ribt20230630

ribt20230630_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 June 30, 2023

☐	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 August 21, 2023, there were 6,607,776 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 Six Months Ended June 30, 2023 and 2022	3
		Condensed Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022	4
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	5
		Notes to Unaudited Condensed Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
	Item 4.	Controls and Procedures	19
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	20
	Item 1A.	Risk Factors	20
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
	Item 3.	Defaults Upon Senior Securities	20
	Item 4.	Mine Safety Disclosures	20
	Item 5.	Other Information	20
	Item 6.	Exhibits	20
Signatures			22

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, 2022. 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 June 30,						Six Months Ended June 30,
	2023			2022			2023			2022

Revenues	$	6,269		$	6,581		$	12,113		$	12,572
Cost of goods sold		6,245			6,970			12,147			12,993
Gross profit (loss)		24			(389	)		(34	)		(421	)
Selling, general and administrative expenses		1,644			1,215			3,102			2,585
Loss from continuing operations before other income (expense)		(1,620	)		(1,604	)		(3,136	)		(3,006	)
Interest income		8			1			27			2
Interest expense		(174	)		(105	)		(353	)		(218	)
Change in fair value of derivative warrant liability		(11	)		(417	)		(39	)		(588	)
Other expense		(43	)		(38	)		(103	)		(72	)
Other income		9			1			265			5
Loss from continuing operations before income taxes		(1,831	)		(2,162	)		(3,339	)		(3,877	)
Income tax expense		(5	)		(12	)		(11	)		(12	)
Loss from continuing operations		(1,836	)		(2,174	)		(3,350	)		(3,889	)
Loss from discontinued operations		(8,495	)		(447	)		(9,009	)		(248	)
Net loss	$	(10,331	)	$	(2,621	)	$	(12,359	)	$	(4,137	)

Basic loss per common share:
Continuing operations	$	(0.27	)	$	(0.41	)	$	(0.50	)	$	(0.74	)
Discontinued operations		(1.27	)		(0.09	)		(1.36	)		(0.05	)
	$	(1.54	)	$	(0.50	)	$	(1.86	)	$	(0.79	)

Diluted loss per common share:
Continuing operations	$	(0.27	)	$	(0.41	)	$	(0.50	)	$	(0.74	)
Discontinued operations		(1.27	)		(0.09	)		(1.36	)		(0.05	)
	$	(1.54	)	$	(0.50	)	$	(1.86	)	$	(0.79	)

Weighted average number of shares outstanding:
Basic		6,722,938			5,286,164			6,645,886			5,269,672
Diluted		6,722,938			5,286,164			6,645,886			5,269,672

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

RiceBran Technologies

Condensed Consolidated Balance Sheets

(Unaudited) (in thousands, except share amounts)

	June 30			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	302		$	3,941
Accounts receivable, net of allowance for credit losses of $26 and $27		3,368			3,703
Inventories		466			465
Other current assets		667			735
Current assets held for sale		-			2,224
Total current assets		4,803			11,068
Property and equipment, net		6,213			6,020
Operating lease right-of-use assets		26			77
Intangible assets		323			380
Long-term assets held for sale		-			9,888
Total assets	$	11,365		$	27,433

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,441		$	1,232
Commodities payable		1,752			1,546
Accrued salary, wages and benefits		395			489
Accrued legal		1,245			595
Accrued expenses		708			500
Operating lease liabilities, current portion		36			107
Due under bank line of credit		-			1,832
Due under factoring agreement		2,092			3,150
Due under insurance premium finance agreements		360			185
Finance lease liabilities, current portion		141			113
Long-term debt, current portion		1,287			988
Current liabilities held for sale		-			540
Total current liabilities		9,457			11,277
Finance lease liabilities, less current portion		464			320
Long-term debt, less current portion		454			836
Derivative warrant liability		108			69
Long-term liabilities held for sale		-			2,022
Total liabilities		10,483			14,524
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
Common stock, no par value, 15,000,000 shares authorized, 6,607,276 shares and 6,309,509 shares, issued and outstanding		328,883			328,551
Accumulated deficit		(328,076	)		(315,717	)
Total shareholders' equity		882			12,909
Total liabilities and shareholders' equity	$	11,365		$	27,433

See Notes to Unaudited Condensed Consolidated Financial Statements

Table of Contents

RiceBran Technologies

Condensed Consolidated Statements of Cash Flows

(Unaudited) (in thousands)

