Company Quick10K Filing
Arcadia Biosciences
Price0.26 EPS-3
Shares9 P/E-0
MCap2 P/FCF-0
Net Debt-20 EBIT-23
TEV-18 TEV/EBIT1
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-13
10-Q 2020-03-31 Filed 2020-05-13
10-K 2019-12-31 Filed 2020-03-25
S-1 2019-12-11 Public Filing
10-Q 2019-09-30 Filed 2019-11-06
S-1 2019-07-26 Public Filing
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-04-01
S-1 2018-12-27 Public Filing
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-20
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-10
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-08
10-Q 2016-09-30 Filed 2016-11-10
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-08
10-Q 2015-09-30 Filed 2015-11-05
10-Q 2015-06-30 Filed 2015-08-11
10-Q 2015-03-31 Filed 2015-06-25
8-K 2020-08-13 Earnings, Exhibits
8-K 2020-07-06 Enter Agreement, Sale of Shares, Exhibits
8-K 2020-07-06 Enter Agreement, Sale of Shares
8-K 2020-06-26 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-06-01
8-K 2020-05-14
8-K 2020-05-14
8-K 2020-05-13
8-K 2020-04-16
8-K 2020-03-25
8-K 2019-11-06
8-K 2019-09-27
8-K 2019-09-11
8-K 2019-09-05
8-K 2019-08-22
8-K 2019-08-14
8-K 2019-08-05
8-K 2019-06-12
8-K 2019-06-03
8-K 2019-05-20
8-K 2019-05-08
8-K 2019-03-27
8-K 2019-02-28
8-K 2019-02-13
8-K 2018-11-07
8-K 2018-08-08
8-K 2018-07-31
8-K 2018-06-11
8-K 2018-06-06
8-K 2018-05-12
8-K 2018-05-09
8-K 2018-05-07
8-K 2018-05-02
8-K 2018-03-20
8-K 2018-03-19
8-K 2018-01-19

RKDA 10Q Quarterly Report

Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.2 rkda-ex102_12.htm
EX-31.1 rkda-ex311_6.htm
EX-31.2 rkda-ex312_9.htm
EX-32.1 rkda-ex321_7.htm
EX-32.2 rkda-ex322_8.htm

Arcadia Biosciences Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
854913-23-59-952013201520172020
Assets, Equity
4.50.6-3.3-7.2-11.1-15.02013201520172020
Rev, G Profit, Net Income
7553319-13-352013201520172020
Ops, Inv, Fin

10-Q 1 rkda-10q_20200630.htm 10-Q rkda-10q_20200630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                      to                     

 

Commission File Number: 001-37383

 

Arcadia Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-0571538

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

202 Cousteau Place, Suite 105

Davis, CA

95618

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (530) 756-7077

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common

RKDA

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, smaller reporting company, or an emerging growth 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 12b-2 of the Exchange Act).   Yes      No  

 

As of August 10, 2020, the registrant had 10,699,577 shares of common stock outstanding, $0.001 par value per share.

 

 

 


 

Arcadia Biosciences, Inc.

FORM 10-Q FOR THE QUARTER ENDED June 30, 2020

INDEX

 

 

 

 

 

 

 

Page

Part I —

 

Financial Information

 

1

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements:

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

 

2

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

5

 

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

33

 

 

 

 

Part II —

 

Other Information

 

34

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

34

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

34

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

34

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

34

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

35

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

36

 

 

 

 

 

 

 

SIGNATURES

 

37

 

 

 

 


 

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

 

 

June 30, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,995

 

 

$

8,417

 

Short-term investments

 

 

600

 

 

 

16,915

 

Accounts receivable

 

 

403

 

 

 

602

 

Inventories, net — current

 

 

8,772

 

 

 

1,794

 

Prepaid expenses and other current assets

 

 

1,326

 

 

 

712

 

Total current assets

 

 

26,096

 

 

 

28,440

 

Restricted cash

 

 

2,000

 

 

 

 

Property and equipment, net

 

 

3,403

 

 

 

1,799

 

Right of use asset

 

