SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number
RiceBran Technologies
(Exact Name of Registrant as Specified in its Charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(
(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 | ||
| | | 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.
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).
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 ☐ | 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
As of December 13, 2023, there were
Index
Form 10-Q
| PART I. FINANCIAL INFORMATION | Page | ||
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Item 1. |
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| Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022 |
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| Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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| PART II. OTHER INFORMATION | |||
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 5. |
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Item 6. |
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| 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.
PART I. FINANCIAL INFORMATION
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 | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Loss from continuing operations before other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative warrant liability | ||||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income | ( | ) | ||||||||||||||
| 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 Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands, except share amounts)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance for credit losses of $49 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' 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' equity (deficit): | ||||||||
| Preferred stock, shares authorized: Series G, convertible, shares authorized, stated value $, shares, issued and outstanding | ||||||||
| Common stock, par value, shares authorized, shares and shares, issued and outstanding | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders' equity (deficit) | ( | ) | ||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Cash Flows
(Unaudited) (in thousands)
| Nine Months Ended September 30, | ||||||||
| 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 of continuing operations | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Stock and share-based compensation | ||||||||
| Change in fair value of derivative warrant liability | ( | ) | ( | ) | ||||
| Other | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Commodities payable | | |||||||
| Assets held for sale | ( | ) | ||||||
| Other | ( | ) | ( | ) | ||||
| Net cash used in operating activities of continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by (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 insurance premium finance agreements | ||||||||
| Payments on insurance premium finance agreements | ( | ) | ( | ) | ||||
| Capitalized loan costs | ( | ) | ||||||
| Advances on debt and finance lease agreements | ||||||||
| Payments of debt and finance lease liabilities | ( | ) | ( | ) | ||||
| 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 | $ | $ | ||||||
| Net change in cash and cash equivalents | | |||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
See Notes to Unaudited Condensed Consolidated Financial Statements
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 $
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
Related to this financing, Funicular was also granted warrants to purchase up to
With the proceeds of this financing, the Company repaid its $
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 $
The proceeds, net of expenses, of $
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 | $ | |||
| Estimated expenses, accrued as of June 30, 2023 | ( | ) | ||
| Net proceeds | $ | |||
| Repayment of mortgage promissory note | $ | |||
| Payment of paid time off liabilities | ||||
| $ |
The following table summarizes the estimated 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 | $ |
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 | $ | $ | $ | |||||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ||||||||||
| Selling, general and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from operations of discontinued operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on sale | ( | ) | ||||||||||||||
| Loss from discontinued operations | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Depreciation included in cost of goods sold | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
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 | $ | ( | ) | $ | ||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net cash provided to continuing operations | $ | ( | ) | $ | ( | ) | ||
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 $
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 | $ |
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Recent accounting standards not yet adopted
There are no accounting standards not yet adopted that have resulted, 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.
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
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 September 30, 2023 | % | % | % | % | ||||||||||||
| % of revenues, three months ended September 30, 2022 | % | % | % | % | ||||||||||||
| % of revenues, nine months ended September 30, 2023 | % | % | % | % | ||||||||||||
| % of revenues, nine months ended September 30, 2022 | % | % | % | % | ||||||||||||
| % of accounts receivable, as of September 30, 2023 | % | % | % | % | ||||||||||||
| % of accounts receivable, as of December 31, 2022 | % | % | % | % | ||||||||||||
The following table presents disaggregated revenues (in thousands).
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Rice products | $ | $ | $ | $ | ||||||||||||
| Barley products | ||||||||||||||||
| Other | ||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
NOTE 6. INVENTORIES
The following table details the components of inventories (in thousands).
