Arcadia Biosciences, Inc 10-Q for FY2023 Q1
Arcadia Biosciences, Inc. (RKDA)
About this 10-Q
Arcadia Biosciences, Inc filed this 10-Q on May 15, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.51M
- down 53.1% from $3.22M a year earlier
- Net loss
- $9.38M
- compared with a net loss of $4.49M a year earlier
- Diluted EPS
- -$10.86
- compared with -$8.09 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Emerging growth company |
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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 May 8, 2023, the registrant had
Arcadia Biosciences, Inc.
FORM 10-Q FOR THE QUARTER ENDED March 31, 2023
INDEX
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Part I — |
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Financial Information (Unaudited) |
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Item 1. |
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II — |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Arcadia Biosciences, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
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March 31, 2023 |
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December 31, 2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable and other receivables, net of allowance for doubtful accounts of |
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Inventories, net — current |
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Assets held for sale |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use asset |
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Inventories, net — noncurrent |
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Intangible assets, net |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Amounts due to related parties |
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Operating lease liability — current |
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Other current liabilities |
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Total current liabilities |
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Operating lease liability — noncurrent |
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Common stock warrant and option liabilities |
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Other noncurrent liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Non-controlling interest |
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Total stockholders' equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
1
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share data)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Revenues: |
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Product |
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$ |
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$ |
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Royalty |
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Total revenues |
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Operating expenses (income): |
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Cost of revenues |
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Research and development |
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Change in fair value of contingent consideration |
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Gain on sale of property and equipment |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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Interest income (expense) |
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Other income, net |
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Valuation loss on March 2023 PIPE |
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Change in fair value of common stock warrant and option liabilities |
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Issuance and offering costs allocated to liability classified options |
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Net loss |
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Net loss attributable to non-controlling interest |
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Net loss attributable to common stockholders |
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$ |
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$ |
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Net loss per share attributable to common stockholders: |
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Basic and diluted |
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$ |
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Weighted-average number of shares used in per share |
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Basic and diluted |
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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)
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Common Stock |
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Additional |
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Accumulated |
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Non- |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Interest |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of shares related to March 2023 PIPE |
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— |
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— |
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— |
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Modification of warrants related to March 2023 PIPE |
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— |
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— |
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— |
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Issuance of shares related to August 2022 pre-funded warrants exercise |
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— |
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— |
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— |
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— |
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— |
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Issuance of shares related to employee stock |
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— |
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— |
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Issuance of shares related to reverse stock split |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common Stock |
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Additional |
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Accumulated |
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Non- |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Interest |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Reclassification upon adoption of ASU 2020-06 |
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— |
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— |
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( |
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— |
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Issuance of shares related to employee stock |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the unaudited condensed consolidated financial statements.
3
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
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Three Months Ended March 31, |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
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$ |
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Adjustments to reconcile net loss to cash used in operating activities: |
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Change in fair value of common stock warrant and option liabilities |
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Change in fair value of contingent consideration |
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Issuance and offering costs allocated to liability classified options |
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Valuation loss on March 2023 PIPE |
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Depreciation |
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Amortization of intangible assets |
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Lease amortization |
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Gain on disposal of property and equipment |
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Stock-based compensation |
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Write-down of inventories |
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Changes in operating assets and liabilities: |
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Accounts receivable and other receivables |
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Inventories |
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Prepaid expenses and other current assets |
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Other noncurrent assets |
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Accounts payable and accrued expenses |
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Amounts due to related parties |
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Other current liabilities |
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Operating lease liabilities |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from sale of property and equipment |
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Proceeds from sale of Verdeca — earn-out received |
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Purchases of property and equipment |
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Net cash provided by investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock, pre-funded warrants and |
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Payments of offering costs relating to March 2023 PIPE |
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Proceeds from ESPP purchases |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents — beginning of period |
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Cash and cash equivalents — end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
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Cash paid for interest |
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$ |
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$ |
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NONCASH INVESTING AND FINANCING ACTIVITIES: |
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Common stock warrant liabilities reclassifed to equity |
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$ |
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$ |
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Accrued legal and accounting fees included in offering |
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$ |
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$ |
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Common stock options issued to placement agent and included in offering |
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$ |
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$ |
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Warrant and option modifications included in Valuation loss on March |
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$ |
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$ |
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Proceeds from sale of Verdeca in accounts receivable and other receivables |
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$ |
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$ |
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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," "Arcadia" or "management"), was incorporated in
The Company is a producer and marketer of innovative, plant-based food and beverage products. Its history as a leader in science-based approaches to developing high-value crop improvements, as well as nutritionally enhanced food ingredients, has laid the foundation for its path forward. The Company used advanced breeding techniques to develop these proprietary innovations which are now being commercialized through the sales of seed and grain, as well as food ingredients and products. The acquisition of the assets of Live Zola, LLC (“Zola”) added coconut water to the Company's portfolio of products.
In May 2021, the Company’s wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”) acquired the businesses of Eko, Lief, and Zola. The acquisition included consumer CBD brands like Soul Spring™, a CBD-infused botanical therapy brand in the natural category, Saavy Naturals™, a line of natural body care products and ProVault™, a CBD-infused sports performance formula made with natural ingredients, providing effective support and recovery for athletes. Also included in the purchase is Zola, a coconut water sourced exclusively with sustainably grown coconuts from Thailand. In July 2022, the Company licensed Saavy Naturals™ to Radiance Beauty and Wellness, Inc. ("Radiance Beauty").
In August 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 partnership Archipelago Ventures Hawaii, LLC (“Archipelago”), combines the Company’s extensive genetic expertise and resources with Legacy’s experience in hemp extraction and sales. In October 2021, Arcadia and Legacy mutually agreed to wind down the cultivation activities of Archipelago, due to regulatory challenges and a saturated hemp market.
