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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-37383
Arcadia Biosciences, Inc.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
81-0571538 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
5950 Sherry Lane, Suite 215 Dallas, TX |
75225 |
(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (214) 974-8921
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common |
RKDA |
NASDAQ CAPITAL MARKET |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☐ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☒ |
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Smaller reporting company |
☒ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 8, 2023, the registrant had 950,406 shares of common stock outstanding, $0.001 par value per share.
Arcadia Biosciences, Inc.
FORM 10-Q FOR THE QUARTER ENDED March 31, 2023
INDEX
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Arcadia Biosciences, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
22,998 |
|
|
$ |
20,644 |
|
Accounts receivable and other receivables, net of allowance for doubtful accounts of $18 and $3 as of March 31, 2023 and December 31, 2022, respectively |
|
|
923 |
|
|
|
1,287 |
|
Inventories, net — current |
|
|
2,591 |
|
|
|
2,571 |
|
Assets held for sale |
|
|
87 |
|
|
|
87 |
|
Prepaid expenses and other current assets |
|
|
606 |
|
|
|
809 |
|
Total current assets |
|
|
27,205 |
|
|
|
25,398 |
|
Property and equipment, net |
|
|
622 |
|
|
|
704 |
|
Right of use asset |
|
|
1,618 |
|
|
|
1,848 |
|
Inventories, net — noncurrent |
|
|
760 |
|
|
|
767 |
|
Intangible assets, net |
|
|
40 |
|
|
|
40 |
|
Other noncurrent assets |
|
|
165 |
|
|
|
165 |
|
Total assets |
|
$ |
30,410 |
|
|
$ |
28,922 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
2,785 |
|
|
$ |
2,881 |
|
Amounts due to related parties |
|
|
15 |
|
|
|
48 |
|
Operating lease liability — current |
|
|
1,014 |
|
|
|
1,010 |
|
Other current liabilities |
|
|
283 |
|
|
|
270 |
|
Total current liabilities |
|
|
4,097 |
|
|
|
4,209 |
|
Operating lease liability — noncurrent |
|
|
760 |
|
|
|
1,007 |
|
Common stock warrant and option liabilities |
|
|
6,861 |
|
|
|
806 |
|
Other noncurrent liabilities |
|
|
2,000 |
|
|
|
2,000 |
|
Total liabilities |
|
|
13,718 |
|
|
|
8,022 |
|
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, $0.001 par value—150,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 857,572 and 616,079 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively |
|
|
65 |
|
|
|
65 |
|
Additional paid-in capital |
|
|
284,003 |
|
|
|
278,827 |
|
Accumulated deficit |
|
|
(267,243 |
) |
|
|
(257,859 |
) |
Total stockholders’ equity |
|
|
16,825 |
|
|
|
21,033 |
|
Non-controlling interest |
|
|
(133 |
) |
|
|
(133 |
) |
Total stockholders' equity |
|
|
16,692 |
|
|
|
20,900 |
|
Total liabilities and stockholders’ equity |
|
$ |
30,410 |
|
|
$ |
28,922 |
|
See accompanying notes to the unaudited condensed consolidated financial statements.
1
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Revenues: |
|
|
|
|
|
|
|
Product |
|
$ |
1,509 |
|
|
$ |
3,170 |
|
|
Royalty |
|
|
— |
|
|
|
50 |
|
|
Total revenues |
|
|
1,509 |
|
|
|
3,220 |
|
|
Operating expenses (income): |
|
|
|
|
|
|
|
Cost of revenues |
|
|
825 |
|
|
|
3,458 |
|
|
Research and development |
|
|
359 |
|
|
|
395 |
|
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(31 |
) |
|
Gain on sale of property and equipment |
|
|
(19 |
) |
|
|
(328 |
) |
|
Selling, general and administrative |
|
|
4,392 |
|
|
|
4,349 |
|
|
Total operating expenses |
|
|
5,557 |
|
|
|
7,843 |
|
|
Loss from operations |
|
|
(4,048 |
) |
|
|
(4,623 |
) |
|
Interest income (expense) |
|
|
198 |
|
|
|
(1 |
) |
|
Other income, net |
|
|
32 |
|
|
|
14 |
|
|
Valuation loss on March 2023 PIPE |
|
|
(6,076 |
) |
|
|
— |
|
|
Change in fair value of common stock warrant and option liabilities |
|
|
940 |
|
|
|
— |
|
|
Issuance and offering costs allocated to liability classified options |
|
|
(430 |
) |
|
|
— |
|
|
Net loss |
|
|
(9,384 |
) |
|
|
(4,610 |
) |
|
Net loss attributable to non-controlling interest |
|
|
— |
|
|
|
(122 |
) |
|
Net loss attributable to common stockholders |
|
$ |
(9,384 |
) |
|
$ |
(4,488 |
) |
|
Net loss per share attributable to common stockholders: |
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(10.86 |
) |
|
$ |
(8.09 |
) |
|
Weighted-average number of shares used in per share calculations: |
|
|
|
|
|
|
|
Basic and diluted |
|
|
864,391 |
|
|
|
554,675 |
|
|
See accompanying notes to the unaudited condensed consolidated financial statements.
