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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-36245
RiceBran Technologies
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
25420 Kuykendahl Rd., Suite B300
Tomball, TX
(Address of principal executive offices)
87-0673375
(I.R.S. Employer Identification No.)
77375
(Zip Code)
Registrant’s telephone number, including area code: (281) 675-2421
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐
Non-accelerated filer ☒
Accelerated filer ☐
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). YES ☐ NO ☒
As of June 30, 2023, the aggregate market value of our common stock held by non-affiliates was $10.4 million calculated by using the closing price of the
common stock on such date on NASDAQ Capital Market of $1.11 per share.
As of March 29, 2024, there were 10,002,902 shares of our common stock, no par value per share, outstanding.
Documents incorporated by reference: None
Auditor Firm PCAOB ID:
100 Auditor Name:
Withum Smith+Brown, PC
Auditor Location:
Whippany, New Jersey
Auditor Firm PCAOB ID:
49 Auditor Name:
RSM US LLP
Auditor Location:
Houston, Texas
Table of Contents
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
FORM 10-K
INDEX
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Signatures
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements
are not historical facts, but are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. Words such
as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “plans,” “projects,” “will,” “may” and similar expressions are intended to identify forward-
looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements are not guarantees of future
performance and concern matters that could subsequently differ materially from those described in the forward-looking statements. Future events and
actual results could differ materially from those discussed in this Annual Report. These risks and uncertainties include those described in “Risk Factors”
and elsewhere in this Annual Report. Except as required by law, we undertake no obligation to revise any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this Annual Report. We do not endorse any projections regarding future performance that may be
made by third parties.
Unless the context requires otherwise, references to “we,” “us,” “our” and the “Company” refer to RiceBran Technologies, and its consolidated
subsidiaries.
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ITEM 1. BUSINESS
Overview
Our Company
PART I
We are a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small
grains. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing
consumer demand for all natural, non-GMO and organic products.
We incorporated under the laws of the State of California in 2000. From July 2003 until October 2012, our corporate name was “NutraCea.” In October
2012, we changed our name to “RiceBran Technologies”. In 2018, we moved our corporate headquarters to Texas, from Arizona.
We own and operate a grain mill and processing facility in East Grand Forks, Minnesota operated by MGI Grain, Incorporated (MGI), acquired in 2019.
On June 23, 2023, we completed the sale of our assets related to our stabilized rice bran business (SRB Business) for $1.8 million in cash and the
assumption of $1.7 million of real estate operating lease and other liabilities. The sale agreement contains customary representations, warranties, and
covenants. The SRB Business was a specialty ingredient company that produced nutritional and functional ingredients derived from raw rice bran for the
nutraceutical, healthy food, companion animal and equine feed categories to convert raw rice bran into stabilized rice bran (SRB) and high-value SRB
derivative products.
On December 1, 2023, an entity owned by Cable Car Capital LLC, Funicular Funds, LP (Funicular), purchased $0.4 million of shares of common stock of
the Company and lent the Company $4.1 million.
On January 25, 2024, we sold our rice mill facility in Wynne, Arkansas operated by Golden Ridge Rice Mills, Inc. (Golden Ridge), that was acquired and
owned and operated since 2018. Golden Ridge specialized in producing #1 and #2 Grade U.S. premium long and medium white rice milled to United States
Department of Agriculture (USDA) standards. Golden Ridge also produced brown rice, brewers rice, and brokens.
Our MGI grain mill and processing facility in East Grand Forks, Minnesota specializes in processing barley, oats, and mustard and provides us a presence
in a key production region in the U.S. MGI’s facility is an American Institute of Baking (AIB) certified barley pearling facility, Hazard Analysis Critical
Control Point (HACCP) and SQF certified.
Our Customers
We use almost entirely internal sales staff to market our portfolio of products to customers domestically and internationally. In 2023 and 2022, three
customers accounted for 48.4% and 44.0% of our revenues from continuing operations. We continue to focus efforts on diversification of our customer base
to mitigate the concentration of customers.
Government Regulations
Our operations are subject to federal, foreign, state and local government laws and regulations, including those relating to zoning, workplace safety and
accommodations for the disabled, and our relationships with our employees are subject to regulations, including minimum wage requirements, anti-
discrimination laws, overtime and working conditions and citizenship requirements.
In both our U.S. and foreign markets, we are affected by extensive laws, governmental regulations, administrative determinations, court decisions and
similar constraints. Such laws, regulations and other constraints exist at the federal, state and local levels in the U.S., and at all levels of government in
foreign jurisdictions, including to the formulation, manufacturing, packaging, labeling, distribution, sale and storage of our products. We are also subject to
regulations regarding product claims and advertising.
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The formulation, manufacturing, packaging, labeling, advertising, distribution and sale of our products are subject to regulation by one or more federal
agencies, including the Food & Drug Administration (FDA), the Federal Trade Commission (FTC) and the USDA. We are also regulated by various states
and local agencies where our products are manufactured and/or sold, as well as a host of agencies outside the U.S. Among other matters, the FDA and FTC
are concerned with product safety and claims made with respect to a product’s ability to provide health-related benefits. The FDA, under the Federal Food,
Drug and Cosmetic Act (FDCA), regulates the formulation, manufacturing, packaging, labeling, distribution and sale of food and food ingredients, while
the FTC regulates their advertising.
Federal agencies, including the FDA and the FTC, have a variety of enforcement remedies, including investigations, issuing warning letters and cease-and-
desist orders, requiring corrective labeling or advertising, requiring consumer redress such as requiring that a company offer to repurchase products
previously sold, seeking injunctive relief or product seizures, imposing civil penalties or commencing criminal prosecution. Certain state agencies have
similar authority. These federal and state agencies have in the past used these remedies in regulating participants in the food and food ingredient industries,
including the imposition of civil penalties.
The FDA Food Safety Modernization Act (FSMA), enacted January 4, 2011, amended the FDCA to significantly enhance the FDA’s authority over various
aspects of food regulation. The FSMA granted the FDA mandatory recall authority when the FDA determines there is a reasonable probability that a food
is adulterated or misbranded and that the use of, or exposure to, the food will cause serious adverse health consequences or death to humans or animals.
One of the more significant changes under FSMA is the requirement of hazard analysis and risk-based preventive controls (HARPC) for all human and
animal food processing facilities. We are committed to FSMA compliance and are SQF certified at our facility.
Any substance that is intentionally added to food is a food additive and is subject to premarket review and approval by the FDA, unless the substance is
generally recognized, among qualified experts, as having been adequately shown to be safe under the conditions of its intended use, or unless the use of the
substance is otherwise excluded from the definition of a food additive. When an additive is proposed for use in a meat, its safety, technical function and
conditions of use must also be evaluated by the USDA. Because the USDA retains jurisdiction over meat products and food ingredients intended for use in
meats, the use of our SRB meat enhancers is regulated by this agency. SRB has USDA approval for use in certain meat products.
Animal feed ingredients are regulated by the FDA at the federal level and by the individual states.
Competition
Our major competitors include producers of barley, oats and mustard. We compete with other companies that offer products that incorporate cereal grains as
well as other companies that offer alternative food ingredients. Many consumers may consider such products to be a replacement for our products. We
believe that increased competition negatively impacted our financial results in 2023, especially in our prior SRB Business, and is likely to continue to
impact us negatively in the foreseeable future. Our results of operations in 2023 were impacted by competition from companies that have invested
significant resources to develop technologies for stabilizing and processing rice bran. During 2023, we also faced competition from producers of isolated
soy protein, wheat bran and oat bran and from companies that offer products incorporating stabilized rice bran.
Human Capital
We employ a skilled workforce within a broad range of functions. As of December 31, 2023, we had 35 employees. Our employees are located throughout
the United States to serve our business operations. From year to year, we experience normal variable labor fluctuation at our production facility.
We attract and retain our workforce through a dynamic and inclusive culture by providing a safe work environment, flexible work arrangements, and
competitive pay and benefits, including access to personal health advocates offering independent guidance. We believe that we have positive relationships
with our employees and have deployed programs that advance employee engagement, communication, and feedback. None of our employees are covered
by collective bargaining agreements.
Available Information
We maintain an Internet website at the following address: www.ricebrantech.com. We make available on or through our Internet website certain reports and
amendments to those reports that we file with the Securities and Exchange Commission (SEC) in accordance with the Securities Exchange Act of 1934
(Exchange Act). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and the reports of
beneficial ownership. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the
information with, or furnish it to, the SEC. The contents of our website are not incorporated by reference in this report on Form 10-K and shall not be
deemed “filed” under the Exchange Act.
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ITEM 1A. RISK FACTORS
Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our
business, financial condition, results of operations, cash flows and the trading price of our common stock. Investors or potential investors in our stock
should carefully consider the risks described below.
Risks Relating to Our Business
We have not yet achieved annual positive cash flows.
RISK FACTORS
Our net cash used in operating activities from continuing operations was $2.2 million in 2023 and $3.8 million in 2022. We may not be able to achieve
revenue growth, profitability or positive cash flow, on either a quarterly or annual basis, and that profitability, if achieved, may not be sustained. If we are
unable to achieve or sustain profitability, we may not be financially viable in the future and may have to curtail, suspend, or cease operations, restructure
existing operations to attempt to ensure future viability, or pursue other alternatives such as pursuing dissolution and liquidation, seeking to merge with
another company, selling all or substantially all of our assets or raising additional capital through equity or debt financings. Because of our recurring losses
and negative cash flows from operations, the audit report of our independent registered public accountants on our consolidated financial statements
contains an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
We depend primarily on the sale of a limited number of products milled in a single facility, and the failure to diversify our product offering could
materially harm our business and our operating results.
Historically, we depended in large part on revenue derived from sales of SRB to a few key customers. Following the sale of our SRB Business and our
Golden Ridge facility in June 2023 and January 2024, respectively, we no longer receive revenue from the sale of SRB and derive revenue from the sale of
barley, oats and mustard produced in one facility. Given the recent divestitures of our business, the consequent reduction in our product revenue
diversification could adversely affect our profitability potential and could materially and adversely affect our business, operations and cash flows by
making us more vulnerable to, among other things:
● Fluctuations in the prices of and demand for the products we manufacture;
● Construction in the supply of raw materials;
● Droughts, floods and other adverse growing conditions impacting barley, oats and mustard;
● Fires, floods, explosions, accidents and adverse weather conditions that could damage our grain mill;
● Disruption in transportation;
● Regulatory changes affecting our milling operations or other aspects of our business;
● General economic disruption; and
● Changes in consumer tastes
We have generated significant losses since our inception in 2000, and losses in the future could cause the trading price of our stock to decline or have a
material adverse effect on our financial condition, cash flow, and ability to pay our debts as they become due.
Through December 31, 2023, we have incurred an accumulated deficit in excess of $333 million. We may not be able to achieve profitability or maintain
profitable operations if achieved. If our losses continue, our liquidity may continue to be severely impaired, our stock price may fall and our shareholders
may lose all or a significant portion of their investment. If we are not able to attain profitability in the near future our financial condition could deteriorate
further which could have a material adverse impact on our business and prospects and result in a significant or complete loss of shareholder investment.
Further, we may be unable to pay our debt obligations as they become due, which include obligations to secured creditors.
We may need to raise additional funds in the future to achieve our business objectives and to satisfy our cash obligations, which would dilute the
ownership of our existing shareholders and possibly subordinate certain of their rights to the rights of new investors.
We may need to raise additional funds through debt or equity financings to complete our business objectives. We also may choose to raise additional funds
in debt or equity financings if they are available to us on reasonable terms to increase our working capital, strengthen our financial position or to make
acquisitions. Our board of directors has the ability, without seeking shareholder approval, to issue convertible debt and additional shares of common stock
or preferred stock that is convertible into common stock for such consideration as the board of directors may consider sufficient, which may be at a
discount to the market price. Any sales of additional equity or convertible debt securities could result in dilution of the equity interests of our existing
shareholders, which could be substantial. Additionally, if we issue shares of preferred stock or convertible debt to raise funds, the holders of those securities
might be entitled to various preferential rights over the holders of our common stock, including repayment of their investment, and possibly additional
amounts, before any payments could be made to holders of our common stock in connection with an acquisition of us. Such preferred shares, if authorized,
might be granted rights and preferences that would be senior to, or otherwise adversely affect, the rights and the value of our common stock. Also, new
investors may require that we and certain of our shareholders enter into voting arrangements that give them additional voting control or representation on
our board of directors. We have a limited number of authorized and unissued (and unreserved) shares, which limits our ability to raise additional funds
through such debt or equity financings. Our shareholders would need to approve any increase in the number of authorized shares. If we determine that such
an increase is desirable, it is possible our shareholders will not approve the increase.
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Our outstanding debt is subject to terms that may adversely affect our operations and financial condition.
We entered into a factoring agreement in October 2019. The factoring agreement provides for a $7.0 million credit facility which we may draw upon to the
extent we have qualifying accounts receivable as defined in the agreement. The lender has the right to demand repayment of advances under the facility at
any time, and amounts owed under the agreement are secured by our personal property assets. If the lender demands repayment and we fail to make such
repayment, or if we cause or permit any other event of default as defined in the agreement or fail to comply with covenants set forth in the agreement
(including restrictions on incurring other debt under unsecured loans), we would be subject to additional expenses or possible foreclosure on our assets that
secure our obligations under the agreement. Such results could have a material adverse effect on our operations and financial condition.
We have identified material weaknesses in our internal control over financial reporting, and if we are unable to achieve and maintain effective internal
control over financial reporting, investors could lose confidence in our consolidated financial statements and our Company, which could have a
material adverse effect on our business and our stock price.
In the course of preparing the financial statements for the fiscal year ended December 31, 2023, our management determined that we have material
weaknesses in our internal control over financial reporting, which relate to management’s review controls over the documentation and review of the
required dual approval for the posting of journal entries and the processing and review of inventory costing. We had consistent turnover within the
accounting department that led to the Company having a lack of sufficient number of qualified personnel to maintain proper controls over financial
reporting. As a result of these material weaknesses, we have initiated and will continue to implement remediation measures including, but not limited to:
hiring additional accounting staff and the necessary customization of the Company’s accounting system to provide the documentation for the required dual
approval for the posting of journal entries. As a result, the Company believes that it has adequate resources to address accounting and reporting
requirements under U.S. GAAP and SEC reporting standards and to implement the appropriate internal controls. If we fail to fully remediate these material
weaknesses or fail to maintain effective internal controls in the future, it could result in a material misstatement of our consolidated financial statements
that would not be prevented or detected on a timely basis, which could cause investors to lose confidence in our financial information or cause the trading
price of our common stock to decline.
If we are unable to maintain effective internal control over financial reporting, investors could lose confidence in our consolidated financial statements
and our Company, which could have a material adverse effect on our business and our stock price.
We are required to maintain adequate internal control over financial reporting and to evaluate the effectiveness of our internal controls in accordance with
the framework established by Internal Control - Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway
Commission. If we fail to maintain effective internal controls in the future, this could result in a material misstatement of our consolidated financial
statements that would not be prevented or detected on a timely basis, which could cause investors to lose confidence in our financial information or cause
the trading price of our common stock to decline.
There are significant market risks associated with our business.
Our business plan and strategies are based on certain assumptions regarding the size of the barley and oat markets, our anticipated share of these markets,
the estimated price and acceptance of our products and other factors. These assumptions are based on our best estimates; however, our assessments may not
prove to be correct. Any future success may depend upon factors including changes in governmental regulation, increased levels of competition, including
the entry of additional competitors and increased success by existing competitors, changes in general economic conditions, increases in operating costs
including costs of production, supplies, personnel, equipment, and reduced margins caused by competitive pressures. Many of these factors are beyond our
control.
Effects of COVID-19 pandemic and other health epidemics and outbreaks, including economic, regulatory, legal, workforce and cyber security risks,
could adversely impact our financial condition, results of operations and cash flows.
The COVID-19 pandemic has adversely affected the business and financial markets of many countries, disrupted global supply chains, and created
significant volatility in the financial markets. In addition, the pandemic has resulted in travel restrictions, business closures and the institution of
quarantining and other restrictions on movement in communities. With widespread availability of vaccines, the U.S. Centers for Disease Control and
Prevention has revised its guidance, travel restrictions have started to lift and businesses have reopened. However, the COVID-19 pandemic continues to
evolve and the extent to which our business and results of operations are impacted will depend on various factors beyond our control, such as duration,
severity and sustained geographic resurgence of the virus, the emergence of new variants, and the success of actions to contain the virus and its variants or
treat its impact. The pandemic could adversely affect the demand for our products, and it poses the risk that we, or our customers, suppliers, and other
business partners may be disrupted or prevented from conducting business for an uncertain period of time. The extent to which this would impact our
financial results is unknown as it is dependent on future developments, which are highly uncertain and cannot be predicted. As such, it is difficult to
estimate the exact magnitude of the COVID-19 pandemic on our business.
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We have not had, and we do not expect any of our facilities to be closed subject to government-mandated closures, and we have informed our customers
that we anticipate operating throughout the COVID-19 outbreak. Disruption in the supply chain of raw materials used to produce our products as a result of
the COVID-19 outbreak, has not caused us to close any of our facilities, and to date, our employees have been reporting to work, either remotely or in-
person without any material change in attendance or productivity. However, we cannot ensure that the COVID-19 outbreak will not cause disruptions to our
business in the future.
We depend on a limited number of customers and their ability to meet their obligations.
In 2023, three customers accounted for 48.4% of revenues and the top ten customers accounted for 75.1% of revenues. As of December 31, 2023, the
customers with the highest ten balances accounted for 86.1% of accounts receivable.
We are dependent upon the continued growth, viability and financial stability of our customers. We expect to continue to depend upon a relatively small
number of customers for a significant percentage of our revenues. Consolidation among our customers may reduce our number of customers or result in a
concentration of credit risk with respect to outstanding accounts receivable. We consider the financial strength of our customers, the remoteness of the
possible risk that a default event will occur, the potential benefits to our future growth and development, possible actions to reduce the likelihood of a
default event, and the benefits from the transaction, before entering into a large credit limit with a customer. Although we analyze these factors, the ultimate
collection of the obligation from the customer may not occur. Although we continue to expand our customer base in an attempt to mitigate the
concentration of credit risk, writing off of an accounts receivable balance could have an adverse effect on our results of operations. Financial instruments
that potentially subject us to concentration of credit risk consist primarily of cash equivalents and trade receivables. Historically, we have not experienced
any loss of our cash and cash equivalents, but we have experienced losses to our trade receivables. A significant reduction in sales to any of our significant
customers could have a material adverse effect on our results of operations.
We may encounter difficulties in maintaining relationships with distributors and customers while enforcing our credit policies.
We define credit risk as the risk of loss from obligors or counterparty default. Our credit risks arise from both distributors and customers. Many of these
risks and uncertainties are beyond our control. Our ability to forecast future trends and spot shifts in consumer patterns or behavior even before they occur
are vital for success in today’s economy. In managing risk, our objective is to protect our profitability, but also to protect, to the extent we can, our ongoing
relationships with our distributors and customers. However, as part of our credit risk policies, we occasionally must, among other things, cancel, reduce
credit limits and place cash-only requirements for certain questionable accounts. These credit risk policies may negatively impact our relationships with our
distributors and customers, which could adversely affect our results of operations.
Our ability to generate sales is dependent upon our ability to continue our ongoing marketing efforts to raise awareness of our products and their
benefits.
We are dependent on our ability to market products to animal food producers, food manufacturers, mass merchandisers, health food retailers and to other
companies for use in their products. We must increase the level of awareness and benefits of our products to be used in food and food ingredients in general
and our products in particular. We will be required to devote substantial management and financial resources to these marketing and advertising efforts and
such efforts may not be successful.
Adverse economic, weather, or other conditions may impact the price and supply of our feedstocks.
If economic or weather conditions, for example drought or excessive moisture can adversely affect the timing and number of acres planted to barley and
oats in Minnesota, North Dakota, and Manitoba. We are not always able to immediately pass cost increases to our customers. Therefore, cost increases
could have an adverse effect on our results of operations.
We face competition from producers of grains and other alternative ingredients with similar benefits.
Competition in our targeted industries, including food ingredients, animal feed supplements and companion pet food ingredients is vigorous, with many
businesses engaged in the various industries. Many of our competitors have established reputations for successfully developing and marketing their
products, including products that incorporate cereal grains and other alternative ingredients that are widely recognized as providing similar benefits. In
addition, many of our competitors have greater financial, managerial and technical resources than we do. If we are not successful in competing in these
markets, we may not be able to attain our business objectives.
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We are affected by extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints both domestically
and abroad and our failure to comply with these laws, regulations and constraints could lead to the imposition of significant penalties or claims, which
could harm our financial condition and operating results.
In both the U.S. and foreign markets, the formulation, manufacturing, packaging, labeling, distribution, sale and storage of our products are affected by
extensive laws, governmental regulations, administrative determinations, court decisions and similar constraints. Such laws, regulations and other
constraints may exist at the federal, state or local levels in the United States and at all levels of government in foreign jurisdictions. We are subject to
regulation by one or more federal agencies including the U.S. Food and Drug Administration (FDA), the U.S. Federal Trade Commission and the U.S.