	Six Months Ended June 30,
	2023			2022
Cash flow from operating activities:
Net loss	$	(12,359	)	$	(4,137	)
Loss from discontinued operations		(9,009	)		(248	)
Loss from continuing operations		(3,350	)		(3,889	)
Adjustments to reconcile net loss to net cash used in operating activities of continuing operations
Depreciation		465			440
Amortization		57			81
Stock and share-based compensation		239			323
Change in fair value of derivative warrant liability		39			588
Other		(16	)		10
Changes in operating assets and liabilities:
Accounts receivable		337			(20	)
Inventories		(1	)		227
Accounts payable and accrued liabilities		611			454
Commodities payable		206			10
Other		68			(437	)
Net cash used in operating activities of continuing operations		(1,345	)		(2,213	)
Net cash provided by (used in) operating activities of discontinued operations		(211	)		475
Net cash used in operating activities		(1,556	)		(1,738	)
Cash flows from investing activities:
Purchases of property and equipment		(317	)		(132	)
Net cash used in investing activities of continuing operations		(317	)		(132	)
Net cash provided by (used in) investing activities of discontinued operations		1,679			(180	)
Net cash provided by (used in) investing activities		1,362			(312	)
Cash flows from financing activities:
Advances on factoring agreement		16,367			18,173
Payments on factoring agreement		(17,425	)		(18,387	)
Advances of bank line of credit		37			1,800
Payments of bank line of credit		(1,869	)		-
Advances on insurance premium finance agreements		450			794
Payments on insurance premium finance agreements		(275	)		(392	)
Proceeds from debt, net of issuance costs		2,494			-
Payments of debt and finance lease liabilities		(2,764	)		(626	)
Net cash provided by (used in) financing activities of continuing operations		(2,985	)		1,362
Net cash used in financing activities of discontinued operations		(460	)		(13	)
Net cash provided by (used in) financing activities		(3,445	)		1,349
Net change in cash and cash equivalents	$	(3,639	)	$	(701	)

Cash and cash equivalents, beginning of period	$	3,941		$	5,825
Cash and cash equivalents, end of period		302			5,124
Net change in cash and cash equivalents	$	(3,639	)	$	(701	)

Supplemental disclosures, continuing operations:
Cash paid for interest	$	347		$	205
Cash paid for income taxes	$	20		$	19

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, 2022, 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.

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

NOTE 2. LIQUIDITY AND MANAGEMENT’S PLANS

Our continuing operations include 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). Until June 23, 2023, as discussed further in Note 3, our operations included the production of stabilized rice bran and 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).

Our history of operating losses and negative operating cash flows from continuing operations raised substantial doubt about our ability to continue as a going concern before consideration of management’s plans, however after consideration of management’s plans and the factors below, we believe substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued has been alleviated. The factors that alleviated the substantial doubt are summarized below:

●

Improving Operating Cash Flows - Golden Ridge has been a significant source of operating losses for us since its acquisition in 2018, however it made its first positive quarterly contribution to operating cash flows in the fourth quarter of 2022 and operations continue to improve. MGI, which has been consistently profitable since its acquisition in 2019, saw a significant increase in sales and profit contribution in the fourth quarter of 2022 due to additional capacity coming online in the third quarter of 2022 after a major capital expansion, which has continued in 2023. The transition of Golden Ridge to positive operating cash flows and expansion in MGI’s contribution to operating cash flows, together with the steps we have taken to lower our run rate for selling, general administrative expenses, should provide us with a pathway to improved operating cash flows.

●

Access to Equity Funding - We could raise additional capital from offerings of equity, including common equity and equivalents. We successfully completed equity raises in both 2022 and 2021.

●

Ability to Leverage and/or Sell Real Property - We have been able to supplement liquidity by borrowing against our real property located in Wynne, Arkansas. We also own our facility in East Grand Forks, Minnesota. We could sell or mortgage these facilities to provide additional liquidity.

●

Strategic Review Process - In light of our challenges in achieving our operating and financial targets, we are continuing our strategic review of all the possible alternatives to generate improved returns to our shareholders.

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

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 lease and other liabilities. The sale agreement contains customary representations, warranties and covenants.

We estimated the proceeds, net of expenses, at $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 for a loss on sale of $8.6 million. The estimated 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 a lender's 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 initial distribution of proceeds (in thousands).