 

5,598

 

 

 

1,963

 

Inventories, net — noncurrent

 

 

658

 

 

 

364

 

Other noncurrent assets

 

 

23

 

 

 

8

 

Total assets

 

$

37,778

 

 

$

32,574

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

6,937

 

 

$

4,685

 

Amounts due to related parties

 

 

22

 

 

 

40

 

Debt — current

 

 

519

 

 

 

24

 

Unearned revenue — current

 

 

 

 

 

42

 

Operating lease liability — current

 

 

623

 

 

 

611

 

Other current liabilities

 

 

263

 

 

 

306

 

Total current liabilities

 

 

8,364

 

 

 

5,708

 

Debt — noncurrent

 

 

2,742

 

 

 

107

 

Operating lease liability — noncurrent

 

 

5,220

 

 

 

1,497

 

Common stock warrant liabilities

 

 

5,836

 

 

 

14,936

 

Other noncurrent liabilities

 

 

2,000

 

 

 

2,000

 

Total liabilities

 

 

24,162

 

 

 

24,248

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value—150,000,000 shares authorized as

   of June 30, 2020 and December 31, 2019; 10,046,440

   and 8,646,149 shares issued and outstanding as of June 30,

   2020 and December 31, 2019, respectively

 

 

50

 

 

 

49

 

Additional paid-in capital

 

 

226,405

 

 

 

214,826

 

Accumulated other comprehensive income

 

 

 

 

 

1

 

Accumulated deficit

 

 

(214,335

)

 

 

(207,171

)

Total Arcadia Biosciences stockholders’ equity

 

 

12,120

 

 

 

7,705

 

Non-controlling interest

 

 

1,496

 

 

 

621

 

Total stockholders' equity

 

 

13,616

 

 

 

8,326

 

Total liabilities and stockholders’ equity

 

$

37,778

 

 

$

32,574

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

1


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

 

2020

 

 

 

2019

 

 

2020

 

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

231

 

 

$

162

 

$

385

 

 

$

269

 

License

 

 

 

 

 

 

 

100

 

 

 

 

Royalty

 

 

12

 

 

 

 

 

42

 

 

 

 

Contract research and government grants

 

 

38

 

 

 

41

 

 

63

 

 

 

92

 

Total revenues

 

 

281

 

 

 

203

 

 

590

 

 

 

361

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

 

1,490

 

 

 

89

 

 

1,622

 

 

 

148

 

Research and development

 

 

1,993

 

 

 

1,950

 

 

4,237

 

 

 

3,456

 

Selling, general and administrative

 

 

3,674

 

 

 

3,146

 

 

7,397

 

 

 

5,957

 

Total operating expenses

 

 

7,157

 

 

 

5,185

 

 

13,256

 

 

 

9,561

 

Loss from operations

 

 

(6,876

)

 

 

(4,982

)

 

(12,666

)

 

 

(9,200

)

Interest expense

 

 

(6

)

 

 

 

 

(9

)

 

 

 

Other income, net

 

 

10

 

 

 

101

 

 

82

 

 

 

221

 

Change in fair value of common stock warrant liabilities

 

 

(3,079

)

 

 

9,482

 

 

5,082

 

 

 

987

 

Gain on extinguishment of warrant liability

 

 

47

 

 

 

 

 

47

 

 

 

 

Offering costs

 

 

 

 

 

(365

)

 

 

 

 

(365

)

Net (loss) income before income taxes

 

 

(9,904

)

 

 

4,236

 

 

(7,464

)

 

 

(8,357

)

Income tax benefit (provision)

 

 

10

 

 

 

1

 

 

(7

)

 

 

(18

)

Net (loss) income

 

 

(9,894

)

 

 

4,237

 

 

(7,471

)

 

 

(8,375

)

Net loss attributable to non-controlling interest

 

 

(205

)

 

 

 

 

(307

)

 

 

 

Net (loss) income attributable to common stockholders

 

$

(9,689

)

 

$

4,237

 

$

(7,164

)

 

$

(8,375

)

Net (loss) income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(1.04

)

 

$

0.84

 

$

(0.80

)

 

$

(1.70

)

Weighted-average number of shares used in per share

   calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

9,327,317

 

 

 

5,054,812

 

 

8,989,265

 

 

 

4,916,116

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on available-for-sale

   securities

 

 

 

 

 

 

 

(1

)

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

(1

)

 

 

 

Comprehensive (loss) income attributable to common stockholders

 

$

(9,689

)

 

$

4,237

 

$

(7,165

)

 

$

(8,375

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.


