What changed in Arcadia Biosciences, Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Arcadia Biosciences, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+168 added−166 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-30)
Top changes in Arcadia Biosciences, Inc.'s 2023 10-K
168 paragraphs added · 166 removed · 105 edited across 7 sections
- Item 7. Management's Discussion & Analysis+77 / −66 · 35 edited
- Item 1A. Risk Factors+39 / −51 · 31 edited
- Item 1. Business+46 / −43 · 33 edited
- Item 5. Market for Registrant's Common Equity+3 / −3 · 3 edited
- Item 2. Properties+1 / −1 · 1 edited
Item 1. Business
Business — how the company describes what it does
33 edited+13 added−10 removed25 unchanged
Item 1. Business
Business — how the company describes what it does
33 edited+13 added−10 removed25 unchanged
2022 filing
2023 filing
Biggest changeOur Product Portfolio GoodWheat Consumer Products In June 2022, we launched our GoodWheat pasta in five varieties – penne, spaghetti, fettuccine, elbows and rotini – in select retailers nationwide and on Amazon. Our pasta delivers 4 times the fiber of traditional wheat pasta with 9g 2 Table of Contents of protein per serving and no sacrifice on taste.
Biggest changeOur GoodWheat portfolio of better-for-you products addresses these needs as they are naturally higher in fiber and protein than traditional wheat without sacrificing on taste or texture. GoodWheat Pasta In June 2022, we launched our GoodWheat pasta in five varieties – penne, spaghetti, fettuccine, elbows and rotini – in select retailers nationwide and on Amazon.
Our innovation team is focused on using science-based solutions to leverage our wheat and hemp varieties to develop an array of food products and wellness ingredients. Because we are innovating directly from our own well-established plant technology traits, we expect this extension of our involvement will provide more meaningful improvements. Field Trials and Breeder & Foundation Seed Production .
Our innovation team is focused on using science-based solutions to leverage our wheat varieties to develop an array of food products and wellness ingredients. Because we are innovating directly from our own well-established plant technology traits, we expect this extension of our involvement will provide more meaningful improvements. Field Trials and Breeder & Foundation Seed Production .
Product Development With our food, beverage and wellness products now entering the market, we are firmly in the commercialization phase of our corporate lifecycle. We are de-emphasizing new trait discovery research and development (“R&D”) and are increasing our focus on food-science innovation to fully leverage the value in our existing superior wheat genetics.
Product Development With our food and beverage products now entering the market, we are firmly in the commercialization phase of our corporate lifecycle. We are de-emphasizing new trait discovery research and development (“R&D”) and are increasing our focus on food-science innovation to fully leverage the value in our existing superior wheat genetics.
Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 43% of our Board of Directors are women. From a management perspective, 63% of our CEO's direct reports are women, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company.
Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 43% of our Board of Directors are women. From a management perspective, 50% of our CEO's direct reports are women, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company.
Calyxt is an agriculture biotechnology company that has a similar strategy to ours to create healthier specialty food ingredients and agriculturally advantageous food crops. 6 Table of Contents • Coconut water: The beverage industry is competitive. Competitors in this market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings.
Cibus, Inc. is an 6 Table of Contents agriculture biotechnology company that has a similar strategy to ours to create healthier specialty food ingredients and agriculturally advantageous food crops. • Coconut water: The beverage industry is competitive. Competitors in this market compete for brand recognition, ingredient sourcing, product shelf space, and e-commerce page rankings.
We are evolving our organizational capabilities to match this strategy progression to include in-house food formulation and CPG supply chain expertise. 4 Table of Contents Food Formulation Innovation. We will expand the application of our innovation platform to build on our pipeline of products focused on health and wellness.
We are evolving our organizational capabilities to match this strategy progression to include in-house food formulation and CPG supply chain expertise. Food Formulation Innovation. We will expand the application of our innovation platform to build on our pipeline of products focused on health and wellness.
These numbers do not include in-licensed patents for which we either do not have exclusive rights (such as certain enabling technology licenses), or for which we have exclusive rights only in a limited field of use or do not control prosecution and maintenance of the licensed patents.
These numbers do not include in-licensed patents for which we either do not have exclusive rights (such as certain enabling technology 5 Table of Contents licenses), or for which we have exclusive rights only in a limited field of use or do not control prosecution and maintenance of the licensed patents.
The collaboration leverages our TILLING platform 5 Table of Contents with Corteva Agriscience’s enabling technology platforms, high-quality elite germplasm and global commercial channels. Under the collaboration, the companies will further develop and commercialize an improved wheat quality trait, which has completed initial field trials and is advancing to next-stage field trials.