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials | ||||||||
| Packaging | ||||||||
| Inventories | $ | $ | ||||||
NOTE 7. PROPERTY AND EQUIPMENT
The following table details the components of property and equipment (amounts in thousands).
| September 30, | December 31, | Estimated Useful Lives | |||||||||
| 2023 | 2022 | (in years) | |||||||||
| 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 8. LEASES
The components of lease expense and cash flows from leases (in thousands) follow.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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 leases 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 | $ | $ | $ | $ | ||||||||||||
As of September 30, 2023, variable lease payments do not depend on a rate or index. As of September 30, 2023, property and equipment, net, includes $
As of September 30, 2023, 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, 2023, follows.
| Operating Leases | Finance Leases | ||||||||
| Remaining leases terms (in years) | - | - | |||||||
| Weighted average remaining lease terms (in years) | - | ||||||||
| Discount rates | - | ||||||||
| Weighted average discount rate | |||||||||
Maturities of lease liabilities as of September 30, 2023, follow (in thousands).
| Operating | Finance | |||||||
| Leases | Leases | |||||||
| 2023 | $ | |||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Amounts representing interest | ( | ) | ||||||
| Present value of lease obligations | $ | $ | ||||||
NOTE 9. DEBT
We finance certain amounts owed for annual insurance premiums under financing agreements. As of September 30, 2023, amounts due under insurance premium financing agreements are due in monthly installments of principal and interest through March 2024, at an average annual interest rate of
We borrow under a factoring agreement with a lender (the Lender), which provides a $
The Lender also advanced us $
Additional information related to our factoring obligation (exclusive of the Over-advance) follows (in thousands).
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Average borrowings outstanding | $ | $ | $ | $ | ||||||||||||
| Interest paid on borrowings | ||||||||||||||||
| Fees paid on borrowings | ||||||||||||||||
During the nine months ended September 30, 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 $
Long-term debt consists of the following (in thousands).
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Mortgage promissory note - Originally dated July 2020. As subsequently modified, interest accrues at an annual rate which is the greater of % above the Lender's prime rate (% at June 30, 2023) and % and payable in monthly installments through . Face amount $ million. Secured by certain real property in Arkansas. December 31, 2022, excludes $ thousand allocated to discontinued operations. | $ | $ | ||||||
| Equipment note - Dated May 2021. Original principal $ thousand. Due in monthly installments through . Interest accrues at the effective discount rate of % per year. |
|
|
| |||||
| Equipment note - Dated June 2023. Original principal $ thousand. Due in monthly installments through . Interest accrues at the effective discount rate of % per year. | ||||||||
| Progress payment agreement - Dated August 2022. Original principal $ thousand. Interest was payable monthly at the rate of % per year until obligation was transferred to a finance lease in February 2023. | ||||||||
| Total long-term debt, net | $ | $ | ||||||
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 $
Future principal maturities of long-term debt outstanding as of September 30, 2023, follow (in thousands).
| 2023 | $ | |
| 2024 | | |
| 2025 | ||
| Principal maturities | ||
| Debt issuance costs | ||
| Total long-term debt, net | $ |
NOTE 10. EQUITY, SHARE-BASED COMPENSATION AND WARRANTS
A summary of equity activity for the three and nine months ended September 30, 2023 and 2022, follows (in thousands, except share amounts).
| Shares | ||||||||||||||||||||||||
| Preferred | Preferred | Common | Accumulated | |||||||||||||||||||||
| Series G | Common | Stock | Stock | Deficit | Equity | |||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Common stock awards under equity incentive plans | ||||||||||||||||||||||||
| Stock units issued to vendor | ||||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ||||||||||||||||||||||
| Common stock awards under equity incentive plans | ( | ) | ( | ) | ||||||||||||||||||||
| Stock units issued to vendor | ||||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Common stock awards under equity incentive plans | ||||||||||||||||||||||||
| Stock units issued to vendor | ||||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Common stock awards under equity incentive plans | ||||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, March 31, 2022 | ( | ) | ||||||||||||||||||||||
| Common stock awards under equity incentive plans | ||||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Common stock awards under equity incentive plans | - | - | ||||||||||||||||||||||
| Common stock issued to vendor | ||||||||||||||||||||||||
| Other | - | - | - | - | ||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ |
Share-based compensation by type of award, follows (in thousands).
