Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed consolidated financial statements (interim financial statements) of RiceBran Technologies and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") 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, 2020, which included all disclosures required by generally accepted accounting principles.
The results reported in these interim financial statements are not necessarily indicative of the results to be expected for the full fiscal year, or any other future period, and have been prepared based on the realization of assets and the satisfaction of liabilities in the normal course of business.
NOTE 2. BUSINESS
We are a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small grains. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing consumer demand for all natural, non-GMO and organic products. We believe our products are 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; as well as a variety of other valuable derivatives extracted from these core products.
In granular form, SRB is an ingredient used in products for human and animal consumption. We believe SRB has certain qualities that make it more attractive than ingredients based on the by-products of other agricultural commodities, including 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 four locations: two facilities located within supplier-owned rice mills in Arbuckle and West Sacramento, California; one company-owned facility in Mermentau, Louisiana; and our own rice mill in Wynne, Arkansas. At our Dillon, Montana facility, we produce SRB-based products and derivatives through proprietary processes. Our rice mill in Wynne, Arkansas also supplies grades U.S. No. 1 and No. 2 premium long and medium white rice, and our grain processing facility in East Grand Forks, Minnesota, mills a variety of traditional, and ancient, small grains. Given the integrated nature of these facilities, we have one reporting unit and one 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 must be adopted on a modified retrospective approach through cumulative-effect adjustment to retained earnings as of January 1, 2023. Based on the nature of our current receivables and our credit loss history, we do not expect the adoption of the guidance to have a significant impact on our results of operations, financial position, or cash flows.
Recently adopted accounting standards
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). Among other things, the new guidance eliminates some of the conditions that must be met for equity classification of freestanding warrants under ASC 815-40-25. We adopted ASU 2020-06 effective January 1, 2021, using the modified retrospective method. Adoption of the standard had no impact on our results of operations, financial position, or cash flows.
NOTE 4. CASH AND CASH EQUIVALENTS
As of September 30, 2021, we have $4.5 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 receivables on our consolidated balance sheets and require payment on a short-term basis. Invoices are generally issued at the point control transfers and substantially all of our invoices are due within 30 days or less, however certain customers have terms of up to 120 days. For substantially all of our contracts, control of the ordered product(s) transfers at our location. Periodically, we require payment prior to the point in time we recognize revenue. Amounts received from customers prior to revenue recognition on a contract are contract liabilities, are classified as customer prepayments liability on our consolidated balance sheets and are typically applied to an invoice within 30 days of the prepayment.
Our accounts receivable potentially subject us to significant concentrations of credit risk. Revenues and accounts receivable from significant customers (customers with revenue or accounts receivable in excess of 10% of consolidated totals) are stated below as a percent of consolidated totals.
|
|
Customer
|
|
|
|
A
|
|
|
B
|
|
|
C
|
|
|
D
|
|
|
E
|
|
% of revenues, three months ended September 30, 2021
|
|
|
21
|
%
|
|
|
9
|
%
|
|
|
7
|
%
|
|
|
5
|
%
|
|
|
2
|
%
|
% of revenues, three months ended September 30, 2020
|
|
|
-
|
%
|
|
|
-
|
%
|
|
|
6
|
%
|
|
|
12
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of revenues, nine months ended September 30, 2021
|
|
|
10
|
%
|
|
|
11
|
%
|
|
|
11
|
%
|
|
|
5
|
%
|
|
|
2
|
%
|
% of revenues, nine months ended September 30, 2020
|
|
|
1
|
%
|
|
|
3
|
%
|
|
|
11
|
%
|
|
|
10
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of accounts receivable, as of September 30, 2021
|
|
|
15
|
%
|
|
|
4
|
%
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
6
|
%
|
% of accounts receivable, as of December 31, 2020
|
|
|
10
|
%
|
|
|
7
|
%
|
|
|
1
|
%
|
|
|
17
|
%
|
|
|
10
|
%
|
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
The following table presents revenues by geographic area shipped to (in thousands).
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
United States
|
|
$
|
6,450
|
|
|
$
|
4,714
|
|
|
$
|
21,867
|
|
|
$
|
18,214
|
|
Other countries
|
|
|
459
|
|
|
|
446
|
|
|
|
1,221
|
|
|
|
1,179
|
|
Revenues
|
|
$
|
6,909
|
|
|
$
|
5,160
|
|
|
$
|
23,088
|
|
|
$
|
19,393
|
|
NOTE 6. INVENTORIES
The following table details the components of inventories (in thousands).