Department of Agriculture (USDA), state and local authorities and foreign governmental agencies. In addition, the adoption of new regulations or changes
in the interpretations of existing regulations may result in significant compliance costs or discontinuation of product sales and may negatively impact the
marketing of our products, resulting in significant loss of sales revenues. Our failure to comply with these current and new regulations could lead to the
imposition of significant penalties or claims, limit the production or marketing of any non-compliant products or advertising and could negatively impact
our business.
Our warehousing and manufacturing facilities are subject to risks that may negatively affect our business and operations.
Our ability to make, store, and move our products is important to our success. Disruption to our manufacturing capabilities or to our storage capabilities,
due to damage to our facilities or equipment, inability or delay in replacing parts or equipment, weather, natural disaster, fire, terrorism, pandemic, or other
factors, could impair our ability to manufacture or distribute our products. If we fail to mitigate the possible impact of such events, or effectively manage
them if they occur, they could adversely affect our business and results of operations. Such events could also require additional resources to restore our
supply chain.
Our facilities are subject to laws and regulations administered by the FDA, USDA, the Occupational Safety and Health Administration, and other federal,
state, and local governmental agencies relating to the production, storage, distribution, quality, and safety of food products and the health and safety of our
employees. Our failure to comply with such laws and regulations could subject us to lawsuits, administrative penalties, and civil remedies, including fines,
injunctions, and recalls of our products. Changes in such laws or regulations that impose additional requirements on us could increase the cost of operating
our facilities, causing our results of operations to be adversely affected.
We may be subject to product liability claims and product recalls.
We sell food and nutritional products for animal and human consumption, which involves risks such as product contamination or spoilage, product
tampering and other adulteration of food products. We may be subject to liability if the consumption of any of our products causes injury, illness or death.
We maintain a product liability policy for $5.0 million per year in the aggregate. In addition, we may voluntarily recall products in the event of
contamination or damage. A significant product liability judgment or a widespread product recall may cause a material adverse effect on our financial
condition. Even if a product liability claim is unsuccessful, there may be negative publicity surrounding any assertion that our products caused illness or
injury which could adversely affect our reputation with existing and potential customers.
Many of the risks of our business have only limited insurance coverage and many of our business risks are uninsurable.
Our business operations are subject to potential product liability, environmental, fire, employee, manufacturing, shipping and other risks. Although we have
insurance to cover some of these risks, the amount of this insurance is limited and includes numerous exceptions and limitations to coverage. In the event
we were to suffer a significant uninsured claim, our financial condition would be materially and adversely affected.
Our success depends in part on our ability to obtain, enforce and protect our licenses and other intellectual property rights for our products and
technology.
Our success is dependent upon our ability to protect and enforce the trade secrets and trademarks that we have and to develop and obtain new patents and
trademarks for future processes, machinery, compounds and products that we develop. The process of seeking patent protection may be long and expensive,
and patents might not be issued or not be broad enough in scope. We may not be able to protect our technology adequately, and our competition may be
able to develop similar technology that does not infringe or encroach upon any of our rights.
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There currently are no claims or lawsuits pending or threatened against us regarding possible infringement claims, but infringement claims by third parties,
or claims for indemnification resulting from infringement claims, could be asserted in the future or that such assertions, if proven to be accurate, could have
a material adverse effect on our business, financial condition and results of operations. In the future, litigation may be necessary to protect our trade secrets
or know-how or to defend against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others.
Any litigation could result in substantial cost and diversion of our efforts and other resources, which could have a material adverse effect on our financial
condition and results of operations. Adverse determinations in any litigation could result in the loss of our proprietary rights, subjecting us to significant
liabilities to third parties, require us to seek licenses from third parties or prevent us from manufacturing or selling our systems, any of which could have a
material adverse effect on our financial condition and results of operations. A license under a third party’s intellectual property rights might not be available
to us on reasonable terms, if at all.
We are dependent on key employees.
Our success depends upon the efforts of our top management team and certain other key employees, including the efforts of our executive chairman and the
mill leadership teams. Although we have written employment agreements with some of these employees, such individuals could die, become disabled,
retire, or resign. In addition, our success is dependent upon our ability to attract and retain key management persons for positions relating to the marketing
and distribution of our products. We may not be able to recruit and employ such executives at times and on terms acceptable to us. Also, volatility, lack of
positive performance in our stock price and changes in our overall compensation program, including our equity incentive program, may adversely affect
our ability to retain such key employees.
Our officers and directors have limited liability and have indemnification rights.
Our articles of incorporation and bylaws provide that we may indemnify our officers and directors against losses sustained or liabilities incurred which
arise from any transaction in that officer’s or director’s respective managerial capacity, unless that officer or director violates a duty of loyalty, did not act in
good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend or derived an improper benefit from the
transaction.
Risks Relating to Our Stock
Our common stock was delisted from Nasdaq, which may adversely affect our stock price and the liquidity of our stock and could impact our ability to
obtain financing could be impaired.
Trading in the Company’s common stock was suspended at the open of business on November 8, 2023 removing the Company’s securities from listing and
registration on Nasdaq. We have transferred the quotation of our common stock to the over-the-counter markets operated by OTC Markets Group Inc. The
shares of the Company’s common stock are currently trading under the symbol of “RIBT” on OTC Pink Market.
The delisting of our common stock from Nasdaq may negatively impact our Company and holders of our common stock, including the willingness of
investors to hold our common stock because of the resulting decreased price, liquidity and trading of our common stock, limited availability of price
quotations and reduced news and analyst coverage. There can be no guarantee that a broker will continue to make a market in our common stock and that
trading will continue on the OTC Pink Market. The delisting from Nasdaq may further adversely impact the perception of our financial condition, cause
reputational harm with investors, our employees and business partners, and limit our access to debt and equity financing.
Our stock price is volatile.
The market price of our common stock has fluctuated significantly in the past and may continue to fluctuate significantly in the future. The market price of
the common stock may continue to fluctuate in response to a number of factors, including:
● fluctuations in our quarterly or annual operating results;
● asset sales and refinancings;
● fluctuations in the cost of feedstocks for our business;
● developments in our relationships with customers and suppliers;
● our ability to obtain financing;
● announcements of new products or product enhancements by us or our competitors;
● announcements of technological innovations or new systems or enhancements used by us or our competitors;
● the loss of services of one or more of our executive officers or other key employees;
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● developments in our or our competitors’ intellectual property rights;
● adverse effects to our operating results due to the impairment of goodwill;
● failure to meet the expectation of securities analysts or the public;
● general economic and market conditions;
● our ability to expand our operations, domestically and internationally;
● the amount and timing of expenditures related to any expansion;
● litigation involving us, our industry or both;
● actual or anticipated changes in expectations by investors or analysts regarding our performance; and
● price and volume fluctuations in the overall stock market from time to time.
In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that
company. Our stock price is volatile and in prior years we have been the target of shareholder litigation. Any shareholder litigation brought against us in the
future could result in substantial costs and divert our management’s attention and resources from our business.
We have significant “equity overhang” which could adversely affect the market price of our common stock and impair our ability to raise additional
capital through the sale of equity securities.
As of December 31, 2023, 9,513,341 shares of common stock were outstanding, 4,501,858 shares of common stock were issuable upon exercise of our
outstanding stock options and warrants, 14,235 shares of common stock were issuable upon conversion of preferred stock and 490,061 shares of common
stock issuable upon vesting of restricted stock units. The possibility that substantial amounts of our common stock may be sold by investors or the
perception that such sales could occur, often called “equity overhang,” could adversely affect the market price of our common stock and could impair our
ability to raise additional capital through the sale of equity securities in the future. The issuance of the additional shares upon an increase in our authorized
shares of common stock would significantly increase the amount of our common stock outstanding and the amount of the equity overhang.
The authorization and issuance of preferred stock may have an adverse effect on the rights of holders of our common stock.
Our Board, without further action or vote by holders of our common stock, has the right to establish the terms, preference, rights and restrictions and issue
shares of preferred stock. Any series of preferred stock could be issued with terms, rights, preferences and restrictions that could adversely affect the rights
of holders of our common stock and thereby reduce the value of our common stock. The designation and issuance of preferred stock favorable to current
management or shareholders could make it more difficult to gain control of our board of directors or remove our current management and may be used to
defeat hostile bids for control which might provide shareholders with premiums for their shares.
If we fail to comply with the continuing listing standards, our securities could be delisted, which could affect the market price of our common stock and
reduce our ability to raise capital.
Our common stock is currently listed on the OTC Pink Market under the symbol “RIBT”.
There can be no assurance that we will be able to maintain compliance with the continued listing requirements for the OTC Pink Market. If we fail to
maintain compliance with any such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such
continued listing requirement in the future.
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General Risks
An “ownership change” could limit our ability to utilize our net operating loss (NOL) carryforwards and other tax attributes, which could result in
increased future tax liability to us. We have entered into a rights agreement (Rights Agreement) to reduce the likelihood of an “ownership
change” occurring in the future.
We have significant U.S. federal and state NOL carryforwards. Federal tax laws impose restrictions on the utilization of NOL carryforwards and other tax
attributes in the event of an “ownership change” as defined by Section 382 of the Internal Revenue Code of 1986, as amended (Tax Code). A corporation
generally will experience an “ownership change” if the percentage of the corporation’s stock owned by its “5-percent shareholders,” as defined in Section
382 of the Tax Code (Section 382), increases by more than 50 percentage points over their lowest ownership percentage within the “testing period” as
defined in Section 382, which is generally a rolling three-year period. Under Section 382, if a corporation undergoes an “ownership change,” such
corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Future
changes in our stock ownership, which may be outside of our control, may trigger an “ownership change.” If an “ownership change” occurs in the future,
utilization of our NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax liability to us.
Accordingly, we have adopted the Rights Agreement. The Rights Agreement is designed to reduce the likelihood that we will experience an “ownership
change” under Section 382 by discouraging any person or group of persons from acquiring beneficial ownership of 4.95% or more of the shares of our
common stock then outstanding or from acquiring additional shares of our common stock. Although the Rights Agreement is intended to reduce the
likelihood of an “ownership change” that could adversely affect the utilization of our NOL carryforwards and other tax attributes, we cannot provide
assurance that these restrictions on transferability will prevent all transfers that could result in such an “ownership change”.
We must comply with our contractual obligations.
We have numerous ongoing contractual obligations under various purchase, sale, supply, production and other agreements which govern our business
operations. While we seek to always comply with these obligations, we may not be able to comply with the terms of all contracts during all periods of time,
especially if there are significant changes in market conditions or our financial condition. If we are unable to comply with our material contractual
obligations, there likely would be a material adverse effect on our financial condition and results of operations.
Compliance with corporate governance and public disclosure regulations may result in additional expenses.
In order to comply with laws, regulations and standards relating to corporate governance and public disclosure, including the framework established by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) entitled “Internal Control - Integrated Framework”, and other regulations
issued by the SEC, such as Dodd-Frank, we may need to invest substantial resources to comply with these evolving standards, and this investment would
result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance
activities.
Breaches of our information system security measures could disrupt our internal operations.
We are dependent upon information technology for the distribution of information internally and to our customers and suppliers. This information
technology is subject to theft, damage or interruption from a variety of sources, including but not limited to malicious computer viruses, security breaches
and defects in design. Security breaches may result from employees’ failure to observe internal control protocols designed to protect the security of our
network and the information on it, or solely from external intrusion despite our best efforts to protect our network and the information on it. Various
measures have been implemented to manage our risks related to information system and network disruptions, but a system failure or breach of these
measures could negatively impact our operations and financial results.
Our inability to successfully recover from a disaster or other business continuity problem could cause material financial loss, regulatory actions,
reputational harm or legal liability.
Should we experience a local or regional disaster or other business continuity problem, such as a terrorist attack, pandemic, security breach, power loss,
telecommunications failure, earthquake, hurricane or other natural or man-made disaster, our continued success will depend, in part, on the availability of
key personnel, and the proper functioning of computer, telecommunication and other related systems and operations. Further, we could potentially lose
customer data or experience adverse interruptions to our operations in a disaster recovery scenario, which could result in material financial loss, regulatory
action, reputational harm or legal liability.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We employ a risk management framework to identify, assess, monitor, and test cyber risk and controls, and perform comprehensive due diligence and
ongoing oversight of third-party relationships, including vendors. We have made and will continue to make ongoing investments in developing and
enhancing our security processes and controls and in maintaining our technology infrastructure, including the maintenance of a business continuity and
disaster recovery program, which is tested on a regular basis. We have also implemented processes to help identify, assess and manage cybersecurity risks
associated with our use of a third-party service provider. We also provide regular education and training to our employees and contractors on cybersecurity
and the protection of our information systems in order to mitigate risk associated with protection against threats to the confidentiality, availability, and
integrity of our information systems. We do not believe that risks from cybersecurity threats of which we are currently aware, including as a result of any
previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of
operations, or financial condition. See Item 1A – Risk Factors above for additional information on risks related to cyber-attacks.
Governance
Together with the Board’s standing committees, the Company’s Board of Directors is responsible for ensuring that material risks, including material
cybersecurity risks, are identified and managed appropriately. The Board and its committees regularly review material operational, financial, cybersecurity,
compensation and compliance risks with management. For example, the Audit Committee oversees the Company’s consultation with outside parties with
an expertise in cybersecurity that we engage and retain to review and assess our information security program. The Board also receives regular updates
concerning our information security and cyber risk strategy, cyber defense initiatives, cyber event preparedness, and cybersecurity risk assessments.
ITEM 2. PROPERTIES
We use our owned facility for manufacturing, warehousing and distribution. The following table summarizes the properties currently used to conduct our
operations:
Location
Status
Primary Use
East Grand Forks, Minnesota
Owned
Manufacturing
We believe that our facility is in good operating condition and the machinery and equipment is well-maintained. We believe the facility is suitable for its
intended purposes and have capacities adequate for current operations.
ITEM 3. 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 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Price Range of Common Stock
Our common stock trades on the OTC Pink Market under the symbol “RIBT.” Our CUSIP No. is 762831303. Any over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Holders
As of March 29, 2024, there were approximately 222 holders of record of our common stock.
Dividends
We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain any future earnings for the expansion
and operation of our business and do not anticipate paying cash dividends in the near future.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2023, we issued the securities described below without registration under the Securities Act. The description below
does not include issuances that were disclosed previously on Current Reports on Form 8-K. Unless otherwise indicated below, the securities were issued
pursuant to the private placement exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended. All issuances below were made
without any public solicitation, to a limited number of sophisticated persons and were acquired for investment purposes only.
On December 1, 2023, we issued 2,222,222 shares of common stock to an entity owned by Cable Car Capital LLC, Funicular Funds, LP (Funicular), at a
purchase price equal to $0.18 per share.
On December 31, 2023, we issued 600 shares of common stock to a service provider, that is not a natural person, as compensation for service provided. The
shares were valued at an aggregate of $2,100.
Share Repurchases
None
ITEM 6. RESERVED
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Basis of Presentation and Going Concern
The Company has incurred losses and generated negative cash flows from operations since its inception. As of December 31, 2023, the Company had an
accumulated deficit of $333.3 million and cash and cash equivalents of $1.1 million.
Our history of operating losses and negative operating cash flows from continuing operations raises substantial doubt about our ability to continue as a
going concern within one year from the date of this filing. Due to these historical losses and negative cash flows, management has considered various
strategic alternatives. Specifically, we recently completed a refinancing in December 2023, as further described below.
On December 1, 2023, an entity owned by Cable Car Capital LLC, Funicular Funds, LP (Funicular), purchased $0.4 million of shares of common stock of
the Company and lent the Company $4.1 million.
Related to this financing, Funicular was also granted warrants to purchase up to 5.0 million shares of common stock of the Company. If Funicular exercised
all its warrants, it would own 49.8% of the Company. The Company also exchanged existing warrants with other investors to purchase an aggregate 2.2
million shares of common stock of the Company for an aggregate of approximately 0.6 million shares of common stock of the Company and new warrants
to purchase 1.2 million shares of common stock of the Company.
With the proceeds of this financing, the Company repaid its $1.5 million mortgage note (see Note 9) and will use the remaining balance to fund its current
and future general working capital and operating, investing, and financing cash flow needs.
On January 25, 2024, the Company sold Golden Ridge for $2.15 million. As a result of the sale, the Company has streamlined its business and balance
sheet, eliminating unprofitable operations.
The Company also believes additional cash can be secured through other debt or structured equity financing, if necessary. However, there can be no
assurance that equity or debt financing will be available to the Company should it need it or, if available, that the terms will be satisfactory to the Company
and not dilutive to existing shareholders. The Company’s failure to raise capital as and when needed could have significant negative consequences for its
business, financial condition, and results of consolidated operations.
On June 23, 2023, we completed the sale of assets related to the production of stabilized rice bran and the processing of stabilized rice bran into stabilized
rice bran derivatives at facilities located in West Sacramento, California, Mermentau, Louisiana, Lake Charles, Louisiana and Dillon, Montana (the SRB
Business). The SRB Business’s results are presented as discontinued operations in our consolidated statements of operations and are excluded from
continuing operations for all periods presented. See Note 3 in the Notes to Consolidated Financial Statements for further discussion of our discontinued
operations.
For the year ended December 31, 2023, our continuing operations included the results of operating our rice mill located in Wynne, Arkansas (Golden
Ridge) and our barley and oats mill located in East Grand Forks, Minnesota (MGI). Subsequently, on January 26, 2024, we completed the sale of our
Golden Ridge rice mill and the assets exclusively related to our production of No. 1 and No. 2 Grade U.S. premium long and medium white rice and SRB
products at the Golden Ridge facility for $2.15 million.
Following the sales of the SRB Business and Golden Ridge, we derive revenues from sales of barley, oats and mustard produced at our grain mill and
processing facility in East Grand Forks, Minnesota. As a result of these transactions (which are by nature non-recurring) our future results of operations
may differ materially from our past results.
Results of Continuing Operations
Revenues from continuing operations were $22.6 million in 2023, a decrease of $4.0 million, or 15.0%, compared to $26.6 million in 2022. This decrease
was equally split between our MGI and Golden Ridge milling operations. At MGI, the decrease was about equally split among the four quarters primarily
due to lower commodity prices during the year. The Golden Ridge decrease mainly occurred in the fourth quarter and was primarily due to unavoidable
business disruption during its sale process that concluded with the sale of the mill on January 25, 2024.
Despite this decrease in revenue, the 2023 gross loss from continuing operations improved $0.4 million over 2022 primarily due to better matching of raw
material commodity and sales prices.
Selling general and administrative (SG&A) expenses from continuing operations were $5.9 million in 2023, an increase of $0.5 million, or 9.3% compared
to $5.4 million in 2022. This increase was primarily due to increased legal costs as we continue to explore strategic alternatives.
Loss from continuing operations in 2023 was $8.6 million, or $1.22 per share, compared to a loss from continuing operations of $6.7 million, or $1.21 per
share, in 2022. This increase was primarily due to a $1.5 million impairment charge recorded in the fourth quarter on the property and equipment at Golden
Ridge related to the sale of these assets on January 25, 2024.
Net loss in 2023 was $17.6 million, or $2.51 per share, compared to a net loss of $7.9 million, or $1.42 per share in 2022. This $9.7 million increase was
primarily due to the $8.6 million loss on the sale of our SRB in June 2023 and the $1.5 million impairment charge noted above offset by $0.4 million of net
savings driven by not having SRB and its related losses in the second half of 2023.
Liquidity, Going Concern and Capital Resources
The Company has incurred losses and generated negative cash flows from operations since its inception. As of December 31, 2023, the Company had an
accumulated deficit of $333.3 million, shareholders’ deficit of $3.0 million and cash and cash equivalents of $1.1 million. In our continuing operations, we
used $2.2 million in operating cash during 2023, compared to $3.8 million of operating cash in 2022. We also funded $0.7 million of capital expenditures
in 2023, compared to $0.2 million in in the prior year. These capital expenditures relate primarily to equipment at our MGI facility.
Our history of operating losses and negative operating cash flows from continuing operations raises substantial doubt about our ability to continue as a
going concern within one year from the date of this filing. Due to these historical losses and negative cash flows, management has considered various
strategic alternatives. Specifically, we recently completed a refinancing in December 2023, as further described below.
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On December 1, 2023, Funicular, purchased $0.4 million of shares of common stock of the Company and lent the Company $4.1 million.
Related to this financing, Funicular was also granted warrants to purchase up to 5.0 million shares of common stock of the Company. If Funicular exercised
all its warrants, it would own 49.8% of the Company. The Company also exchanged existing warrants with other investors to purchase an aggregate 2.2
million shares of common stock of the Company for an aggregate of approximately 0.6 million shares of common stock of the Company and new warrants
to purchase 1.2 million shares of common stock of the Company.
With the proceeds of this financing, the Company repaid its $1.5 million mortgage note and will use the remaining balance to fund its current and future
general working capital and operating, investing, and financing cash flow needs.