2
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated |
|
|
Non- Controlling |
|
|
Total Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Interest |
|
|
Equity |
|
Balance at December 31, 2022 |
|
|
616,079 |
|
|
$ |
65 |
|
|
$ |
278,827 |
|
|
$ |
(257,859 |
) |
|
$ |
(133 |
) |
|
$ |
20,900 |
|
Issuance of shares related to March 2023 PIPE |
|
|
165,500 |
|
|
|
— |
|
|
|
4,740 |
|
|
|
— |
|
|
|
— |
|
|
|
4,740 |
|
Modification of warrants related to March 2023 PIPE |
|
|
— |
|
|
|
— |
|
|
|
219 |
|
|
|
— |
|
|
|
— |
|
|
|
219 |
|
Issuance of shares related to August 2022 pre-funded warrants exercise |
|
|
56,813 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of shares related to employee stock purchase plan |
|
|
88 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Issuance of shares related to reverse stock split |
|
|
19,092 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
212 |
|
|
|
— |
|
|
|
— |
|
|
|
212 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,384 |
) |
|
|
— |
|
|
|
(9,384 |
) |
Balance at March 31, 2023 |
|
|
857,572 |
|
|
$ |
65 |
|
|
$ |
284,003 |
|
|
$ |
(267,243 |
) |
|
$ |
(133 |
) |
|
$ |
16,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Accumulated |
|
|
Non- Controlling |
|
|
Total Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Interest |
|
|
Equity |
|
Balance at December 31, 2021 |
|
|
554,609 |
|
|
$ |
63 |
|
|
$ |
257,515 |
|
|
$ |
(226,485 |
) |
|
$ |
103 |
|
|
$ |
31,196 |
|
Reclassification upon adoption of ASU 2020-06 |
|
|
— |
|
|
|
— |
|
|
|
19,390 |
|
|
|
(15,998 |
) |
|
|
— |
|
|
|
3,392 |
|
Issuance of shares related to employee stock purchase plan |
|
|
118 |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
260 |
|
|
|
— |
|
|
|
— |
|
|
|
260 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,488 |
) |
|
|
(122 |
) |
|
|
(4,610 |
) |
Balance at March 31, 2022 |
|
|
554,727 |
|
|
$ |
63 |
|
|
$ |
277,169 |
|
|
$ |
(246,971 |
) |
|
$ |
(19 |
) |
|
$ |
30,242 |
|
See accompanying notes to the unaudited condensed consolidated financial statements.