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Finished goods
|
|
$
|
1,461
|
|
|
$
|
1,512
|
|
Raw materials
|
|
|
558
|
|
|
|
236
|
|
Packaging
|
|
|
154
|
|
|
|
130
|
|
Inventories
|
|
$
|
2,173
|
|
|
$
|
1,878
|
|
NOTE 7. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
|
|
September 30,
|
|
|
December 31
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
Estimated Useful Lives
|
Land
|
|
$
|
730
|
|
|
$
|
730
|
|
|
|
|
|
|
Furniture and fixtures
|
|
|
276
|
|
|
|
276
|
|
|
|
5
|
-
|
10 years
|
Plant
|
|
|
10,044
|
|
|
|
9,377
|
|
|
|
20
|
-
|
40 years, or life of lease
|
Computer and software
|
|
|
1,095
|
|
|
|
1,060
|
|
|
|
3
|
-
|
5 years
|
Leasehold improvements
|
|
|
1,880
|
|
|
|
1,880
|
|
|
|
4
|
-
|
15 years, or life of lease
|
Machinery and equipment
|
|
|
16,811
|
|
|
|
16,402
|
|
|
|
5
|
-
|
15 years
|
Property and equipment, cost
|
|
|
30,836
|
|
|
|
29,725
|
|
|
|
|
|
|
Less accumulated depreciation
|
|
|
15,156
|
|
|
|
13,358
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
15,680
|
|
|
$
|
16,367
|
|
|
|
|
|
|
Amounts payable for property and equipment included in accounts payable of $0.1 million at September 30, 2021, and $0.3 million at December 31, 2020. Assets which had not yet been placed in service, included in property and equipment, totaled $0.8 million at September 30, 2021, and $0.6 million at December 31, 2020.
Involuntary Conversion
In 2020, we wrote down assets, consisting primarily of a building, machinery and equipment, in the amount of $0.9 million and incurred other costs of $0.1 million as a result of hurricane damage that occurred in August 2020 to our Lake Charles, Louisiana property. Operations at this facility have been shut down since September 2020, while this facility is being repaired. We currently expect insurance recoveries will cover our asset loss to the extent it exceeds our $0.1 million deductible under our insurance policy. In September 2020, we received an advance on the insurance settlement of $0.3 million and we accrued a receivable for the additional $0.7 million of expected insurance proceeds related to our asset loss. The resulting $0.1 million net loss on involuntary conversion of assets was included in selling, general and administrative expenses in our consolidated financial statements in the third quarter of 2020. During the three and nine months ended September 30, 2021, we received $0.4 million and $0.6 million of proceeds from the insurer. The insurance proceeds receivable included in other current assets on our consolidated balance sheet was $0.1 million at September 30, 2021, and $0.7 million as of December 31, 2020. The final settlement with the insurer on this matter will likely differ from the total proceeds we have estimated as of September 30, 2021. We accrue estimated insurance proceeds receivable when the proceeds are estimable and probable of collection. Given the nature of recoveries of lost profits under business interruption insurance we have not accrued insurance proceeds receivable for any potential recoveries of lost profits.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 8. LEASES
The components of lease expense and cash flows from leases (amounts in thousands) follow.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Finance lease cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of right-of use assets, included in cost of goods sold
|
|
$
|
24
|
|
|
$
|
20
|
|
|
$
|
67
|
|
|
$
|
41
|
|
Interest on lease liabilities
|
|
|
2
|
|
|
|
4
|
|
|
|
8
|
|
|
|
8
|
|
Operating lease cost, included in selling, general and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed leases cost
|
|
|
129
|
|
|
|
131
|
|
|
|
387
|
|
|
|
261
|
|
Variable lease cost
|
|
|
37
|
|
|
|
33
|
|
|
|
112
|
|
|
|
48
|
|
Short-term lease cost
|
|
|
21
|
|
|
|
-
|
|
|
|
60
|
|
|
|
3
|
|
Total lease cost
|
|
$
|
213
|
|
|
$
|
188
|
|
|
$
|
634
|
|
|
$
|
361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from finance leases
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
8
|
|
Operating cash flows from operating leases
|
|
$
|
129
|
|
|
$
|
131
|
|
|
$
|
387
|
|
|
$
|
261
|
|
Financing cash flows from finance leases
|
|
$
|
23
|
|
|
$
|
20
|
|
|
$
|
73
|
|
|
$
|
46
|
|
As of September 30, 2021, variable lease payments do not depend on a rate or index. As of September 30, 2021, property and equipment, net, includes $0.2 million of finance lease right-of-use-assets, with an original cost of $0.5 million. During 2021, we financed the purchase of less than $0.1 million of property and equipment in noncash finance lease transactions.