In February 2012, the Company formed Verdeca, which was equally owned with Bioceres. Verdeca was formed to develop and deregulate soybean varieties using both partners’ agricultural technologies. In November 2020, Arcadia sold its membership interest in Verdeca to Bioceres in a transaction in which Arcadia received cash, shares of Bioceres stock and a royalty stream of up to $
Reverse Stock Split
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, Arcadia Wellness, and Archipelago.
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.
5
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 Archipelago in the condensed consolidated financial statements after eliminating intercompany transactions. For consolidated joint ventures, the non-controlling partner’s share of the 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 $
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, 2022 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 30, 2023.
Liquidity, Capital Resources, and Going Concern
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. Since inception, the Company has financed its operations primarily through equity and debt financings. As of March 31, 2023, the Company had an accumulated deficit of $
With cash and cash equivalents of $
The Company may seek to raise additional funds through debt or equity financings. The Company may also consider entering into additional partner arrangements. The sale of additional equity would result in dilution to the Company’s stockholders. 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 would restrict operations. If the Company requires additional funds and 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 product launches. Any of these actions could materially harm the business, results of operations and financial condition.
2. Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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
6
3. Inventory
Inventory costs are tracked on a lot-identified basis and are included as cost of 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 included in cost of revenues and are based upon estimates about future demand from the Company’s customers and distributors and market conditions. The Company recorded a write-down of $
Inventories, net consist of the following (in thousands):
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Goods in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
4. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Laboratory equipment |
|
$ |
|
|
$ |
|
||
Software and computer equipment |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Vehicles |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less: accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was $
As of March 31, 2023 and December 31, 2022, there was $
Property and equipment are considered assets held for sale when management approves and commits to a plan to dispose of a property or group of properties. The property and equipment held for sale prior to the sale date is separately presented, within current assets, on the condensed consolidated balance sheet as assets held for sale.
During the three months ended March 31, 2023 and 2022, management sold property and equipment and realized a gain on sale of $
Property and equipment related to Archipelago, in the amount of $
7
5. Investments and Fair Value Instruments
Investments
The investments are carried at fair value, based on quoted market prices or other readily available market information. Unrealized and realized gains and losses are recognized as other income in the condensed consolidated statements of operations and comprehensive loss.
The following tables summarize the amortized cost and fair value of the investment securities portfolio at March 31, 2023 and December 31, 2022.
(Dollars in thousands) |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Assets at Fair Value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(Dollars in thousands) |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Assets at Fair Value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company did
Fair Value Measurement
The fair value of the investment securities at March 31, 2023 were as follows:
|
|
Fair Value Measurements at March 31, 2023 |
|
|||||||||||||
(Dollars in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets at Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Assets at Fair Value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair value of the investment securities at December 31, 2022 were as follows:
|
|
Fair Value Measurements at December 31, 2022 |
|
|||||||||||||
(Dollars in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets at Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Assets at Fair Value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2023 or 2022. The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable and other receivables, accounts payable and accrued liabilities. For accounts receivable and other receivables, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of March 31, 2023 and December 31, 2022 were considered representative of their fair values due to their short term to maturity or repayment. Cash equivalents are carried at cost, which approximates their fair value.
8
The Company’s Level 3 liabilities consist of a contingent liability resulting from the Anawah, Inc. ("Anawah") acquisition as described in Note 13, as well as preferred investment options related to the March 2023 Private Placement and August 2022 Registered Direct offerings described in Note 9.
The contingent liability related to the Anawah acquisition was measured and recorded on a recurring basis as of March 31, 2023 and December 31, 2022, using unobservable inputs, namely the Company’s ability and intent to pursue certain specific products developed using technology acquired in the purchase. A significant deviation in the Company’s ability and/or intent to pursue the technology acquired in the purchase could result in a significantly lower (higher) fair value measurement.
The preferred investment option liabilities were measured and recorded on a recurring basis using the Black-Scholes Model with the following assumptions as of March 31, 2023 and December 31, 2022:
|
|
March 2023 Options - Series A & |
|
|
March 2023 Options - Series B |
|
|
August 2022 Options & August 2022 Placement Agent Options |
|
|||||||||||||||
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
December 31, |
|
||||||
Remaining term (in years) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expected volatility |
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
% |
||||||
Risk-free interest rate |
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
% |
||||||
Expected dividend yield |
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
% |
||||||
The significant input used in the fair value measurement of the Company’s Level 3 options liabilities is volatility. A significant increase (decrease) in volatility could result in a significantly higher (lower) fair value measurement.
The following table sets forth the establishment of the Company’s Level 3 liabilities, as well as a summary of the changes in the fair value and other adjustments (in thousands):
|
|
|
|
|||||||||||||||||||||||||
(Dollars in thousands) |
|
March 2023 |
|
|
March 2023 |
|
|
March 2023 Placement Agent Options |
|
|
August 2022 |
|
|
August 2022 |
|
|
Contingent |
|
|
Total |
|
|||||||
Balance as of December 31, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Initial recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Change in fair value and other adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance as of March 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Assets classified as held for sale are recorded at fair value as of March 31, 2023. The Company has classified the fair value measurements as a Level 3 measurement in the fair value hierarchy as the fair value has been estimated using publicly available prices for some of the assets, and business partners' estimates for assets with prices not readily available, due to the relatively small size of the industry in which they can be used.
6. Consolidated Joint Venture
In 2019, the Company and Legacy Ventures Hawaii, LLC, a Nevada limited liability company (“Legacy”), formed Archipelago Ventures Hawaii, LLC, a Delaware limited liability company and entered into a Limited Liability Company Operating Agreement (the “Operating Agreement”). The Company and Legacy formed Archipelago to develop, extract and commercialize hemp-derived products from industrial hemp grown in Hawaii.