On January 25, 2024, the Company sold Golden Ridge for $2.15 million. As a result of the sale, the Company has streamlined its business and balance
sheet, eliminating unprofitable operations.
The Company also believes additional cash can be secured through other debt or structured equity financing, if necessary. However, there can be no
assurance that equity or debt financing will be available to the Company should it need it or, if available, that the terms will be satisfactory to the Company
and not dilutive to existing shareholders. The Company’s failure to raise capital as and when needed could have significant negative consequences for its
business, financial condition, and results of consolidated operations.
Critical Accounting Policies
The accompanying consolidated financial statements have been prepared in U.S. Dollars and in accordance with accounting principles generally accepted
in the United States (GAAP). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues
and expenses. These estimates and assumptions are affected by the application of our accounting policies. Our significant accounting policies are described
in Note 1 to the accompanying consolidated financial statements. Critical accounting estimates are those that require application of management’s most
difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. While we apply
our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that
materially different amounts would be reported using different assumptions. The following is a description of what we consider to be our most significant
critical accounting policies.
Inventories – We state inventories at the lower of cost or net realizable value. We employ a full absorption procedure using standard cost techniques for
most of our operations. The standards are customarily reviewed and adjusted so that they are materially consistent with actual purchase and production
costs. We make provisions for potentially obsolete or slow-moving inventory based upon our analysis of inventory levels, historical obsolescence and
future sales forecasts. We write-off inventory determined to be obsolete immediately.
Property and Equipment – Property and equipment are stated at cost less accumulated depreciation. We compute depreciation on the straight-line basis
and recognize it over the estimated useful lives of the assets. We expense maintenance and repairs as incurred and capitalize renewals and betterments. We
include gains or losses on the sale of property and equipment in net income (loss).
Impairment of Long-lived Assets – We review our long-lived assets, such as property and equipment and right-of-use assets, for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We recognize an impairment loss when the
undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized balance of the asset.
The impairment loss is the difference between the carrying value and the estimated fair value. We determine the estimated fair value based on either the
discounted future cash flows or other appropriate fair value methods with the amount of any such deficiency charged to operations in the current year.
Estimates of future cash flows are based on many factors, including current operating results, expected market trends and competitive influences. We report
assets to be disposed of by sale at the lower of the carrying amount or fair value, less estimated costs to sell.
Intangible Assets – We amortize recognized intangible assets over the useful lives of the assets unless that life is determined to be indefinite. All of our
intangible assets are finite lived. We evaluate the remaining useful life of an intangible asset each reporting period to determine whether events or
circumstances may indicate that a revision to the useful life is warranted to reflect the remaining expected use of the asset. If an intangible asset’s useful life
is determined to be finite, but the precise length of that life is not known, the intangible asset is amortized over our best estimate of the asset’s useful life in
a manner that reflects the pattern in which the asset’s economic benefits are consumed or expected to be realized. We review our long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We recognize an
impairment loss when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the
unamortized balance of the asset. Our primary intangible asset is a customer relationship intangible which derives its value from future cash flows expected
from the acquired customers. Changes in the actual or estimated future cash flows of these customers could result in a material adjustment to amortization
expense, an impairment loss, or both. Estimates of future cash flows are based on many factors, including current cash flows, expected market trends and
competitive influences.
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Revenue Recognition – We account for a contract with a customer when the written contract is committed, the rights of the parties, including payment
terms, are identified, the contract has commercial substance and consideration is probable of collection. Substantially all of our revenue is derived by
fulfilling customer orders for the purchase of our products under contracts which contain a single performance obligation, to supply continually defined
quantities of product at fixed prices. We account for shipping and handling activities that occur after the customer has obtained control of a good as a
fulfillment cost rather than as an additional promised service. We recognize revenue at the point in time that control of the ordered product(s) is transferred
to the customer, which is upon delivery to the customer, or its designee at our location, a customer location or other customer-designated delivery point. For
substantially all of our contracts, control of the ordered product(s) transfers at our location. Amounts invoiced to customers for shipping and handling are
reported as revenues and the related costs incurred to deliver product to the customer are reported as cost of goods sold.
We measure revenue as the amount of consideration we expect to receive in exchange for fulfilling product orders. Incidental items that are immaterial in
the context of the contract are recognized as expense. Our contracts do not include a significant financing component. Our contracts may include terms that
could cause variability in the transaction price, including, for example, rebates and volume discounts, or other forms of contingent revenue. The amount of
consideration we expect to receive and revenue we recognize includes estimates of variable consideration, including costs for rebates and discounts. If the
consideration promised in a contract includes a variable amount, we estimate the amount to which we expect to be entitled using either the expected value
or most likely amount method. Changes in judgments and estimates regarding probability of collection and variable consideration might result in a change
in the timing or amount of revenue recognized.
We capitalize the incremental costs of obtaining a revenue contract and amortized those costs on a straight-line basis over the expected customer
relationship period if we expect to recover those costs. As a practical expedient, we expense costs to obtain a contract as incurred if the amortization period
would have been a year or less. Typically, costs to incur revenue contracts are not significant.
Discontinued Operations - A discontinued operation may include a component or a group of components of our operations. A disposal of a component or
a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on our operations
and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the
component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by
abandonment or in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale,
qualifying for presentation as a discontinued operation, we report the results of operations of the discontinued operations (including any gain or loss
recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a
separate component in the consolidated statement of operations for current and all prior periods presented.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of RiceBran Technologies:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of RiceBran Technologies and Subsidiaries (the “Company”) as of December 31, 2023, and
the related consolidated statements of operations, changes in shareholders’ (deficit) equity, and cash flows for the year then ended, and the related notes to
the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 2 to the
financial statements, the entity has an accumulated deficit at December 31, 2023 and, since inception, has suffered significant operating losses and negative
cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the entity’s financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2)
involved especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
18
Asset Impairment
As described in Notes 6 and 7 to the financial statements, the Company’s net consolidated property and equipment and intangible assets balances were
$4,238,000 and $270,000, respectively, at December 31, 2023. As further described in Note 1 to the financial statements, the Company reviews long-lived
assets, including property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
the estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset. Based on events occurring
during the year ended December 31, 2023, management performed an impairment assessment to test long-lived assets for impairment. The results of this
assessment indicated that assets were impaired and an impairment expense of approximately $1,542,000 was recorded. The Company’s impairment
assessment required management to make significant estimates and assumptions related to a number of factors, including forecasts of revenue and cash
flows.
We identified the long-lived asset impairment assessment as a critical audit matter because changes in certain significant assumptions management used in
the impairment analysis, including projected revenues and operating margins could have a significant impact on the analysis. Auditing these assumptions
involved a high degree of auditor judgment and subjectivity and increased audit effort.
Our audit procedures related to the Company’s long-lived asset impairment assessment included the following, among others:
● We obtained an understanding of the relevant controls related to the development of forecasted revenue and operating margins
● We tested the reasonableness of management’s process for determining the forecasts of revenue and operating margins
● We tested the reasonableness of management’s assumptions of forecasted revenue and operating margins by comparing management’s prior forecast to
historical results for the Company
● We evaluated whether the estimates were consistent with evidence obtained in other areas of the audit.
/s/ WithumSmith+Brown, PC
We have served as RiceBran Technologies’ auditor since 2023.
Whippany, New Jersey
March 29, 2024
PCAOB ID Number 100
19
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of RiceBran Technologies:
Opinion on the Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply discontinued operations, as discussed in Note 3, the accompanying
consolidated balance sheet of RiceBran Technologies and its subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of
operations, changes in shareholders’ (deficit) equity and cash flows for the year ended December 31, 2022, and the related notes to the consolidated
financial statements (collectively, the financial statements). The 2022 financial statements before the effects of the adjustment described in Note 3 are not
presented herein. In our opinion, before the effects of the adjustments to retrospectively apply discontinued operations, as discussed in Note 3, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its
cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to retrospectively apply discontinued operations, as discussed in Note 3, and accordingly,
we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those
adjustments were audited by other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ RSM US LLP
We served as the Company’s auditor from 2018 to 2023.
Houston, Texas
March 16, 2023
20
Table of Contents
RiceBran Technologies
Consolidated Balance Sheets
December 31, 2023 and 2022
(in thousands, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for credit losses of $32 and $27
Inventories
Other current assets
Current assets held for sale
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Intangible assets
Long-term assets held for sale
Total assets
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable
Commodities payable
Accrued salary, wages and benefits
Accrued legal
Accrued expenses
Operating lease liabilities, current portion
Due under bank line of credit
Due under factoring agreement
Due under insurance premium finance agreements
Finance lease liabilities, current portion
Long-term debt, current portion
Current liabilities held for sale
Total current liabilities
Finance lease liabilities, less current portion
Long-term debt, less current portion
Derivative warrant liability
Long-term liabilities held for sale
Total liabilities
Commitments and contingencies
Shareholders' (deficit) equity:
Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated
value $150, 150 shares, issued and outstanding
Common stock, no par value, 15,000,000 shares authorized, 9,513,341 shares and 6,309,509 shares,
issued and outstanding
Accumulated deficit
Total shareholders' (deficit) equity
Total liabilities and shareholders' (deficit) equity
See Notes to Consolidated Financial Statements
21
2023
2022
1,139 $
2,824
543
308
-
4,814
4,238
-
270
-
9,322 $
1,549 $
2,466
316
1,985
434
-
-
1,866
75
132
137
-
8,960
402
2,960
-
-
12,322
3,941
3,703
465
735
2,224
11,068
6,020
77
380
9,888
27,433
1,232
1,546
489
595
500
107
1,832
3,150
185
113
988
540
11,277
320
836
69
2,022
14,524
75
75
330,202
(333,277)
(3,000)
9,322 $
328,551
(315,717)
12,909
27,433
$
$
$
$
Table of Contents
RiceBran Technologies
Consolidated Statements of Operations
Years Ended December 31, 2023 and 2022
(in thousands, except share and per share amounts)
Revenues
Cost of goods sold
Gross loss
Selling, general and administrative expenses
Property and equipment impairment
Loss from continuing operations before other income (expense)
Interest expense
Interest income
Change in fair value of derivative warrant liability
Other income
Other expense
Loss from continuing operations before income taxes
Income tax expense
Loss from continuing operations
Loss from discontinued operations
Net loss
Basic and diluted loss per common share:
Continuing operations
Discontinued operations
Weighted average number of shares outstanding:
Basic
Diluted
See Notes to Consolidated Financial Statements
22
2023
2022
$
$
$
$
$
22,649 $
23,060
(411)
5,944
1,542
(7,897)
(672)
25
69
266
(330)
(8,539)
(12)
(8,551)
(9,009)
(17,560) $
(1.22) $
(1.29) $
(2.51) $
26,647
27,410
(763)
5,397
-
(6,160)
(516)
22
189
7
(183)
(6,641)
(19)
(6,660)
(1,198)
(7,858)
(1.21)
(0.21)
(1.42)
6,992,358
6,992,358
5,514,671
5,514,671
Table of Contents
RiceBran Technologies
Consolidated Statements of Changes in Shareholders’ (Deficit) Equity
Years Ended December 31, 2023 and 2022
(in thousands, except share amounts)
Balance, January 1, 2022
Sales of common stock and common stock
warrants, net of costs
Common stock awards under equity
incentive plans
Exercise of common stock warrant
Common stock issued to vendors
Stock units issued to vendors
Other
Net loss
Balance, December 31, 2022
Sales of common stock and common stock
warrants, net of costs
Common stock awards under equity
incentive plans
Common stock issued to vendors
Stock units issued to vendors
Net loss
Balance, December 31, 2023
Shares
Preferred
Common Accumulated
Series G
Common
Stock
Stock
Deficit
(Deficit)
Equity
150
5,158,967 $
75 $
326,279 $
(307,859) $
18,495
-
675,000
-
-
-
-
-
-
150
137,695
325,000
2,400
-
10,447
-
6,309,509
-
-
-
-
-
-
-
75
986
-
1,261
-
10
15
-
-
328,551
-
-
-
-
-
(7,858)
(315,717)
986
1,261
-
10
15
(7,858)
12,909
-
2,851,032
-
1,155
-
1,155
-
-
-
-
150
290,935
2,400
59,465
-
9,513,341 $
-
-
-
-
75 $
412
80
4
-
330,202 $
-
-
-
(17,560)
(333,277) $
412
80
4
(17,560)
(3,000)
See Notes to Consolidated Financial Statements
23
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RiceBran Technologies
Consolidated Statements of Cash Flows
Years Ended December 31, 2023 and 2022
(in thousands)
2023
2022
Cash flow from operating activities:
Net loss
Loss from discontinued operations
Loss from continuing operations
Adjustments to reconcile net loss to net cash used in operating activities:
$
(17,560) $
(9,009)
(8,551)
Depreciation
Amortization
Stock and share-based compensation
Change in fair value of derivative warrant liability
Impairment of Golden Ridge assets
Other
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Accounts payable and accrued expenses
Commodities payable
Other
Net cash used in operating activities of continuing operations
Net cash used in operating activities of discontinued operations
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property and equipment
Net cash used in investing activities of continuing operations
Net cash provided by (used in) investing activities of discontinued operations
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Advances on factoring agreement
Payments on factoring agreement
Advances on bank line of credit
Payments on bank line of credit
Advances on long-term debt and finance lease agreements
Payments of long-term debt and finance lease liabilities
Proceeds from issuances of common stock and warrants, net of cash issuance costs
Net cash provided by (used in) financing activities of continuing operations
Net cash used in financing activities of discontinued operations
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Net change in cash and cash equivalents
$
$
See Notes to Consolidated Financial Statements
24
929
110
496
(69)
1,542
-
879
(78)
1,470
921
144
(2,207)
(211)
(2,418)
(689)
(689)
1,679
990
26,002
(27,286)
37
(1,869)
3,863
(2,061)
400
(914)
(460)
(1,374)
(2,802) $
3,941
1,139
(2,802) $
(7,858)
(1,198)
(6,660)
866
147
1,204
(189)
-
11
369
309
433
(156)
(129)
(3,795)
(141)
(3,936)
(225)
(225)
(229)
(454)
38,117
(38,346)
2,789
-
-
(1,286)
1,256
2,530
(24)
2,506
(1,884)
5,825
3,941
(1,884)
Table of Contents
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
We are a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small
grains. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing
consumer demand for all natural, non-GMO and organic products.
Segment Reporting
Given the integrated nature of the products we produce and the facility in which we produce them, we have one reporting unit and one operating segment,
as defined in applicable accounting guidance, specialty ingredients.
Recent Accounting Guidance
Recent accounting standards not yet adopted
The following discusses the accounting standard(s) not yet adopted that will, or are expected to, result in a significant change in practice and/or have a
significant financial impact on our financial position, results of operations or cash flows.
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosures, which requires disclosure of disaggregated income taxes
paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU
2023-09 is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption.
These requirements are not expected to have an impact on our results of operations, financial position, or cash flows and will expand income tax
disclosures.
Recently adopted accounting standards
In June 2016, the FASB issued guidance ASU No. 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments which changes the accounting for credit losses for certain instruments, including trade receivables, from an incurred loss method to a current
expected loss method. The measurement of expected credit losses is based on relevant information about past events, including historical experience,
current conditions, and reasonable and supportable forecasts. We adopted the guidance, and subsequent guidance related to the topic, effective January 1,
2023. Adoption of the standard had no significant impact on our results of operations, financial position, or cash flows as of January 1, 2023.
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation – The accompanying consolidated financial statements have been prepared in U.S. dollars and in
accordance with accounting principles generally accepted in the United States (GAAP). The accompanying consolidated financial statements include the
accounts of RiceBran Technologies and all subsidiaries in which we have a controlling interest. All significant inter-company balances are eliminated in
consolidation.
Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities and the reported amounts
of revenue and expenses during the reporting period. Because of the uncertainty inherent in such estimates, actual results could differ from those estimates.
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Reclassifications – Certain reclassifications have been made to amounts reported for the prior year for discontinued operations to achieve consistent
presentation with the current year. Such reclassifications had no impact on previously reported net loss or shareholders’ equity. See Note 3 in the Notes
to Consolidated Financial Statements for further discussion of our discontinued operations.
Cash and Cash Equivalents – We consider all highly liquid investments purchased with an original maturity of three months or less at the time of
purchase to be cash equivalents. In all periods presented, we maintained our cash and cash equivalents with major banks. We maintain cash in bank
accounts in amounts which at times may exceed federally insured limits. At times we invest in money market funds which are also not federally insured.
We have not experienced any losses on such accounts.
Accounts Receivable and Allowance for Credit Losses – Accounts receivable represent amounts receivable on trade accounts. The allowance for
doubtful accounts is based on our assessment of the collectability of customer accounts and the aging of accounts receivable. We analyze the aging of
customer accounts, customer concentrations, customer creditworthiness, current economic trends and changes in our customer payment patterns when
evaluating the adequacy of the allowance for doubtful accounts. From period to period, differences in judgments or estimates utilized may result in material
differences in the amount and timing of the provision for doubtful accounts. We periodically evaluate our credit policy to ensure that customers are worthy
of terms and support our business plans. We generally do not require collateral.
Inventories – We state inventories at the lower of cost or net realizable value. We employ a full absorption procedure using standard cost techniques for
most of our operations. The standards are customarily reviewed and adjusted so that they are materially consistent with actual purchase and production
costs. We make provisions for potentially obsolete or slow-moving inventory based upon our analysis of inventory levels, historical obsolescence and
future sales forecasts. We write-off inventory determined to be obsolete immediately.
Property and Equipment – Property and equipment are stated at cost less accumulated depreciation. We compute depreciation on the straight-line basis
and recognize it over the estimated useful lives of the assets. We expense maintenance and repairs as incurred and capitalize renewals and betterments. We
include gains or losses on the sale of property and equipment in net income (loss).
Impairment of Long-lived Assets – We review our long-lived assets, such as property and equipment and right-of-use assets, for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We recognize an impairment loss when the
undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the unamortized balance of the asset.
The impairment loss is the difference between the carrying value and the estimated fair value. We determine the estimated fair value based on either the
discounted future cash flows or other appropriate fair value methods with the amount of any such deficiency charged to operations in the current year.
Estimates of future cash flows are based on many factors, including current operating results, expected market trends and competitive influences. We report
assets to be disposed of by sale at the lower of the carrying amount or fair value, less estimated costs to sell.
Intangible Assets – We amortize recognized intangible assets over the useful lives of the assets unless that life is determined to be indefinite. All of our
intangible assets are finite lived. We evaluate the remaining useful life of an intangible asset each reporting period to determine whether events or
circumstances may indicate that a revision to the useful life is warranted to reflect the remaining expected use of the asset. If an intangible asset’s useful life
is determined to be finite, but the precise length of that life is not known, the intangible asset is amortized over our best estimate of the asset’s useful life in
a manner that reflects the pattern in which the asset’s economic benefits are consumed or expected to be realized. We review our long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We recognize an
impairment loss when the undiscounted future cash flows estimated to be generated by the asset to be held and used are not sufficient to recover the
unamortized balance of the asset. Our primary intangible asset is a customer relationship intangible which derives its value from future cash flows expected
from the acquired customers. Changes in the actual or estimated future cash flows of these customers could result in a material adjustment to amortization
expense, an impairment loss, or both. Estimates of future cash flows are based on many factors, including current cash flows, expected market trends and
competitive influences.
Leases – We lease certain buildings, land and corporate office space under operating leases with monthly or annual rent payments. We lease certain
machinery and equipment under finance leases with monthly rent payments. We determine if an arrangement is a lease at inception. We present operating
lease assets as operating lease right-of-use assets and the related liabilities as operating lease liabilities in our consolidated balance sheets. We include
finance lease right-of-use assets in property and equipment, net, and the related liabilities as finance lease liabilities in our consolidated balance sheets.
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Table of Contents
We recognize right-of-use assets and lease liabilities based on the present value of the future minimum lease payments over the lease term, beginning at the
commencement date, for leases exceeding a year. Minimum lease payments include the fixed lease components of the lease and any variable rate payments
that depend on an index, initially measured using the index at the lease commencement date. Lease terms may include options to renew when it is
reasonably certain that we will exercise that option. We combine lease and nonlease components and account for them as a single lease component. Certain
leases contain rent escalation clauses, rent holidays, capital improvement funding or other lease concessions.
In determining our right-of-use assets and lease liabilities, we apply a discount rate to the minimum lease payments within each lease. When we cannot
readily determine the discount rate implicit in a lease, we utilize our incremental borrowing rate, the rate of interest that we would incur to borrow, on a
collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. To estimate the incremental borrowing
rate, we reference a market yield curve consistent with our assessment of our credit quality.
We recognize operating lease expense related to the minimum lease payments on a straight-line basis over the lease term. For finance leases, we recognize
amortization expense related to the minimum lease payments on a straight-line basis over the lease term while interest expense is recognized using the
effective interest method. Expense related to variable lease payments that do not depend on a rate or index and short-term rentals, on leases with terms less
than a year, are expensed as incurred.