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Stock options | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Restricted stock units | ||||||||||||||||
| Compensation expense related to common stock awards issued under equity incentive plans | $ | $ | $ | |||||||||||||
We have outstanding (i) restricted stock units issued under our 2014 Equity Incentive Plan (RSUs) to employees and directors and (ii) other restricted stock units held by a service provider (SUs). Each RSU and SU represents a contingent right to receive one share of common stock. Summaries of nonvested and vested restricted stock unit activity follows.
| RSUs | SUs | |||||||||||||||||||||||||||||||
| Number of Units | Unrecognized Compensation (in thousands) | Average Grant Date Fair Value per share | Weighted Average Expense Period (Years) | Number of Units | Unrecognized Compensation (in thousands) | Average Grant Date Fair Value per share | Weighted Average Expense Period (Years) | |||||||||||||||||||||||||
| Nonvested at December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Granted | - | - | ||||||||||||||||||||||||||||||
| Forfeited | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Vested with service | ( | ) | - | - | - | ( | ) | - | - | - | ||||||||||||||||||||||
| Expense | - | ( | ) | - | - | - | ( | ) | - | - | ||||||||||||||||||||||
| Nonvested at March 31, 2023 | ||||||||||||||||||||||||||||||||
| Granted | - | - | ||||||||||||||||||||||||||||||
| Forfeited | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Vested with service | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||
| Vested upon involuntary termination | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||
| Expense reversal (expense) | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||
| Nonvested at June 30, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Granted | - | - | ||||||||||||||||||||||||||||||
| Forfeited | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Vested with service | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||
| Vested upon involuntary termination | ( | ) | - | - | - | - | - | - | ||||||||||||||||||||||||
| Expense reversal (expense) | - | ( | ) | - | - | - | ( | ) | - | - | ||||||||||||||||||||||
| Nonvested at September 30, 2023 | $ | $ | - | $ | $ | |||||||||||||||||||||||||||
| Number of RSUs | ||||
| Vested at December 31, 2022 | ||||
| Vested with service | ||||
| Issued at vesting | ( | ) | ||
| Vested at March 31, 2023 | ||||
| Vested with service | ||||
| Vested upon involuntary termination | ||||
| Issued at vesting | ( | ) | ||
| Vested at June 30, 2023 | ||||
| Vested with service | ||||
| Vested upon involuntary termination | ||||
| Issued at vesting | ( | ) | ||
| Vested at September 30, 2023 | ||||
As of September 30, 2023, issuance of
Under the original terms of certain RSUs outstanding during the periods presented, the nonvested portion of an RSU is vested upon the without-cause involuntary termination of the holder’s service. Under the original terms of all RSUs outstanding during the periods presented, upon voluntary or with-cause termination of the holder’s service, the nonvested portion of an RSU is forfeited and any previously recognized compensation related to the nonvested portion of an RSU is reversed because our policy is to recognize forfeitures as they occur.
In July 2023, we issued an option for the purchase of up to
Preferred Stock and Tax Benefits Preservation Plan (Rights Agreement)
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,
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
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.
NOTE 11. INCOME TAXES
Our tax expense for the three and nine months ended September 30, 2023 and 2022, differs from the tax expense computed by applying the U.S. statutory tax rate to loss from continuing operations before income taxes as no tax benefits were recorded for tax losses generated in the U.S. As of September 30, 2023, we had deferred tax assets primarily related to U.S. federal and state tax loss carryforwards. We provided a full valuation allowance against our deferred tax assets as future realization of such assets is not more likely than not to occur.
NOTE 12. LOSS PER SHARE (EPS)
We calculate basic EPS 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.
We calculate diluted EPS by dividing our loss from continuing operations 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. We calculate the dilutive effects of outstanding options, warrants and nonvested restricted stock units that vest solely on the basis of a service condition using the treasury stock method. We calculate the dilutive effects of outstanding preferred stock using the if-converted method.