As of September 30, 2021, we do not believe it is certain that we will exercise any renewal options. The remaining terms of our leases and the discount rates used in the calculation of the fair value of our leases as of September 30, 2021, follows.
|
|
Operating
Leases
|
|
|
Finance
Leases
|
|
Remaining leases terms (in years)
|
|
2.1
|
-
|
11.4
|
|
|
0.2
|
-
|
4.9
|
|
Weighted average remaining lease terms (in years)
|
|
|
|
6.4
|
|
|
|
|
2.4
|
|
Discount rates
|
|
6.3%
|
-
|
9.0
|
%
|
|
2.8%
|
-
|
7.3
|
%
|
Weighted average discount rate
|
|
|
|
7.7
|
%
|
|
|
|
5.1
|
%
|
Maturities of lease liabilities as of September 30, 2021, follows (in thousands).
|
|
Operating
|
|
|
Finance
|
|
|
|
Leases
|
|
|
Leases
|
|
2021 (three months ended December 31, 2021)
|
|
$
|
119
|
|
|
$
|
26
|
|
2022
|
|
|
548
|
|
|
|
88
|
|
2023
|
|
|
528
|
|
|
|
57
|
|
2024
|
|
|
429
|
|
|
|
18
|
|
2025
|
|
|
439
|
|
|
|
4
|
|
Thereafter
|
|
|
1,028
|
|
|
|
2
|
|
Total lease payments
|
|
|
3,091
|
|
|
|
195
|
|
Amounts representing interest
|
|
|
(689
|
)
|
|
|
(8
|
)
|
Present value of lease obligations
|
|
$
|
2,402
|
|
|
$
|
187
|
|
NOTE 9. DEBT
We finance certain amounts owed for annual insurance premiums under financing agreements. As of September 30, 2021, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through February 2022, at an average interest rate of 3.7% per year.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
In October 2019, we entered into a factoring agreement which provides for a $7.0 million credit facility with a lender. We may only borrow to the extent we have qualifying accounts receivable as defined in the agreement. The facility has an initial two-year term and automatically renews for successive annual periods, unless proper termination notice is given. We paid a $0.2 million facility fee upon inception of the agreement which is amortizing to interest expense on a straight-line basis over two years. We incur recurring fees under the agreement, including a funding fee of 0.5% above the prime rate, in no event to be less than 5.5%, on any advances and a service fee on average net funds borrowed. The lender has the right to demand repayment of the advances at any time. The lender has a security interest in personal property assets. In October 2021, the initial two-year term expired. As no written notice of cancellation was submitted by the Company, the term was automatically extended for a successive period of one year.
Due under factoring agreement consists of the following (in thousands).
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Borrowings outstanding
|
|
$
|
2,026
|
|
|
$
|
1,860
|
|
Debt issuance costs, net
|
|
|
(8
|
)
|
|
|
(75
|
)
|
Due under factoring agreement
|
|
$
|
2,018
|
|
|
$
|
1,785
|
|
Additional information related to our factoring obligation follows.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Average borrowings outstanding (in thousands)
|
|
$
|
1,522
|
|
|
$
|
1,670
|
|
|
$
|
1,324
|
|
|
$
|
1,900
|
|
Amortization of debt issuance costs (in thousands)
|
|
$
|
23
|
|
|
$
|
23
|
|
|
$
|
68
|
|
|
$
|
68
|
|
Fees paid, as a percentage of average outstanding borrowings
|
|
|
2.0
|
%
|
|
|
1.4
|
%
|
|
|
5.0
|
%
|
|
|
6.0
|
%
|
Interest paid, as a percentage of average outstanding borrowings
|
|
|
1.6
|
%
|
|
|
1.5
|
%
|
|
|
5.0
|
%
|
|
|
5.0
|
%
|
Long-term debt consists of the following (in thousands).