Revenue Recognition – We account for a contract with a customer when the written contract is committed, the rights of the parties, including payment
terms, are identified, the contract has commercial substance and consideration is probable of collection. Substantially all of our revenue is derived by
fulfilling customer orders for the purchase of our products under contracts which contain a single performance obligation, to supply continually defined
quantities of product at fixed prices. We account for shipping and handling activities that occur after the customer has obtained control of a good as a
fulfillment cost rather than as an additional promised service. We recognize revenue at the point in time that control of the ordered product(s) is transferred
to the customer, which is upon delivery to the customer, or its designee at our location, a customer location or other customer-designated delivery point. For
substantially all of our contracts, control of the ordered product(s) transfers at our location. We report amounts invoiced to customers for shipping and
handling are reported as revenues and the related costs incurred to deliver product to the customer are reported as cost of goods sold.
We measure revenue as the amount of consideration we expect to receive in exchange for fulfilling product orders. Incidental items that are immaterial in
the context of the contract are recognized as expense. Our contracts do not include a significant financing component. Our contracts may include terms that
could cause variability in the transaction price, including, for example, rebates and volume discounts, or other forms of contingent revenue. The amount of
consideration we expect to receive and revenue we recognize includes estimates of variable consideration, including costs for rebates and discounts. If the
consideration promised in a contract includes a variable amount, we estimate the amount to which we expect to be entitled using either the expected value
or most likely amount method. Changes in judgments and estimates regarding probability of collection and variable consideration might result in a change
in the timing or amount of revenue recognized.
We capitalize the incremental costs of obtaining a revenue contract and amortized those costs on a straight-line basis over the expected customer
relationship period if we expect to recover those costs. As a practical expedient, we expense costs to obtain a contract as incurred if the amortization period
would have been a year or less. Typically, costs to incur revenue contracts are not significant.
Discontinued Operations - A discontinued operation may include a component or a group of components of our operations. A disposal of a component or
a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on our operations
and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the
component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by
abandonment or in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale,
qualifying for presentation as a discontinued operation, we report the results of operations of the discontinued operations (including any gain or loss
recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a
separate component in the consolidated statement of operations for current and all prior periods presented.
Selling, General and Administrative Expenses – Selling, general and administrative expenses include salaries and wages, bonuses and incentives, share-
based compensation expense, employee-related expenses, facility-related expenses, marketing and advertising expense, depreciation of non-operating
property and equipment, professional fees, amortization of intangible assets, provisions for losses on accounts receivable and other operating expenses.
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Table of Contents
Share-Based Compensation – For awards of nonvested common stock and common stock units to employees and directors, share-based compensation is
measured based on the fair value of our common stock on the date of grant and the corresponding expense is recognized over the period during which the
holder is required to provide service in exchange for the award. Compensation expense related to service-based awards are recognized on a straight-line
basis over the requisite service period for the award. In the event we require no specific future performance, the entire amount of compensation is
recognized immediately.
We have outstanding common stock options as of December 31, 2023 and 2022. Share-based compensation expense for common stock options granted to
employees and directors was calculated at the grant date using the Black-Scholes-Merton valuation model and is expensed on a straight-line basis over the
service period of the award. The Black-Scholes-Merton option pricing model required us to estimate key assumptions such as expected life, volatility, risk-
free interest rates and dividend yield to determine the fair value of share-based awards, based on both historical information and management’s judgment
regarding market factors and trends.
We recognize forfeitures of employee and director awards as they occur. In the event an employee or director terminates service prior to the vesting of an
award, we reverse the entire amount of previously recognized compensation expense related to the award.
Share-based compensation for awards to non-employees is calculated as of the grant date, taking into consideration the probability of satisfaction of
performance conditions, in a manner consistent with awards to employees. The expense associated with share-based awards for service is recognized over
the term of service. In the event services are terminated early or we require no specific future performance, the entire amount of unrecognized
compensation is expensed. The expense associated with share-based awards made in exchange for goods is generally attributed to expense in the same
manner as if the vendor had been paid in cash.
Income Taxes – We account for income taxes by recording a deferred tax asset or liability for the recognition of future deductible or taxable amounts and
operating loss and tax credit carryforwards. We recognize a deferred tax expense or benefit as a result of timing differences between the recognition of
assets and liabilities for financial reporting and tax purposes.
We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which temporary differences are
expected to be recovered or settled. We recognized deferred tax assets for deductible temporary differences and operating loss and tax credit carryforwards.
When necessary, we establish a valuation allowance to reduce that deferred tax asset if it is more likely than not that the related tax benefits will not be
realized. The realization of deferred tax assets can be affected by, among other things, the nature, frequency and severity of current and cumulative losses,
forecasts of future profitability, the length of statutory carryforward periods, our experience with utilizing operating losses and tax credit carryforwards by
jurisdiction, and tax planning alternatives that may be available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in
a payment that may be different from current estimates of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment,
an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the
liabilities may result in income tax benefits being recognized in the period when it is determined that the liabilities are no longer necessary.
We recognize interest and penalties related to uncertain tax positions, if any, in selling, general and administrative expenses.
Fair Value – Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Certain assets and liabilities may be presented in the financial statements at fair value. Assets and liabilities measured
at fair value on a non-recurring basis may include property and equipment.
We assess the inputs used to measure fair value using a three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable
in the market:
● Level 1 – inputs include quoted prices for identical instruments and are the most observable.
● Level 2 – inputs include quoted prices for similar assets and observable inputs such as interest rates, currency exchange rates and yield curves.
● Level 3 – inputs are not observable in the market and include management’s judgments about the assumptions market participants would use in
pricing the asset or liability.
NOTE 2. GOING CONCERN AND MANAGEMENT’S PLAN
The Company has incurred losses and generated negative cash flows from operations since its inception. As of December 31, 2023, the Company had an
accumulated deficit of $333.3 million and cash and cash equivalents of $1.1 million.
Our history of operating losses and negative operating cash flows from continuing operations raises substantial doubt about our ability to continue as a
going concern within one year from the date of this filing. Due to these historical losses and negative cash flows, management has considered various
strategic alternatives. Specifically, we recently completed a refinancing in December 2023, as further described below.
28
Table of Contents
On December 1, 2023, an entity owned by Cable Car Capital LLC, Funicular Funds, LP (Funicular), purchased $0.4 million of shares of common stock of
the Company and lent the Company $4.1 million.
Related to this financing, Funicular was also granted warrants to purchase up to 5.0 million shares of common stock of the Company. If Funicular exercised
all its warrants, it would own 49.8% of the Company. The Company also exchanged existing warrants with other investors to purchase an aggregate 2.2
million shares of common stock of the Company for an aggregate of approximately 0.6 million shares of common stock of the Company and new warrants
to purchase 1.2 million shares of common stock of the Company.
With the proceeds of this financing, the Company repaid its $1.5 million mortgage note (see Note 9) and will use the remaining balance to fund its current
and future general working capital and operating, investing, and financing cash flow needs.
On January 25, 2024, the Company sold Golden Ridge for $2.15 million. As a result of the sale, the Company has streamlined its business and balance
sheet, eliminating unprofitable operations.
The Company also believes additional cash can be secured through other debt or structured equity financing, if necessary. However, there can be no
assurance that equity or debt financing will be available to the Company should it need it or, if available, that the terms will be satisfactory to the Company
and not dilutive to existing shareholders. The Company’s failure to raise capital as and when needed could have significant negative consequences for its
business, financial condition, and results of consolidated operations.
NOTE 3. DISCONTINUED OPERATIONS
We continuously assess the composition of our portfolio to ensure it is aligned with our strategic objectives and positioned to maximize return to our
shareholders. On June 23, 2023, we completed the sale of our assets related to the SRB Business for $1.8 million in cash and the assumption of $1.7
million of real estate operating leases and other liabilities. The sale agreement contained customary representations, warranties, and covenants.
The proceeds, net of expenses, of $1.4 million, and the net carrying value of the SRB Business assets and liabilities assumed as of the date of sale at $10.0
million resulted in our recognition of a loss on sale of $8.6 million. The loss on sale includes no provision for income taxes as it is anticipated the tax
benefit for the expected tax loss on disposition will not be realized based on our current U.S. valuation allowance position.
In consideration of the Lender’s (as defined below) consent to the sale and release of securities interests and liens on SRB Business assets, we paid a
portion of the amount outstanding on our mortgage promissory note, not exclusively related to the SRB Business, from proceeds of the sale. In addition, we
paid liabilities for accumulated paid time off to the employees of the SRB Business. The following table summarizes the distribution of proceeds (in
thousands).
Purchase price
Expenses as of June 30, 2023
Net proceeds
Repayment of mortgage promissory note
Payment of paid time off liabilities
29
$
$
$
$
1,800
(375)
1,425
450
215
665
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The following table summarizes the carrying amounts of the SRB Business as of June 23, 2023, the date of sale (in thousands).
Inventories
Other current assets
Property and equipment
Operating lease right of use assets
Total assets
Accrued expenses
Operating lease liabilities
Finance lease liabilities
Long-term debt
Total liabilities
Net assets sold
$
$
2,252
185
7,710
1,566
11,713
9
1,668
12
14
1,703
10,010
The buyer of the SRB business did not acquire accounts receivable generated by the operation of the SRB Business assets and generally did not assume any
accounts payable or accrued expenses related to the operation of the SRB Business through the June 23, 2023, date of sale.
We determined that the disposal met the criteria for presentation as discontinued operations in the second quarter of 2023. Accordingly, SRB Business
results are presented as discontinued operations in our consolidated statements of operations and are excluded from continuing operations for all periods
presented. In addition, the SRB Business assets and liabilities are classified as held for sale in our consolidated balance sheets for December 31, 2022. The
operations of the SRB Business are included in our results through the June 23, 2023, date of sale. The following two tables represent activity up to the date
of the sale.
The following table summarizes the major line items included in loss from discontinued operations related to the SRB Business and divestiture (in
thousands).
Revenues
Cost of goods sold
Selling, general and administrative expenses
Interest expense
Loss from operations of discontinued operations
Gain (loss) on sale
Loss from discontinued operations
Depreciation included in cost of goods sold
Capital expenditures
December 31
2023
2022
6,857 $
(6,796)
(457)
(28)
(424)
(8,585)
(9,009) $
646 $
111 $
14,970
(14,966)
(1,293)
(56)
(1,345)
147
(1,198)
1,238
964
$
$
$
$
The following table summarizes the major line items included in cash flows from discontinued operations related to the SRB Business and divestiture (in
thousands).
Net cash used in operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities
Net cash provided by (used in) discontinued operations
30
December 31
2023
2022
$
(211) $
1,679
(460)
1,008
(141)
(229)
(24)
(394)
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In the year ended December 31, 2023, net cash provided by investing activities in the table above is presented in our consolidated statements of cash flows
in net cash provided by investing activities of discontinued operations and includes the $1.4 million net proceeds from the sale of the SRB Business. In the
year ended December 31, 2023, net cash used in financing activities in the table above is presented in our consolidated statements of cash flows used in
financing activities of discontinued operations and includes the $0.5 million repayment of our mortgage promissory note from the initial proceeds from the
sale.
The following table summarizes the carrying amounts of major classes of SRB Business assets and liabilities classified as held for sale as of December 31,
2022 (in thousands).
Inventories
Other current assets
Property and equipment
Operating lease right of use assets
Total assets held for sale
Accrued expenses, including paid time off liabilities of employees of the SRB business
Operating lease liabilities
Finance lease liabilities
Long-term debt, including $450 of mortgage promissory note, not exclusively related to the SRB business
Total liabilities held for sale
$
$
$
$
1,913
311
8,187
1,701
12,112
236
1,841
17
468
2,562
NOTE 4. ACCOUNTS RECEIVABLE AND REVENUES
We classify amounts billed as accounts receivable on our consolidated balance sheets and require payment on a short-term basis. Invoices are generally
issued at the point control transfers and substantially all of our invoices are due within 30 days or less, however certain customers have terms of up to 120
days. For substantially all of our contracts, control of the ordered product(s) transfers at our location. Periodically, we require payment prior to the point in
time we recognize revenue. We classify amounts received from customers prior to revenue recognition on a contract as customer prepayments liability on
our consolidated balance sheets. We typically apply customer prepayments to an invoice within 30 days of the prepayment. The accounts receivable
balance as of January 1, 2022, was $2.4 million.
Our accounts receivable potentially subject us to significant concentrations of credit risk. Revenues and accounts receivable from significant customers
(customers with revenue or accounts receivable in excess of 10% of consolidated totals) are stated below as a percent of consolidated totals.
% of revenue, 2023
% of revenue, 2022
% of accounts receivable, as of December 31, 2023
% of accounts receivable, as of December 31, 2022
The following table presents disaggregated revenues (in thousands).
Long Grain Rice and Bran
Barley and Oats
Feed and Other
Revenues
A
Customer
B
C
26%
20%
32%
12%
$
$
13%
13%
11%
19%
10%
11%
10%
9%
2023
2022
15,723 $
6,296
630
22,649 $
16,957
8,306
1,384
26,647
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NOTE 5. INVENTORIES
The following table details the components of inventories (in thousands).
Finished goods
Raw materials
Packaging
Inventories
December 31
2023
2022
$
$
123 $
393
27
543 $
228
212
25
465
NOTE 6. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
December 31
2023
2022
Estimated Useful Lives (in
years)
$
$
493 $
-
1,902
27
-
6,423
8,845
4,607
4,238 $
493
71
3,440
382
152
5,758
10,296
4,276
6,020
7 - 10
40 or life of
lease
20 -
3 - 5
6 or life of
lease
5 -
5 - 15
Land
Furniture and fixtures
Plant
Computer and software
Leasehold improvements
Machinery and equipment
Property and equipment, cost
Less accumulated depreciation
Property and equipment, net
NOTE 7. INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands).
December 31, 2023
December 31, 2022
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
930 $
13
22
965 $
668 $
6
21
695 $
262 $
7
1
270 $
930 $
13
22
965 $
564 $
5
16
585 $
366
8
6
380
Estimated
Useful Life
15
10
5
$
$
Customer relationships
Trademarks
Non-compete agreement
Total intangible assets
The customer relationship intangible is amortizing over the 15-year period of expected future economic benefit, in proportion to the discounted expected
future cash flows used to estimate the value of the intangible at acquisition in 2019. It is amortizing at a more rapid rate in the earlier periods than in later
periods. Other finite-lived intangible assets are amortizing on a straight-line basis.
As of December 31, 2023, the weighted-average remaining amortization period for intangibles is 8.9 years and future intangible amortization is expected to
total the following (in thousands):
2024
2025
2026
2027
2028
Thereafter
Total amortization
$
$
80
58
42
31
22
37
270
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NOTE 8. LEASES
The components of lease expense and cash flows from leases (in thousands) follow.
Finance lease cost:
Amortization of right-of use assets, included in cost of goods sold
Interest on lease liabilities
Operating lease cost, included in selling, general and administrative expenses:
Fixed lease cost
Variable lease cost
Short-term lease cost
Total lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash flows from operating leases
Financing cash flows from finance leases
2023
2022
$
$
$
$
$
145 $
52
80
61
188
526 $
52 $
80 $
150 $
97
21
515
168
85
886
21
515
104
As of December 31, 2023, we do not believe it is certain that we will exercise any lease renewal options. The remaining terms of our leases and the
discount rates used in the calculation of the fair value of our leases as of December 31, 2023, follows.
Remaining leases terms (in years)
Weighted average remaining lease terms (in years)
Discount rates
Weighted average discount rate
Maturities of lease liabilities as of December 31, 2023, follows (in thousands).
2024
2025
2026
2027
2028
Total lease payments
Amounts representing interest
Present value of lease obligations
NOTE 9. DEBT
Finance
Leases
-
3.7
2.8% -
0.2
9.6%
4.1
11.6%
Finance
Leases
$
$
178
167
165
126
4
640
(106)
534
We finance certain amounts owed for annual insurance premiums under financing agreements. As of December 31, 2023, amounts due under insurance
premium financing agreements are due in monthly installments of principal and interest through March 2024, at an interest rate of 7.5% per year.
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Table of Contents
Long-term debt consists of the following (in thousands).
Mortgage promissory note - Dated December 1, 2023. Original principal $4.1 million. Interest accrues and
compounds quarterly at 13.5% per year. At each quarterly interest payment date, the accrued and unpaid
interest can be paid in cash or paid in-kind and has a December 1, 2028 maturity date.
Mortgage promissory note - Originally dated July 2020. As subsequently modified, interest accrued at an
annual rate which is the greater of 7.0% above the Lender's prime rate (15.5% at September 30, 2023) and
10.3% and payable in monthly installments through January 2025. Face amount $2.5 million. Secured by
certain real property in Arkansas. December 31, 2022, excludes $450 thousand allocated to discontinued
operations.
Equipment note - Dated May 2021. Original principal $46 thousand. Due in monthly installments through
June 2025. Interest accrues at the effective discount rate of 3.6% per year.
Equipment note - Dated June 2023. Original principal $144 thousand. Due in monthly installments through
August 2025. Interest accrues at the effective discount rate of 14.0% per year.
Progress payment agreement - Dated August 2022. Original principal $37 thousand. Interest was payable
monthly at the rate of 25.2% per year until obligation was transferred to a finance lease in February 2023.
Total long-term debt, net
$
December 31,
2023
2022
$
2,968 $
-
-
15
114
-
3,097 $
1,761
24
-
39
1,824
On December 1, 2023, we entered into a new secured promissory note with Funicular, guaranteed by its subsidiaries Golden Ridge and MGI, in the
aggregate principal amount of $4.1 million, funded on December 1, 2023. A portion of the proceeds from the note were used to pay amounts owed under
the previous mortgage promissory note. The note has a stated maturity date of December 1, 2028. Interest accrues at a rate per annum equal to 13.50%. On
each quarterly interest payment date, the accrued and unpaid interest shall, at the election of the Company in its sole discretion, be either paid in cash or
paid in-kind. In addition, the note requires payment of a $50,000 fee on account of costs and expenses of Funicular, which fee was in-kind at the
Company’s election as per the agreement.
In January 2023, we entered into agreements with the Lender to effect a modification of the terms of the mortgage promissory note. This modification
involved us entering into a new mortgage promissory note in the principal amount of $2.5 million. We received $0.3 million in cash, and the lender applied
the remainder of the new principal to the $1.3 million then outstanding on the prior mortgage promissory note and the $0.9 million Over-advance. Under
the terms of the January 2023 note, (i) interest accrued at the same rate as the prior note, an annual rate which is the greater of 7.0% above the 1ender’s
prime rate and 10.3%, and (ii) principal and interest are payable in equal monthly installments through January 2025, under the January note. Prior to the
January 2023 modification, principal and interest were payable in equal monthly installments through December 2023. The note is secured by a mortgage
on our real property in Arkansas. The current portion of long-term debt on the consolidated balance sheet as of December 31, 2022, reflects the terms of the
January 2023 modification.
We borrow under a factoring agreement with a lender (the Lender), which provides a $7.0 million credit facility. We may only borrow to the extent we have
qualifying accounts receivable to use as collateral as defined in the agreement. The facility had an initial two-year term and automatically renews for
successive annual periods until delivery of a proper termination notice. The facility term automatically extended to October 2024. We incur recurring fees
under the agreement, including a funding fee of 0.5% above the prime rate, in no event to be less than 5.5%, on any advances, and a service fee on average
net funds borrowed. The Lender has a security interest in our assets and the right to demand repayment of the advances at any time.
The Lender also advanced us $0.9 million effective September 30, 2022 (the Over-advance), pending restructuring of our mortgage promissory note with
the Lender. The Over-advance accrued interest at an annual rate which is the greater of 7.0% above the Lender's prime rate (14.5% at December 31, 2022)
and 10.3% until it was repaid in January 2023. As of December 31, 2023, the Over-advance was classified as long-term debt in our consolidated balance
sheet as it was refinanced on a long-term basis in January 2023, as discussed below.
Additional information related to our factoring obligation (exclusive of the Over-advance) follows (in thousands).
Average borrowings outstanding (in thousands)
Fees paid, as a percentage of average outstanding borrowings
Interest paid, as a percentage of average outstanding borrowings
$
2023
2022
2,303
$
7.3%
9.5%
3,179
5.8%
7.0%
In 2023, we borrowed under a line of credit with a bank. The borrowing was secured by our cash on deposit with the bank and bore interest at prime. There
were no stipulated repayment terms for the line as long as we maintained sufficient cash collateral. We repaid the amounts borrowed under the line of credit
in full in April 2023. Our borrowings under the line of credit averaged $0.6 million and the average annual interest rate on borrowings was 6.7%.
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Table of Contents
Future principal maturities of long-term debt outstanding at December 31, 2023, follow (in thousands).
2024
2025
2026
2027
2028
Principal maturities
Debt issuance costs
Total long term debt, net
$
$
75
54
-
-
4,035
4,164
(1,067)
3,097
NOTE 10. EQUITY, SHARE-BASED COMPENSATION, WARRANTS AND SECURITIES OFFERINGS
In August 2022, our board of directors approved a 1 for 10 reverse split of our common stock. Our common stock began trading on a post-split basis on
August 26, 2022. All share and per share information has been retrospectively adjusted for all prior periods presented giving retroactive effect to the
reverse stock split. Such adjustments include calculations of our weighted average number of shares outstanding and loss per share, as well as disclosures
regarding our share-based compensation and warrants.