Reconciliations of the numerators and denominators in the EPS computations for continuing operations follow.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| NUMERATOR (in thousands): | ||||||||||||||||
| Basic and diluted - loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| DENOMINATOR: | ||||||||||||||||
| Weighted average number of shares of shares of common stock outstanding | ||||||||||||||||
| Weighted average number of shares of common stock underlying vested RSUs and SUs | ||||||||||||||||
| Basic and diluted EPS - weighted average number of shares outstanding | ||||||||||||||||
No effects of potentially dilutive securities outstanding were included in the calculation of diluted EPS for continuing operations for the three and nine months ended September 30, 2023 and 2022, because to do so would be antidilutive because of our net loss from continuing operations. Potentially dilutive securities outstanding at September 30, 2023, included our outstanding convertible preferred stock, options, warrants, nonvested RSUs and nonvested SUs.
NOTE 13. FAIR VALUE MEASUREMENTS
The fair value of cash and cash equivalents, accounts receivable, accounts payable, commodities payable and short-term debt approximates their carrying value due to shorter maturities. As of September 30, 2023, the fair values of our operating lease liability, 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).
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):
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Total liabilities at fair value as of September 30, 2023 - Derivative warrant liability | $ | |||||||||||||||
| Total liabilities at fair value as of December 31, 2022 - Derivative warrant liability | $ | $ | $ | $ | ||||||||||||
The following tables summarize the changes in level 3 items measured at fair value on a recurring basis for the three and nine months ended September 30, 2023, (in thousands):
| Fair Value as of Beginning of Period | Total and Unrealized | Issuance of New Instruments | Net of | Fair Value, at End of Period | Change in Unrealized Gains (Losses) on Instruments Still Held | |||||||||||||||||||
| Three months ended September 30, 2023 | ||||||||||||||||||||||||
| Total Level 3 fair value - Derivative warrant liability | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Nine months ended September 30, 2023: | ||||||||||||||||||||||||
| Total Level 3 fair value - Derivative warrant liability | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Three months ended September 30, 2022 | ||||||||||||||||||||||||
| Total Level 3 fair value - Derivative warrant liability | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Nine months ended September 30, 2022: | ||||||||||||||||||||||||
| Total Level 3 fair value - Derivative warrant liability | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The derivative warrant liability relates to a warrant issued in September 2021 for the purchase of up to
| September 2023 | December 31, 2022 | |||||||
| Assumed exercise price | $ | $ | ||||||
| Assumed volatility | % | % | ||||||
| Assumed risk free interest rate | % | % | ||||||
| Expected life of options (in years) | ||||||||
| Expected dividends | ||||||||
NOTE 14. COMMITMENTS AND CONTINGENCIES
Employment Contracts and Severance Payments
In the normal course of business, we periodically enter into agreements which incorporate indemnification provisions. While the maximum amount to which we may be exposed under such agreements cannot be reasonably estimated, we maintain insurance coverage, which we believe will effectively mitigate our obligations under these indemnification provisions. No amounts have been recorded in our financial statements with respect to any obligations under such agreements.
Vesting of certain outstanding nonvested equity grants would accelerate following a change in control.
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 liability will be incurred and the amount of loss can be reasonably estimated. 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 are expected to have a material effect on our financial position or results of operations. We expense defense as incurred. Defense costs, when incurred, are included in selling, general and administrative expenses.
In January 2023, we received $
NOTE 15. SUBSEQUENT EVENTS
On November 8, 2023, the Nasdaq Stock Market LLC (Nasdaq) delisted the Company. The Company’s stock is now traded on the OTC Pink Market under the symbol “RIBT.”
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
On June 23, 2023, we completed the sale of our 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 Unaudited Condensed Consolidated Financial Statements for further discussion of our discontinued operations.
As of September 30, 2023, 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).
Results of Continuing Operations – Three Months Ended September 30, 2023 and 2022
Revenues of $4.8 million in the third quarter of 2023 decreased $ 1.8 million, or 26.8%, from $6.6 million in the third quarter of 2022. $1.2 million of this decrease related to Golden Ridge mainly due a lack of availably of end of the season crop leading to lower volumes. The remaining $0.6 million revenue decrease at MGI Grain was mainly due to lower commodity prices.
