January 11, 2006
Mr. Todd C. Crow, Chief Financial Officer
NutraCea
1261 Hawk`s Flight Court
El Dorado Hills, California
95762
Re: NutraCea
Form 10-KSB for Fiscal Year Ended December 31, 2004
Filed March 31, 2005
Forms 10-QSB for Fiscal Quarters Ended March 31, 2005
and June 30, 2005
Filed May 10, 2005 and August 15, 2005
Response Letter Dated December 20, 2005
File No. 0-32565
Dear Mr. Crow:
We have reviewed your response letter and have the following
comments. We have limited our review to only your financial
statements and related disclosures and do not intend to expand our
review to other portions of your documents. Where indicated, we
think you should revise your document in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure. After reviewing this information, we
may
raise additional comments.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Report of Independent Registered Public Accounting Firm, page F-1
1. The audit report should refer to the statement of stockholders`
equity and statement of comprehensive loss to be consistent with
the
titles used in the financial statements. Please revise
accordingly.
Note 9 - Commitments and Contingencies
Agreements, page F-15
2. We have considered your response to our prior comment number
three
in our letter dated December 6, 2005. We cannot reconcile your
response to this comment with the disclosures starting on the page
F-
15 regarding the agreements and the schedule provided to us in
response to comment 11 in our letter dated October 21, 2005. For
example, the disclosure on page F-15 refers to a January 12, 2004
one
year consulting agreement involving 4,000,000 warrants. The
context
of this disclosure indicates future services will be provided.
Your
schedule shows this to be expensed in the first quarter of 2004 in
its entirety because no additional services were to be performed.
For each agreement disclosed, tell us why no further services were
to
be performed as of the date of the agreements and amend these
disclosures accordingly. If future services will be provided, we
reissue our prior comment three.
Agreements, page F-18
3. We have considered your response to our prior comment four in
our
letter dated December 6, 2005. Tell us the value assigned to the
6,000,000 warrants. Also, in accordance with Emerging Issue Task
Force Issue (EITF) Number 00-18, paragraph 6, tell us the specific
facts and circumstances you considered in reaching your conclusion
that the warrants` value should be immediately expensed, given the
first year salary under the agreement is $50,000.
Note 10 - Preferred and Common Stock
Common Stock, page F-21
4. We have considered your response to our prior comment seven in
our
letter dated December 6, 2005. The disclosure you indicate in
your
response states the 5.5 million shares are restricted. This
appears
to conflict with your response to our comment six in our letter
dated
December 6, 2005, in which you state the restricted stock
agreement
was not adopted or ratified by the Board. Tell us why the
description of this stock as restricted is appropriate, or revise
your management discussion and analysis and footnote disclosures
as
appropriate to consistently describe the nature of the restricted
stock agreement.
Note 11 - Stock Options and Warrants, page F-22
5. We have considered your response to our prior comment eight in
our
letter dated December 6, 2005. We do not agree with your
conclusion
that the table of outstanding options is segregated into
meaningful
ranges, given the current stock price of the Registrant and the
requirements of Statement of Financial Accounting Standards (SFAS)
123 paragraphs 46 through 48. Revise the table of outstanding
options and warrants such that the range of $0.001 - $1.20 is
divided
into ranges meaningful for assessing the number and timing of
additional shares that may be issued and cash that may be
received.
6. Your response to our prior comment eight in our letter dated
December 6, 2005, indicates options granted to employees were not
under a stock-based compensation plan. Your policy in footnote
two
disclosing pro-forma results indicates you have issued options
under
such plans accounted for under the intrinsic method, and the
disclosures under footnote 11 refer to the 2003 Stock Compensation
plan. Revise footnote 11 to describe each plan, the accounting
policy for each plan, and revise the tables to include outstanding
options issued under stock compensation plans in accordance with
SFAS
123, paragraph 45-48.
Form 10-QSB for the Fiscal Quarters Ended March 31, 2005, June 30,
2005 September 30, 2005
Note 4 - Commitments and Contingencies
Agreements, page 8
7. We have considered your response to our prior comment 13 in our
letter dated December 6, 2005. Your response did not address all
the
non-employee agreements disclosed in your Form 10-QSBs in 2005.
We
reissue are prior comment 13. Refer to EITF No. 00-18 for
guidance.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your amendment and responses to our
comments.
You may contact Gary Newberry at (202) 551-3761 if you have
questions regarding comments on the financial statements and
related
matters. Please contact me at (202) 551- 3684 with any other
questions.
Sincerely,
April Sifford
Branch Chief
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Mr. Todd C. Crow
NutraCea
January 11, 2006
page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
100 F Street, N.E.
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE
MAIL STOP 7010