ribt20220930

ribt20220930_10q.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2022

☐	TRANSITION REPORT UNDER 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)

87-0673375

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

25420 Kuykendahl Rd., Suite B300

Tomball, TX

(Address of Principal Executive Offices)

77375

(Zip Code)

(281) 675-2421

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report

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

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock, no par value per share		RIBT		The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule l2b-2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2022, there were 6,242,077 shares of common stock outstanding.

Table of Contents

RiceBran Technologies

Index

Form 10-Q

PART I. FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	3
	Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	20
Signatures		21

Cautionary Note about Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” concerning our operations, economic performance and financial condition. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, liquidity or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services, products or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. The forward-looking statements contained herein reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those projected in such forward-looking statements due to a number of factors, risks and uncertainties, including the factors that may affect future results set forth in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021. Forward-looking statements speak only as of the date on which they are made, and we disclaim any obligation to update any forward-looking statements as a result of developments occurring after the date of this quarterly report.

Unless the context requires otherwise, references to “we,” “us,” “our” and “the Company” refer to RiceBran Technologies and its consolidated subsidiaries.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

RiceBran Technologies

Condensed Consolidated Statements of Operations

(Unaudited) (in thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

Revenues	$	10,252		$	6,909		$	31,001		$	23,088
Cost of goods sold		10,949			7,185			31,673			22,539
Gross profit (loss)		(697	)		(276	)		(672	)		549
Selling, general and administrative expenses		1,765			1,802			5,165			5,476
Loss (gain) on involuntary conversion of property and equipment		-			(1	)		(147	)		5
Operating loss		(2,462	)		(2,077	)		(5,690	)		(4,932	)
Interest income		7			-			9			1
Interest expense		(152	)		(121	)		(396	)		(353	)
Change in fair value of derivative warrant liability		612			-			24			-
Gain on extinguishment of PPP loan		-			-			-			1,792
Other expense		(39	)		(18	)		(111	)		(55	)
Other income		-			3			5			3
Loss before income taxes		(2,034	)		(2,213	)		(6,159	)		(3,544	)
Income tax expense		(8	)		-			(20	)		(1	)
Net loss	$	(2,042	)	$	(2,213	)	$	(6,179	)	$	(3,545	)

Loss per common share:
Basic	$	(0.38	)	$	(0.47	)	$	(1.17	)	$	(0.77	)
Diluted	$	(0.38	)	$	(0.47	)	$	(1.17	)	$	(0.77	)

Weighted average number of shares outstanding:
Basic		5,332,308			4,745,684			5,290,780			4,631,880
Diluted		5,332,308			4,745,684			5,290,780			4,631,880

See Notes to Unaudited Condensed Consolidated Financial Statement

Table of Contents

RiceBran Technologies

Condensed Consolidated Balance Sheets

(Unaudited) (in thousands, except share amounts)

	September 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	4,374		$	5,825
Accounts receivable, net of allowance for doubtful accounts of $123 and $18		4,995			4,136
Inventories		2,687			2,444
Other current assets		1,148			810
Total current assets		13,204			13,215
Property and equipment, net		14,629			15,444
Operating lease right-of-use assets		1,868			2,127
Intangible assets		411			527
Total assets	$	30,112		$	31,313

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,450		$	826
Commodities payable		1,960			1,702
Accrued salary, wages and benefits		908			787
Accrued expenses		941			683
Operating lease liabilities, current portion		417			382
Due under bank line of credit		1,846			-
Due under factoring agreement, including the Over-advance		4,926			3,379
Due under insurance premium finance agreements		429			128
Finance lease liabilities, current portion		130			86
Long-term debt, current portion		1,333			1,183
Total current liabilities		14,340			9,156
Operating lease liabilities, less current portion		1,613			1,948
Finance lease liabilities, less current portion		357			100
Long-term debt, less current portion		365			1,356
Derivative warrant liability		234			258
Total liabilities		16,909			12,818
Commitments and contingencies
Shareholders' equity:
Preferred stock, 20,000,000 shares authorized: Series G, convertible, 3,000 shares authorized, stated value $150, 150 shares, issued and outstanding		75			75
Common stock, no par value, 15,000,000 shares authorized, 5,242,077 shares and 5,158,967 shares, issued and outstanding		327,166			326,279
Accumulated deficit		(314,038	)		(307,859	)
Total shareholders' equity		13,203			18,495
Total liabilities and shareholders' equity	$	30,112		$	31,313