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
Mortgage promissory note - Dated September 2020. Interest accrues at an annual rate which is the greater of 11.0% above the lender's prime rate and 14.3%. Payable in monthly installments through June 2022. Net of $20 and $26 debt issuance costs at September 30, 2021 and December 31, 2020.
|
|
$
|
1,404
|
|
|
$
|
1,817
|
|
Payroll Protection Program note - Dated April 2020. Interest accrued at an annual rate of 1.0%. Forgiven in January 2021.
|
|
|
-
|
|
|
|
1,792
|
|
Equipment notes - Initially recorded in November 2018, in an acquisition, at the present value of future payments using a discount rate of 4.8% per year. Payable in monthly installments through expiry dates ranging from May 2022 to August 2022.
|
|
|
15
|
|
|
|
37
|
|
Equipment note - Dated December 2019. Due in monthly installments through December 2024. Interest accrues at the effective discount rate of 9.3% per year.
|
|
|
28
|
|
|
|
33
|
|
Equipment note - Dated May 2021. Original principal $46. Due in monthly installments through June 2025. Interest accrues at the effective discount rate of 3.6% per year.
|
|
|
36
|
|
|
|
-
|
|
Total long term debt, net
|
|
$
|
1,483
|
|
|
$
|
3,679
|
|
In April 2020, we received $1.8 million on a Small Business Administration ("SBA") Payroll Protection Program ("PPP") loan as provided for in the Coronavirus Aid, Relief and Economic Security Act, enacted into U.S. law in March 2020. Under certain conditions, the loan and accrued interest were forgivable, if the loan proceeds were used for maintaining workforce levels. As of December 31 2020, payments on the PPP loan were deferred under the terms of the program. Interest accrued at an annual rate of 1.0%. The loan proceeds were used for maintaining workforce levels and the entire loan and related accrued interest was forgiven, in its entirety in January 2021. As discussed further in Note 14, our compliance with the loan program is subject to potential audit by the SBA.
In July 2020, we entered into a mortgage agreement with a lender pursuant to a promissory note. In September 2020, we borrowed $1.0 million on the note and, in October 2020, we borrowed the remaining $1.0 million available on the note. Interest on this note accrues at an annual rate which is the greater of 11.0% above the lender’s prime rate and 14.3%. In addition, we incurred a facility fee equal to 1.0% of the amount of each advance under the promissory note. The principal amount of the note must be repaid in monthly installments ending in June 2022. The note is secured by certain real property and personal property assets located in Wynne, Arkansas. As of September 30, 2021, the note bore interest at an annual rate of 14.3%.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Future principal maturities of long-term debt outstanding as of September 30, 2021, follow (in thousands).
2021 (three months ended December 31, 2021)
|
|
$
|
155
|
|
2022
|
|
|
1,306
|
|
2023
|
|
|
18
|
|
2024
|
|
|
19
|
|
2025
|
|
|
5
|
|
Principal maturities
|
|
|
1,503
|
|
Debt issuance costs
|
|
|
(20
|
)
|
Total long term debt, net
|
|
$
|
1,483
|
|
NOTE 10. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS
A summary of equity activity follows (in thousands, except share amounts).