Pursuant to the Operating Agreement, a joint operating committee consisting of
The Company consolidates Archipelago in the condensed consolidated financial statements after eliminating intercompany transactions. Net loss attributable to non-controlling interest of $
In October 2021, Arcadia and Legacy mutually agreed to wind down the cultivation activities of Archipelago, due to regulatory challenges and a saturated hemp market.
9
7. Collaborative Arrangements
In
The Company accounts for research and development (“R&D”) costs in accordance ASC 730, Research and Development, which states R&D costs must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred. Third-party R&D costs are expensed when the contracted work has been performed or as milestone results are achieved.
8. Leases
Operating Leases
As of March 31, 2023, the Company leases office space in Dallas, TX and Davis, CA as well as additional buildings, land and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these short-term leases on a straight-line basis. The Company subleases a portion of the Davis office lease to third parties. In 2022, the Company terminated its lease for office space in Chesterfield, MO effective September 30, 2022. The original lease term was scheduled to expire in
The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or material restrictive covenants.
Leases |
|
Classification |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Operating lease assets |
|
Right of use asset |
|
$ |
|
|
$ |
|
||
Total leased assets |
|
|
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current - Operating |
|
Operating lease liability- current |
|
$ |
|
|
$ |
|
||
Noncurrent - Operating |
|
Operating lease liability- noncurrent |
|
|
|
|
|
|
||
Total leased liabilities |
|
|
|
$ |
|
|
$ |
|
||
Lease Cost |
|
Classification |
|
Three |
|
|
Three |
|
|
||
Operating lease cost |
|
SG&A and R&D Expenses |
|
$ |
|
|
$ |
|
|
||
Short term lease cost |
|
SG&A Expenses |
|
|
|
|
|
|
|
||
Sublease income (1) |
|
SG&A and R&D Expenses |
|
|
( |
) |
|
|
( |
) |
|
Net lease cost |
|
|
|
$ |
|
|
$ |
|
|
||
Lease Term |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Weighted-average remaining |
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
% |
|
|
% |
||
10
9. Equity Financing
March 2023 Private Placement
In March 2023, the Company issued in a private placement offering (the “March 2023 Private Placement”) pursuant to a securities purchase agreement (“March 2023 Purchase Agreement”) (i)
In connection with the March 2023 Private Placement, the Company entered into preferred investment option amendment agreements (the “Option Amendment Agreements”) with certain investors. Under the Option Amendment Agreements, the Company agreed to amend certain existing warrants and preferred investment options to purchase up to a total of
The March 2023 Options and March 2023 Placement Agent Options are classified as liabilities within Level 3 due to certain early settlement provisions that preclude them from equity classification. The Company utilized the Black-Scholes Model on March 6, 2023 with the following assumptions for the Series A Investment Options: volatility of
The estimated fair value of the common stock issued and March 2023 Pre-Funded Warrants was $
The March 2023 Placement Agent Options were issued for services performed by the placement agent as part of the March 2023 Private Placement and were treated as offering costs. The value of the March 2023 Placement Agent Options was determined to be $
August 2022 Registered Direct Offering
On May 11, 2018, the Company filed a shelf Registration Statement on Form S-3 with the SEC which was declared effective on June 8, 2018 (“2018 Shelf Registration Statement”). On April 21, 2022, the Company filed a shelf Registration Statement on Form S-3 with the SEC which was declared effective on May 12, 2022 (“2022 Shelf Registration Statement”). Each of the 2018 Shelf Registration Statement and the 2022 Shelf Registration Statement allows the Company to sell any combination of common stock, preferred stock, warrants and units consisting of such securities in one or more offerings from time to time having aggregate offering prices of up to $
In August 2022, the Company entered into a securities purchase agreement (the “August 2022 Purchase Agreement”) pursuant to which it sold (i)
11
Offering, the Company granted to a placement agent preferred investment options ("August 2022 Placement Agent Options") to purchase a total of
The August 2022 Options and August 2022 Placement Agent Options are classified as liabilities within Level 3 due to certain early settlement provisions that preclude them from equity classification. The Company utilized the Black-Scholes Model on August 16, 2022 with the following assumptions: volatility of
The August 2022 Placement Agent Options were issued for services performed by the placement agent as part of the August 2022 Registered Direct Offering and were treated as offering costs. The value of the August 2022 Placement Agent Options was determined to be $
10. Warrants and Options
Equity Classified Common Stock Warrants
The Company issued the following warrants to purchase shares of its common stock, which are outstanding as of March 31, 2023 and December 31, 2022, respectively. These warrants are exercisable any time at the option of the holder until their expiration date.
|
|
Issuance Date |
|
Term |
|
Exercise |
|
|
Exercised |
|
|
Outstanding at |
|
|
Exercised |
|
|
Outstanding at |
|
|||||
March 2023 Pre-Funded Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 2022 Service and Performance Warrants (1) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
October 2022 Service and Performance Warrants (1) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 2022 Pre-Funded Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
January 2021 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
January 2021 Service and Performance Warrants (1)(3) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 2020 Warrants (4) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 2020 Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 2020 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
July 2020 Warrants (4) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
July 2020 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
May 2020 Warrants (4) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
May 2020 Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
May 2020 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 2020 Service and Performance Warrants (1)(3) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
September 2019 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
June 2019 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
April 2019 Service and Performance Warrants (1) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
June 2018 Placement Agent Warrants |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 2018 Placement Agent Warrants (3) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
January 2021 Warrants (2)(4) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
January 2021 Warrants (2) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
September 2019 Warrants (2)(4) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
September 2019 Warrants (2) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
June 2019 Warrants (2) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 2018 Warrants (2)(3) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
(1) The Company issued service and performance warrants (“Service and Performance Warrants”) in connection with professional services agreements with non-affiliated third party entities.