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

RiceBran Technologies

Condensed Consolidated Statements of Cash Flows

(Unaudited) (in thousands)

	Nine Months Ended September 30,
	2022			2021
Cash flow from operating activities:
Net loss	$	(6,179	)	$	(3,545	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		1,575			1,821
Amortization		116			150
Stock and share-based compensation		887			840
Change in fair value derivative warrant liability		(24	)		-
Loss (gain) on involuntary conversion of property and equipment		(147	)		5
Gain on extinguishment of PPP loan		-			(1,792	)
Provision for bad debts		105			13
Other		1			54
Changes in operating assets and liabilities:
Accounts receivable		(964	)		(18	)
Inventories		(243	)		(295	)
Accounts payable and accrued expenses		1,094			594
Commodities payable		258			619
Other		(338	)		(431	)
Net cash used in operating activities		(3,859	)		(1,985	)
Cash flows from investing activities:
Purchases of property and equipment		(411	)		(1,187	)
Proceeds from insurance on involuntary conversion		109			638
Net cash used in investing activities		(302	)		(549	)
Cash flows from financing activities:
Advances on factoring agreement, including the Over-advance		28,964			22,135
Payments on factoring agreement		(27,417	)		(21,970	)
Advances on bank line of credit		2,725			-
Payments on bank line of credit		(900	)		-
Advances on insurance premium finance agreements		928			962
Payments on insurance premium finance agreements		(627	)		(677	)
Payments on long-term debt and finance lease liabilities		(963	)		(534	)
Proceeds from issuances of common stock and warrants, net of costs		-			3,372
Proceeds from common stock warrant exercises		-			171
Net cash provided by financing activities		2,710			3,459
Net change in cash and cash equivalents	$	(1,451	)	$	925

Cash and cash equivalents, beginning of period	$	5,825		$	5,263
Cash and cash equivalents, end of period		4,374			6,188
Net change in cash and cash equivalents	$	(1,451	)	$	925

Supplemental disclosures:
Cash paid for interest	$	354		$	267
Cash paid for income taxes	$	19		$	15

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements (interim financial statements) of RiceBran Technologies and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the rules and regulations of the Securities and Exchange Commission (the SEC) for reporting on Form 10-Q; therefore, they do not include all of the information and notes required by GAAP for complete financial statements. The interim financial statements contain all adjustments necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented of a normal and recurring nature necessary to present fairly the interim results of operations, financial position and cash flows for the periods presented.

These interim financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2021, which included all disclosures required by generally accepted accounting principles.

The results reported in these interim financial statements are not necessarily indicative of the results to be expected for the full fiscal year, or any other future period, and have been prepared based on the realization of assets and the satisfaction of liabilities in the normal course of business.

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.

Certain reclassifications have been made to amounts reported for the prior periods to achieve consistent presentation with the current period. Such reclassifications had no impact on previously reported net loss or shareholders’ equity.

NOTE 2. BUSINESS

We are a specialty ingredient company focused on the development, production, and marketing of products derived from traditional and ancient small grains. We create and produce products utilizing proprietary processes to deliver improved nutrition, ease of use, and extended shelf-life, while addressing consumer demand for all natural, non-GMO and organic products. We believe our products can become valuable alternatives to traditional food ingredients.

Notably, we apply our proprietary technologies to convert raw rice bran into stabilized rice bran (SRB), and high value-added derivative products including: RiBalance, a rice bran nutritional package derived from SRB; RiSolubles, a nutritious, carbohydrate and lipid rich fraction of RiBalance; RiFiber, a fiber rich insoluble derivative of RiBalance and ProRyza, a rice bran protein-based product; and a variety of other valuable derivatives extracted from these core products.

In granular form, SRB is a food additive used in products for human and animal consumption. We believe SRB has certain qualities that make it more attractive than additives based on the by-products of other agricultural commodities, such as corn, soybeans, wheat, and yeast. Our SRB products and SRB derivatives support the production of healthy, natural, hypoallergenic, gluten free, and non-genetically modified ingredients and supplements for use in meats, baked goods, cereals, coatings, health foods, and high-end animal nutrition. Our target customers are food and animal nutrition manufacturers, wholesalers and retailers, both domestically and internationally.

