ribt20230930

ribt20230930_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, 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		OTC Markets (Pinks)

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 December 13, 2023, there were 9,512,741 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, 2023 and 2022	3
		Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022	4
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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	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	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, in our Annual Report on Form 10-K for the year ended December 31, 2022 and in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023. 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.

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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,
	2023			2022			2023			2022

Revenues	$	4,857		$	6,637		$	16,970		$	19,209
Cost of goods sold		5,337			7,199			17,484			20,192
Gross loss		(480	)		(562	)		(514	)		(983	)
Selling, general and administrative expenses		1,250			1,436			4,352			4,021
Loss from continuing operations before other income (expense)		(1,730	)		(1,998	)		(4,866	)		(5,004	)
Interest income		(1	)		7			26			9
Interest expense		(123	)		(125	)		(476	)		(343	)
Change in fair value of derivative warrant liability		53			612			14			24
Other expense		106			(39	)		(3	)		(111	)
Other income		(87	)		-			178			5
Loss from continuing operations before income taxes		(1,782	)		(1,543	)		(5,121	)		(5,420	)
Income tax expense		-			(8	)		(11	)		(20	)
Loss from continuing operations		(1,782	)		(1,551	)		(5,132	)		(5,440	)
Loss from discontinued operations		-			(491	)		(9,009	)		(739	)
Net loss	$	(1,782	)	$	(2,042	)	$	(14,141	)	$	(6,179	)

Basic and diluted loss per common share:
Continuing operations	$	(0.26	)	$	(0.29	)	$	(0.77	)	$	(1.03	)
Discontinued operations		-			(0.09	)		(1.34	)		(0.14	)
	$	(0.26	)	$	(0.38	)	$	(2.11	)	$	(1.17	)

Weighted average number of shares outstanding:
Basic		6,806,353			5,332,308			6,699,963			5,290,780
Diluted		6,806,353			5,332,308			6,699,963			5,290,780

See Notes to Unaudited Condensed Consolidated Financial Statements

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RiceBran Technologies

Condensed Consolidated Balance Sheets

(Unaudited) (in thousands, except share amounts)

	September 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	466		$	3,941
Accounts receivable, net of allowance for credit losses of $49 and $27		2,620			3,703
Inventories		514			465
Other current assets		515			735
Current assets held for sale		-			2,224
Total current assets		4,115			11,068
Property and equipment, net		5,937			6,020
Operating lease right-of-use assets		-			77
Intangible assets		295			380
Long-term assets held for sale		-			9,888
Total assets	$	10,347		$	27,433

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,414		$	1,232
Commodities payable		2,538			1,546
Accrued salary, wages and benefits		438			489
Accrued legal		1,545			595
Accrued expenses		590			500
Operating lease liabilities, current portion		-			107
Due under bank line of credit		-			1,832
Due under factoring agreement		1,910			3,150
Due under insurance premium finance agreements		195			185
Finance lease liabilities, current portion		136			113
Long-term debt, current portion		1,273			988
Current liabilities held for sale		-			540
Total current liabilities		10,039			11,277
Finance lease liabilities, less current portion		434			320
Long-term debt, less current portion		603			836
Derivative warrant liability		55			69
Long-term liabilities held for sale		-			2,022
Total liabilities		11,131			14,524
Commitments and contingencies
Shareholders' equity (deficit):
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, 6,608,376 shares and 6,309,509 shares, issued and outstanding		328,999			328,551
Accumulated deficit		(329,858	)		(315,717	)
Total shareholders' equity (deficit)		(784	)		12,909
Total liabilities and shareholders' equity	$	10,347		$	27,433

See Notes to Unaudited Condensed Consolidated Financial Statements

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RiceBran Technologies

Condensed Consolidated Statements of Cash Flows

(Unaudited) (in thousands)