12
(2) Certain warrants contain a contingent cash payment feature and therefore were accounted for as a liability at the date of issuance and were adjusted to fair value at each balance sheet date. Upon adoption of ASU No. 2020-06 on January 1, 2022, all of the common stock warrant liabilities have been reclassified to equity classified common stock warrants, due to the elimination of the contingent cash payments as criteria for liability classification.
(3) These warrants expired in the .
(4) These warrants were repriced as part of the March 2023 Private Placement offering.
Liability Classified Preferred Investment Options
The preferred investment options issued in connection with the March 2023 Private Placement and August 2022 Registered Direct offerings contain certain early settlement provisions that preclude them from equity classification and therefore were accounted for as liabilities at the date of issuance and are adjusted to fair value at each balance sheet date. The change in fair value of the options liabilities is recorded as change in fair value of common stock warrant and option liabilities in the consolidated statements of operations and comprehensive loss.
|
|
Issuance Date |
|
Term |
|
Exercise |
|
|
Exercised |
|
|
Outstanding at |
|
|
Exercised |
|
|
Outstanding at |
|
|||||
March 2023 Options - Series A |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 2023 Options - Series B |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
March 2023 Placement Agent Options |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 2022 Options (1) |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
August 2022 Placement Agent Options |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(1) These options were repriced as part of the March 2023 Private Placement offering.
11. Stock-Based Compensation and Employee Stock Purchase Program
Stock Incentive Plans
The Company has
In 2006, the Company adopted the 2006 Plan, which provided for the granting of stock options to executives, employees, and other service providers under terms and provisions established by the Board of Directors. The Company granted non-statutory stock options (“NSOs”) under the 2006 Plan until May 2015, when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding and were issued under the 2006 Plan.
In June 2019, the shareholders approved an amendment to the Company’s 2015 Plan for a one-time increase to the number of shares of common stock that may be issued under the 2015 Plan by
13
The following is a summary of stock option information and weighted average exercise prices under the Company’s stock incentive plans (in thousands, except share data and price per share):
|
|
Shares |
|
|
Weighted- |
|
|
Aggregate |
|
|||
Outstanding — Balance at December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|||
Options granted |
|
|
|
|
|
|
|
|
|
|||
Options exercised |
|
|
|
|
|
|
|
|
|
|||
Options forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Options expired |
|
|
|
|
|
|
|
|
|
|||
Outstanding — Balance at March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Vested and expected to vest — March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Exercisable — March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|||
Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock determined by our Board of Directors for each of the respective periods. The intrinsic value of options exercised was $
As of March 31, 2023, there was $
In determining the fair value of the stock-based awards, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Expected Term—The expected term is the estimated period of time outstanding for stock options granted and was estimated based on a simplified method allowed by the SEC, and defines the term as the average of the contractual term of the options and the weighted-average vesting period for all open employee awards.
Expected Volatility—The historical volatility data was computed using the daily closing prices for the Company’s shares during the equivalent period of the calculated expected term of the stock-based awards.
Risk-Free Interest Rate—The risk-free interest rate is based on the interest rate of U.S. Treasuries of comparable maturities on the date the options were granted.
Expected Dividend—The expected dividend yield is based on the Company’s expectation of future dividend payouts to common stockholders.
The fair value of stock option awards was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumption:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Expected term (years) |
|
|
|
|
|
|
||
Expected volatility |
|
|
% |
|
|
% |
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Dividend yield |
|
|
|
|
|
|
||
The Company recognized $
14
Employee Stock Purchase Plan
The Company’s 2015 Employee Stock Purchase Plan (“ESPP”) became effective on May 14, 2015. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount of up to
12. Income Taxes
Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items that are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or as the tax environment changes.
The interim financial statement provision for income taxes is different from the amounts computed by applying the United States federal statutory income tax rate of
During the three months ended March 31, 2023, there were
In February 2023, the Company received notification from the Internal Revenue Service that our Archipelago joint venture was selected for audit for the 2021 tax year. The Opening Conference was held on April 24, 2023. Management received the IRS agent’s Initial Document Request in April 2023. The Company is currently not under audit for state purposes.
13. Commitments and Contingencies
Leases
The Company leases office and laboratory space, grain storage bins, warehouse space, farmland, and equipment under operating lease agreements having initial lease terms ranging from to
Legal Matters
From time to time, in the ordinary course of business, the Company may become involved in certain legal proceedings. The Company currently is not a party to any material litigation or other material legal proceedings.
Contingent Liability Related to the Anawah Acquisition
In, the Company completed its agreement and plan of merger and reorganization with Anawah, to purchase the Anawah’s food and agricultural research company through a non-cash stock purchase. Pursuant to the merger with Anawah, and in accordance with the ASC 805 - Business Combinations, the Company incurred a contingent liability not to exceed $
Contingent Liability Related to the ISI Acquisition
In August 2020, the Company acquired by merger ISI. A portion of the purchase price consideration for the acquisition in the amount of $
15
Contracts
The Company has entered into contract research agreements with unrelated parties that require the Company to pay certain funding commitments. The initial terms of these agreements range from to
The Company licenses certain technologies via executed agreements (“In-Licensing Agreements”) that are used to develop and advance the Company’s own technologies. The Company has entered into various In-Licensing Agreements with related and unrelated parties that require the Company to pay certain license fees, royalties, and/or milestone fees. In addition, certain royalty payments ranging from
The Company could be adversely affected by certain actions by the government as it relates to government contract revenue received in prior years. Government agencies, such as the Defense Contract Audit Agency routinely audit and investigate government contractors. These agencies review a contractor’s performance under its agreements; cost structure; and compliance with applicable laws, regulations and standards. The agencies also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. While the Company’s management anticipates no adverse result from an audit, should any costs be found to be improperly allocated to a government agreement, such costs will not be reimbursed, or if already reimbursed, may need to be refunded. If an audit uncovers improper or illegal activities, civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments or fines, and suspension or prohibition from doing business with the government could occur. In addition, serious reputational harm or significant adverse financial effects could occur if allegations of impropriety were made against the Company. There currently are routine audits in process relating to government grant revenues.