The third quarter 2023 gross loss at both MGI Grain Incorporated (MGI Grain) and Golden Ridge Rice Mills, Inc. (Golden Ridge) decreased compared to the third quarter of 2022 by $0.1 million in total or 15.5% due to the rationalization of less profitable business due to the commodity supply changes noted above.
Despite increased legal and consulting costs incurred in the third quarter of 2023 as we continue to explore all our strategic alternatives, selling, general and administrative (SG&A) expenses of $1.2 million in the third quarter of 2023 still decreased $0.2 million or 12.7% from $1.4 million in the third quarter of 2022 due to continued control of other overhead expenses, mainly staff.
Loss from continuing operations before other income (expense) was $1.7 million in the third quarter of 2023, $0.3 million or 13.5% less than the third quarter of 2022 because of the improved gross margin and decreased SG&A expenses noted above.
Other expense, net, increased $0.5 million in the third quarter of 2023 compared to the third quarter of 2022 mainly due to the reduction in the gain from the change in the fair value of our derivative warrant liability.
As a result of the above, our third quarter 2023 loss from continuing operations was $1.8 million, or $0.26 per share, compared to $2.0 million, or $0.29 per share, in the third quarter of 2022.
Results of Continuing Operations – Nine Months Ended September 30, 2023 and 2022
Primarily due to commodity input pricing changes, revenues of $17.0 million in the first nine months of 2023 decreased $2.2 million, or 11.7%, from $19.2 million in the first nine months of 2022. This decrease included a $1.9 million decrease in MGI Grain revenues and $0.3 million decrease in Golden Ridge revenues.
However, our gross loss of $0.5 million in the first nine months of 2023 improved 47.9% from a gross loss of $1,0 million in the first nine months of 2022 about equally at both MGI Grain and Golden Ridge gross due to the elimination of certain operating inefficiencies.
SG&A expenses of $4.3 million in the first nine months of 2023 increased $0.3 million or 8.3% compared to $4.0 million in the first nine months 2022 due to increased legal and consulting costs incurred as we continue to explore all our strategic alternatives.
Loss from continuing operations before other income (expense) was $4.8 million in the first nine months of 2023, compared to $5.0 million for the same period of 2022 because of, as noted above, the impact of our improved gross margin offset by increased SG&A expenses.
Other income, net, increased $0.2 million from the nine months of 2023 compared to same period of 2022 mainly due to the favorable impact of a $0.3 million restitution payment from a former employee, which had been ordered by a federal court in 2012.
As a result of the above our loss from continuing operations in the first nine months of 2023 was $5.1 million, or $0.77 per share, compared to $5.4 million, or $1.03 per share, in the first nine months of 2022.
Liquidity, Going Concern and Capital Resources
We had $0.5 million in cash and equivalents as of September 30, 2023, a decline of $0.6 million from December 31, 2022, after considering repayments of $3.0 million on our factoring, line of credit, long term debt and finance lease liabilities. In our continuing operations, during the first nine months of 2023, we used $0.5 million of cash to fund operations and $1.1 million to fund capital expenditures. This was offset by $0.5 million of net cash provided by the operation and disposition of our SRB Business in the first nine months of 2023.
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 believes this financing will be adequate to fund the Company’s planned operations over the next twelve months from the issuance of these Unaudited Condensed Consolidated Financial Statements.
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 March 30, 2020, we entered into a sales agreement with respect to an at-the-market (ATM) offering program, under which we may offer and sell shares of our common stock having an aggregate offering price of up to $6.0 million, which we currently have $2.8 million remaining. Under the terms of the securities purchase agreement related to a September 2021 offering, we are prohibited from entering into an agreement to effect any at-the-market issuance until September 13, 2023. Under the terms of the securities purchase agreement related to the October 2022 offerings, we are generally prohibited from entering into a variable rate transaction, as defined in the agreement, until October 20, 2023.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures on the date of the financial statements. On an ongoing basis, we evaluate the estimates, including, but not limited to, those related to revenue recognition, inventory valuation, and long-lived asset impairment. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates.