2


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Non-

Controlling

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Loss) Income

 

 

Interest

 

 

Equity

 

Balance at December 31, 2019

 

 

8,646,149

 

 

$

49

 

 

$

214,826

 

 

$

(207,171

)

 

$

1

 

 

$

621

 

 

$

8,326

 

Issuance of shares related to employee stock

   purchase plan

 

 

7,946

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

14

 

Stock-based compensation

 

 

 

 

 

 

 

 

772

 

 

 

 

 

 

 

 

 

 

 

 

772

 

Unrealized losses on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Non-controlling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

689

 

 

 

689

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

2,525

 

 

 

 

 

 

(102

)

 

 

2,423

 

Balance at March 31, 2020

 

 

8,654,095

 

 

$

49

 

 

$

215,612

 

 

$

(204,646

)

 

$

 

 

$

1,208

 

 

$

12,223

 

Issuance of shares related to exercise of

   June 2018 Warrants

 

 

1,392,345

 

 

 

1

 

 

 

5,568

 

 

 

 

 

 

 

 

 

 

 

 

5,569

 

Issuance of investor warrants related to

   May 2020 Warrant Transaction

 

 

 

 

 

 

 

 

4,415

 

 

 

 

 

 

 

 

 

 

 

 

4,415

 

Issuance of placement agent warrants related to

   issuance of May 2020 Warrants

 

 

 

 

 

 

 

 

215

 

 

 

 

 

 

 

 

 

 

 

 

215

 

Stock-based compensation

 

 

 

 

 

 

 

 

595

 

 

 

 

 

 

 

 

 

 

 

 

595

 

Non-controlling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

493

 

 

 

493

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(9,689

)

 

 

 

 

 

(205

)

 

 

(9,894

)

Balance at June 30, 2020

 

 

10,046,440

 

 

 

50

 

 

 

226,405

 

 

 

(214,335

)

 

 

 

 

 

1,496

 

 

 

13,616

 

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

 

4,774,919

 

 

$

45

 

 

$

191,136

 

 

$

(178,366

)

 

$

12,815

 

Issuance of shares related to employee stock

   purchase plan

 

 

2,500

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Stock-based compensation

 

 

 

 

 

 

 

 

422

 

 

 

 

 

 

422

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,612

)

 

 

(12,612

)

Balance at March 31, 2019

 

 

4,777,419

 

 

$

45

 

 

$

191,566

 

 

$

(190,978

)

 

$

633

 

Issuance of shares related to June 2019 Offering

 

 

1,489,575

 

 

 

2

 

 

 

3,301

 

 

 

 

 

 

3,303

 

Issuance of placement agent warrants related to

   June 2019 Offering

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

198

 

Offering costs related to June 2019 Offering

 

 

 

 

 

 

 

 

(474

)

 

 

 

 

 

(474

)

Stock-based compensation

 

 

 

 

 

 

 

 

389

 

 

 

 

 

 

389

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

4,237

 

 

 

4,237

 

Balance at June 30, 2019

 

 

6,266,994

 

 

$

47

 

 

$

194,980

 

 

$

(186,741

)

 

$

8,286

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.