Preferred Stock and Tax Benefits Preservation Plan (Rights Agreement)
Our board of directors, without further action or vote by holders of our common stock, has the right to establish the terms, preference, rights and
restrictions and issue shares of preferred stock. We previously designated and issued six series of preferred stock of which no shares remain outstanding. In
addition, we designated and issued a seventh series of preferred stock, Series G, of which 150 shares remain outstanding as of December 31, 2023.
The Series G preferred stock is non-voting and may be converted into shares of our common stock at the holders’ election at any time, subject to certain
beneficial ownership limitations, at a ratio of 1 preferred share for 94.89915 shares of common stock. The Series G preferred stock is entitled to receive
dividends if we pay dividends on our common stock, in which case the holders of the preferred stock are entitled to receive the amount and form of
dividends that they would have received if they held the common stock that is issuable upon conversion of the Series G preferred stock. If we are liquidated
or dissolved, the holders of Series G preferred stock are entitled to receive, before any amounts are paid in respect of our common stock, an amount per
share of preferred stock equal to $1,000, plus any accrued but unpaid dividends thereon.
In July 2023, in connection with the Rights Agreement described below, we designated an eighth series of preferred stock, Series H Junior Participating
Preferred Stock, no par value (Series H Preferred Shares). Series H Preferred shares will be entitled, if declared, to a preferential per share quarterly
dividend payment equal to the greater of (i) $1.00 per share or (ii) an amount equal to 1,000 times the dividend declared per share of our common stock.
Each share of Series H Preferred Stock entitles the holder to 1,000 votes on all matters submitted to a vote of our shareholders. In the event of any merger,
consolidation or other transaction in which shares of common stock are converted or exchanged, each share of Series H Preferred Stock will be entitled to
receive 1,000 times the amount received per one share of our common stock.
In July 2023, we entered into the Rights Agreement designed to reduce the likelihood that we will experience an “ownership change” under Section 382 of
the Internal Revenue Code of 1986, as amended, by (i) discouraging any person or group of persons from becoming an “Acquiring Person”, which is
defined in the Rights Agreement generally as a person or group of affiliated or associated persons that, at any time after the date of the Rights Agreement,
has acquired, or obtained the right to acquire, beneficial ownership of 4.95% or more of the shares of our then-outstanding common stock and (ii)
discouraging any existing shareholder currently beneficially holding 4.95% or more of the shares of our common stock from acquiring more shares of our
common stock. In connection therewith, the board of directors of the company (the Board) declared a dividend of one preferred share purchase right (a
Right) for each outstanding share of common stock to shareholders of record at the close of business on July 17, 2023. Each Right entitles the holder to
purchase one one-thousandth of a share of our Series H Preferred Stock at a price of $6.00, subject to certain adjustments.
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Table of Contents
The Rights will separate and begin trading separately from our common stock generally (i) when a person or group of affiliated or associated persons has
become an Acquiring Person or (ii) following the commencement, or announcement of an intention to commence, a tender offer or exchange offer the
consummation of which would result in any person becoming an Acquiring Person. If issued, each Right, other than Rights beneficially owned by the
Acquiring Person (which will thereupon become void) will become exercisable for common stock having a value equal to two times the exercise price of
the Right. Prior to exercise, a Right does not give its holder any dividend, voting or liquidation rights. If not otherwise redeemed, exchanged or terminated,
the Rights will expire in July 2026, or at such later date as may be established by the Board.
Each share of Series H Preferred Stock will be entitled, when, as and if declared, to a preferential per share quarterly dividend payment equal to the greater
of (i) $1.00 per share or (ii) an amount equal to 1,000 times the dividend declared per share of Common Stock. Each share of Series H Preferred Stock will
entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Company. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are converted or exchanged, each share of Series H Preferred Stock will be entitled to receive 1,000
times the amount received per one share of Common Stock.
The Exercise Price payable, and the number of shares of Series H Preferred Stock or other securities or property issuable, upon exercise of the Rights are
each subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of,
the Series H Preferred Stock, (ii) upon the grant to holders of the Series H Preferred Stock of certain rights or warrants to subscribe for or purchase Series
H Preferred Stock or convertible securities at less than the then-current market price of the Series H Preferred Stock or (iii) upon the distribution to holders
of the Series H Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Series H
Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of outstanding Rights and the number of one one-
thousandths of a share of Series H Preferred Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock split, reverse
stock split, stock dividends and other similar transactions involving the Common Stock.
In the event that any person or group of affiliated or associated persons becomes an Acquiring Person, each holder of a Right, other than the Rights
beneficially owned by the Acquiring Person, affiliates and associates of the Acquiring Person and certain transferees thereof (which will thereupon become
null and void), will thereafter have the right to receive, upon exercise of a Right, that number of shares of Common Stock having a market value of two
times the Exercise Price.
In the event that, after a person or a group of affiliated or associated persons has become an Acquiring Person, the Company is acquired in a merger or
other business combination transaction, or 50% or more of the Company’s assets or earning power are sold, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of
common stock of the acquiring company having a market value at the time of that transaction equal to two times the Exercise Price.
With certain exceptions, no adjustment in the Exercise Price will be required unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Exercise Price. No fractional shares of Series H Preferred Stock will be issued (other than fractions which are integral multiples of one
one-thousandth of a share of Series H Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts) and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Series H Preferred Stock on the trading day immediately prior to the date of exercise.
Securities Offerings
In December 2023, we entered into a securities purchase agreement (the Purchase Agreement) with Funicular, pursuant to which the Company sold and
issued (i) a secured promissory note in the principal amount of $4,000,000, as more fully described under “The Funicular Note” below, (ii) 2,222,222
shares (the Funicular Shares) of the Company’s common stock, no par value (the Common Stock), at a purchase price equal to $0.18 per share and (iii)
warrants (the Funicular Warrants) to purchase 5,010,206 shares of Common Stock (the Funicular Warrant Shares), for an aggregate purchase price of
$4,000,000 (collectively, the Private Placement). The Funicular Warrants will be exercisable at a price of $0.18 per share, subject to adjustments as
provided under the terms of the Funicular Warrants. The Funicular Warrants are exercisable at any time on or after December 1, 2023, until the expiration
thereof, provided that the Company has a sufficient number of shares of authorized Common Stock under the Company’s Restated and Amended Articles
of Incorporation to permit such exercise. The Funicular Warrants have a term of five years from the date of issuance. In connection with the Private
Placement, on December 1, 2023, the Company entered into a Registration Rights Agreement with Funicular (the Registration RightsAgreement), pursuant
to which the Company agreed to submit to or file with the U.S. Securities and Exchange Commission within 180 days after the Closing Date a registration
statement registering the resale of the Funicular Shares and the Funicular Warrant Shares (the Resale Registration Statement), and the Company agreed to
use its reasonable best efforts to have the Resale Registration Statement declared effective as promptly as reasonably possible after the filing thereof. In
certain circumstances, Funicular can demand the Company’s assistance with underwritten offerings and block trades, and Funicular will be entitled to
certain piggyback registration rights. On December 1, 2023, the Company entered into a secured promissory note (the Funicular Note) in favor of Funicular
and guaranteed by its subsidiaries Golden Ridge and MGI, evidencing the loan made to the Company by Funicular in the aggregate principal amount of $4
million, funded to the Company on December 1, 2023, net of a discount equal to 10% of the aggregate principal amount. The Funicular Note has a stated
maturity date of December 1, 2028. Interest accrues at a rate per annum equal to 13.50%. On each interest payment date, the accrued and unpaid interest
shall, at the election of the Company in its sole discretion, be either paid in cash or paid in-kind. In addition, the Funicular Note requires payment of a
$50,000 fee on account of costs and expenses of Funicular, which fee was in-kind, at the Company’s election, within thirty days. The obligations under the
Funicular Note are guaranteed by Golden Ridge and MGI and are secured by a security interest in the assets (other than certain excluded assets, the
Collateral) of the Company, Golden Ridge and MGI, subject to the intercreditor agreement described below. The Funicular Note contains negative and
restrictive covenants which limit the ability of the Company, Golden Ridge and MGI to, among other things, transfer or otherwise dispose of the Collateral,
incur indebtedness and create, incur, assume or allow liens on the Collateral or any real property owned by the Company, Golden Ridge or MGI.
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In October 2022, we issued and sold 675,000 shares of our common stock and a prefunded warrant (the 2022 Prefunded Warrant) exercisable into 325,000
shares of our common stock pursuant to our effective “shelf” registration statement on Form S-3. The holder exercised the 2022 Prefunded Warrant with an
exercise price of $0.0001 per share (net of the $1.4999 per share prefunded) in full in 2022. In a concurrent private placement, we issued and sold warrants
for the purchase up to 2,000,000 shares of our common stock at an exercise price of $1.60 per share, which are exercisable in April 2023, and expire in
October 2025. The net proceeds from the concurrent offerings of $1.0 million, after deducting placement agent fees and other offering expenses of $0.5
million, were allocated to equity. We determined the exercise price of the 2022 Prefunded Warrant was nominal and, as such, we will consider the shares
underlying that warrant to be outstanding effective October 20, 2022, for the purposes of calculating basic earnings (loss) per share (EPS). We intend to use
the net proceeds from the October 2022 offerings for general corporate purposes, which may include funding capital expenditures, working capital and
repaying indebtedness. In addition, we issued warrants for the purchase of up to 63,000 shares of our common stock to the placement agent at an exercise
price of $1.875 per share which expire in October 2027.
In September 2021, we issued and sold 230,750 shares of common stock, a warrant for the purchase of up to 230,769 shares of common stock (Series
Warrant A), and a prefunded warrant (the 2021 Prefunded Warrant) for the purchase of up to 230,786 shares of common stock pursuant to our effective
“shelf” registration statement on Form S-3. The initial $10.00 per share exercise price of Series Warrant A was subject to adjustment in September 2022,
and will be subject to adjustment again in September 2023, if 110% of the 5-day volume weighted average price of our common stock is less than the then-
current exercise price. The 2021 Prefunded Warrant, which the holder exercised in full in 2021, had an exercise price of $0.001 (net of the $6.499 per share
prefunded). We determined that the 2021 Prefunded Warrant qualified for equity accounting, however, Series Warrant A did not qualify for equity
accounting because the holder may elect cash settlement of this warrant in the event of a change of control. As a result, we carry Series Warrant A as a
liability at fair value in our consolidated balance sheets and the change in fair value of this warrant is recorded in our consolidated statements of operations.
The net proceeds from the offering of $2.8 million, after deducting commissions and other cash offering expenses of $0.2 million were allocated to
derivative warrant liability, in an amount equal to the $0.6 million estimated fair value of Series Warrant A as of September 13, 2021, with the remainder of
the proceeds recorded in equity. We determined the exercise price of the Prefunded Warrant was nominal and, as such, considered the 230,786 shares
initially underlying the 2021 Prefunded Warrant to be outstanding effective September 13, 2021, for the purposes of calculating basic EPS. We used the net
proceeds from the September 2021 offering for general corporate purposes, which included funding capital expenditures and working capital and repaying
indebtedness.
Equity Incentive Plan
Our Board adopted our Amended and Restated 2014 Equity Incentive Plan (the 2014 Plan) after shareholders approved the plan, and amendments thereto.
On July 14, 2022, shareholders approved an increase in the number of shares of common stock authorized for issuance under the 2014 Plan of 600,000
shares. The total shares of common stock now authorized for issuance under the 2014 Plan is 1,230,000 shares. Under the terms of the plan, we may grant
stock options, shares of common stock and share-based awards to officers, directors, employees or consultants providing services on such terms as are
determined by the Board. Our Board administers the plan, determines vesting schedules on plan awards and may accelerate the vesting schedules for award
recipients. The stock options granted under the 2014 Plan have terms of up to 10 years and vesting periods of up to 4 years. The restricted stock units
granted under the plan vest over periods of up to 5 years. As of December 31, 2023, awards for the purchase of 1,230,000 shares of common stock have
been granted and remain outstanding (common stock options, common stock and restricted stock units) and no available shares of common stock are
reserved for future grants under the 2014 Plan.
37
Table of Contents
Share-based compensation expenses related to employees and directors are included in selling, general and administrative expenses. Share-based
compensation by type of award follows (in thousands).
Restricted stock units
Stock options
Compensation expense related to common stock awards issued under equity
incentive plan
$
$
2023
2022
316 $
96
412 $
1,160
101
1,261
Information regarding common stock issued under the 2014 Plan, including shares issued upon vesting of restricted stock units follows. All shares of
common stock issued in 2023 or 2022 were vested as of the date issued.
2023
2022
Weighted
Average
Grant
Date Fair Value
Per Share
Shares
Issued
Weighted
Average
Grant
Date Fair Value
Per Share
Shares
Issued
104,249 $
186,686
59,465
350,400
1.11
4.16
1.29
34,875 $
89,307
13,516
137,698
6.71
5.75
6.47
Directors
Employees
Vendors
Restricted Stock Units
We have outstanding (i) restricted stock units issued under the 2014 Plan (RSUs) to employees and directors and (ii) other restricted stock units issued to a
service provider (SUs). Each RSU and SU represents a contingent right to receive one share of common stock. Summaries of nonvested and vested stock
unit and activity follow.
RSUs
SUs
Number of
Units
Unrecognized
Compensation
(in thousands)
Average
Grant
Date
Fair Value
per share
Weighted
Average
Expense
Period
(Years)
Unrecognized
Compensation
(in thousands)
Average
Grant Date
Fair Value
per share
Numer of
Units
Weighted
Average
Expense
Period
(Years)
Nonvested at January 1,
2022
Granted
Impact of Modification:
Before modification
After modification
Forfeited
Vested with service
Expensed
Nonvested at December 31,
2022
Granted
Forfeited
Vested with Service
Expensed
Nonvested at December 31,
2023
126,603 $
527,871
658 $
1,680
5.20
3.18
8.77
3.73
5.77
(150)
64
(68)
-
(1,160)
NA
1,024
186
(892)
-
(317)
2.79
0.59
3.81
NA
0.9
2.7
0.6
-
1.1
-
-
2.8
-
1.3
-
-
- $
160,000
-
-
-
-
-
-
160,000
6,132
-
(59,465)
-
- $
216
-
-
-
-
-
(15)
201
5
-
-
(80)
-
1.35
-
-
-
-
-
NA
1.26
0.74
-
-
NA
(17,050)
17,050
(11,744)
(275,912)
-
366,818
316,845
(234,059)
(449,104)
-
500 $
1
1.28
0.2
106,667 $
126 $
1.18
38
-
3.0
-
-
-
-
-
-
2.7
-
-
-
-
1.8
Table of Contents
Vested at January 1, 2022
Vested with service
Issued at termination of service
Issued at vesting
Vested at December 31, 2022
Vested with service
Issued at vesting
Vested at December 31, 2023
Number of
RSUs
86,505
275,912
(83,725)
(53,967)
224,725
508,569
(350,400)
382,894
At December 31, 2023, unvested RSUs and SUs had an intrinsic value of less than $0.1 million, and vested RSUs had an intrinsic value of $0.1 million. As
of December 31, 2023, the intrinsic value of all RSUs and SUs outstanding was $0.1 million, unrecognized compensation was $0.1 million and the
remaining vesting period was 1.3 years. At December 31, 2023, issuance of 382,894 shares of common stock subject to the vested RSUs, is deferred to the
date the holder is no longer providing service to our company.
We issued 160,000 SUs to a service provider in 2022, which the service provider elected to purchase with a $0.2 million cash signing fee. The SUs vest in
three annual installments ending in September 2025 and we are expensing the fair value of the SUs over three years. The service provider may also earn
performance-based cash compensation beginning October 1, 2022, if certain performance criteria are met. The performance compensation will be paid
quarterly in an amount of cash which may then be used to purchase, at the election of the service provider, a number of fully vested SUs equal to (a) the
performance compensation, divided by (b) the volume weighted average closing price of our common stock over the 90 consecutive trading days ending on
the last day of the applicable performance period. The aggregate number of SUs purchased by the service provider, including the initial 160,000 SUs issued
in 2022 may not exceed 1,000,000.
In 2022, we modified RSUs held by resigning directors and an employee such that the awards vested on the date of their termination of service. Prior to the
modification, the resigning directors and employee would have forfeited the unvested RSUs on the date service terminated. As a result of the modifications,
we adjusted cumulative expense on the RSUs to equal the fair value of the awards on the modification dates in accordance with applicable accounting
guidance, as indicated in the table above.
Options
As of December 31, 2023 and 2022, we had outstanding options for the purchase of up 114,056 and 55,424 shares of common stock. We granted 100,000
stock options in 2023 and no stock options in 2022. Stock options for the purchase of up to 41,368 and 8,972 shares of common stock forfeited or expired
in 2023 and 2022. As of December 31, 2023, outstanding stock options had an intrinsic value of zero, a weighted average exercise price of $3.66 per share,
and a weighted average contractual remaining term of 1.0 years.
Unrecognized Compensation
As of December 31, 2023, the total amount of unrecognized compensation for all outstanding common stock awards, options, RSUs and SUs was $0.1
million, and the remaining average expense period was 0.7 years (including unrecognized compensation on SUs of $0.1 million with a remaining average
expense period of 1.8 years)).
Warrants
The 2022 Prefunded Warrant was exercised in its entirety in 2022 and we issued 325,000 shares of common stock upon the cash exercises. The initial
$10.00 per share exercise price of Series Warrant A adjusted, pursuant to its original terms, to $2.72 per share in September 2022, and adjusted again in
September 2023 to $0.57 per share, if 110% of the 5-day volume weighted average price of our common stock is less than the then-current exercise price.
On December 1, 2023, the Company consummated a transaction pursuant to an exchange agreement (the Cove Lane Exchange Agreement) with Cove
Lane Master Fund LLC (Cove Lane) to exchange the existing Series A Warrant held by Cove Lane or its designees for 150,000 shares of Common Stock to
be issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the Securities Act), upon
the terms and conditions set forth in the Cove Lane Exchange Agreement.
On December 1, 2023, the Company consummated a transaction pursuant to an exchange agreement (the Sabby Exchange Agreement) with Sabby
Volatility Warrant Master Fund, Ltd. (Sabby) to exchange the existing Common Stock Purchase Warrant held by Sabby or its designees for (i) 323,810
shares of Common Stock and (ii) warrants to purchase up to 1,200,000 shares of Common Stock (the Sabby Warrants) each to be issued in reliance on the
exemption from registration provided by Section 3(a)(9) of the Securities Act upon the terms and conditions set forth in the Sabby Exchange Agreement.
39
Table of Contents
The Sabby Warrants will be exercisable at a price of $0.2016 per share, subject to adjustments as provided under the terms of the Sabby Warrants. The
Sabby Warrants are exercisable at any time on or after December 1, 2023, until the expiration thereof. The Sabby Warrants have a term of three years from
the date of issuance.
On December 1, 2023, the Company consummated a transaction pursuant to an exchange agreement (the Hudson Bay Exchange Agreement and,
collectively with the Cove Lane Exchange Agreement and the Sabby Exchange Agreement, the Exchange Agreements) with Hudson Bay Master Fund Ltd.
(Hudson Bay) to exchange the existing Common Stock Purchase Warrant held by Hudson Bay or its designees for 155,000 shares of Common Stock to be
issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act upon the terms and conditions set forth in the
Hudson Bay Exchange Agreement.
Warrant activity, excluding activity related to prefunded warrants follows.
2023
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Shares Under
Warrants
2022
Weighted
Average
Exercise
Price
Shares Under
Warrants
2,298,769 $
4,324,802
1.76
0.21
2.9
4.1
875,067 $
2,063,000 $
9.76
1.61
Weighted
Average
Remaining
Contractual
Life (Years)
1.4
3.1
-
-
(2,230,769)
(5,000)
4,387,802 $
-
-
1.72
20.00
0.21
-
-
2.9
-
4.1
230,769 $
(230,769) $
(639,298)
2,298,769 $
10.00
2.72
9.60
1.76
4.0
4.0
-
2.9
Outstanding at January 1
Issued
Impact of Warrant A exercise price
adjustment:
Before adjustment
After adjustment
Forfeited
Expired
Outstanding at December 31
The following table summarizes information related to exercisable and outstanding warrants as of December 31, 2023.
Exercise
Prices
Shares Under
Warrants
$
$
$
0.18
0.20
1.88
3,124,802
1,200,000
63,000
4,387,802
$
$
40
Outstanding
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
0.18
0.20
1.88
0.21
4.9
1.8
3.8
4.1
Table of Contents
NOTE 11. INCOME TAXES
Deferred tax asset (liability) is comprised of the following (in thousands):
Net operating loss carryforwards
Stock options and warrants
Property and equipment
Intangible assets
Capitalized expenses
Other
Operating right-of-use lease assets
Operating right-of-use lease liabilities
Net deferred tax assets
Less: Valuation allowance
Deferred tax asset (liability)
December 31
2023
2022
$
$
17,734 $
1,090
310
688
105
440
-
124
20,491
(20,491)
- $
14,264
1,151
(46)
875
117
655
-
167
17,183
(17,183)
-
We have determined it is more likely than not that our deferred tax assets will not be realized. Accordingly, we have provided a valuation allowance for
deferred tax assets.