14. Net Loss per Share
Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period and excludes any dilutive effects of stock-based awards and warrants. Diluted net loss per share attributable to common stockholders is computed giving effect to all potentially dilutive common shares, including common stock issuable upon exercise of stock options and warrants. As the Company had net losses during the three months ended March 31, 2023 and 2022, all potentially dilutive common shares were determined to be anti-dilutive.
|
|
For the Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Options to purchase common stock |
|
|
|
|
|
|
||
Warrants to purchase common stock |
|
|
|
|
|
|
||
Preferred investment options |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
15. Related-Party Transactions
The Company’s related parties include Moral Compass Corporation (“MCC”) and the John Sperling Foundation (“JSF”). The rights to the intellectual property owned by Blue Horse Labs, Inc. (“BHL”) were assigned to its sole shareholder, the John Sperling Revocable Trust (“JSRT”) due to BHL’s dissolution and then subsequently to the JSF. The JSF is deemed a related party of the Company because MCC, the Company’s largest stockholder, and the JSF share common officers and directors.
JSF receives a single digit royalty from the Company when revenue has been collected on product sales or for license payments from third parties that involve certain intellectual property developed under research funding originally from BHL. Royalty fees due to JSF were $
16. Subsequent Events
Management has evaluated subsequent events through May 15, 2023, the date that the financial statements were available to be issued.
16
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes to those statements included herein. In addition to historical financial information, this report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. The statements contained in this report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in the most recent Annual Report on Form 10-K filed by the Company. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Solely for convenience, the trademarks, service marks and trade names referred to in this report may appear without the ®, TM, or SM symbols, but such references do not constitute a waiver of any rights that might be associated with the respective trademarks, service marks, or trade names.
Overview
We are a producer and marketer of innovative, plant-based food and beverage products. Our history as a leader in science-based approaches to developing high value crop improvements, primarily in wheat, designed to enhance farm economics by improving the performance of crops in the field, as well as their value as food ingredients, has laid the foundation for our path forward. We have used non-genetically modified advanced breeding techniques to develop these proprietary innovations which we are now commercializing through the sales of seed and grain, food ingredients and products, trait licensing and royalty agreements. The acquisition of the assets of Live Zola, LLC ("Zola") added coconut water to our portfolio of products.
Our commercial strategy is to satisfy consumer nutrition demands with the superior functional benefits our crops deliver directly from the farm, enabling us to share premium economics throughout the ag-food supply chain and to build a world-class estate of high value traits and varieties. The acquisition of the Zola brand allows us to broaden our reach within the beverage sector.
It is also estimated by the U.S. Department of Agriculture (“USDA”), that approximately one-fifth of the FDA recommended calories consumed by people in the US are from wheat. Therefore, the market opportunity for nutritional improvements in wheat are significant not only because the wheat market itself is vast, but also because of the “share of stomach” wheat represents. Considering that most people today are not getting enough fiber or protein in their daily diets, the superior nutrient density of our non-GMO GoodWheat™ (“GoodWheat”) technology can improve the dietary intake of average consumers, by increasing their fiber and protein consumption without changing the way they eat. We believe this proprietary advantage gives GoodWheat the potential to become a global standard in wheat.
Our Growth Strategy
We believe there are significant opportunities to grow our business by executing the following elements of our strategy:
17
Arcadia Wellness, LLC
In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola. The acquisition included consumer CBD brands like Soul Spring™, a CBD-infused botanical therapy brand in the natural category, Saavy Naturals™, a line of natural body care products and ProVault™, a CBD-infused sports performance formula made with natural ingredients, providing effective support and recovery for athletes. Also included in the purchase is Zola, a coconut water sourced exclusively with sustainably grown coconuts from Thailand. In July 2022, the Company licensed Saavy Naturals™ to Radiance Beauty and Wellness, Inc. ("Radiance Beauty").
Our Product Portfolio
GoodWheat™ Consumer Products
In June 2022, we launched our GoodWheat pasta in five varieties – penne, spaghetti, fettuccine, elbows and rotini – in select retailers nationwide and on Amazon. Our pasta delivers 4 times the fiber of traditional wheat pasta with 9g of protein per serving and no sacrifice on taste. In fact, our research shows that GoodWheat pasta scores at parity on taste with leading wheat pasta competitors and significantly outscores market leading vegetable-based pastas. Made with only our USA farm grown wheat, GoodWheat pasta meets consumers’ preference for clean labels and transparent sourcing. And, in December of 2022, GoodWheat received the American Heart Association’s Heart-Check mark on all of our pasta products. With its high fiber, lower sodium and zero saturated fat, GoodWheat meets the criteria for a heart-healthy pasta and provides consumers with a better-for-you option that delivers superior nutrition with the taste and texture of traditional pasta.
Most Americans suffer from a significant fiber deficiency. Less than 10 percent of women and less than 3 percent of men get enough fiber in their daily diets. The recommended daily value of fiber is 25g for women and children, and 38g for men according to the May 2021 Food and Health Survey by the International Food Information Council. One serving of GoodWheat Pasta gets your fiber closer to your daily need, delivering 8g of fiber, which accounts for 32 percent of the daily value of fiber needs for women and children, and 20 percent for men.
In 2023, we plan to expand the GoodWheat portfolio with the launch of innovative, new wheat-based products in additional categories, offering consumers more options to improve their fiber intake at multiple mealtimes throughout the day.
