derivative warrant liability | | | 189 | | | | - | | | | | | | 189 | |
Other income | | | 7 | | | | - | | | | | | | 7 | |
Other expense | | | (183 | ) | | | - | | | | | | | (183 | ) |
Loss before income taxes | | | (7,839 | ) | | | 1,298 | | | | | | | (6,541 | ) |
Income tax expense | | | (19 | ) | | | - | | | (d) | | | | (19 | ) |
Net loss | | $ | (7,858 | ) | | $ | 1,298 | | | | | | $ | (6,560 | ) |
| | | | | | | | | | | | | | | | |
Loss per common share: | | | | | | | | | | | | | | | |
Basic | | $ | (1.42 | ) | | | | | | | | | $ | (1.19 | ) |
Diluted | | $ | (1.42 | ) | | | | | | | | | $ | (1.19 | ) |
| | | | | | | | | | | | | | | | |
Weighted average number of shares outstanding: | | | | | | | | | | | | | | | |
Basic | | | 5,514,671 | | | | | | | | | | | 5,514,671 | |
Diluted | | | 5,514,671 | | | | | | | | | | | 5,514,671 | |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
RiceBran Technologies
Pro Forma Condensed Consolidated Balance Sheet
Unaudited March 31, 2023
(in thousands, except share amounts)
| | | As Reported | | | Pro Forma Adjustments | | | Notes | | | Pro Forma | |
ASSETS | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 3,412 | | | $ | 1,800 | | | (e) | | | | | |
| | | | | | | | (450 | ) | | (f) | | | | | |
| | | | | | | | (215 | ) | | (g) | | | $ | 4,547 | |
Accounts receivable, net | | | 3,337 | | | | - | | | | | | | 3,337 | |
Inventories | | | 2,562 | | | | (2,107 | ) | | (h) | | | | 455 | |
Other current assets | | | 989 | | | | (258 | ) | | (h) | | | | 731 | |
Total current assets | | | 10,300 | | | | (1,230 | ) | | | | | | 9,070 | |
Property and equipment, net | | | 14,214 | | | | (7,956 | ) | | (h) | | | | 6,258 | |
Operating lease right-of-use assets | | | 1,686 | | | | (1,635 | ) | | (h) | | | | 51 | |
Intangible assets | | | 351 | | | | - | | | | | | | 351 | |
Total assets | | $ | 26,551 | | | $ | (10,821 | ) | | | | | $ | 15,730 | |
| | | | | | | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | |
Accounts payable | | $ | 1,869 | | | $ | - | | | | | | $ | 1,869 | |
Commodities payable | | | 1,818 | | | | - | | | | | | | 1,818 | |
Accrued salary, wages and benefits | | | 926 | | | | (215 | ) | | (g) | | | | 711 | |
Accrued legal | | | 625 | | | | 50 | | | (e) | | | | 675 | |
Accrued expenses | | | 333 | | | | 325 | | | (e) | | | | | |
| | | | | | | | (3 | ) | | (h) | | | | 655 | |
Operating lease liabilities, current portion | | | 364 | | | | (292 | ) | | (h) | | | | 72 | |
Due under bank line of credit | | | 1,868 | | | | - | | | | | | | 1,868 | |
Due under factoring agreement | | | 2,801 | | | | - | | | | | | | 2,801 | |
Due under insurance premium finance agreements | | | 207 | | | | - | | | | | | | 207 | |
Finance lease liabilities, current portion | | | 160 | | | | (12 | ) | | (h) | | | | 148 | |
Long-term debt, current portion | | | 1,192 | | | | (9 | ) | | (h) | | | | 1,183 | |
Total current liabilities | | | 12,163 | | | | (156 | ) | | | | | | 12,007 | |
Operating lease liabilities, less current portion | | | 1,430 | | | | (1,430 | ) | | (h) | | | | - | |
Finance lease liabilities, less current portion | | | 504 | | | | (2 | ) | | (h) | | | | 502 | |
Long-term debt, less current portion | | | 1,152 | | | | (7 | ) | | (h) | | | | | |
| | | | | | | | (450 | ) | | (f) | | | | 695 | |
Derivative warrant liability | | | 97 | | | | - | | | | | | | 97 | |
Total liabilities | | | 15,346 | | | | (2,045 | ) | | | | | | 13,301 | |
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, 15,000,000 shares authorized, 6,384,934 shares issued and outstanding | | | 328,875 | | | | - | | | | | | | 328,875 | |
Accumulated deficit | | | (317,745 | ) | | | (8,776 | ) | | (i) | | | | (326,521 | ) |
Total shareholders' equity | | | 11,205 | | | | (8,776 | ) | | | | | | 2,429 | |
Total liabilities and shareholders' equity | | $ | 26,551 | | | $ | (10,821 | ) | | | | | $ | 15,730 | |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
RiceBran Technologies
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
The unaudited pro forma condensed consolidated financial statements give effect to the Transaction to be accounted for as a discontinued operation. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2023, and for the year ended December 31, 2022, are presented as if the Transaction occurred as of January 1, 2022. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2023, is presented as if the sale occurred on that date.
(a) | This adjustment reflects the elimination of revenues and cost of goods sold of the Business. |
(b) | This adjustment reflects the elimination of operating expenses of the Business, excluding the anticipated effects of other costs that may be reduced or eliminated as a result of having completed the sale. |
(c) | This adjustment reflects the elimination of interest expense related to debt assumed by the buyer. |
(d) | No income tax adjustment has been made to the unaudited pro forma condensed consolidated statement of operations based on the Company’s existing U.S. valuation allowance position. |
(e) | This adjustment reflects the cash consideration received at closing of the Transaction and the expenses of the Transaction accrued at closing, consisting of $325 thousand of advisory fees and $50 thousand of other costs of the Transaction. |
(f) | This adjustment reflects the repayment of a portion of the amount outstanding on the Company’s mortgage promissory note (not exclusively related to the Business) from proceeds of the Transaction. The note is secured by the Company’s real property in Arkansas. |
(g) | This adjustment reflects the payment of liabilities due to employees of the Company as a result of the Transaction. |
(h) | This adjustment reflects the elimination of the historical assets of the Company that are exclusively related to the Business sold to the buyer and the historical liabilities of the Company that are exclusively related to the Business assumed by or assigned to the buyer. |
(i) | This adjustment reflects the estimated loss arising from the Transaction. The estimated loss has not been reflected in the accompanying statements of operations as it is not related to continuing operations and is considered to be nonrecurring in nature. The actual net loss on the disposition will be recorded in the Company’s financial statements for the second quarter of 2023 and will differ from this estimate. The estimated loss includes no provision for income taxes as it is anticipated the tax benefit for the expected tax loss on disposition will not be realized based on the Company’s existing U.S. valuation allowance position. The estimated tax impact is subject to change and the actual impact could differ from the results reflected herein. |
(j) | This adjustment reflects the elimination of interest expense related to the debt adjustment referred to in footnote (f). |