The following table summarizes the change in the valuation allowance (in thousands):
Valuation allowances, beginning of year
Net operating loss and other temporary differences
Expiration of net operating losses and limitations
Adjustment to deferred taxes
Impact of state tax rate change
Other
Valuation allowance, end of year
2023
2022
$
$
17,183 $
3,974
(33)
(159)
(404)
70
20,491 $
15,456
1,997
(90)
(197)
22
(5)
17,183
As of December 31, 2023, net operating loss (NOL) carryforwards for U.S. federal tax purposes totaled $70.4 million. NOLs generated after December 31,
2017, do not expire. Federal NOLs of $9.9 million expire at various dates from 2036 through 2037 and the remainder do not expire. The Tax Cuts and Jobs
Act (TCJA) limitation of 80% of taxable income is applied to NOLs generated in tax years beginning after December 31, 2017. NOL carryforwards for
state tax purposes totaled $47.5 million at December 31, 2023. State NOLs of $45.6 million expire at various dates from 2024 through 2043 and the
remainder do not expire.
Our ability to utilize previously accumulated NOL carryforwards is subject to substantial annual limitations due to the changes in ownership provisions of
the Internal Revenue Code (IRC) of 1986, as amended, and similar state regulations. Prior to 2020, we experienced several ownership changes as defined in
IRC Section 382(g). In general, the annual limitation is equal to the value of our stock immediately before the ownership change, multiplied by the long-
term tax-exempt rate for the month in which the ownership change occurred. Any unused annual limitation may generally be carried over to later years
until the NOL carryforwards expire. Accordingly, we have reduced our NOL in the table above to reflect these limitations.
We are subject to taxation in the U.S. federal jurisdiction and various state and local jurisdictions. We record liabilities for income tax contingencies based
on our best estimate of the underlying exposures. We are open for audit by the IRS for years after 2019 and, generally, by U.S. state tax jurisdictions after
2018.
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Table of Contents
Reconciliations between the amounts computed by applying the U.S. federal statutory tax rate to loss before income taxes, and income tax expense
(benefit) follows (in thousands):
Pre-tax income (loss)
Income tax benefit at federal statutory rate
Increase (decrease) resulting from:
State tax benefit, net of federal tax effect
Effect of change in state tax rate
Change in valuation allowance
Expirations of net operating losses and application of IRC 382 limitation
Fair value adjustments and others
Other nondeductible expenses
Adjustments to deferreds
Income tax expense
$
$
$
2023
2022
(8,539) $
(1,796) $
(189)
404
3,308
33
(1,960)
53
159
12 $
(6,641)
(1,646)
(421)
(22)
1,727
90
5
89
197
19
During the year ended December 31, 2023, income tax expense on the consolidated statement of operations included $12 thousand from minimum state
taxes and franchise taxes.
Based on an analysis of tax positions taken on income tax returns filed, we determined no material liabilities related to uncertain income tax positions
existed as of December 31, 2023 or 2022. Although we believe the amounts reflected in our tax returns substantially comply with applicable U.S. federal,
state and local tax regulations, the respective taxing authorities may take contrary positions based on their interpretation of the law. A tax position
successfully challenged by a taxing authority could result in an adjustment to our provision or benefit for income taxes in the period in which a final
determination is made.
NOTE 12. INCOME (LOSS) PER SHARE (EPS)
Basic EPS is calculated under the two-class method under which all earnings (distributed and undistributed) are allocated to each class of common stock
and participating securities based on their respective rights to receive dividends. Our outstanding convertible preferred stock are considered participating
securities as the holders may participate in undistributed earnings with holders of common shares and are not obligated to share in our net losses.
Diluted EPS is computed by dividing the net income attributable to RiceBran Technologies common shareholders by the weighted average number of
common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if the impact of
assumed exercises and conversions is dilutive. The dilutive effects of outstanding options, warrants, nonvested shares of common stock and nonvested
restricted stock units that vest solely on the basis of a service condition are calculated using the treasury stock method. The dilutive effects of the
outstanding preferred stock are calculated using the if-converted method.
Below are reconciliations of the numerators and denominators in the EPS computations.
NUMERATOR (in thousands):
Basic and diluted - loss from continuing operations
DENOMINATOR (in thousands):
Weighted average number of shares of shares of common stock outstanding
Weighted average number of shares of common stock underlying vested restricted stock units
Basic EPS - weighted average number of shares outstanding
Effect of dilutive securities outstanding
Diluted EPS - weighted average number of shares outstanding
2023
2022
$
(8,551) $
(6,660)
6,746,688
245,670
6,992,358
-
6,992,358
5,414,079
100,592
5,514,671
-
5,514,671
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for 2023 and 2022, because to do so would be anti-
dilutive due to our net loss. Potentially dilutive securities outstanding during 2023 and 2022 included our outstanding convertible preferred stock, options,
warrants and nonvested restricted stock units. Those potentially dilutive securities, further described in Note 10, could potentially dilute EPS in the future.
NOTE 13. FAIR VALUE MEASUREMENT
The fair value of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable, commodities payable and short-term debt
approximated their carrying value due to shorter maturities. As of December 31, 2023, the fair values of our long-term debt and finance lease liabilities
approximated their carrying values, based on current market rates for similar debt and leases with similar maturities (Level 3 measurements).
42
Table of Contents
The following tables summarize the fair values by input hierarchy of items measured at fair value on a recurring basis on our consolidated balance sheets
(in thousands):
As of December 31, 2022:
Derivative warrant liability
Total liabilities at fair value
Level 1
Level 2
Level 3
Total
$
$
- $
- $
- $
- $
69 $
69 $
69
69
The following tables summarize the changes in level 3 items measured at fair value on a recurring basis (in thousands):
Fair Value as
of
Beginning of
Period
Total
Realized and
Unrealized
Gains
(Losses)
Issuance of
New
Instruments
Net
Transfers
(Into) Out of
Level 3
Fair Value, at
End of Period
Change in
Unrealized
Gains
(Losses)
on
Instruments
Still Held
$
$
$
$
69 $
69 $
(69) $
(69) $
258 $
258 $
(189) $
(189) $
- $
- $
- $
- $
- $
- $
- $
- $
- $
- $
69 $
69 $
(69)
(69)
(189)
(189)
2023:
Derivative warrant liability
Total Level 3 fair value
2022:
Derivative warrant liability
Total Level 3 fair value
The derivative warrant liability in the tables above relates to Series Warrant A, discussed further in Note 10. Series Warrant A, previously held by Cove
Lane, was exchanged for 150,000 shares of Common Stock and is no longer carried in our consolidated balance sheets at December 31, 2023 as derivative
warrant liability.
NOTE 14. COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we are involved in litigation incidental to the conduct of our business. These matters may relate to employment and labor claims, patent
and intellectual property claims, claims of alleged non-compliance with contract provisions and claims related to alleged violations of laws and regulations.
When applicable, we record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably
estimated. Defense costs are expensed as incurred and are included in professional fees. While the outcome of lawsuits and other proceedings against us
cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits and other proceedings had or are
expected to have a material effect on our financial position or results of operations in 2023 and 2022.
In January 2023, we received $0.3 million in restitution payments from a former employee. The payments were ordered by a federal court in 2012.
NOTE 15. SUBSEQUENT EVENT
On January 25, 2024, we sold our Golden Ridge property and equipment for $2.15 million in cash. Related to this sale, on December 31, 2023 we
recognized a $1.5 million impairment expense related to these assets.
PART II
(continued)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
43
Table of Contents
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as such term is defined in Rule 13a and
Rule15d-15(e)) under the Exchange Act was performed as of December 31, 2023, under the supervision and with the participation of our current
management, including our current Executive Chairman, Interim Chief Financial Officer, and Interim Controller. Our disclosure controls and procedures
have been designed to ensure that information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified by the SEC’s rules and forms and that such information is accumulated and communicated to
our management, including our Executive Chairman and Interim Chief Financial Officer to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
Except for as set forth below, there were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2023,
that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Management Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934 (Exchange Act) and for the assessment of the effectiveness of internal control over financial reporting. Our
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and
procedures that:
(i)
(ii)
(iii)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP,
and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
provide reasonable assurance regarding prevention, or timely detection, of unauthorized acquisition, use or disposition of our assets that could
have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of current management, including our current Executive Chairman, Interim Chief Financial Officer, and
Interim Controller, we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023. In making
this assessment, management used the criteria set forth in the framework established by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) entitled “Internal Control - Integrated Framework (the 2013 Framework).”
Material Weaknesses
Our management concluded that as of December 31, 2023, we did not maintain effective internal controls over financial reporting. Specifically, we
identified material weaknesses over management’s review controls over the documentation and review of the required dual approval for the posting of
journal entries and the processing and review of inventory costing.
The Company had consistent turnover within the accounting department in 2023, which led to not sustaining a sufficient number of qualified personnel to
maintain the proper controls over financial reporting. This led to an overstatement in inventory due to the incorrect entry of purchase order quantities,
which was detected by the Company’s independent auditors.
Management has initiated remediation measures including, but not limited to, hiring additional accounting staff and the necessary customization of the
Company’s accounting system to provide the documentation for the required dual approval for the posting of journal entries. As a result, the Company
believes that it has adequate resources to address accounting and reporting requirements under U.S. GAAP and SEC reporting standards and to implement
the appropriate internal controls.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
44
Table of Contents
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The names of our directors and executive officers and certain information about them are set forth below.
PART III
Name
Executive Officers
Eric Tompkins*
William J. Keneally
Non-Employee Directors
Brent D. Rosenthal (2)(3)*
David I. Chemerow (1)(3)*
James P. Flynn (1)(2)*
Georgina Russell (1)(2)(3)*
Age Position
62
61
51
72
43
47
Director and Executive Chairman
Interim Chief Financial Officer and Secretary
Lead Independent Director
Director
Director
Director
(1)
(2)
(3)
*
Current member of the Audit Committee.
Current member of the Compensation Committee.
Current member of the Nominating and Governance Committee.
Director nominee.
Executive Officers
Eric Tompkins has served as our director and executive chairman since June 2023, and has served as business unit leader of our milling operations since
June 2021. Mr. Tompkins served as senior vice president of sales and business development from June 2020 to June 2021 and as senior vice president of
business development from April 2019 to June 2020. Mr. Tompkins was president and chief executive officer of MGI Processing, LLC from March 2017
until we acquired that company in April 2019. He was director of sales for Ardent Mills from 2014 to 2017. From 1987 to 2014, Mr. Tompkins held various
positions at Con Agra Brands, Inc. (NYSE: CAG), lastly as director of national account sales and initially in grain procurement and risk management. Mr.
Tompkins graduated from the University of Colorado with a Bachelor of Arts in Economics and a Bachelor of Arts in International Affairs. He received his
Master of International Management from the Thunderbird-American Graduate School of International Management. The Board believes that Mr.
Tompkins’s extensive experience in commodities and milling, coupled with his history with our Company, are the attributes, skills, experiences and
qualifications that allow Mr. Tompkins to make a valuable contribution as one of our directors.
William J. Keneally has served as our interim chief financial officer since April 2023 under a consulting services agreement with TechCXO, LLC;
TechCXO Florida, LLC; TechCXO Tennessee, LLC and TechCXO Texas, LLC d/b/a CXO Partners. From March 2023 to the present and August 2018 to
May 2022, Mr. Keneally has been a partner of TechCXO, LLC, a provider of C-suite executive services. From February 2020 to the present, Mr. Keneally
has been founder and chief financial officer of Spades SBC whose mission is to significantly increase global planting and growing of trees so to mitigate
client change efficiently and effectively. From June 2022 to February 2023, Mr. Keneally served as chief accounting officer of Flutterwave, Inc., a venture-
backed, African-focused, payments and other solutions technology provider with approximately 50 global subsidiaries. From April 2013 to June 2015, Mr.
Keneally served as chief financial officer of CTPartners Executive Search Inc. On November 12, 2015, the Court of Chancery of the State of Delaware
appointed a receiver for CTPartners Executive Search Inc. Mr. Keneally is an inactive New York State certified public accountant and received his
Bachelor of Business Administration – Accounting Concentration from the University of Notre Dame.
Non-Employee Directors
Brent D. Rosenthal has served as a director since July 2016 and as lead independent director since August 2020. Mr. Rosenthal was non-executive
chairman of our Board from July 2016 to August 2020. Mr. Rosenthal is the founder of Mountain Hawk Capital Partners, LLC, an investment fund focused
on small and micro-cap equities in the food and technology media telecom industries. Mr. Rosenthal also serves as lead director of the board of directors of
Comscore, Inc (NASDAQ: SCOR), a digital data and analytics company, and on the board of directors of FLYHT Aerospace Solutions Ltd. (OTCX:
FLYLF) and OmniLit Acquisition Corp. (NASDAQ: OLIT). Previously, Mr. Rosenthal was an advisor to the board of directors of Park City Group
(NASDAQ: PCYG), a food safety and supply chain software company from 2015 to 2018. Mr. Rosenthal was a partner in affiliates of W.R. Huff Asset
Management where he worked from 2002 to 2016. Mr. Rosenthal served on the board of directors of Rentrak Corporation (NASDAQ: RENT), a media
measurement and advanced consumer targeting company, from 2008 to 2016 and as non-executive chairman of the board from 2011 to 2016. He also
served on the boards of directors of four privately-held Hispanic food companies. Earlier in his career, Mr. Rosenthal was director of mergers and
acquisitions for RSL Communications Ltd. and served emerging media companies for Deloitte. Mr. Rosenthal is an inactive certified public accountant.
Mr. Rosenthal earned his Bachelor of Science in Accounting degree from Lehigh University and Master of Business Administration degree from the S.C.
Johnson Graduate School of Management at Cornell University. The Board believes that Mr. Rosenthal’s experience investing in the food industry,
independent board experience and business acumen are the attributes, skills, experiences and qualifications that allow Mr. Rosenthal to make a valuable
contribution as one of our directors.
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David I. Chemerow has served as a director since October 2018. From August 2016 to September 2017, Mr. Chemerow served as the chief financial officer
and treasurer of Comscore, Inc. and from January 2016 to August 2016, Mr. Chemerow served as the chief revenue officer of Comscore, Inc. Mr.
Chemerow served as the chief operating officer and chief financial officer of Rentrak Corporation from October 2009 until Rentrak Corporation was
merged into Comscore, Inc. in January 2016. Prior to 2009, Mr. Chemerow served in senior executive roles in several companies. Mr. Chemerow
previously served as the non-executive chairman of the board of Playboy Enterprises, Inc. and is a member of the board of directors of Dunham’s
Athleisure Corporation, a sporting goods retailer. Mr. Chemerow serves on the board of The Martha’s Vineyard Playhouse, a non-profit theatre. Mr.
Chemerow is a graduate of Dartmouth College and holds a Master of Business Administration degree from The Amos Tuck School. The Board believes
that Mr. Chemerow’s extensive experience, business knowledge and experience as chief operating officer and chief financial officer of several public
companies are the attributes, skills, experiences and qualifications that allow Mr. Chemerow to make a valuable contribution as one of our directors.
James P. Flynn has served as a director since January 2024. Mr. Flynn is currently the Managing Member and Portfolio Manager of Nerium Capital LLC,
an investment adviser he founded in 2021. He also currently serves on the Board of Directors of ARCA Biopharma (NASDAQ: ABIO), MEI Pharma
(NASDAQ: MEIP), and Axiom Health (private). From 2019 to 2020, Mr. Flynn was exploring business opportunities, which ultimately led to the
formation of Nerium Capital. From 2017 to 2018, Mr. Flynn worked as a therapeutics analyst at Aptigon Capital (a Citadel Company), an investment firm.
Prior to that, from 2003 to 2017, Mr. Flynn served in various roles at Amici Capital, LLC, an investment firm, including healthcare portfolio manager
(2008 to 2017). From 2002 to 2003, Mr. Flynn worked in the credit research/high yield group at Putnam Investments, an investment firm. He earned an
S.B. degree in Management Science with a concentration in Finance and a minor in Economic Science from the Massachusetts Institute of Technology
(MIT). Mr. Flynn is a Chartered Financial Analyst (CFA) Charterholder.
Georgina Russell has served as a director since January 2024. Ms. Russell is the Managing Partner of Chicane GP LLC and the Portfolio Manager of
Chicane Opportunities Fund LP, roles she has held since January 2019. From January 2015 through December 2018, she was a Portfolio Manager at Willett
Advisors, LLC (“Willett”) where she managed a long-term, concentrated fund of publicly traded securities. Prior to Willett, from April 2012 through July
2014, Ms. Russell was a Managing Director at Smithwood Advisers L.P. (“Smithwood”), a Los Angeles based investment advisory firm. Earlier in her
career, Ms. Russell worked as an Analyst at Lonestar Capital Management, LLC in San Francisco, from January 2009 through April 2012. From August
2007 to December 2008, Ms. Russell did a first stint at Smithwood in their Hong Kong office. Before establishing her career in investing, Ms. Russell was
a software engineer. She architected and authored cloud-based distributed systems. Ms. Russell was awarded three patents for her work. Ms. Russell
graduated from the University of California, Berkeley in 1999 with a Bachelor of Arts degree with honors in Computer Science. She received an MBA
with honors from The Wharton School at the University of Pennsylvania in 2007.
Board Leadership Structure
The Board believes our governance structure follows a successful leadership model under which our executive chairman also serves in a role as acting chief
executive of the Company. The Board believes at present that the combined role of executive chairman and chief executive of the Company promotes
united leadership and direction for the Company, which allows for a single, clear focus for management to execute the Company’s strategy and business
plans. We recognize that different leadership models may work well for other companies at different times depending on individual circumstances, and we
believe that the Company is well served by the combination of these roles as we seek to improve the performance of the Company and review our strategic
alternatives. To enhance this approach and strengthen the oversight capabilities of the Board, we designated a lead independent director who is charged
with working with the other independent directors in carrying out the strategic, governance, oversight and decision-making responsibilities of the Board.
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The Board does not have a policy, one way or the other, with respect to whether the same person should serve as both the chief executive officer and
chairman of the Board or, if the roles are separate, whether the chairman should be selected from the non-employee directors or should be an employee.
The Board believes that it should have the flexibility to make these determinations at any given point in time in the way that it believes best to provide
appropriate leadership for the Company at that time. The Board evaluates the leadership structure annually, and it will continue to do so as circumstances
change, including if a new chief executive officer is elected. Currently, Mr. Tompkins serves as executive chairman of the Board and Mr. Rosenthal serves
as lead independent director.
Risk Oversight
The Board has three standing committees with separate chairs – Audit, Compensation, and Nominating and Governance. Our Audit Committee is
responsible for overseeing risk management and at least annually reviews and discusses with management policies and systems pursuant to which
management addresses risk, including risks associated with our audit, financial reporting, internal control, disclosure control, legal and regulatory
compliance, and investment policies. Our Audit Committee also serves as the contact point for employees to report corporate compliance issues. Our Audit
Committee regularly reviews with our Board any issues that arise in connection with such topics. Our full Board regularly engages in discussions of risk
management to assess major risks facing the Company and review options for their mitigation. Each of our Board committees also considers the risk within
its area of responsibilities. For example, our Compensation Committee periodically reviews enterprise risks to ensure that our compensation programs do
not encourage excessive risk-taking and our Nominating and Governance Committee oversees risks related to governance issues.
Board Meetings and Committee Meetings
During 2023, the Board held nine meetings. Each incumbent director who was a director in 2023 attended at least 75% of the aggregate of the total number
of meetings of the Board and meetings of the committees on which such director served that occurred while such director served on the Board or the
committees. Our Board and its committees set schedules to meet throughout the year and also can hold special meetings and act by written consent from
time to time, as appropriate. Our Board has delegated various responsibilities and authority to its committees as generally described below. The committees
regularly report on their activities and actions to the Board.
Audit Committee
The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act, assists the Board in its general oversight of
our financial reporting, internal controls, and audit functions, and is directly responsible for the appointment, compensation and oversight of the work of
our independent registered public accounting firm. As of December 31, 2023, the members of the Audit Committee are Brent D. Rosenthal and David I.
Chemerow. Each member of the Audit Committee is independent under Nasdaq’s independence standards for audit committee members and within the
meaning of Rule 10A-3 of the Exchange Act. The Board has determined that Brent D. Rosenthal and David I. Chemerow are each an “audit committee
financial expert”, as defined by
is available on our website at
www.ricebrantech.com/investors/annual-meeting. The Audit Committee met four times in 2023. Each then-current member of the Audit Committee
attended at least 75% of these meetings during the period that the director was a committee member.
the SEC. The charter of
the Audit Committee
rules of
the
Compensation Committee
The Compensation Committee establishes our executive compensation policy, determines the salary and bonuses of our executive officers and recommends
to the Board share-based compensation grants for our executive officers. The members of the Compensation Committee are Brent D. Rosenthal and David
I. Chemerow, and each member is independent under Nasdaq’s independence standards for compensation committee members. The Compensation
Committee may from time to time delegate some or all of its duties or responsibilities to subcommittees or to one member of the Compensation Committee.