The collaboration leverages our TILLING platform with Corteva Agriscience’s enabling technology platforms, high-quality elite germplasm and global commercial channels. Under the collaboration, the companies will further develop and commercialize an improved wheat quality trait, which has completed initial field trials and is advancing to next-stage field trials.
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.
The acquisition included Saavy Naturals, a line of natural body care products, Soul Spring, a CBD-infused botanical therapy brand in the natural category, and ProVault, a THC-free CBD sports performance formula made with natural ingredients, providing effective support and recovery for athletes (collectively "body care brands").
These totals reflect the following: (i) with respect to the U.S. territory, we owned 23 and exclusively in-licensed 2 U.S. issued patents, and we owned 6 U.S. patent applications and 6 plant variety protection certificates relating to our plants, trait technologies, and business methods; and (ii) in connection with foreign territories, we owned 26 and exclusively in-licensed 19 foreign issued patents, and owned 32 pending foreign patent applications.
These totals reflect the following: (i) with respect to the U.S. territory, we owned 24 and exclusively in-licensed 2 U.S. issued patents, and we owned 6 U.S. patent applications and 6 plant variety protection certificates relating to our plants, trait technologies, and business methods; and (ii) in connection with foreign territories, we owned 29 and exclusively in-licensed 18 foreign issued patents, and owned 32 pending foreign patent applications.
In general, we believe that our competitors generally fall into the following categories: • Companies Selling Pasta Products: As we enter the direct to consumer and retail markets with our GoodWheat products, we believe we face significant competition from a variety of consumer-packaged goods companies.
In general, we believe that our competitors generally fall into the following categories: • Companies Selling Consumer Products in Similar Categories: As we enter retail markets with our GoodWheat products, we believe we face significant competition from a variety of consumer-packaged goods companies.
Available Information Our website address is www.arcadiabio.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports, proxy and registration statements filed or furnished with the Securities and Exchange Commission, or SEC, are available free of charge through our website.
Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports, proxy and registration statements filed or furnished with the Securities and Exchange Commission, or SEC, are available free of charge through our website.
As of December 31, 2022, Arcadia Biosciences, Inc. and Arcadia Wellness, LLC had nine and eight registered trademarks in the United States, respectively. We also have eleven registered trademarks in various other countries. Key Collaborations We have established numerous trait collaborations and have developed close relationships with industry-leading seed and consumer product companies.
As of December 31, 2023, Arcadia Biosciences, Inc. and Arcadia Wellness, LLC each had 12 registered trademarks in the United States. Arcadia Biosciences, Inc. also had nine registered trademarks in various other countries. Key Collaborations We have established numerous trait collaborations and have developed close relationships with industry-leading seed and consumer product companies.
Our proprietary Pedigree and Inventory Management System, or PIMS, tracks the genetic, phenotypic and location information for all our plant materials. The performance of our plant materials is recorded through a variety of laboratory and field observations, and the data are stored within PIMS. The location of all plant materials is tracked throughout the plant life cycle.
Biological Materials Inventory and Tracking . Our proprietary Pedigree and Inventory Management System, or PIMS, tracks the genetic, phenotypic and location information for all our plant materials. The performance of our plant materials is recorded through a variety of laboratory and field observations, and the data are stored within PIMS.
Our competitors have similar distribution channels and retailers to deliver and sell their products. Competitors in this space include Vita Coco, ZICO, C20 and Harmless Harvest. Employees As of December 31, 2022, we had 30 employees with 17 in management, operations, commercial production, accounting/finance, legal and administration. We believe our employee relations to be good.
Our competitors have similar distribution channels and retailers to deliver and sell their products. Competitors in this space include Vita Coco, ZICO, C20 and Harmless Harvest. Employees As of December 31, 2023, we had 21 employees with 14 in management, operations, accounting/finance, legal and administration. We believe our employee relations to be good.
As of December 31, 2022, our GoodWheat® portfolio included 12 U.S. issued patents, 6 U.S. patent applications, 1 plant variety certificate, 23 foreign issued patents and 25 foreign patent applications. With respect to all of the foregoing patent and plant protection assets, our exclusive licenses afford us control over the prosecution and maintenance of the licensed patents and patent applications.
As of December 31, 2023, our GoodWheat® portfolio included 15 U.S. issued patents, 6 U.S. patent applications, 1 plant variety certificate, 27 foreign issued patents and 26 foreign patent applications. With respect to all of the foregoing patent and plant protection assets, our exclusive licenses afford us control over the prosecution and maintenance of the licensed patents and patent applications.