3
Arcadia Biosciences, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
(9,384 |
) |
|
$ |
(4,610 |
) |
Adjustments to reconcile net loss to cash used in operating activities: |
|
|
|
|
|
|
Change in fair value of common stock warrant and option liabilities |
|
|
(940 |
) |
|
|
— |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(31 |
) |
Issuance and offering costs allocated to liability classified options |
|
|
430 |
|
|
|
— |
|
Valuation loss on March 2023 PIPE |
|
|
6,076 |
|
|
|
— |
|
Depreciation |
|
|
71 |
|
|
|
149 |
|
Amortization of intangible assets |
|
|
— |
|
|
|
13 |
|
Lease amortization |
|
|
180 |
|
|
|
166 |
|
Gain on disposal of property and equipment |
|
|
(19 |
) |
|
|
(328 |
) |
Stock-based compensation |
|
|
212 |
|
|
|
260 |
|
Write-down of inventories |
|
|
23 |
|
|
|
368 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable and other receivables |
|
|
80 |
|
|
|
(1,398 |
) |
Inventories |
|
|
(37 |
) |
|
|
669 |
|
Prepaid expenses and other current assets |
|
|
203 |
|
|
|
208 |
|
Other noncurrent assets |
|
|
— |
|
|
|
22 |
|
Accounts payable and accrued expenses |
|
|
(149 |
) |
|
|
(198 |
) |
Amounts due to related parties |
|
|
(33 |
) |
|
|
5 |
|
Other current liabilities |
|
|
12 |
|
|
|
— |
|
Operating lease liabilities |
|
|
(191 |
) |
|
|
(180 |
) |
Net cash used in operating activities |
|
|
(3,466 |
) |
|
|
(4,885 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from sale of property and equipment |
|
|
30 |
|
|
|
787 |
|
Proceeds from sale of Verdeca — earn-out received |
|
|
285 |
|
|
|
— |
|
Purchases of property and equipment |
|
|
— |
|
|
|
(40 |
) |
Net cash provided by investing activities |
|
|
315 |
|
|
|
747 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from issuance of common stock, pre-funded warrants and preferred investment options from March 2023 PIPE |
|
|
5,997 |
|
|
|
— |
|
Payments of offering costs relating to March 2023 PIPE |
|
|
(497 |
) |
|
|
— |
|
Proceeds from ESPP purchases |
|
|
5 |
|
|
|
4 |
|
Net cash provided by financing activities |
|
|
5,505 |
|
|
|
4 |
|
Net (decrease) increase in cash and cash equivalents |
|
|
2,354 |
|
|
|
(4,134 |
) |
Cash and cash equivalents — beginning of period |
|
|
20,644 |
|
|
|
28,685 |
|
Cash and cash equivalents — end of period |
|
$ |
22,998 |
|
|
$ |
24,551 |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
— |
|
|
$ |
1 |
|
NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
Common stock warrant liabilities reclassifed to equity upon adoption of ASU 2020-06 |
|
$ |
— |
|
|
$ |
3,392 |
|
Accrued legal and accounting fees included in offering costs related to March 2023 PIPE |
|
$ |
51 |
|
|
$ |
— |
|
Common stock options issued to placement agent and included in offering costs related to March 2023 PIPE |
|
$ |
212 |
|
|
$ |
— |
|
Warrant and option modifications included in Valuation loss on March 2023 PIPE |
|
$ |
404 |
|
|
$ |
— |
|
Proceeds from sale of Verdeca in accounts receivable and other receivables |
|
$ |
285 |
|
|
$ |
— |
|
See accompanying notes to the unaudited condensed consolidated financial statements.
4
Arcadia Biosciences, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Basis of Presentation
Organization
Arcadia Biosciences, Inc. (the "Company," "Arcadia" or "management"), was incorporated in Arizona in 2002 and maintains its headquarters in Dallas, Texas, with additional office space in Davis, California, and additional facilities in American Falls, Idaho. The Company was reincorporated in Delaware in March 2015.
The Company is a producer and marketer of innovative, plant-based food and beverage products. Its history as a leader in science-based approaches to developing high-value crop improvements, as well as nutritionally enhanced food ingredients, has laid the foundation for its path forward. The Company used advanced breeding techniques to develop these proprietary innovations which are now being commercialized through the sales of seed and grain, as well as food ingredients and products. The acquisition of the assets of Live Zola, LLC (“Zola”) added coconut water to the Company's portfolio of products.
In May 2021, the Company’s wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”) acquired the businesses of Eko, Lief, and Zola. The acquisition included consumer CBD brands like Soul Spring, a CBD-infused botanical therapy brand in the natural category, Saavy Naturals, a line of natural body care products and ProVault, a CBD-infused sports performance formula made with natural ingredients, providing effective support and recovery for athletes. Also included in the purchase is Zola, a coconut water sourced exclusively with sustainably grown coconuts from Thailand. In July 2022,