Zola Coconut Water
Zola is a pure, natural, 100% coconut water with a crisp, clean taste that’s lightly sweet and refreshing. Naturally hydrating and never from concentrate, Zola is Non-GMO Project Verified and only contains 60 calories per serving. In taste tests, Zola beats competitors 2 to 1 and is the best-tasting way to rehydrate, reset and reenergize.
CBD Body Care ProVault Topical Pain Relief
Our portfolio currently consists of two body care brands that both contain CBD. The first brand is ProVault, a muscle and joint pain relief product that is formulated with THC-free CBD isolate along with a proprietary blend of natural ingredients and fast-acting cooling agents. The second brand is SoulSpring, a CBD-infused line of bath and body products that includes nourishing botanicals and minerals.
The market for CBD products has been under pressure primarily due to regulatory uncertainty. Given our strategic focus on food and beverage products, we are currently in the process of exploring strategic alternatives for our body care brands.
18
Components of Our Statements of Operations Data
Revenues
We derive our revenues primarily from product sales and royalties.
Product revenues
Our product revenues consist primarily of sales of Arcadia Wellness products, GoodWheat grain and pasta, and GLA products. We recognize revenue from product sales when control of the product is transferred to third-party distributors and manufacturers, collectively “our customers,” which generally occurs upon delivery. Our revenues fluctuate depending on the timing of shipments of product to our customers and are reported net of estimated chargebacks, returns and losses.
Operating Expenses
Cost of revenues
Cost of revenues relates to the sale of Arcadia Wellness, GoodWheat, and GLA products and consists of the cost of raw materials, including internal and third-party services costs related to procuring, processing, formulating, packaging and shipping our products, as well as in-licensing and royalty fees, any adjustments or write-downs to inventory or prepaid production costs.
Research and development expenses ("R&D")
Research and development expenses consist of costs incurred in the development and testing of our products and other products in development incorporating our traits. These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred. Additionally, we are required from time to time to make certain milestone payments in connection with the development of technologies in-licensed from third parties. Our research and development expenses may fluctuate from period to period.
Gain on sale of property and equipment, net
Gain on sale of fixed assets includes gains from the sale of tangible assets sold above their net book value.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of employee costs, professional service fees, broker and sales commission fees, and overhead costs. Our selling, general, and administrative expenses may fluctuate from period to period. In connection with our commercialization activities for our consumer products, we expect to increase our investments in sales and marketing, including additional consulting fees.
Interest income (expense)
Interest income consists interest income on our cash and cash equivalents and investments.
Valuation loss on March 2023 PIPE
Valuation loss on March 2023 PIPE includes the fair value in excess of gross proceeds and the increase in fair value related to the re-pricing of existing warrants.
Change in the estimated fair value of common stock warrant and option liabilities
Change in the estimated fair value of common stock warrant and option liabilities is comprised of the fair value remeasurement of the liabilities associated with our financing transactions.
Issuance and offering costs allocated to liability classified options
Issuance and offering costs generally include placement agent, legal, advisory, accounting and filing fees related to financing transactions.
19
Income Tax Provision
Our income tax provision has not been historically significant, as we have incurred losses since our inception. The provision for income taxes consists of state and foreign income taxes. Due to cumulative losses, we maintain a valuation allowance against our U.S. deferred tax assets as of March 31, 2023 and December 31, 2022. We consider all available evidence, both positive and negative, including but not limited to: earnings history, projected future outcomes, industry and market trends, and the nature of each of the deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. deferred tax assets.
Results of Operations
Comparison of the Three Months Ended March 31, 2023 and 2022
|
|
Three Months Ended March 31, |
|
|
$ Change |
|
|
% Change |
|
|||||||
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
||||
|
|
(In thousands except percentage) |
|
|||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
1,509 |
|
|
$ |
3,170 |
|
|
$ |
(1,661 |
) |
|
|
(52 |
)% |
Royalty |
|
|
— |
|
|
|
50 |
|
|
|
(50 |
) |
|
|
(100 |
)% |
Total revenues |
|
|
1,509 |
|
|
|
3,220 |
|
|
|
(1,711 |
) |
|
|
(53 |
)% |
Operating expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenues |
|
|
825 |
|
|
|
3,458 |
|
|
|
(2,633 |
) |
|
|
(76 |
)% |
Research and development |
|
|
359 |
|
|
|
395 |
|
|
|
(36 |
) |
|
|
(9 |
)% |
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(31 |
) |
|
|
31 |
|
|
|
(100 |
)% |
Gain on sale of property and equipment |
|
|
(19 |
) |
|
|
(328 |
) |
|
|
309 |
|
|
|
(94 |
)% |
Selling, general and administrative |
|
|
4,392 |
|
|
|
4,349 |
|
|
|
43 |
|
|
|
1 |
% |
Total operating expenses |
|
|
5,557 |
|
|
|
7,843 |
|
|
|
(2,286 |
) |
|
|
(29 |
)% |
Loss from operations |
|
|
(4,048 |
) |
|
|
(4,623 |
) |
|
|
575 |
|
|
|
12 |
% |
Interest income (expense) |
|
|
198 |
|
|
|
(1 |
) |
|
|
199 |
|
|
|
(19900 |
)% |
Other income, net |
|
|
32 |
|
|
|
14 |
|
|
|
18 |
|
|
|
129 |
% |
Valuation loss on March 2023 PIPE |
|
|
(6,076 |
) |
|
|
— |
|
|
|
(6,076 |
) |
|
|
100 |
% |
Change in fair value of common stock warrant and option liabilities |
|
|
940 |
|
|
|
— |
|
|
|
940 |
|
|
|
100 |
% |
Issuance and offering costs allocated to liability classified options |
|
|
(430 |
) |
|
|
— |
|
|
|
(430 |
) |
|
|
100 |
% |
Net loss |
|
|
(9,384 |
) |
|
|
(4,610 |
) |
|
|
(4,774 |
) |
|
|
104 |
% |
Net loss attributable to non-controlling interest |
|
|
— |
|
|
|
(122 |
) |
|
|
122 |
|
|
|
(100 |
)% |
Net loss attributable to common stockholders |
|
$ |
(9,384 |
) |
|
$ |
(4,488 |
) |
|
$ |
(4,896 |
) |
|
|
109 |
% |
Revenues
Product revenues accounted for 100% and 98% of total revenues during the three months ended March 31, 2023 and 2022, respectively. Product revenues decreased $1.7 million, or 52%, during the three months ended March 31, 2023 compared to the same period in 2022. Revenues in the first quarter of 2022 included $1.8 million of GoodWheat grain sales and sales of body care products that are no longer part of the Arcadia product portfolio.