|
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
|
|
Preferred
|
|
|
Common
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Series G
|
|
|
Common
|
|
|
Stock
|
|
|
Stock
|
|
|
Deficit
|
|
|
Equity
|
|
Balance, December 31, 2020
|
|
|
225
|
|
|
|
45,238,087
|
|
|
$
|
112
|
|
|
$
|
322,218
|
|
|
$
|
(298,910
|
)
|
|
$
|
23,420
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
29,943
|
|
|
|
-
|
|
|
|
250
|
|
|
|
-
|
|
|
|
250
|
|
Common stock issued to vendor
|
|
|
-
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
|
|
3
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(3
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
591
|
|
|
|
591
|
|
Balance, March 31, 2021
|
|
|
225
|
|
|
|
45,274,030
|
|
|
|
112
|
|
|
|
322,468
|
|
|
|
(298,319
|
)
|
|
|
24,261
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
29,643
|
|
|
|
-
|
|
|
|
290
|
|
|
|
-
|
|
|
|
290
|
|
Common stock issued to vendor
|
|
|
-
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
5
|
|
|
|
-
|
|
|
|
5
|
|
Exercise of common stock warrant
|
|
|
-
|
|
|
|
177,936
|
|
|
|
-
|
|
|
|
171
|
|
|
|
-
|
|
|
|
171
|
|
Other
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
-
|
|
|
|
3
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,923
|
)
|
|
|
(1,923
|
)
|
Balance, June 30, 2021
|
|
|
225
|
|
|
|
45,487,609
|
|
|
|
112
|
|
|
|
322,937
|
|
|
|
(300,242
|
)
|
|
|
22,807
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
38,978
|
|
|
|
-
|
|
|
|
287
|
|
|
|
-
|
|
|
|
287
|
|
Common stock issued to vendor
|
|
|
-
|
|
|
|
6,000
|
|
|
|
-
|
|
|
|
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
|
|
|
|
50,166,156
|
|
|
$
|
75
|
|
|
$
|
325,991
|
|
|
$
|
(302,455
|
)
|
|
$
|
23,611
|
|
|
|
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
|
|
Preferred
|
|
|
Common
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Series G
|
|
|
Common
|
|
|
Stock
|
|
|
Stock
|
|
|
Deficit
|
|
|
Loss
|
|
|
Equity
|
|
Balance, December 31, 2019
|
|
|
225
|
|
|
|
40,074,483
|
|
|
$
|
112
|
|
|
$
|
318,811
|
|
|
$
|
(287,180
|
)
|
|
$
|
-
|
|
|
$
|
31,743
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
17,534
|
|
|
|
-
|
|
|
|
312
|
|
|
|
-
|
|
|
|
-
|
|
|
|
312
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,033
|
)
|
|
|
-
|
|
|
|
(3,033
|
)
|
Balance, March 31, 2020
|
|
|
225
|
|
|
|
40,092,017
|
|
|
|
112
|
|
|
|
319,123
|
|
|
|
(290,213
|
)
|
|
|
-
|
|
|
|
29,022
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
16,500
|
|
|
|
-
|
|
|
|
316
|
|
|
|
-
|
|
|
|
-
|
|
|
|
316
|
|
Common stock issued to vendors
|
|
|
-
|
|
|
|
31,304
|
|
|
|
-
|
|
|
|
36
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36
|
|
Exercise of common stock warrants
|
|
|
-
|
|
|
|
67,577
|
|
|
|
-
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12
|
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(48
|
)
|
|
|
(48
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,949
|
)
|
|
|
-
|
|
|
|
(3,949
|
)
|
Balance, June 30, 2020
|
|
|
225
|
|
|
|
40,207,398
|
|
|
|
112
|
|
|
|
319,487
|
|
|
|
(294,162
|
)
|
|
|
(48
|
)
|
|
|
25,389
|
|
Common stock awards under equity incentive plans
|
|
|
-
|
|
|
|
129,404
|
|
|
|
-
|
|
|
|
153
|
|
|
|
-
|
|
|
|
-
|
|
|
|
153
|
|
Sale of common stock, net of costs
|
|
|
-
|
|
|
|
1,635,792
|
|
|
|
-
|
|
|
|
657
|
|
|
|
-
|
|
|
|
-
|
|
|
|
657
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48
|
|
|
|
48
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,774
|
)
|
|
|
-
|
|
|
|
(2,774
|
)
|
Balance, September 30, 2020
|
|
|
225
|
|
|
|
41,972,594
|
|
|
$
|
112
|
|
|
$
|
320,297
|
|
|
$
|
(296,936
|
)
|
|
$
|
-
|
|
|
$
|
23,473
|
|
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Share-based compensation under equity incentive plans, by type of award follows (in thousands).