3


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

 

2020

 

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(7,471

)

 

$

(8,375

)

Adjustments to reconcile net loss to cash used in operating activities:

 

 

 

 

 

 

 

 

Change in fair value of common stock warrant liabilities

 

 

(5,082

)

 

 

(987

)

Gain on extinguishment of warrant liability

 

 

(47

)

 

 

 

Offering costs

 

 

 

 

 

365

 

Depreciation

 

 

182

 

 

 

77

 

Lease amortization

 

 

484

 

 

 

348

 

Net amortization of investment premium

 

 

(44

)

 

 

(82

)

Stock-based compensation

 

 

1,367

 

 

 

811

 

Write-down of inventory and prepaid production costs

 

 

1,421

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

199

 

 

 

40

 

Inventories

 

 

(8,031

)

 

 

(561

)

Prepaid expenses and other current assets

 

 

(1,276

)

 

 

(302

)

Other noncurrent assets

 

 

(15

)

 

 

 

Accounts payable and accrued expenses

 

 

2,252

 

 

 

677

 

Amounts due to related parties

 

 

(18

)

 

 

(10

)

Other noncurrent liabilities

 

 

(43

)

 

 

 

Unearned revenue

 

 

(42

)

 

 

(81

)

Operating lease payments

 

 

(384

)

 

 

(349

)

Net cash used in operating activities

 

 

(16,548

)

 

 

(8,429

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,749

)

 

 

(315

)

Purchases of investments

 

 

(1,292

)

 

 

(8,623

)

Proceeds from sales and maturities of investments

 

 

17,650

 

 

 

13,150

 

Net cash provided by investing activities

 

 

14,609

 

 

 

4,212

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from warrant exercises from June 2018 Offering

 

 

6,822

 

 

 

 

Proceeds from borrowings

 

 

3,108

 

 

 

 

Payments of transaction costs relating to extinguishment of warrant liability

 

 

(594

)

 

 

 

Proceeds from issuance of common stock and warrants from June 2019 Offering

 

 

 

 

 

7,500

 

Payments of offering costs relating to June 2019 Offering

 

 

 

 

 

(619

)

Payments of offering costs relating to June 2018 Offering

 

 

 

 

 

(24

)

Principal payments on notes payable

 

 

(15

)

 

 

 

Proceeds from ESPP purchases

 

 

14

 

 

 

8

 

Capital contributions received from non-controlling interest

 

 

1,182

 

 

 

 

Net cash provided by financing activities

 

 

10,517

 

 

 

6,865

 

Net increase in cash, cash equivalents and restricted cash

 

 

8,578

 

 

 

2,648

 

Cash, cash equivalents and restricted cash — beginning of period

 

 

8,417

 

 

 

11,998

 

Cash, cash equivalents and restricted cash — end of period

 

$

16,995

 

 

$

14,646

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

 

$

2

 

Cash paid for interest

 

$

6

 

 

$

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Fixed assets acquired with notes payable

 

$

37

 

 

$

 

Common stock warrants issued to placement agent and included in offering costs related to

   May 2020 Warrant Transaction

 

$

215

 

 

$

 

Offering costs in accounts payable and accrued expenses at end of period

 

$

 

 

$

22

 

Common stock warrants issued to placement agent and included in offering costs related to

   June 2019 Offering

 

$

 

 

$

86

 

Right of use assets obtained in exchange for new operating lease liabilities

 

$

3,947

 

 

$

2,328

 

Purchases of fixed assets included in accounts payable and accrued expenses

 

$

 

 

$

6

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

4


 

Arcadia Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Description of Business and Basis of Presentation

Organization

Arcadia Biosciences, Inc. (the “Company”) was incorporated in Arizona in 2002 and maintains its headquarters in Davis, California, with additional facilities in Phoenix, Arizona, American Falls, Idaho, and Molokai, Hawaii. The Company was reincorporated in Delaware in March 2015.

 

The Company is a leader in science-based approaches to developing high value crop productivity traits primarily in hemp, wheat, and soybean, designed to enhance farm economics by improving the performance of crops in the field, as well as their value as food ingredients, health and wellness products, and their viability for industrial applications. The Company uses state of the art gene-editing technology and advanced breeding techniques to develop these proprietary innovations which are beginning to monetize through a number of methods including seed and grain sales, product extract sales, trait licensing and royalty agreements.