Cost of revenues
Cost of revenues decreased by $2.6 million, or 76%, during the three months ended March 31, 2023 compared to the same period in 2022. Cost of revenues in the first quarter of 2022 included GoodWheat grain sold at cost, low-margin body care product sales, and higher inventory write-downs. Gross profit, calculated as total revenues less cost of revenues, was $684,000 during the three months ended March 31, 2023 compared to gross loss of $238,000 during the three months ended March 31, 2022. The increase in the gross profit was driven by the absence of GoodWheat grain sold at cost, the focus on higher-margin products, and lower inventory write-downs during the three months ended March 31, 2023.
20
Research and development
Research and development expenses decreased by $36,000, or 9%, during the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by the Company's continued focus on commercialization, which has led to lower employee-related expenses, and related activity costs as we right-sized our research teams.
Gain on sale of property and equipment
During the three months ended March 31, 2023 and 2022, the Company sold property and equipment for net proceeds exceeding book value by $19,000 and $328,000, respectively.
Selling, general, and administrative
Selling, general, and administrative expenses increased by $43,000, or 1%, during the three months ended March 31, 2023 compared to the same period in 2022 despite a 43% increase in marketing expenses in 2023.
Interest income (expense)
During the three months ended March 31, 2023, the Company recognized interest income of $198,000 from investments as compared to interest expense of $1,000 during the same period in 2022.
Other income, net
During the three months ended March 31, 2023, the Company recognized other income of $32,000.
Valuation loss on March 2023 PIPE
During the three months ended March 31, 2023, the Company recognized a $6.1 million valuation loss related to the March 2023 PIPE financing transaction. The valuation loss includes the fair value in excess of gross proceeds and the increase in fair value related to the re-pricing of existing warrants.
Change in the estimated fair value of common stock warrant and option liabilities
The change in the estimated fair value of common stock warrant and option liabilities was $940,000 during the three months ended March 31, 2023 related to the change in the estimated fair value of the liability classified preferred investment options issued in connection with the March 2023 PIPE and August 2022 Registered Direct Offering financing transactions.
Issuance and offering costs allocated to liability classified options
Issuance and offering costs were $430,000 during the three months ended March 31, 2023 and were related to the liability classified options issued in the March 2023 PIPE financing transaction.
Seasonality
We and our commercial partners operate in different geographies around the world and conduct field trials used for data generation, which must be conducted during the appropriate growing seasons for particular crops and markets. Demand for our consumer body care products tends to vary with major holidays and demand for coconut water products is generally higher in the summer months.
The level of seasonality in our business overall is difficult to evaluate at this time due to our relatively limited number of commercialized products, our expansion into new geographical markets and our introduction of new products and traits.
21
Liquidity & Capital Resources
We have funded our operations primarily with the net proceeds from our private and public offerings of our equity securities and debt, as well as proceeds from the sale of our products and payments under license agreements. Our principal use of cash is to fund our operations, which are primarily focused on commercializing our products. Our contractual obligations are primarily related to our operating leases for facilities, land and equipment. As of March 31, 2023, we had cash and cash equivalents of $23.0 million. For the three months ended March 31, 2023, the Company had a net loss of $9.4 million and net cash used in operations of $3.5 million. For the twelve months ended December 31, 2022, the Company had net losses of $15.6 million and net cash used in operations of $14.0 million.
Going Concern
We believe that our existing cash and cash equivalents will not be sufficient to meet our anticipated cash requirements for at least the next 12-18 months from the issuance date of these financial statements, 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.
We may seek to raise additional funds through debt or equity financings, if necessary. We may also consider entering into additional partner arrangements. Any sale of additional equity would result in dilution to our stockholders. Our incurrence of debt would result in debt service obligations, and the instruments governing our debt could provide for additional operating and financing covenants that would restrict our operations. If we require additional funds and are not able to secure adequate additional funding, we may be forced to reduce our spending, extend payment terms with our suppliers, liquidate assets, or suspend or curtail planned product launches. Any of these actions could materially harm our business, results of operations and financial condition.
Liquidity
The following table summarizes total current assets, current liabilities and working capital for the dates indicated (in thousands):
|
|
As of |
|
|
As of |
|
||
|
|
2023 |
|
|
2022 |
|
||
Current assets |
|
$ |
27,205 |
|
|
$ |
25,398 |
|
Current liabilities |
|
|
4,097 |
|
|
|
4,209 |
|
Working capital surplus |
|
$ |
23,108 |
|
|
$ |
21,189 |
|
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net cash (used in) provided by: |
|
|
|
|
|
|
||
Operating activities |
|
$ |
(3,466 |
) |
|
$ |
(4,885 |
) |
Investing activities |
|
|
315 |
|
|
|
747 |
|
Financing activities |
|
|
5,505 |
|
|
|
4 |
|
Net increase (decrease) in cash |
|
$ |
2,354 |
|
|
$ |
(4,134 |
) |
Cash flows from operating activities
Cash used in operating activities for the three months ended March 31, 2023, was $3.5 million. With respect to our net loss of $9.4 million, non-cash charges including $430,000 of issuance and offering costs, $6.1 million of valuation loss recognized for the March 2023 PIPE, $212,000 of stock-based compensation, $180,000 of lease amortization, $71,000 of depreciation, $23,000 of write-downs of inventory, and adjustments in our working capital accounts of $76,000, were offset by the change in fair value of common stock warrant and option liabilities of $940,000, operating lease payments of $191,000 and a gain on disposal of property and equipment of $19,000.