	Nine Months Ended September 30,
	2023			2022
Cash flow from operating activities:
Net loss		(14,141	)		(6,179	)
Loss from discontinued operations		(9,009	)		(739	)
Loss from continuing operations		(5,132	)		(5,440	)
Adjustments to reconcile net loss to net cash used in operating activities of continuing operations
Depreciation		694			671
Amortization		85			116
Stock and share-based compensation		448			817
Change in fair value of derivative warrant liability		(14	)		(24	)
Other		-			10
Changes in operating assets and liabilities:
Accounts receivable		1,083			(977	)
Inventories		(49	)		106
Accounts payable and accrued liabilities		1,173			822
Commodities payable		993			258
Assets held for sale		-			(827	)
Other		(63	)		(691	)
Net cash used in operating activities of continuing operations		(782	)		(4,652	)
Net cash provided by (used in) operating activities of discontinued operations		(211	)		880
Net cash used in operating activities		(993	)		(3,772	)
Cash flows from investing activities:
Purchases of property and equipment		(611	)		(494	)
Net cash used in investing activities of continuing operations		(611	)		(494	)
Net cash provided by (used in) investing activities of discontinued operations		1,679			(180	)
Net cash provided by (used in) investing activities		1,068			(674	)
Cash flows from financing activities:
Advances on factoring agreement		21,447			28,936
Payments on factoring agreement		(22,687	)		(27,389	)
Advances on bank line of credit		37			1,846
Payments on bank line of credit		(1,869	)		-
Advances on insurance premium finance agreements		263			794
Payments on insurance premium finance agreements		(253	)		(493	)
Capitalized loan costs		(6	)		-
Advances on debt and finance lease agreements		-			377
Payments of debt and finance lease liabilities		(22	)		(967	)
Net cash provided by (used in) financing activities of continuing operations		(3,090	)		3,104
Net cash used in financing activities of discontinued operations		(460	)		(109	)
Net cash provided by (used in) financing activities		(3,550	)		2,995
Net change in cash and cash equivalents	$	(3,475	)	$	(1,451)

Cash and cash equivalents, beginning of period	$	3,941		$	5,825
Net change in cash and cash equivalents		3,475			1,451
Cash and cash equivalents, end of period	$	466		$	4,374

See Notes to Unaudited Condensed Consolidated Financial Statements

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NOTE 1. BASIS OF PRESENTATION

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

The Company has incurred losses and generated negative cash flows from operations since its inception. As of September 30, 2023, the Company had an accumulated deficit of $329.9 million and cash and cash equivalents of $0.5 million.

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 recently completed refinancing, we believe substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued has been alleviated. The factors that alleviated the substantial doubt are summarized 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 $4.0 million, less an original issue discount of $0.4 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.

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 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 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 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

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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

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 continue to manage collections of those accounts receivable and payments of those liabilities.

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 sale.

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 September 30,					Nine Months Ended September 30,
	2023		2022			2023			2022
Revenues	$	-		3,615		$	6,857		$	11,792
Cost of goods sold		-		(3,750	)		(6,796	)		(11,334	)
Selling, general and administrative expenses		-		(329	)		(457	)		(1,144	)
Interest expense		-		(27	)		(28	)		(53	)
Loss from operations of discontinued operations		-		(491	)		(424	)		(739	)
Loss on sale		-		-			(8,585	)		-
Loss from discontinued operations	$	-	$	(491	)	$	(9,009	)	$	(739	)

Depreciation included in cost of goods sold	$	-	$	315		$	646		$	921
Capital expenditures	$	-	$	433		$	111		$	722

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

	Nine Months Ended September 30,
	2023			2022

Net cash provided by (used in) operating activities	$	(211	)	$	880
Net cash provided by (used in) investing activities		1,679			(180	)
Net cash used in financing activities		(460	)		(109	)
Net cash provided to continuing operations	$	(4,483	)	$	(2,042	)

In the nine months ended September 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 nine months ended September 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.

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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

SEC Form 10-Q filed by RiceBran Technologies