|
|
Three Months Ended
|
|
|
|
September 30, 2021
|
|
|
June 30, 2021
|
|
|
March 31, 2021
|
|
Common stock, vested at issuance and nonvested at issuance
|
|
$
|
29
|
|
|
$
|
32
|
|
|
$
|
28
|
|
Stock options
|
|
|
35
|
|
|
|
35
|
|
|
|
36
|
|
Restricted stock units
|
|
|
223
|
|
|
|
223
|
|
|
|
186
|
|
Compensation expense related to common stock awards issued under equity incentive plans
|
|
$
|
287
|
|
|
$
|
290
|
|
|
$
|
250
|
|
In September 2021, we issued and sold 2,307,500 shares of common stock, a warrant for the purchase of up to 2,307,693 shares (the "Warrant"), and a prefunded warrant (the "Prefunded Warrant") for the purchase of up to 2,307,855 shares of common stock pursuant to our effective “shelf” registration statement on Form S-3. The initial $1.00 per share exercise price of the Warrant is subject to adjustment in September 2022, and again in September 2023, if 110% of the 5-day volume weighted average price of our common stock is less than the then-current exercise price. The Prefunded Warrant has an exercise price of $0.0001 (net of the $0.6499 per share prefunded). We determined that the Prefunded Warrant qualified for equity accounting, however, the other Warrant did not qualify for equity accounting because the holder may elect cash settlement of this warrant in the event of a change of control. Therefore, we must carry the Warrant as a liability at fair value in our consolidated balance sheets. We estimated the fair value of the Warrant using the Black-Scholes methodology. The Warrant will be valued using the Black-Scholes model each reporting period and the resultant change in fair value recorded in our consolidated statements of operations. The net proceeds from the offering of $2.8 million, after deducting commissions and other cash offering expenses of $0.2 million were allocated to the Warrant, in an amount equal the $0.6 million estimated fair value of the Warrant as of September 13, 2021, with the remainder of the proceeds recorded in equity. We determined the exercise price of the Prefunded Warrant is nominal and, as such, have considered the 2,307,855 shares initially underlying the Prefunded Warrant to be outstanding effective September 13, 2021, for the purposes of calculating basic earnings per share ("EPS"). We intend to use the net proceeds from the September 2021 offering for general corporate purposes, which may include funding capital expenditures and working capital and repaying indebtedness.
Under the terms of the securities purchase agreement related to the September 2021 offering, we are prohibited from making sales pursuant to the at-the-market ("ATM") issuance sales agreement with B. Riley FBR, Inc., as sales agent (discussed in the next paragraph), or from entering into any agreement to effect a variable rate transaction until March 12, 2022. We are also prohibited from entering into an agreement to effect any at-the-market issuance involving a variable rate transaction until September 13, 2023.
During the three months ended September 30, 2021, we issued and sold 754,895 shares of common stock under an at market issuance sales agreement, at an average price of $0.80 per share. Proceeds from those sales of $0.5 million are recorded in equity, net of $0.1 million of stock issuance costs. We entered into the at-the-market issuance sales agreement with respect to an at-the-market offering program, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $6.0 million through B. Riley FBR, Inc, as sales agent, in March 2020. The issuances and sales of our common stock under the agreement are made pursuant to our effective “shelf” registration statement on Form S-3.
In the three months ended September 30, 2021, we issued to an employee 38,978 shares of common stock (average $0.75 grant date fair value per share) which were vested at issuance. In the three months ended June 30, 2021, we issued to an employee 29,643 shares of common stock (average $1.09 grant date fair value per share) which were vested at issuance. In the three months ended March 31, 2021, we issued to an employee 29,943 shares of common stock (average $0.94 grant date fair value per share) which were vested at issuance.
In the three months ended September 30, 2021, holders forfeited options for the purchase of up to 1,834 shares of common stock (average $1.23 per share exercise price, average 8.5-year remaining life). In the three months ended June 30, 2021, holders forfeited options for the purchase of up to 8,216 shares of common stock (average $1.90 per share exercise price, average 8.5-year remaining life). In the three months ended March 31, 2021, holders forfeited options for the purchase of up to 18,905 shares of common stock (average $11.54 per share exercise price, average 7.5-year remaining life).
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
A summary of restricted stock unit ("RSU") activity follows.