Purchase price	$	1,800
Estimated expenses accrued as of June 30, 2023		(375	)
Net proceeds	$	1,425

Repayment of mortgage promissory note	$	450
Payment of paid time off liabilities		215
	$	665

The following table summarizes the estimated carrying amounts of the SRB Business as of June 23, 2023, the date of sale (in thousands).

Inventories	$	2,252
Other current assets		185
Property and equipment		7,710
Operating lease right of use assets		1,566
Total assets		11,713
Accrued expenses		9
Operating lease liabilities		1,668
Finance lease liabilities		12
Long-term debt		14
Total liabilities		1,703
Net assets sold	$	10,010

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 all periods presented.

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.

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes the major line items included in loss from discontinued operations related to the SRB Business and divestiture (in thousands).

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenues	$	3,432		$	3,609		$	6,857		$	8,177
Cost of goods sold		(3,147	)		(3,697	)		(6,796	)		(7,731	)
Selling, general and administrative expenses		(184	)		(493	)		(457	)		(815	)
Gain on involuntary conversion		-			147			-			147
Interest expense		(11	)		(13	)		(28	)		(26	)
Loss from operations of discontinued operations		90			(447	)		(424	)		(248	)
Loss on sale		(8,585	)		-			(8,585	)		-
Loss from discontinued operations	$	(8,495	)	$	(447	)	$	(9,009	)	$	(248	)

Depreciation included in cost of goods sold	$	338		$	291		$	646		$	606
Capital expenditures	$	35		$	253		$	111		$	289

The following table summarizes the major line items included in cash flows from discontinued operations related to the SRB Business and divestiture (in thousands).

	Six Months Ended June 30,
	2023			2022

Net cash provided by (used in) operating activities	$	(211	)	$	475
Net cash provided by (used in) investing activities		1,679			(180	)
Net cash used in financing activities		(460	)		(13	)
Net cash provided to continuing operations		1,008			282

In the six months ended June 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 $1.8 million net proceeds from the sale of the SRB Business. In the six months ended June 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	$	1,913
Other current assets		311
Property and equipment		8,187
Operating lease right of use assets		1,701
Total assets held for sale	$	12,112
Accrued expenses, including paid time off liabilities of employees of the SRB business	$	236
Operating lease liabilities		1,841
Finance lease liabilities		17
Long-term debt, including $450 of mortgage promissory note, not exclusively related to the SRB business		468
Total liabilities held for sale	$	2,562

NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent accounting standards not yet adopted

There are no accounting standard(s) not yet adopted that will, or are expected to, result in a significant change in practice 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

Recently adopted accounting standards.

In June 2016, the Financial Accounting Standards Board 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. Our provision for doubtful accounts, recoveries of doubtful accounts and accounts receivable charge-offs were immaterial in all periods presented.

NOTE 5. ACCOUNTS RECEIVABLE AND REVENUES

Revenues in the three and six months ended June 30, 2023 and 2022, 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 percentage of consolidated totals.

	Customer
	A			B			C			D
% of revenues, three months ended June 30, 2023		32	%		16	%		13	%		4	%
% of revenues, three months ended June 30, 2022		5	%		20	%		13	%		15	%

% of revenues, six months ended June 30, 2023		29	%		14	%		12	%		3	%
% of revenues, six months ended June 30, 2022		3	%		20	%		11	%		17	%

% of accounts receivable, as of June 30, 2023		25	%		6	%		-	%		-	%
% of accounts receivable, as of December 31, 2022		19	%		12	%		4	%		-	%

The following table presents disaggregated revenues (in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Rice products	$	4,258	$	3,767	$	8,091	$	7,175
Barley products		1,688		2,117		3,274		3,930
Other		323		697		748		1,467
Revenues	$	6,269	$	6,581	$	12,113	$	12,572

NOTE 6. INVENTORIES

The following table details the components of inventories (in thousands).

	June 30,		December 31,
	2023		2022
Finished goods	$	241	$	228
Raw materials		205		212
Packaging		20		25
Inventories	$	466	$	465

Table of Contents

RiceBran Technologies

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 7. PROPERTY AND EQUIPMENT

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

	June 30,		December 31,
	2023		2022		Estimated Useful Lives
Land	$	493	$	493
Furniture and fixtures		71		71	7-10 years
Plant		3,440		3,440	20-40 years, or life of lease
Computer and software		382		382	3-5 years
Leasehold improvements		151		152	5-6 years
Machinery and equipment		6,417		5,758

SEC Form 10-Q filed by RiceBran Technologies