Most Americans suffer from a significant fiber deficiency. Less than 10 percent of women and less than 3 percent of men get enough fiber in their daily diets. The recommended daily value of fiber is 25g for women and children, and 38g for men according to the May 2021 Food and Health Survey by the International Food Information Council.
The recommended daily value of fiber is 25g for women and children, and 38g for men according to the May 2021 Food and Health Survey by the International Food Information Council. However, less than 10 percent of women and less than 3 percent of men get enough fiber in their daily diets.
And, in December of 2022, GoodWheat received the American Heart Association’s Heart-Check mark on all of our pasta products. With its high fiber, lower sodium and zero saturated fat, GoodWheat meets the criteria for a heart-healthy pasta and provides consumers with a better-for-you option that delivers superior nutrition with the taste and texture of traditional pasta.
With its high fiber, lower sodium and zero saturated fat, GoodWheat meets the criteria for a heart-healthy pasta and provides consumers with a better-for-you option that delivers superior nutrition with the taste and texture of traditional pasta.
Flour from our RS wheat lines has resistant starch levels that are 12 to 20 times higher than the control wheat, and total dietary fiber, or TDF, which is more than eight times higher than the control.
Major growth in these markets is being driven by the convenience health food sector and functional food sector. Flour from our RS wheat lines has resistant starch levels that are 12 to 20 times higher than the control wheat, and total dietary fiber, or TDF, which is more than eight times higher than the control.
GoodWheat Wheat Traits Enhanced Quality Grains The GoodWheat brand also encompasses our current and future non-GMO wheat portfolio of high fiber Resistant Starch ("RS"), Reduced Gluten ("RG") wheat varieties, and extended shelf life wheat, as well as future wheat innovations.
In taste tests, Zola beats competitors 2 to 1 and is the best-tasting way to rehydrate, reset and reenergize. 3 Table of Contents GoodWheat Wheat Traits Enhanced Quality Grains The GoodWheat brand also encompasses our current and future non-GMO wheat portfolio of high fiber Resistant Starch ("RS"), Reduced Gluten ("RG") wheat varieties, and extended shelf life wheat, as well as future wheat innovations.
This includes specific seeds planted within a specific plot of a specific field trial, harvest, seed storage location and use by, or distribution of plant material to, our collaborators or elsewhere. We ensure all of our plant materials are accounted for, tracked and inventoried, which enables us to maintain direct control and proper documentation.
The location of all plant materials is tracked throughout the plant life cycle. This includes specific seeds planted within a specific plot of a specific field trial, harvest, seed storage location and use by, or distribution of plant material to, our collaborators or elsewhere.
Improved Shelf Life of Whole Grain Flour The United States Department of Agriculture recommends that “at least one serving of grains per day must be whole grain-rich” due to evidence that a diet containing whole grains provides a multitude of benefits, including lower risk of obesity, cardiovascular disease, and type-2 diabetes.
We are breeding the trait into additional commercial wheat varieties and working with food processors to give people a choice to enjoy higher quality wheat in the products they love while reducing gluten in their diet. 4 Table of Contents Improved Shelf Life of Whole Grain Flour The United States Department of Agriculture recommends that “at least one serving of grains per day must be whole grain-rich” due to evidence that a diet containing whole grains provides a multitude of benefits, including lower risk of obesity, cardiovascular disease, and type-2 diabetes.
Resistant starch increases the total dietary fiber content of wheat and reduces its glycemic index, which are both desirable nutritional qualities that are important in the management of diabetes and healthy blood glucose levels. High fiber resistant starch wheat can deliver fiber and other benefits to refined white flour products and also whole grain food products.
One such program generated multiple bread wheat and pasta wheat lines with very high levels of amylose, leading to increased levels of resistant starch. Resistant starch increases the total dietary fiber content of wheat and reduces its glycemic index, which are both desirable nutritional qualities that are important in the management of diabetes and healthy blood glucose levels.
Our trait evaluation and development staff conducts field operations for both trials and production in American Falls, Idaho, and oversee production in other areas of the country, as needed.
Our trait evaluation and development staff conducts field operations for both trials and production in American Falls, Idaho, and oversee production in other areas of the country, as needed. Similarly, regulatory trials may be needed to develop data for use in submissions for regulatory review and may involve plant varieties developed by our collaborators or our own grain quality programs.