|
|
RSU Shares
Issued
|
|
|
Unrecognized
Stock
Compensation
(in thousands)
|
|
|
Weighted
Average
Expense
Period (Years)
|
|
Nonvested at December 31, 2020
|
|
|
1,495,400
|
|
|
$
|
730
|
|
|
|
1.4
|
|
Granted
|
|
|
452,400
|
|
|
|
412
|
|
|
|
2.0
|
|
Expensed
|
|
|
-
|
|
|
|
(186
|
)
|
|
|
|
|
Nonvested at March 31, 2021
|
|
|
1,947,800
|
|
|
|
956
|
|
|
|
1.4
|
|
Granted
|
|
|
344,040
|
|
|
|
375
|
|
|
|
1.0
|
|
Vested
|
|
|
(450,400
|
)
|
|
|
-
|
|
|
|
|
|
Expensed
|
|
|
-
|
|
|
|
(223
|
)
|
|
|
|
|
Nonvested at June 30, 2021
|
|
|
1,841,440
|
|
|
|
1,108
|
|
|
|
1.4
|
|
Forfeited
|
|
|
(2,907
|
)
|
|
|
(3
|
)
|
|
|
|
|
Expensed
|
|
|
-
|
|
|
|
(223
|
)
|
|
|
|
|
Nonvested at September 30, 2021
|
|
|
1,838,533
|
|
|
$
|
882
|
|
|
|
1.1
|
|
The shares of common stock subject to the RSUs granted in 2021 vest within two years of grant. The 2021 RSU grants are not subject to any market conditions and were valued using the market price of our common stock on the date of grant.
As of September 30, 2021, issuance of 1,180,843 shares of common stock subject to certain RSUs, 836,803 of which are vested, is deferred to the date the holder is no longer providing service to RiceBran Technologies.
In the three months ended September 30, 2021, we issued 1,500,000 shares of common stock to a warrant holder upon the cashless exercise of 1,500,427 shares underlying the Prefunded Warrant. As of September 30, 2021, the Prefunded Warrant is outstanding and exercisable as to 807,638 underlying shares of common stock.
In the three months ended June 30, 2021, we issued 177,936 shares of common stock to a warrant holder upon the cash exercise of a warrant with an exercise price of $0.96 per share.
In the three months ended March 31, 2021, warrants for the purchase of up to 25,000 shares of common stock ($5.25 per share exercise price) expired.
In October 2021, we issued 807,498 shares of common stock to a warrant holder upon the cashless exercise of the remaining 807,638 shares underlying the Prefunded Warrant.
NOTE 11. INCOME TAXES
Our tax expense for the three and nine months ended September 30, 2021 and 2020, differs from the tax expense computed by applying the U.S. statutory tax rate to net loss as no tax benefits were recorded for tax losses generated in the U.S. As of September 30, 2021, we had deferred tax assets primarily related to U.S. federal and state tax loss carryforwards. We provided a full valuation allowance against our deferred tax assets as future realization of such assets is not more likely than not to occur.
NOTE 12. LOSS PER SHARE (EPS)
Basic EPS is calculated under the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock and participating securities based on their respective rights to receive dividends. Our outstanding convertible preferred stock are considered participating securities as the holders may participate in undistributed earnings with holders of common shares and are not obligated to share in our net losses.
Diluted EPS is computed by dividing the net loss attributable to RiceBran Technologies common shareholders by the weighted average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if the impact of assumed exercises and conversions is dilutive. The dilutive effects of outstanding options, warrants, nonvested shares of common stock and nonvested restricted stock units that vest solely on the basis of a service condition are calculated using the treasury stock method. The dilutive effects of the outstanding preferred stock are calculated using the if-converted method.
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
Below are reconciliations of the numerators and denominators in the EPS.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
NUMERATOR (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic and diluted EPS - net loss
|
|
$
|
(2,213
|
)
|
|
$
|
(2,774
|
)
|
|
$
|
(3,545
|
)
|
|
$
|
(9,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DENOMINATOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of shares of common stock outstanding
|
|
|
46,620,039
|
|
|
|
40,691,824
|
|
|
|
45,755,871
|
|
|
|
40,232,289
|
|
Weighted average number of shares of common stock underlying vested RSUs
|
|
|
836,803
|
|
|
|
132,457
|
|
|
|
562,933
|
|
|
|
47,577
|
|
Denominator for basic and diluted EPS - weighted average number of shares outstanding
|
|
|
47,456,842
|
|
|
|
40,824,281
|
|
|
|
46,318,804
|
|
|
|
40,279,866
|
|
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for the three and nine months ended September 30, 2021 and 2020, because to do so would be antidilutive as a result of our net loss. Potentially dilutive securities outstanding during the three and nine months ended September 30, 2021 and 2020, included our outstanding convertible preferred stock, options, warrants, nonvested restricted stock units and nonvested stock. Those potentially dilutive securities still outstanding could potentially dilute EPS in the future.