We manufacture and distribute SRB from four locations: two facilities located within supplier-owned rice mills in Arbuckle and West Sacramento, California; one company-owned facility in Mermentau, Louisiana; and our own rice mill in Wynne, Arkansas. At our Dillon, Montana facility, we produce SRB-based products and derivatives through proprietary processes. Our rice mill in Wynne, Arkansas (Golden Ridge) supplies grades U.S. No. 1 and No. 2 premium long and medium white rice, and our grain processing facility in East Grand Forks, Minnesota (MGI) mills a variety of traditional, and ancient, small grains. Given the integrated nature of these facilities, we have one reporting unit and one operating segment, specialty ingredients.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent accounting standards not yet adopted

The following discusses the accounting standard(s) not yet adopted that will, or are expected to, result in a significant change in practice and/or have a significant financial impact on our financial position, results of operations or cash flows.

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

In June 2016, the Financial Accounting Standards Board (FASB) issued guidance ASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which changes the accounting for credit losses for certain instruments, including trade receivables, from an incurred loss method to a current expected loss method. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The guidance, and subsequent guidance related to the topic, is effective for our annual and interim periods beginning in 2023 and we must adopt the guidance on a modified retrospective approach through cumulative-effect adjustment to retained earnings as of January 1, 2023. Based on the nature of our current receivables and our credit loss history, we do not expect the adoption of the guidance to have a significant impact on our results of operations, financial position, or cash flows.

NOTE 4. CASH AND CASH EQUIVALENTS

As of September 30, 2022, we have $2.7 million of cash and cash equivalents invested in a money market fund with net assets invested in U.S. Dollar denominated money market securities of domestic and foreign issuers, U.S. Government securities and repurchase agreements. We consider all liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

We have cash on deposit in excess of federally insured limits at a bank. We do not believe that maintaining substantially all such assets with the bank or investing in a liquid mutual fund represent material risks.

NOTE 5. ACCOUNTS RECEIVABLE AND REVENUES

Amounts billed and due from our customers are classified as accounts 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. Revenues in the three and nine months ended September 30, 2022 and 2021, include $0.1 million, or less, in unearned revenue as of the end of the prior year.

Our accounts receivable potentially subject us to significant concentrations of credit risk. Revenues and accounts receivable from significant customers (customers with revenue or accounts receivable in excess of 10% of consolidated totals) are stated below as a percent of consolidated totals.

	Customer
	A			B			C			D
% of revenues, three months ended September 30, 2022		15	%		5	%		11	%		-	%
% of revenues, three months ended September 30, 2021		21	%		7	%		-	%		9	%

% of revenues, nine months ended September 30, 2022		13	%		8	%		5	%		2	%
% of revenues, nine months ended September 30, 2021		10	%		11	%		1	%		11	%

% of accounts receivable, as of September 30, 2022		13	%		7	%		17	%		-	%
% of accounts receivable, as of December 31, 2021		15	%		8	%		-	%		9	%

The following table presents revenues by geographic area shipped to (in thousands).

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
United States	$	9,876	$	6,450	$	30,034	$	21,867
Other countries		376		459		967		1,221
Revenues	$	10,252	$	6,909	$	31,001	$	23,088

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 6. PROPERTY AND EQUIPMENT

The following table details the components of property and equipment (amounts in thousands).

	September 30,		December 31
	2022		2021		Estimated Useful Lives
Land	$	730	$	730
Furniture and fixtures		259		265	5	-	10 years
Plant		10,094		10,457	20	-	40 years, or life of lease
Computer and software		450		452	3	-	5 years
Leasehold improvements		1,838		1,828	4	-	15 years, or life of lease
Machinery and equipment		15,598		15,115	5	-	15 years
Property and equipment, cost		28,969		28,847
Less accumulated depreciation		14,340		13,403
Property and equipment, net	$	14,629	$	15,444

Amounts payable for property and equipment included in accounts payable totaled $0.1 million at September 30, 2022, and $0.2 million at December 31, 2021. Assets not yet in service, included in property and equipment, totaled $1.1 million at September 30, 2022, and $0.9 million at December 31, 2021.

NOTE 7. LEASES

The components of lease expense and cash flows from leases (in thousands) follow.