We believe improving the fiber content of wheat can deliver improved health benefits to a wide population. 3 Table of Contents High Fiber RS Wheat Our high fiber RS wheat provides a source of wheat with inherently high levels of resistant starch, increasing the total dietary fiber content of food products without the need for fiber additives from other sources.
High Fiber RS Wheat Our high fiber RS wheat provides a source of wheat with inherently high levels of resistant starch, increasing the total dietary fiber content of food products without the need for fiber additives from other sources. Currently, corn resistant starch is a product in two market segments: dietary fiber additives and modified starch additives.
Our competitors in the pasta market range from companies like Banza and Ancient Harvest who offer high-nutrition pasta alternatives to large, traditional pasta producers including Barilla and De Cecco. • Specialty health and nutrition ingredient companies : In response to the growing consumer demand for healthier food alternatives, a number of agricultural and food-based companies are augmenting their product and market strategies to bring new quality food ingredients to market.
Finally, in mac and cheese, we face competition from brands such as Kraft, Annie’s and Goodles. • Specialty health and nutrition ingredient companies : In response to the growing consumer demand for healthier food alternatives, a number of agricultural and food-based companies are augmenting their product and market strategies to bring new quality food ingredients to market.
More broadly, 59% of our employees are women. Facilities Our corporate headquarters are located in Dallas, Texas with additional office space in Davis, California and additional facilities in American Falls, Idaho. We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations.
More broadly, 52% of our employees are women. Facilities Our corporate headquarters are located in Dallas, Texas with additional office space in Davis and Sacramento, California and additional facilities in American Falls, Idaho.
We now hold more than 15 global patents on our high fiber RS wheat, protecting both bread wheat and durum (pasta) wheat. Claims granted recently strengthen our IP for our RS portfolio of products.
We now hold 24 global patents on our high fiber RS wheat, protecting both bread wheat and durum (pasta) wheat. Claims granted recently strengthen our IP for our RS portfolio of products. Our GoodWheat wheat traits redesign wheat as a functional food adding value to the wheat supply chain by enabling a wider range of choices to meet consumer demands.
Arcadia Wellness, LLC In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola.
As a result, we plan to continue to invest in trial-driving activities and expand distribution of our Zola coconut water brand through mass market retailers and grocery store chains. Arcadia Wellness, LLC In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola.
In fact, our research shows that GoodWheat pasta scores at parity on taste with leading wheat pasta competitors and significantly outscores market leading vegetable-based pastas. Made with only our USA farm grown wheat, GoodWheat pasta meets consumers’ preference for clean labels and transparent sourcing.
Our pasta delivers 4 times the fiber of traditional wheat pasta with 9g of protein per serving and no sacrifice on taste. In fact, our research shows that GoodWheat pasta scores at parity on taste with leading wheat pasta competitors and significantly outscores market leading vegetable-based pastas.
Intellectual Property We rely on patents and other proprietary right protections, including trade secrets and contractual protection of our proprietary know-how and confidential information, to preserve our competitive position. As of December 31, 2022, we owned or exclusively controlled 70 issued patents, 38 pending patent applications worldwide, and 6 plant variety protection certificates.
As of December 31, 2023, we owned or exclusively controlled 73 issued patents, 38 pending patent applications worldwide, and 6 plant variety protection certificates.
We plan to expand distribution of our Zola coconut water brand through mass market retailers and grocery store chains. Based on our research, consumers prefer the clean, crisp taste of Zola to that of other leading coconut water brands. As a result, we plan to refresh our packaging, launch new innovation and continue to invest in effective brand-building activities.
We believe there is a significant opportunity to integrate our wheat IP and GoodWheat brand into larger businesses and drive shareholder value. • Scale Zola through retail expansion. Based on our research, consumers prefer the clean, crisp taste of Zola to that of other leading coconut water brands.
Naturally hydrating and never from concentrate, Zola is Non-GMO Project Verified and only contains 60 calories per serving. In taste tests, Zola beats competitors 2 to 1 and is the best-tasting way to rehydrate, reset and reenergize. CBD Body Care ProVault Topical Pain Relief Our portfolio currently consists of two body care brands that both contain CBD.
Naturally hydrating and never from concentrate, Zola is Non-GMO Project Verified and only contains 60 calories per serving.
Removed
This will include launching GoodWheat into multiple categories where our wheat can provide a compelling point-of-difference at attractive margins. We will continue to acquire, develop and retain the requisite management and industry experience to fully participate in, and control, the route to market for our high value food ingredients. • Evaluate acquisitive growth opportunities.