In February 2012, the Company formed Verdeca LLC (“Verdeca,” see Note 5), which is jointly owned with Bioceres, Inc. (“Bioceres”), a U.S. wholly owned subsidiary of Bioceres, S.A., an Argentine corporation. Bioceres, S.A. is an agricultural investment and development cooperative. Verdeca, which is consolidated by the Company, was formed to develop and deregulate soybean varieties using both partners’ agricultural technologies.

On August 9, 2019, the Company entered into a joint venture agreement with Legacy Ventures Hawaii, LLC (“Legacy,” see Note 6) to grow, extract, and sell hemp products. The new partnership, Archipelago Ventures Hawaii, LLC (“Archipelago”), combines the Company’s extensive genetic expertise and resources with Legacy’s experience in hemp extraction and sales.

The Company is closely monitoring how the spread of the novel coronavirus is affecting its business operations and employees. The Company’s targeted revenues have been adversely impacted as hemp growers have been slower to make decisions to purchase hemp seeds due to economic uncertainty and wheat consumer packaged goods companies have been heavily focused on production over R&D evaluation as demand for staples like pasta and flour have increased. At this time, there is significant uncertainty relating to the trajectory of the novel coronavirus outbreak and impact of related responses. The continued spread of the outbreak may further impact the Company’s business, results of operations, and financial condition.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and are in the form prescribed by the Securities and Exchange Commission (the “SEC”) in instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods indicated. All material intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, Verdeca and Archipelago. Certain prior year amounts have been reclassified to conform to the current year presentation.

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities ("VIEs"). This approach focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE.

For all periods presented, the Company has determined that it is the primary beneficiary of Verdeca, which is a VIE. Accordingly, the Company consolidates the entity in the condensed consolidated financial statements after eliminating intercompany transactions. The Company evaluates its relationships with its VIEs upon the occurrence of certain significant events that affect the design, structure or other factors pertinent to the primary beneficiary determination. Verdeca LLC had no operations for the three and six months ended June 30, 2020 and 2019, respectively, and had no assets or liabilities as of June 30, 2020 and December 31, 2019, respectively.

For all periods presented, the Company has determined that it is the primary beneficiary of Archipelago, a joint venture, as it has a controlling interest in Archipelago. Accordingly, the Company consolidates the entity in the condensed consolidated financial statements after eliminating intercompany transactions. For consolidated joint ventures, the non-controlling partner’s share of the

5


 

assets, liabilities and operations of the joint venture is included in non-controlling interests as equity of the Company. The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage of Archipelago. Net loss attributable to non-controlling interest of $205,000 and $307,000 is recorded as an adjustment to net income to arrive at net income attributable to common stockholders for the three and six months ended June 30, 2020, respectively. The non-controlling partner’s equity interests are presented as non-controlling interests on the condensed consolidated balance sheets as of June 30, 2020.

The information included in these condensed consolidated financial statements and notes thereto should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein and Management’s Discussion and Analysis of Financial Condition and Results of Operations and the condensed consolidated financial statements and notes thereto for the fiscal year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 25, 2020.

Restricted Cash

Restricted cash consists of funds that are contractually or legally restricted as to usage or withdrawal and have been presented separately from cash and cash equivalents on the condensed consolidated balance sheets.

Liquidity, Capital Resources, and Going Concern

As of June 30, 2020, the Company had an accumulated deficit of $214.3 million, cash and cash equivalents of $15.0 million and short-term investments of $0.6 million. For the six months ended June 30, 2020, the Company had net losses of $7.5 million and net cash used in operations of $16.5 million. For the twelve months ended December 31, 2019, the Company had net losses of $28.9 million and net cash used in operations of $17.2 million.