	Three Months Ended September 30,				Nine Months Ended Setepmber 30,
	2022		2021		2022		2021
Finance lease cost:
Amortization of right-of use assets, included in cost of goods sold	$	20	$	24	$	59	$	67
Interest on lease liabilities		6		2		11		8
Operating lease cost, included in selling, general and administrative expenses:
Fixed leases cost		129		129		387		387
Variable lease cost		39		37		125		112
Short-term lease cost		41		21		62		60
Total lease cost	$	235	$	213	$	644	$	634

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	6	$	2	$	11	$	8
Operating cash flows from operating leases	$	129	$	129	$	387	$	387
Financing cash flows from finance leases	$	22	$	23	$	68	$	73

As of September 30, 2022, variable lease payments do not depend on a rate or index. As of September 30, 2022, and December 31, 2021, property and equipment, net, includes $0.6 million and $0.2 million of finance lease right-of-use-assets, with an original cost of $0.9 million as of September 30, 2022, and $0.5 million as of December 31, 2021. During the three months and nine months ended September 30, 2022, we financed the purchase of $0.1 million and $0.3 million of property and equipment in noncash finance lease transactions. During the three months and nine months ended September 30, 2021, we financed the purchase of less than $0.1 million of property and equipment in noncash finance lease transactions.

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

As of September 30, 2022, we do not believe it is certain that we will exercise any renewal options. The remaining terms of our leases and the discount rates used in the calculation of our lease liabilities as of September 30, 2022, follows.

	Operating Leases				Finance Leases
Remaining leases terms (in years)		1.0	-	10.4		0.4	-	5.0
Weighted average remaining lease terms (in years)			5.7				3.0
Discount rates		6.3%	-	9.0%		2.8%	-	10.4%
Weighted average discount rate			7.8%				8.1%

Maturities of lease liabilities as of September 30, 2022, follows (in thousands).

	Operating			Finance
	Leases			Leases
2022 (three months ended December 31, 2022)	$	122		$	52
2023		528			158
2024		429			117
2025		440			102
2026		450			100
Thereafter		578			60
Total lease payments		2,547			589
Amounts representing interest		(517	)		(102	)
Present value of lease obligations	$	2,030		$	487

NOTE 8. DEBT

We finance certain amounts owed for annual insurance premiums under financing agreements. As of September 30, 2022, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through March 2023, at interest rates of 3.5% to 3.9% per year.

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 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 has automatically extended to October 2023. We paid a $0.2 million facility fee upon inception of the agreement which amortized to interest expense on a straight-line basis over the two years ending in October 2021. We incur recurring fees under the agreement, including a funding fee of 0.5% above the prime rate, in no event to be less than 5.5%, on any advances and a service fee on average net funds borrowed. The lender has the right to demand repayment of the advances at any time. The Lender has a security interest in our personal property assets.

The Lender 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 accrues interest at an annual rate which is the greater of 7.0% above the Lender's prime rate and 10.3% (13.3% at September 30, 2022). The Over-advance is due the earlier of the completion of the restructuring of the mortgage promissory note or December 29, 2022.

Additional information related to our factoring obligation (exclusive of the Over-advance) follows.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Average borrowings outstanding (in thousands)	$	3,150		$	1,522		$	3,036		$	1,324
Amortization of debt issuance costs (in thousands)	$	-		$	23		$	-		$	68
Interest paid, as a percentage of average outstanding borrowings		1.6	%		2.0	%		1.4	%		5.0	%
Fees paid, as a percentage of average outstanding borrowings		1.6	%		1.6	%		1.2	%		5.0	%

As of September 30, 2022, we had $1.8 million outstanding under a line of credit with a bank. The borrowing is secured by our cash on deposit with the bank and bears interest at prime (6.3% at September 30, 2022). There are no stipulated repayment terms for the line as long as we maintain sufficient cash collateral. Our borrowings under the line of credit averaged $1.5 million in the three months ended September 30, 2022, and $0.5 million for the nine months ended September 30, 2022.

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

Long-term debt consists of the following (in thousands).

	September 30,		December 31,
	2022		2021
Mortgage promissory note - Originally dated July 2020 and modified in December 2021. As modified, interest accrues at an annual rate which is the greater of 7.0% above the Lender's prime rate and 10.3% (13.3% at September 30, 2022) payable in monthly installments through December 2023. Net of $11 debt issuance costs at September 30, 2022. Face amount $2.5 million. Secured by certain real property in Wynne, Arkansas.	$	1,614	$	2,469
Progress payment agreement - Dated August 2022. Original principal $37. Interest is payable monthly at the rate of 25.2% per year. Due in November 2022, unless a finance lease is executed with the lender before that date for the related equipment.		37		-
Equipment note - Dated May 2021. Original principal $46. Due in monthly installments through June 2025. Interest accrues at the effective discount rate of 3.6% per year.		27		33