Our executive chairman often makes recommendations to the Compensation Committee and the Board concerning compensation of other executive
officers. The Compensation Committee seeks input on certain compensation policies from the executive chairman. The charter of the Compensation
Committee is available on our website at www.ricebrantech.com/investors/annual-meeting.
In fulfilling its duties and responsibilities, the Compensation Committee seeks periodic input, advice and recommendations from various sources, including
our Board and our executive officers. The Committee at all times exercises independent discretion in its executive compensation decisions. In 2023, all
members of the board were on all committees, and the entire board met for compensation committee matters.
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Nominating and Governance Committee
The Nominating and Governance Committee is responsible for matters relating to the corporate governance of our Company and the nomination of
members of the Board and committees thereof. The members of the Nominating and Governance Committee are Brent D. Rosenthal and David I.
Chemerow and each member is independent under Nasdaq’s independence standards. The charter of the Nominating and Governance Committee is
available on our website at www.ricebrantech.com/investors/annual-meeting. In 2023, all members of the board were on all committees, and the entire
board met for nominating and governing committee matters.
Nomination Process
In evaluating potential candidates for membership on the Board, the Nominating and Governance Committee may consider such factors as it deems
appropriate. These factors may include judgment, skill, diversity, integrity, experience with businesses and other organizations of comparable size, the
interplay of the candidate’s experience with the experience of other Board members and the extent to which the candidate would be a desirable addition to
the Board and any committees of the Board. While the Nominating and Governance Committee has not established any specific minimum qualifications
for director nominees, the Nominating and Governance Committee believes that demonstrated leadership, as well as significant years of service in an area
of endeavor such as business, law, public service, related industry or academia, is a desirable qualification for service as our director. Upon the
identification of a qualified candidate, the Nominating and Governance Committee selects, or recommends for consideration by the full Board, the nominee
for the election of directors to the Board.
We are committed to diversity and inclusion. Although we do not have a formal policy in place, we consider diversity, among other factors, to identify our
nominees for the Board. We view diversity broadly to include diversity of experience, skills and viewpoint. In sum, we strive to assemble a diverse Board
that is strong in its collective knowledge and that also consists of individuals who bring a variety of complementary attributes and skills to the Board such
that the Board, taken as a whole, has the necessary and appropriate skills and experience to provide an enriched environment. The needs of the Board and
the factors that the Nominating and Governance Committee considers in evaluating candidates are reassessed on an annual basis, when the committee’s
charter is reviewed. The charter of the Nominating and Governance Committee is available on our website at www.ricebrantech.com/investors/annual-
meeting.
The Nominating and Governance Committee will consider nominees recommended by shareholders. Any shareholder may make recommendations to the
Nominating and Governance Committee for membership on the Board by sending a written statement of the qualifications of the recommended individual
to: Secretary, RiceBran Technologies, 25420 Kuykendahl Rd., Suite B300, Tomball, Texas 77375. Such recommendations should be received no later than
twenty days prior to the annual meeting for which the shareholder wishes his or her recommendation to be considered; provided, however, that in the event
that less than thirty days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely
must be received no later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. Such shareholder’s notice must set forth all of the information required by, and comply with, our articles of incorporation and
bylaws, including the following: (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director: (i) the name,
age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares
of the Company which are beneficially owned by such person, (iv) any other information relating to such person that is required by law to be disclosed in
solicitations of proxies for election of directors, and (v) such person's written consent to being named as a nominee and to serving as a director if elected;
and (b) as to the shareholder giving the notice: (i) the name and address, as they appear on the Company's books, of such shareholder, (ii) the class and
number of shares of the Company which are beneficially owned by such shareholder, and (iii) a description of all arrangements or understandings between
such shareholder and each nominee and any other person or persons (naming such person or persons) relating to the nomination. The Board will evaluate
candidates recommended by shareholders on the same basis as it evaluates other candidates, including the following criteria:
● Directors should be of the highest ethical character and share values that reflect positively on themselves and us.
● Directors should have reputations, both personal and professional, consistent with our image and reputation.
● Directors should be highly accomplished in their respective fields, with superior credentials and recognition.
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The fact that a proposed director nominee meets some or all of the above criteria will not obligate the Nominating and Governance Committee to nominate
or recommend the candidate for election to the Board.
Code of Business Conduct and Ethics
Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. Any waivers of any provision of
this code for our directors or officers may be granted only by the Board or a committee appointed by the Board. Any waivers of any provisions of this code
for an employee or a representative may be granted only by our executive chairman or chief financial officer. We will provide any person, without charge, a
copy of this code. Requests for a copy of the code may be made by writing to RiceBran Technologies at 25420 Kuykendahl Rd., Suite B300, Tomball,
Texas 77375, Attention: Secretary. The Code of Business Conduct and Ethics is also available on our website at www.ricebrantech.com/investors/annual-
meeting.
Our Board has not adopted any practices or policies regarding the ability of our employees or directors, or any of their designees, to engage in transactions
that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities.
Communication Policy
Shareholders and other interested parties may send communications to the Board or individual members of the Board by writing to them, care of Secretary,
RiceBran Technologies, 25420 Kuykendahl Rd., Suite B300, Tomball, Texas 77375, who will forward the communication to the intended director or
directors. If the shareholder wishes the communication to be confidential, then the communication should be provided in a form that will maintain
confidentiality.
Attendance of Directors at Annual Meetings of Shareholders
We have a policy of encouraging, but not requiring, directors to attend our annual meeting of shareholders. All of our current directors who were directors
at the time of the 2023 Annual Meeting of Shareholders attended such meeting.
ITEM 11. EXECUTIVE COMPENSATION
We are currently considered a “smaller reporting company” for purposes of the SEC’s executive compensation disclosure rules. In accordance with such
rules, we are required to provide a summary compensation table and an outstanding equity awards at fiscal year end table, as well as limited narrative
disclosures. Further, our reporting obligations extend only to the individuals serving as our principal executive officer, who was our executive chairman,
and our two other most highly compensated executive officers other than our principal executive officer, if any. For 2023, our “named executive officers”
were:
● Eric Tompkins, Director and Executive Chairman; and
● William J. Keneally, Interim Chief Financial Officer and Secretary; and
● Peter G. Bradley, Former Director and Executive Chairman; and
● Todd T. Mitchell, Former Chief Operating Officer and Chief Financial Officer.
Compensation Philosophy
Our Compensation Committee is charged with the evaluation of the compensation of our named executive officers and to assure that they are compensated
effectively in a manner consistent with our compensation strategy and resources, competitive practice, and the requirements of the appropriate regulatory
bodies.
Our compensation philosophy has the following basic components: (i) establish competitive base salaries to attract qualified talent, and (ii) evaluate
performance and grant performance-based bonuses that may include equity and cash components. Our goal is to establish executive compensation levels to
allow us to remain competitive in our industry and to attract and retain executives of a high caliber. Similarly, we strive to align components of annual
compensation to performance and achievement of our business objectives in an effort to retain highly motivated executives who are focused on
performance. We review other public reports and consider the compensation paid to executives at similarly situated companies, both within and outside of
our industry, when determining and evaluating our compensation philosophy and compensation levels. Our performance, including, but not limited to,
earnings, revenue growth, cash flow, and continuous improvement initiatives, is a significant part of our evaluation and determination of compensation
levels.
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Summary Compensation Table
The following table sets forth all compensation awarded, earned or paid to our named executive officers for services rendered to us in all capacities during
2023 and 2022.
Name and Principal Position (1)
Year
Salary
($)
Bonus
($)
Stock
Awards
($) (2)
Option
Awards
($) (3)
Total
($)
Eric Tompkins, Director and Executive
Chairman
William J. Keneally, Interim Chief
Financial Officer and Secretary
Peter G. Bradley, Former Director and
Executive Chairman
Todd T. Mitchell, Former Chief Operating
Officer and Chief Financial Officer
2023
2022
2023
2022
2023
2022
2023
2022
300,000
200,000
100,000
-
-
57,000
-
-
400,000
257,000
405,266
-
31,196
235,000
126,160
275,000
-
-
-
-
-
-
-
-
72,830
-
478,096
-
27,968
628,882
-
449,513
-
-
-
-
59,164
863,882
126,160
724,513
(1) Reflects the positions held by our named executive officers as of December 31, 2023. Mr. Tompkins was appointed executive chairman of the
Company in June 2023, and Mr. Keneally was appointed interim chief financial officer in April 2023.
(2) Amounts in this column reflect the grant date fair value of share and share-based awards granted to the named executive officers, calculated in
accordance with FASB ASC Topic 718 and the SEC rules. The assumptions underlying these calculations are described in Note 10 to the
accompanying consolidated financial statements.
(3) Amounts in this column reflect the grant date fair value, calculated in accordance with FASB ASC Topic 718 and the SEC rules of equity and
equity-based awards granted to the named executive officers. The assumptions underlying these calculations are described in Note 10 to the
accompanying consolidated financial statements.
Narrative Disclosure to the Summary Compensation Table
The following is a brief description of the compensation arrangements we had with each of the named executive officers and the other compensation
received by the named executive officers during 2023. All Common Stock, stock option, and RSU grants (including DSU grants) described below were
made pursuant to the 2014 Plan.
Eric Tompkins, Executive Chairman
Mr. Tompkins was initially employed by us when he was appointed executive chairman of the Board effective June 13, 2023. Mr. Tompkins’ employment
is at-will, and his employment continues until either the Company or Mr. Tompkins elects to separate from the Company.
Mr. Tompkins is entitled to receive an annual cash salary of $300,000. Whether any bonus award is earned by Mr. Tompkins is determined in the complete
discretion of the Board. We do not maintain a formal bonus plan, but historically, the Board has considered both individual and Company performance in
determining whether annual bonuses have been earned. The Board determined that a retention bonus of $100,000 was earned by Mr. Tompkins for 2023.
William J. Keneally, Interim Chief Financial Officer
Mr. Keneally, on behalf of CXO Partners, entered into a consulting services agreement with us and was appointed interim chief financial officer in April
2023. Under the consulting services agreement, Mr. Keneally is entitled to receive a monthly consulting fee of $45,000. Whether any bonus award is earned
by Mr. Keneally is determined in the complete discretion of the Board. We do not maintain a formal bonus plan, but historically, the Board has considered
both individual and Company performance in determining whether annual bonuses have been earned. In July 2023, the Board granted Mr. Keneally
100,000 vested stock options.
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Peter G. Bradley, Former Executive Chairman
Mr. Bradley was initially employed by us when he was appointed executive chairman of the Board effective August 14, 2020. He served as a non-employee
director of our Board from July 2019 until August 14, 2020. We entered into an offer letter with Mr. Bradley on August 12, 2020, governing the terms of
his employment as our executive chairman (Offer Letter). Pursuant to the Offer Letter, the nature of Mr. Bradley’s employment was at-will and his
employment continued until either the Company or Mr. Bradley elected to terminate the Offer Letter. Mr. Bradley resigned in June 2023.
Under the Offer Letter, Mr. Bradley was entitled to receive an annual cash salary of $180,000, an annual cash bonus award and stock grants under the 2014
Plan with a value of $10,000 for each month of his service. Whether any bonus award was earned by Mr. Bradley was determined in the complete
discretion of the Board. We do not maintain a formal bonus plan, but historically, the Board has considered both individual and Company performance in
determining whether annual bonuses have been earned. The Board determined that no annual bonus was earned by Mr. Bradley for 2023 or 2022. Effective
February 1, 2022, Mr. Bradley’s annual cash salary increased from $180,000 to $240,000 and the monthly stock grant value decreased from $10,000 to
$5,000. Additionally, Mr. Bradley was eligible under the Offer Letter to participate in the benefit plans and programs we made available to similarly
situated employees from time to time.
The monthly stock grant Mr. Bradley received was in the form of DSUs for his service. Each DSU award was fully vested on the applicable date of grant.
The number of shares of underlying DSUs was determined based on the weighted average closing price of our Common Stock for the ten (10) trading days
prior to the applicable date of grant.
Mr. Bradley received awards of RSUs and DSUs during 2022 in addition to the stock awards granted pursuant to the Offer Letter as described above. In
March 2022, the Board granted Mr. Bradley 36,585 RSUs contingent upon shareholders approving an increase in the shares available for issuance under the
2014 Plan. Half of the RSUs vested on March 4, 2023, and the remainder were to vest on March 4, 2024, subject to Mr. Bradley’s continued employment
through the applicable vesting date. In March 2022, the Board also granted Mr. Bradley 100,000 DSUs contingent upon shareholders approving an increase
in the shares available for issuance under the 2014 Plan. The DSUs vested as to 20% of the units March 4, 2023, and were to vest on March 4th of each of
2024, 2025, 2026 and 2027, subject to Mr. Bradley’s continued employment through the applicable vesting date. In July 2022, as compensation for his
services as a director, the Board granted Mr. Bradley 13,158 DSUs which were to vest on the earlier of July 14, 2023, or one day prior to the next annual
meeting of shareholders, subject to Mr. Bradley’s continued employment, or board service, through the vesting date.
Shareholders approved the increase in shares available under the 2014 Plan on July 14, 2022, and the grant date fair value reflected in the Summary
Compensation Table above with respect to the awards granted contingent upon the increase was on July 14, 2022, the date the contingency was resolved
under FASB ASC Topic 718.
Todd T. Mitchell, Former Chief Operating Officer and Chief Financial Officer
Mr. Mitchell was initially employed by us in May 2019, appointed chief financial officer effective July 1, 2019, and appointed chief operating officer
effective December 7, 2021. We entered into an employment agreement with Mr. Mitchell on May 28, 2019, governing the terms of his employment
(Employment Agreement). Pursuant to the Employment Agreement, the term of Mr. Mitchell’s employment renewed automatically for successive one-year
terms unless either party notified the other party in writing at of the then-effective term of such party’s intention not to renew the agreement. Mr. Mitchell
resigned in April 2023.
Under the Employment Agreement, Mr. Mitchell was entitled to receive an annual base salary of $275,000. Mr. Mitchell was eligible to participate in any
bonus program that we adopted applicable to our senior officers. Mr. Mitchell was eligible to earn an annual cash bonus of up to 40% of his annual base
salary based upon satisfaction of corporate and individual goals as determined by our Compensation Committee. The Compensation Committee determined
that no bonus was earned by Mr. Mitchell during 2022.
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In December 2022, we entered into a retention agreement with Mr. Mitchell (Retention Agreement) under which he was eligible to receive a cash bonus
payment of $137,500, if he remained employed through June 30, 2023, or if he was terminated without cause prior to June 30, 2023.
Under the Employment Agreement, Mr. Mitchell was eligible to receive equity awards at the discretion of the Board or the Compensation Committee. In
March 2022, the Board granted Mr. Mitchell 18,293 RSUs contingent upon shareholders approving an increase in the number of shares available for
issuance under the 2014 Plan. As noted above, such increase was approved by the shareholders on July 14, 2022. Half of the RSUs vested on March 4,
2023, and the remainder were to vest on March 4, 2024, subject to Mr. Mitchell’s continued employment through such date.
Equity Compensation Arrangements – 2014 Plan
The Board originally adopted the 2014 Plan in June 2020, after it was approved by our shareholders. As of December 31, 2023, the total shares of Common
Stock authorized for issuance under the 2014 Plan, as amended, was 1,230,000 shares. Under the terms of the 2014 Plan, we may grant stock options,
shares of Common Stock and other share-based awards to officers, directors, employees or consultants providing services on such terms as are determined
by the Board. The Board administers the plan, determines vesting schedules on plan awards and may accelerate the vesting schedules for award recipients.
The options granted under the 2014 Plan have terms of up to 10 years. As of December 31, 2023, awards for the issuance or purchase of 1,230,000 shares
of Common Stock had been granted and remain outstanding (including common stock options, Common Stock, RSUs (including DSUs)) and no shares of
Common Stock were reserved for future grants under the 2014 Plan.
401(k) Plan
Our named executive officers employed by the Company were eligible to participate in a defined contribution retirement plan qualified under subsection
401(k) of the Internal Revenue Code (401(k) Plan) in 2023. Named executive officers participating in the 401(k) Plan did not receive contributions from
the Company into the 401(k) Plan in 2023. None of our named executive officers employed by the Company are currently covered by any other pension
plan or other similar benefit plan that provides for payments or other benefits at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our named executive officers employed by the Company are covered by a defined contribution or other plan that provides for the deferral of
compensation on a basis that is not tax-qualified.
Outstanding Equity Awards at Fiscal Year End
The following table provides information as of December 31, 2023, regarding outstanding equity awards held by each of our named executive officers.
Option Awards
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
1,422
2,853
100,000
-
-
(1)
(2)
(3)
Option
Exercise Price
($/sh)
Option
Expiration
Date
-
-
-
-
-
35.20
12.30
1.05
-
-
4/4/2029
1/28/2030
7/10/2028
-
-
Eric Tompkins
William J. Keneally
Peter G. Bradley
Todd T. Mitchell
(1) Options vested and became exercisable 25% on April 4th of each 2020, 2021, 2022 and 2023.
(2) Options vested and became exercisable 25% on January 28th of each 2021, 2022, 2023 and 2024..
(3) Options vested and became exercisable on July 10, 2023.
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Termination and Change in Control Arrangements
Mr. Tompkins and Mr. Keneally are not party to any contract, agreement, plan or arrangement that provides for payment at, following, or in connection
with the resignation, retirement or other termination of employment or a change in control.
Upon Mr. Bradley’s resignation, he received 100,743 shares of common stock underlying the vested DSUs he was previously awarded according to the
terms of such award agreements.
Mr. Mitchell did not receive any compensation upon resignation from the Company.
Director Compensation
Our Compensation Committee adopted a comprehensive director compensation program to attract and retain qualified non-employee directors who are
critical to our future value, growth and governance. For 2023, annual compensation for non-employee directors consisted of the following amounts:
$10,000 to each member of the Audit Committee, and $4,000 to each member of the Nominating and Governance Committee and the Compensation
Committee.
For 2023, the Compensation Committee approved payment of the annual retainer amounts in quarterly installments, under the 2014 Plan. The
Compensation Committee elected to pay such installments in the form of grants of immediately-vested DSUs. The number of shares of Common Stock
subject to these regular board fee DSUs was determined based on the closing price of our Common Stock on the last day of the applicable quarter. We
reimburse all directors for travel required in connection with their service on the Board and other necessary business expenses incurred in the performance
of director services and extend coverage to them under our directors and officers indemnity insurance policies.
2023 Director Compensation
The following director compensation table sets forth summary information concerning the compensation paid to our non-employee directors in 2023. The
compensation paid to our employee directors during 2023 in respect of their service on the Board is reflected in the Summary Compensation Table above
under “Executive Compensation.”
Name
Will T. Black
David I. Chemerow
Jean M. Heggie
Brent D. Rosenthal
Stock
Awards
($) (1) (2)
All Other
Compensation
($)
22,083
58,906
23,850
52,892
Total
($)
22,083
58,906
23,850
52,892
-
-
-
-
(1) Amounts shown in this column reflect the grant date fair value, determined in accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (FASB ASC Topic 718), of DSUs granted for 2023 services under the 2014 Plan. For additional information
regarding the assumptions underlying this calculation please see Note 1 and Note 10 of “Notes to Consolidated Financial Statements”.
(2) As of December 31, 2023, the aggregate number of outstanding stock awards held by each of our non-employee directors with respect to vested
DSUs for which settlement is deferred, 193,727 by David I. Chemerow and 189,167 by Brent D. Rosenthal. There were no outstanding equity
awards held by Mr. Bradley, Mr. Black and Ms. Heggie as of December 31, 2023. There were no outstanding equity awards held by Mr. Bradley,
Mr. Black and Ms. Heggie as of December 31, 2023.
53
Table of Contents
ITEM
STOCKHOLDER MATTERS.
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
The following table sets forth certain information regarding beneficial ownership of our Common Stock as of March 29, 2024, by (i) each person or entity
who is known by us to own beneficially more than 5% of the outstanding shares of that class or series of our stock, (ii) each of our directors and director
nominees, (iii) each of the named executive officers, and (iv) all directors and current executive officers as a group. For purposes of this section, “named
executive officers” shall mean: (i) each person who served as our principal executive officer during 2023; (ii) the two (2) most highly compensated
executive officers other than the principal executive officer who were serving as executive officers as of December 31, 2023, if any; and (iii) up to two (2)
additional individuals for whom disclosure would have been provided in the table below, but for the fact that such persons were not serving as executive
officers as of December 31, 2023.
The table is based on information provided to us or filed with the SEC by our directors, executive officers and principal shareholders. Beneficial ownership
is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Shares of Common Stock issuable
upon exercise or conversion of options and warrants that are currently exercisable or are exercisable within sixty days after March 29, 2024, and shares
underlying RSUs (including DSUs) vesting within sixty days after March 29, 2024, are deemed outstanding for purposes of computing the percentage
ownership of the person holding such securities but are not deemed outstanding for computing the percentage of any other shareholder. Unless otherwise
indicated, the address for each shareholder listed in the following table is c/o RiceBran Technologies, 25420 Kuykendahl Rd., Suite B300, Tomball, Texas
77375.