Recent Accounting Pronouncements
See Note 4 in the Notes to Unaudited Condensed Consolidated Financial Statements for further discussion.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act) and are not required to provide the information otherwise required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosures. As of September 30, 2023, there have been no significant changes to our critical accounting policies and related estimates previously disclosed in our 2022 Annual Report on Form 10-K.
We evaluated, with the participation of our executive chairman, and interim chief financial officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our executive chairman and interim chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
During the most recently completed fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
We are involved in or subject to, or may become involved in or subject to, routine litigation, claims, disputes, proceedings and investigations in the ordinary course of business. 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 are expected to have a material effect on our financial position, results of operations or cash flows. We record accruals for contingencies when it is probable that liability will be incurred, and the amount of loss can be reasonably estimated.
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and the factor discussed in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the period ended June 30, 2023, which could materially affect our business, financial condition, liquidity or future results. The risks described in our Annual Report on Form 10-K, Quarterly Report on Form 10-Q and below are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.
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.
On October 30, 2023, we received a Staff Delisting Determination (the Staff Determination) from the Nasdaq Listing Qualifications Department (the Staff). The Staff Determination was issued as a result of the Company failing to comply with the minimum $2,500,000 stockholders’ equity requirement for continued listing as set forth in Nasdaq Listing Rule 5550(b) (the Listing Requirement). On the basis of the Staff’s review and materials submitted by the Company to Nasdaq on October 9, 2023 and October 23, 2023, the Staff determined that the Company did not provide a definitive plan evidencing its ability to achieve near term compliance with the Listing Requirement or sustain such compliance over an extended period of time. Accordingly, 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended September 30, 2023, we issued the securities described below without registration under the Securities Act of 1933, as amended (the Securities Act). The description below does not include issuances that we 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. All issuances below were made without any public solicitation, to a limited number of sophisticated persons and were acquired for investment purposes only.
On September 30, 2023, we issued 600 shares of common stock to a service provider, that is not a natural person, as compensation for service provided. These shares were valued at an aggregate of $444.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
None
The following exhibits are attached hereto and filed herewith:
| Incorporated by Reference |
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| Exhibit Number |
Exhibit Description |
Form |
File No. |
Exhibit Number |
Filing / Effective Date |
Filed Here-with |
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| 3.1 |
Certificate of Determination of Series H Junior Participating Preferred Stock |
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|
X |
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| 3.2 | Amendment to Bylaws, effective August 30, 2023 | 8-K | 001-36245 | 3.1 | August 30, 2023 | |||||||
| 4.1 |
8-K |
001-36245 |
4.1 |
July 6, 2023 |
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| 10.1 | Agreement for Purchase And Sale with Republic Business Credit, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 1, 2019). | 8-K | 001-36245 | 10.1 | September 14, 2023 | |||||||
| 16.1 | Letter from RSM US LLP to the Securities and Exchange Commission, dated August 23, 2023. | 8-K | 001-36245 | 16.1 | August 23, 2023 | |||||||
| 31.1 |
X |
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| 31.2 |
X |
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| 32.1 |
X |
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| 101.INS (1) |
Inline XBRL Instance Document |
X |
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| 101.SCH (1) |
Inline XBRL Taxonomy Extension Schema Document |
X |
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| 101.CAL (1) |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
X |
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| 101.DEF (1) |
Inline XBRL Taxonomy Extension Calculation Definition Linkbase Document |
X |
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| 101.LAB (1) |
Inline XBRL Taxonomy Extension Calculation Label Linkbase Document |
X |
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| 101.PRE (1) |
Inline XBRL Taxonomy Extension Calculation Presentation Linkbase Document |
X |
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| 104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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| (1) |
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. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: December 20, 2023 |
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| /s/ Eric Tompkins |
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| Eric Tompkins |
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| Director and Executive Chairman |
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| /s/ William J. Keneally |
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| William J. Keneally |
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| Interim Chief Financial Officer |
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