NOTE 13. FAIR VALUE MEASUREMENTS
The fair value of cash and cash equivalents, restricted cash, accounts and other receivables and accounts payable approximates their carrying value due to shorter maturities. As of September 30, 2021, the fair values of our operating lease liabilities were approximately $0.3 million higher than their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements). As of September 30, 2021, the fair values of our debt and finance lease liabilities approximated their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements).
The following tables summarize the fair values by input hierarchy of items measured at fair value on a recurring basis on our consolidated balance sheets (in thousands):
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Warrant liability (1)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
647
|
|
Total liabilities at fair value
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
647
|
|
The following tables summarize the changes in level 3 items measured at fair value on a recurring basis for both the three and nine months ended September 30, 2021 (in thousands):
|
|
Fair Value
as of
Beginning
of Period
|
|
|
Total
Realized
and
Unrealized
Gains
(Losses)
|
|
|
Issuance of
New
Instruments
|
|
|
Net
Transfers
(Into) Out of
Level 3
|
|
|
Fair Value,
at End of
Period
|
|
|
Change in
Unrealized
Gains
(Losses) on
Instruments
Still Held
|
|
Warrant liability (1)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
-
|
|
Total Level 3 fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
-
|
|
|
$
|
647
|
|
|
$
|
-
|
|
(1)
|
We estimated the fair value of the Warrant using the Black-Scholes value of a 5-year warrant with an exercise price of $1.00 per share.
|
RiceBran Technologies
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 14. COMMITMENTS AND CONTINGENCIES
PPP Audit Contingency
As discussed in Note 9, the outstanding principal and related accrued interest on our PPP loan were completely forgiven in January 2021. The SBA may audit any PPP loan at its discretion through January 2027, six years after the date the SBA forgave the loan. The SBA may review any or all of the following when auditing a PPP loan: whether the borrower qualified for the PPP loan, whether the PPP loan amount was appropriately calculated and the proceeds used for allowable purposes, and whether the loan forgiveness amount was appropriately determined. We could be deemed ineligible for the PPP loan received in 2020 upon audit by the SBA. We believe the SBA’s stated intention is to focus its reviews on borrowers with loans greater than $2 million, thereby mitigating our future risk of an audit. The SBA continues to develop and issue new and updated guidance regarding required borrower certifications and requirements for forgiveness of loans made under the program.
Employment Contracts and Severance Payments
In the normal course of business, we periodically enter into employment agreements which incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be reasonably estimated, we maintain insurance coverage, which we believe will effectively mitigate our obligations under these indemnification provisions. No amounts have been recorded in our financial statements with respect to any obligations under such agreements.
We have employment contracts with certain officers and key management that include provisions for potential severance payments in the event of without-cause terminations or terminations under certain circumstances after a change in control. In addition, vesting of outstanding nonvested equity grants would accelerate following a change in control.
Legal Matters
From time to time, we are involved in litigation incidental to the conduct of our business. These matters may relate to employment and labor claims, patent and intellectual property claims, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position or results of operations. Defense costs are expensed as incurred and are included in professional fees.
NOTE 15. RELATED PARTY TRANSACTIONS
Our director, Ari Gendason, is an employee and senior vice president and chief investment officer of Continental Grain Company ("CGC"). As of the date of this filing, CGC owns approximately 21.2% of our outstanding common stock. We have agreed that in connection with each annual or special meeting of our shareholders at which members of our board of directors are to be elected, or any written consent of our shareholders pursuant to which members of the board of directors are to be elected, CGC shall have the right to designate one nominee to our board of directors.
NOTE 16. FAILURE TO COMPLY WITH NASDAQ LISTING REQUIREMENTS
On September 15, 2021, we received a notification letter from The Nasdaq Stock Market LLC (Nasdaq) indicating that we have failed to comply with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a)(2) requires that companies listed on the Nasdaq Capital Market maintain a minimum bid price of $1.00. To regain compliance with this listing rule, the closing bid price of our common stock has to be at least $1.00 for a period of Nasdaq's discretion, of at least 10, but not to exceed 20, consecutive business days. In accordance with Nasdaq Marketplace Rules and 5810(c)(3)(A), we have a period of 180 calendar days from the date of notification, or until March 14, 2022, to regain compliance with the minimum bid price requirement. We may be eligible for an additional 180-day compliance period if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement. We are committed to taking actions that would enable us to regain compliance, including, if necessary, completing a reverse split of our common stock to increase its share price above the $1.00 minimum bid price.