22
Cash used in operating activities for the three months ended March 31, 2022, was $4.9 million. With respect to our net loss of $4.6 million, non-cash charges including $260,000 of stock-based compensation, $166,000 of lease amortization, $368,000 of write-downs of inventory, and $149,000 of depreciation were offset by adjustments in our working capital accounts of $692,000, $328,000 of gain on disposal of property and equipment, other non-cash income from the change in fair value of contingent consideration of $31,000, and operating lease payments of $180,000.
Cash flows from investing activities
Cash provided by investing activities for the three months ended March 31, 2023 consisted of proceeds of $30,000 from sale of property and equipment as well as proceeds of $285,000 from sale of Verdeca.
Cash provided by investing activities for the three months ended March 31, 2022 consisted of $787,000 of proceeds from sales of property and equipment, partially offset by $40,000 of purchases of property and equipment.
Cash flows from financing activities
Cash provided by financing activities for the three months ended March 31, 2023 consisted of gross proceeds of $6.0 million from the March 2023 PIPE financing transaction and proceeds from the purchase of ESPP shares of $5,000, which were offset by payments of transaction costs related to the March 2023 PIPE financing transaction of $497,000.
Cash provided by financing activities for the three months ended March 31, 2022 consisted of proceeds from the purchase of ESPP shares of $4,000.
Off-Balance Sheet Arrangements
Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities, or variable interest entities other than Verdeca, which was disposed of in November 2020.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated, and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We consider our critical accounting policies and estimates to be revenue recognition, determination of the provision for income taxes, and net realizable value of inventory.
23
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Required.
ITEM 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, or Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation identified above that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
24
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We currently are not a party to any material litigation or other material legal proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition, liquidity or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Information concerning our sales of unregistered securities during the quarter ended March 31, 2023, has previously been reported in Current Reports on Form 8-K that we filed during that quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are attached hereto or are incorporated herein by reference.
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Incorporated by Reference |
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Exhibit Number |
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Exhibit Description |
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Form |
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File No. |
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Exhibit |
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Filing Date |
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Filed Herewith |
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3.1 |
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8-K |
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001-37383 |
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3.1 |
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5/26/2015 |
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3.2 |
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Amendment to the Amended and Restated Certificate of Incorporation |
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8-K |
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001-37383 |
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3.1 |
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2/28/2023 |
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3.3 |
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8-K |
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001-37383 |
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3.1 |
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12/8/2022 |
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4.1 |
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8-K |
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001-37383 |
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4.1 |
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3/3/2023 |
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4.2 |
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8-K |
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001-37383 |
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4.2 |
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3/3/2023 |
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4.3 |
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8-K |
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001-37383 |
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4.3 |
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3/3/2023 |
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4.4 |
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8-K |
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001-37383 |
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4.4 |
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3/3/2023 |
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10.1 |
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8-K |
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001-37383 |
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10.1 |
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3/3/2023 |
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10.2 |
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8-K |
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001-37383 |
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10.2 |
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3/3/2023 |
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10.3 |
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8-K |
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001-37383 |
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10.3 |
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3/3/2023 |
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10.4* |
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Employment Letter and Severance and Change in Control Agreement for Thomas J. Schaefer |
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8-K/A |
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001-37383 |
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10.1 |
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1/5/2023 |
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31.1 |
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X |
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31.2 |
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X |
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32.1(1) |
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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32.2(1) |
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Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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X |
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101.INS |
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Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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X |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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X |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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X |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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X |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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X |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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X |
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104.1 |
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Cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in inline XBRL (and contained in Exhibit 101) |
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X |
* Indicates a management contract or compensatory plan or arrangement
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Arcadia Biosciences, Inc. |
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May 15, 2023 |
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By: |
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/s/ STANLEY E. JACOT, JR. |
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Stanley E. Jacot, Jr. |
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President and Chief Executive Officer |
May 15, 2023 |
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By: |
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/s/ THOMAS J. SCHAEFER |
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Thomas J. Schaefer |
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Chief Financial Officer |
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Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Stanley E. Jacot, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Arcadia Biosciences, Inc. for the period ended March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 15, 2023 |
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/s/ STANLEY E. JACOT, JR. |
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Stanley E. Jacot, Jr. |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas J. Schaefer, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Arcadia Biosciences, Inc. for the period ended March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: May 15, 2023 |
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/s/ THOMAS J. SCHAEFER |
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Thomas J. Schaefer |
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Chief Financial Officer |
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(Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Arcadia Biosciences, Inc. (the “Company”), on Form 10-Q for the quarter ended March 31, 2023 (the “Report”), I, Stanley E. Jacot, Jr., President and Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 15, 2023 |
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/s/ STANLEY E. JACOT, JR. |
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Stanley E. Jacot, Jr. |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report of Arcadia Biosciences, Inc. (the “Company”), on Form 10-Q for the quarter ended March 31, 2023 (the “Report”), I, Thomas J. Schaefer, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 15, 2023 |
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/s/ THOMAS J. SCHAEFER |
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Thomas J. Schaefer |
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Chief Financial Officer |
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(Principal Financial Officer) |