With cash and cash equivalents of $15.0 million and short-term investments of $0.6 million as of June 30, 2020, the Company believes that its existing cash, cash equivalents and investments will be insufficient to meet its anticipated cash requirements for at least through August 2021, and thus raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company may seek to raise additional funds through debt or equity financings, if necessary and available. The Company may also consider entering into additional partner arrangements. The sale of additional equity would result in dilution to the Company’s stockholders and could have unfavorable terms. The incurrence of debt would result in debt service obligations, and the instruments governing such debt could provide for additional operating and financing covenants that could restrict operations. If the Company is unable to secure adequate additional funding at terms agreeable to the Company, the Company may be forced to reduce spending, extend payment terms with suppliers, liquidate assets, or suspend or curtail planned development programs or operations. Any of these actions could materially harm the business, results of operations and financial condition. 

 

As previously disclosed, there is significant uncertainty relating to the trajectory of the novel coronavirus outbreak (“COVID-19”) and impact of related responses. The continued spread of the outbreak could materially harm the Company’s business, results of operations, and financial condition. Due to this uncertainty and plans outside of management’s control, the Company may not be able to achieve and implement such plans within one year after the date that the financial statements are issued to address the substantial doubt that exists.

 

 

2. Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Additionally, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326 in April 2019 and ASU 2019-05, Financial Instruments — Credit Losses (Topic 326) — Targeted Transition Relief in May 2019. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. In November 2019, the FASB issued ASU No. 2019-10, which defers the effective date of ASU No. 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on the condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments affect any entity required to make disclosures about recurring or nonrecurring fair value measurements. The amendments were effective for all entities for fiscal years beginning after December 15, 2019. The Company adopted ASU No. 2018-13 on January 1, 2020 and expanded its disclosures for significant unobservable inputs used to develop Level 3 fair value measurements. There was no impact on the condensed consolidated financial statements. See Note 4.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic

6


 

740 and clarifying other areas of existing guidance. The amendments are effective for all entities for fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of the adoption of ASU No. 2019-12 on the condensed consolidated balance sheets, statements of operations and comprehensive (loss) income, or statements of cash flows.

In April 2020, the FASB issued a staff question-and-answer (“Q&A”) document to respond to frequently asked questions about the accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current GAAP, subsequent changes to lease payments that are not stipulated in the original lease contract are generally accounted for as lease modifications under Topic 842. The Q&A allows companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications. Entities that make this election then need to decide whether to apply the lease modification guidance in ASC 842 to the concession or account for the concession as if it were contemplated as part of the existing contract. The Company has not entered into any lease modifications that provide concessions related to the effects of the COVID-19 pandemic, and therefore has not evaluated its option to make this accounting policy election.

 

3. Inventory

Inventory costs are tracked on a lot-identified basis and are included as cost of product revenues when sold. Inventories are stated at the lower of cost or net realizable value. The Company makes adjustments to inventory when conditions indicate that the net realizable value may be less than cost due to physical deterioration, obsolescence, changes in price levels, or other factors. Additional adjustments to inventory are made for excess and slow-moving inventory on hand that is not expected to be sold within a reasonable timeframe to reduce the carrying amount to its estimated net realizable value. The write-downs to inventory are based upon estimates about future demand from the Company’s customers and distributors and market conditions. The Company recorded write-downs of wheat inventories, hemp seed inventories, and prepaid production costs of $1.4 million for the three and six months ended June 30, 2020. There were no such write-downs for the three and six months ended June 30, 2019.

The inventories—current line item on the balance sheet represents inventory forecasted to be sold or used in production in the next 12 months, as of the balance sheet date, and consists primarily of the cost of GoodWheat seed, grain, and flour, GLA oil, and hemp seed. The inventories—noncurrent line item represents inventory expected to be used in production or sold beyond the next 12 months, as of the balance sheet date, and consists primarily of GoodWheat seed and grain, and GLA oil and seed.

Raw materials inventories consist primarily of the cost to purchase hemp seeds and GLA seed production costs incurred by contracted cooperators. Goods in process inventories consist of costs to process hemp seed, hemp seed production costs incurred by Archipelago, grower fees and related costs for soybeans to be transferred to Verdeca, and GoodWheat seed and grain. Finished goods inventories consist of GoodWheat products, GoodHemp seed and GLA oil that are available for sale.

Inventories, net consist of the following (in thousands):

 

 

 

June 30, 2020

 

 

December 31, 2019