Name and Address of Beneficial Owner
Eric Tompkins (2)
David I. Chemerow (3)
William J. Keneally (4)
Brent D. Rosenthal
James P. Flynn
Georgina Russell
All directors and executive officers as a group (5 persons) (5)
* less than 1%
Common Stock Beneficially Owned
Number
Percentage (1)
45,618
220,250
100,000
230,734
-
-
596,602
*%
2.20%
1.00%
2.31%
*%
*%
5.96%
(1) The applicable percentage of ownership is based on 10,002,902 shares of our Common Stock outstanding as of March 29, 2024.
(2) Includes 4,275 shares issuable upon exercise of options.
(3) Includes 26,033 shares held by the David I. Chemerow 1992 Trust.
(4) Includes 100,000 shares issuable upon exercise of options.
(5) Includes 104,275 shares issuable upon exercise of options.
54
Table of Contents
Equity Compensation Plan Information
The following table sets forth, as of December 31, 2023, certain information with respect to the 2014 Plan:
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
(a)
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available
for
future issuance under
equity compensation
plans
(excluding securities
reflected in column a)
(c)
104,275 $
-
104,275 $
1.83
-
1.83
-
-
-
Plan Category
Equity compensation plans approved by shareholders
Equity compensation plans not approved by shareholders
Total
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Review, Approval or Ratification of Transactions with Related Parties
As provided in our Audit Committee charter, our Audit Committee reviews and approves, unless otherwise approved by our Compensation Committee, any
transaction or series of similar transactions to which we were or are to be a party in which the amount involved exceeds the lesser of (a) $120,000 or (b)
one percent of the average of our total assets at the end of our last two completed fiscal years, and in which any director, director nominee, executive officer
or holder of more than 5% of any class of our capital stock, or members of any such person’s immediate family (as the term is defined by Item 401 of
Regulation S-K), had or will have a direct or indirect material interest (each such transaction, a Related Party Transaction). Each Related Party Transaction
that occurred since January 1, 2021, if any, has been approved by our Board, Audit Committee or Compensation Committee.
Related Party Transactions
Other than compensation described above in “Executive Compensation,” “Director Compensation” and “Director Compensation Table”, we believe that
there have been no Related Party Transactions since January 1, 2021.
Director Independence
Our Board annually determines the independence of each director, based on the independence criteria set forth in the listing standards of the Marketplace
Rules of Nasdaq. In making its determinations, the Board considers all relevant facts and circumstances brought to its attention as well as information
provided by the directors and a review of any relevant transactions or relationships between each director or any member of his or her family, and the
Company, its senior management or our independent registered public accounting firm. Based on its review, the Board determined that the following
directors, director nominees and former directors are each independent under the Nasdaq’s criteria for independent board members: Brent D. Rosenthal,
David I. Chemerow, James P. Flynn and Georgina Russell.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees Billed by Independent Registered Public Accounting Firms
The following table presents fees for professional services rendered by our independent registered public accounting firm Withum Smith+Brown, PC for
2023 and our former independent registered public accounting firm for 2022, RSM US LLP, Houston, Texas.
Audit fees
Audit-related fees
Tax fees
All other fees
Total
2023
2022
$
$
261,202 $
-
-
-
261,202 $
370,000
26,000
-
-
396,000
55
Table of Contents
Audit fees
Audit fees consist of fees billed for professional services rendered for the audit of our year-end consolidated financial statements and the review of our
financial statements included in our quarterly filings on Form 10-Q, as well as services that are normally provided by our independent registered public
accounting firm in connection with statutory and regulatory filings.
Audit-related fees
Audit-related fees in 2023 and 2022 relate to consents and comfort letters provided in connection with filings on Form S-1 and Form S-3.
Tax fees
There were no tax fees in 2023 or 2022.
All other fees
There were no other fees in 2023 or 2022.
Pre-Approval Policies
Our Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent auditors. In recognition of this
responsibility, the Audit Committee pre-approves all audit and non-audit services provided by our independent registered public accounting firm prior to
the engagement of the independent registered public accounting firm for such services. All fees reported under the headings Audit fees, Audit-related fees,
Tax fees and All other fees above were approved by the Audit Committee before the respective services were rendered, which concluded that the provision
of such services was compatible with the maintenance of the independence of the firm providing those services in the conduct of its auditing functions.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Exhibit Index attached hereto.
The Financial Statements are included under Item 8.
56
Table of Contents
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
Incorporated by Reference
Form
File No.
Exhibit
Number Filing/Effective Date
Filed
Herewith
3.01.01 Restated and Amended Articles of Incorporation filed
with the Secretary of State of California on December
13, 2001
3.01.02 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on
August 4, 2003
3.01.03 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on
October 31, 2003
3.01.04 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on
September 29, 2005
3.01.05 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on
August 20, 2007
3.01.06 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on June
30, 2011
3.01.07 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on July
12, 2013
10-KSB
000-32565
3.3
April 16, 2002
SB-2
333-129839
3.01.1
November 21, 2005
10-QSB
000-32565
3.4
November 19, 2003
SB-2
333-129839
3.03
November 21, 2005
10-Q
000-32565
3.1
August 14, 2007
8-K
000-32565
3.1
July 5, 2011
10-Q
000-32565
3.1
August 14, 2013
3.01.08 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on May
30, 2014
3.01.09 Certificate of Amendment of Articles of Incorporation
S-3
S-3
333-196541
333-217131
3.01.8
3.1.9
June 5, 2014
April 04, 2017
filed with the Secretary of State of California on
February 15, 2017
3.01.10 Certificate of Amendment of Articles of Incorporation
filed with the Secretary of State of California on June
18, 2020
3.01.11 Certificate of Amendment of Articles of Incorporation
3.02
3.03
3.04
3.05
filed with the Secretary of State of California on
August 25, 2022
Certificate of Designation of the Rights, Preferences,
and Privileges of the Series A Preferred Stock filed
with the Secretary of State of California on December
13, 2001
Certificate of Determination, Preferences and Rights
of Series B Convertible Preferred Stock filed with the
Secretary of State of California on October 4, 2005
Certificate of Determination, Preferences and Rights
of Series C Convertible Preferred Stock filed with the
Secretary of State of California on May 10, 2006
Certificate of Determination, Preferences and Rights
of the Series D Convertible Preferred Stock, filed with
the Secretary of State of California on October 17,
2008
3.06
Certificate of Determination, Preferences and Rights
of the Series E Convertible Preferred Stock, filed with
the Secretary of State of California on May 7, 2009
10-Q
001-36245
3.1
August 12, 2020
8-K
000-32565
3.1
August 25, 2022
SB-2
333-89790
4.1
June 4, 2002
000-32565
3.1
October 4, 2005
000-32565
3.1
May 15, 2006
000-32565
3.1
October 20, 2008
000-32565
3.1
May 8, 2009
8-K
8-K
8-K
8-K
57
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing/Effective
Date
Filed
Herewith
8-K
001-36245
3.1
February 23, 2016
Table of Contents
EXHIBIT INDEX
Exhibit
Number
3.07
3.08
Exhibit Description
Certificate of Determination, Preferences and Rights
of the Series F Convertible Preferred Stock, filed with
the Secretary of State of California on February 18,
2016
Form of Certificate of Determination of Preferences
and Rights of Series G Convertible Preferred Stock,
filed with the Secretary of State of California on
February 9, 2017
3.09
Certificate of Determination of Series H Junior
Preferred Stock
8-K
10-Q
3.09.1 Bylaws
3.09.3 Amendment of Bylaws, effective December 4, 2009
3.09.4 Amendment of Bylaws, effective as of February 13,
SB-2
8-K
S-3
2017
Certificate of Ownership dated October 3, 2012
3.09.5 Amendments to Bylaws, effective August 30, 2023
3.10
4.01
4.02
4.04
Form of Warrant (Private Placement)
Form of Prefunded Warrant (Private Placement)
Form of Pre-Funded Warrant (Registered Direct
Offering and Private Placement)
Form of Private Placement Warrant (Registered Direct
Offering and Private Placement)
4.05
4.06
Form of Wainwright Warrant (Registered Direct
4.07
4.08
10.01
Offering and Private Placement)
Form of Funicular Warrant
Form of Sabby Warrant
* Employment Agreement with Todd T. Mitchell dated
May 28, 2019
10.02
* Amended and Restated 2014 Equity Incentive Plan, as
amended on June 17, 2020
10.03
* Form of Award of Deferred and Restricted Stock
Units for 2014 Equity Incentive Plan
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
10-Q
8-K
8-K
58
001-36245
001-36245
333-134957
000-32565
333-217131
001-36245
000-32565
001-36245
001-36245
001-36245
001-36245
001-36245
001-36245
001-36245
001-36245
001-36245
001-36245
3.1
3.1
3.05
3.1
3.9.4
3.1
3.01
4.1
4.2
4.1
4.2
4.3
4.1
4.2
10.2
10.2
10.3
February 15, 2017
December 20, 2023
June 12, 2006
December 10, 2009
April 04, 2017
August 30, 2023
October 10, 2012
September 13, 2021
September 13, 2021
October 20, 2022
October 20, 2022
October 20, 2022
December 6, 2023
December 6, 2023
May 5, 2020
July 17, 2020
July 17, 2020
Table of Contents
EXHIBIT INDEX
Exhibit
Number
10.04
Exhibit Description
* Form of Stock Option Agreement for 2014 Equity
Incentive Plan
10.05
* Form of Restricted Stock Award Agreement for 2014
Equity Incentive Plan
10.06
* Form of Restricted Stock Unit Award Agreement for
2014 Equity Incentive Plan
10.07
* Employee Agreement (Offer Letter) with Peter G.
Bradley dated August 12, 2020
10.08
* Amendment No. 1 to Restricted Stock Unit Award
Grant Notice and Award Agreement with Todd T.
Mitchell, effective December 15, 2021
10.09
* Form of Indemnification Agreement for Officers and
Directors
10.10
10.11
10.12
10.13
10.14
10.15
* Form of Award of Contingently Granted Deferred and
Restricted Stock Units for 2014 Equity Incentive Plan
Agreement for Purchase and Sale with Republic
Business Credit, LLC dated October 28, 2019
Purchase Agreement dated December 17, 2019
(Public Offering)
Form of Securities Purchase Agreement dated
September 9, 2021 (Private Placement)
Form of Registration Rights Agreement dated March
7, 2019
Registration Rights Agreement, dated as of December
1, 2023, by and between RiceBran Technologies and
Funicular Funds, LP
10.16
At Market Issuance Sales Agreement with B Riley
10.17
FBR, Inc
Promissory Note dated as of April 15, 2020
(Paycheck Protection Program)
10.18
Secured Promissory Note, dated as of December 1,
2023, by and among RiceBran Technologies,
Funicular Funds, LP, as holder, Golden Ridge Rice
Mills, Inc., as guarantor, and MGI Grain Incorporated,
as guarantor
10.19
Mortgage Agreement and Amendment for Purchase
and Sale with Republic Business Credit, LLC, dated
July 10, 2020
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing/Effective
Date
Filed
Herewith
10-K
10-K
8-K
10-K
10-K
10-Q
10-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
001-36245
001-36245
10.72
10.73
March 31, 2015
March 31, 2015
001-36245
10.1
October 3, 2018
001-36245
10.21
February 25, 2021
001-36245
10.08
March 17, 2022
000-32565
10.2
May 12, 2011
001-36245
10-.24
March 17, 2022
001-36245
001-36245
10.1
1.1
November 1, 2019
December 19, 2019
001-36245
10.1
September 13, 2021
001-36245
001-36245
001-36245
001-36245
001-36245
10.3
10.2
10.1
10.1
10.6
March 13, 2019
December 6, 2023
March 30, 2020
April 16, 2002
December 6, 2023
8-K
001-36245
10.1
July 17, 2020
10.20
Mortgage Agreement and Amendment for Purchase
8-K
001-36245
10.1
July 17, 2020
and Sale with Republic Business
Credit, LLC, dated July 10, 2020
59
Incorporated by Reference
Form
File No.
001-36245
Exhibit
Number
10.1
Filing/Effective
Date
January 19, 2023
Filed
Herewith
001-36245
10.7
December 6, 2023
Table of Contents
EXHIBIT INDEX
Exhibit
Number
10.21
10.22
10.23
10.24
Exhibit Description
Mortgage Agreement and Amended Amendment for
Purchase and Sale with Republic Business Credit,
LLC, dated January 12, 2023
Fifth Amendment, Consent and Waiver to the
Agreement for Purchase and Sale, dated as of
December 1, 2023, by and among RiceBran
Technologies, Golden Ridge Rice Mills, Inc. and MGI
Grain Incorporated, as sellers, and Republic Business
Credit, LLC, as purchaser
Form of Securities Purchase Agreement (Registered
Direct Offering and Private Placement)
Securities Purchase Agreement dated as of December
1, 2023, by and between RiceBran Technologies and
Funicular Funds, LP
8-K
8-K
8-K
8-K
10.25
Asset Purchase Agreement with Stabil Nutrition LLC,
8-K
001-36245
dated as of June 23, 2023
10.26
Letter Agreement with Continental Republic Capital
LLC d/b/a Republic Business Credit, dated as of June
23, 2023
8-K
001-36245
10.27
Consulting Services Agreement with CXO Partners
S-1/A
001-36245
dated as of April 6, 2023
10.28
Tax Benefits Preservation Plan, dated as of July 6,
2023, with American Stock Transfer & Trust
Company, LLC, as Rights Agent
8-K
001-36245
001-36245
001-36245
10.1
10.1
2.1
10.1
10.1
4.1
October 20, 2022
December 6, 2023
June 28, 2023
June 28, 2023
April 11, 2023
July 6, 2023
10.29
Agreement for Purchase And Sale with Republic
8-K
001-36245
10.1
September 14, 2023
Business Credit, LLC (incorporated by reference to
Exhibit 10.1 to the Company’s Form 8-K filed on
November 1, 2019)
10.30
Letter from RSM US LLP to the Securities and
Exchange Commission, dated August 23, 2023
8-K
001-36245
10.31
Exchange Agreement, dated as of December 1, by and
8-K
001-36245
16.1
10.3
August 23, 2023
December 6, 2023
between RiceBran Technologies and Cove Lane
Master Fund LLC
10.32
10.33
21
23.1
Exchange Agreement, dated as of December 1, by and
between RiceBran Technologies and Sabby Volatility
Warrant Master Fund, Ltd.
Exchange Agreement, dated as of December 1, by and
between RiceBran Technologies and Hudson Bay
Master Fund Ltd.
List of Subsidiaries
Consent of Independent Registered Public Accounting
8-K
8-K
Firm List of Subsidiaries
23.2
Consent of Independent Registered Public Accounting
Firm List of Subsidiaries
60
001-36245
10.4
December 6, 2023
001-36245
10.5
December 6, 2023
X
X
X
Table of Contents
EXHIBIT INDEX
Exhibit
Number
24.1
31.1
31.2
Exhibit Description
Power of Attorney – Power of Attorney
(incorporated by reference to the signature page of
this Annual Report on Form 10-K.)
Certification by CEO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002Power of Attorney –
Power of Attorney (incorporated by reference to the
signature page of this Annual Report on Form 10-K.)
Certification by CFO pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.Certification by CEO
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
32.1
Certification by CEO and CFO pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.Certification
by CFO pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
101.INS @ Inline XBRL Instance Document
101.SCH @ Inline XBRL Taxonomy Extension Schema
Document
101.CAL @ Inline XBRL Taxonomy Extension Calculation
Linkbase Document
101.DEF @ Inline XBRL Taxonomy Extension Definition
Linkbase Document
101.LAB @ Inline XBRL Taxonomy Extension Label Linkbase
Document
101.PRE @ Inline XBRL Taxonomy Extension Presentation
Linkbase Document
104101.PRE@ Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)Inline XBRL
Taxonomy Extension Presentation Linkbase
Document
104
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)
Incorporated by Reference
Form
File No.
Exhibit
Number
Filing/Effective
Date
Filed
Herewith
X
X
X
X
X
X
X
X
X
X
X
*
@
Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, and otherwise is not subject to liability under these sections.
61
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: March 29, 2024
RICEBRAN TECHNOLOGIES
By:
/s/ Eric Tompkins
Name: Eric Tompkins
Title: Director and Executive Chairman
Power of Attorney
Each person whose signature appears below constitutes and appoints William J. Keneally, true and lawful attorney-in-fact, with the power of substitution,
for him/her in any and all capacities, to sign amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
Signature
Title
Date
Principal Executive Officer:
/s/ Eric Tompkins
Eric Tompkins
Principal Financial Officer
and Principal Accounting Officer:
/s/ William J. Keneally
William J. Keneally
Additional Directors:
/s/ James P. Flynn
James P. Flynn
/s/ David I. Chemerow
David I. Chemerow
/s/ Georgina Russell
Georgina Russell
/s/ Brent D. Rosenthal
Brent D. Rosenthal
Director and Executive Chairman
March 29, 2024
Interim Chief Financial Officer and Secretary
March 29, 2024
Director
Director
Director
Director and Chairman
62
March 29, 2024
March 29, 2024
March 29, 2024
March 29, 2024
RiceBran Technologies
Subsidiaries of the Registrant
As of March 29, 2024
Exhibit 21
Those subsidiaries not listed would not, in the aggregate, constitute a “significant subsidiary” of RiceBran Technologies, as that term is defined in Rule 1-
02(w) of Regulations S-X.
Subsidiaries of the Registrant
MGI Grain Incorporated (1)
NutraCea, LLC (1)
RBT PRO, LLC (3)
RBT – YOUJI, LLC (4)
The RiceX Company (1)
RiceX Nutrients, Inc. (2)
State or Other Jurisdiction of Incorporation
Delaware corporation
Delaware limited liability company
Delaware limited liability company
Delaware limited liability company
Delaware corporation
Montana corporation.
(1)
(2)
(3)
(4)
wholly owned subsidiary of RiceBran Technologies
wholly owned subsidiary of The RiceX Company
50.0 % interest
55.0 % interest
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We hereby consent to the incorporation by reference in the Registration Statements (Nos. 333-196950, 333-199646, 333-212658, 333-217131, 333-221124,
333-230963, 333-232447 and 333-266194) on Form S 3, (Nos. 333-110585, 333-135814, 333-199648 and 333-221781) on Form S 8 and (No. 333-269226)
on Form S-1 of RiceBran Technologies of our report dated March 29, 2024, which includes an explanatory paragraph regarding the substantial doubt about
the Company's ability to continue as a going concern, relating to the consolidated financial statements of RiceBran Technologies as of and for the year
ended December 31, 2023 which appear in this Form 10-K.
/s/ WithumSmith+Brown, PC
Whippany, New Jersey
March 29, 2024
Consent of Independent Registered Public Accounting Firm
Exhibit 23.2
We consent to the incorporation by reference in the Registration Statements (Nos. 333-196950, 333-199646, 333-212658, 333-217131, 333-221124, 333-
230963 and 333-266194) on Form S-3 and (Nos. 333-110585, 333-135814, 333-199648 and 333-221781) on Form S-8 and No. 333-269226 on Form S-1
of RiceBran Technologies of our report dated March 16, 2023, relating to the consolidated financial statements of RiceBran Technologies appearing in the
Annual Report on Form 10-K of RiceBran Technologies for the year ended December 31, 2023.
As discussed in Note 3 to the consolidated financial statements, the 2022 consolidated financial statements and disclosures have been restated to
retrospectively apply discontinued operations. We have not audited the adjustments to the 2022 consolidated financial statements to retrospectively apply
discontinued operations, as described in Note 3.
/s/ RSM US LLP
Houston, Texas
March 29, 2024
Exhibit 31.1
I, Eric Tompkins, Director and Executive Chairman of RiceBran Technologies, certify that:
1)
I have reviewed this annual report on Form 10-K of RiceBran Technologies, a California corporation;
CERTIFICATION
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 was 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(s) 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: March 29, 2024
/s/ Eric Tompkins
Name: Eric Tompkins
Title: Director and Executive Chairman
Exhibit 31.2
I, William J. Keneally, Interim Chief Financial Officer of RiceBran Technologies, certify that:
1)
I have reviewed this annual report on Form 10-K of RiceBran Technologies, a California corporation;
CERTIFICATION
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 was 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(s) 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: March 29, 2024
/s/ William J. Keneally
Name: William J. Keneally
Title: Interim Chief Financial Officer and Secretary
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF
TITLE 18, UNITED STATES CODE)
Exhibit 32.1
In connection with the Annual Report of RiceBran Technologies (the “Company”) on Form 10-K for the year ending December 31, 2023, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), we, Eric Tompkins, Executive Chairman of the Company, and William J. Keneally,
Interim Chief Financial Officer of the Company, 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: March 29, 2024
By: /s/ Eric Tompkins
Eric Tompkins
Director and Executive Chairman
By: /s/ William J. Keneally
William J. Keneally
Interim Chief Financial Officer and Secretary