Added
We have launched GoodWheat into multiple categories where our wheat provides a compelling point-of-difference and we will continue to evaluate ways to extract value throughout the supply chain. • Evaluate scale M&A opportunities. We intend to evaluate potential mergers, acquisitions, and other strategic opportunities that will allow us to scale the GoodWheat value proposition more quickly.
Removed
We intend to evaluate potential acquisitions that will allow us to bring the GoodWheat value proposition to an existing business. We believe there is a significant opportunity to scale our business faster by purchasing an existing business in a new wheat-based category outside of pasta. • Scale Zola through retail expansion.
Added
In July 2023, management made the decision to exit the remaining body care brands, Soul Spring and ProVault, as a result of continued pressure on the CBD market due to regulatory uncertainty. Body care operations ceased as of September 30, 2023. 2 Table of Contents Our Product Portfolio Most Americans suffer from a significant fiber deficiency.
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One serving of GoodWheat Pasta gets your fiber closer to your daily need, delivering 8g of fiber, which accounts for 32 percent of the daily value of fiber needs for women and children, and 20 percent for men.
Added
Made with only our USA farm grown wheat, GoodWheat pasta meets consumers’ preference for clean labels and transparent sourcing. And, in December of 2022, GoodWheat received the American Heart Association’s Heart-Check mark on all of our pasta products.
Removed
In 2023, we plan to expand the GoodWheat portfolio with the launch of innovative, new wheat-based products in additional categories, offering consumers more options to improve their fiber intake at multiple mealtimes throughout the day. Zola Coconut Water Zola is a pure, natural, 100% coconut water with a crisp, clean taste that’s lightly sweet and refreshing.
Added
GoodWheat Pancakes and Waffle Mixes In August 2023, we launched our GoodWheat into the breakfast category with new, better-for-you pancake and waffle mixes as well as single-serve Quikcakes. Our new mixes are made with simple ingredients and Arcadia’s proprietary wheat grain, which is naturally higher in fiber and protein than traditional wheat.
Removed
The first brand is ProVault, a muscle and joint pain relief product that is formulated with THC-free CBD isolate along with a proprietary blend of natural ingredients and fast-acting cooling agents. The second brand is SoulSpring, a CBD-infused line of bath and body products that includes nourishing botanicals and minerals.
Added
GoodWheat pancake and waffle mixes are sold in resealable, multi-serve pouches, with each serving delivering 8 times the fiber of traditional pancake mix and 5 grams of protein. Our multi-serve mixes will be available in 3 classic varieties, including Buttermilk, Chocolate Chocolate Chip and Apple Cinnamon.
Removed
The market for CBD products has been under pressure primarily due to regulatory uncertainty. Given our strategic focus on food and beverage products, we are currently in the process of exploring strategic alternatives for our body care brands.
Added
GoodWheat Quikcakes are an innovative, single-serve instant pancake that is a great option for busy mornings – you simply pour one packet into a bowl, add water and microwave for 90 seconds. Quikcakes have 11 times the fiber of traditional single-serve pancake mixes and contain 7 grams of protein per serving.
Removed
Our GoodWheat wheat traits redesign wheat as a functional food adding value to the wheat supply chain by enabling a wider range of choices to meet consumer demands. One such program generated multiple bread wheat and pasta wheat lines with very high levels of amylose, leading to increased levels of resistant starch.
Added
Quikcakes are available in 3 flavors, including Buttermilk, Chocolate Chocolate Chip and Confetti. GoodWheat Mac and Cheese In November 2023, we announced the third GoodWheat category, Mac and Cheese. Our Mac and Cheese is made with real cheese and contains no artificial flavors, dyes or preservatives and are available in three varieties: Classic Cheddar, White Cheddar and Three Cheese.
Removed
Currently, corn resistant starch is a product in two market segments: dietary fiber additives and modified starch additives. Major growth in these markets is being driven by the convenience health food sector and functional food sector.
Added
GoodWheat Mac and Cheese packs in the most fiber of any brand in the category, 4 times more than the leading brand. In fact, one serving of GoodWheat Mac and Cheese has the same fiber as two servings of oatmeal, or two and a half servings of broccoli!
Removed
We are breeding the trait into additional commercial wheat varieties and working with food processors to give people a choice to enjoy higher quality wheat in the products they love while reducing gluten in their diet.
Added
And, just like our pasta and pancake mixes, GoodWheat Mac and Cheese is higher in protein than the leading brand, with 12 grams of protein per serving. Zola Coconut Water Zola is a pure, natural, 100% coconut water with a crisp, clean taste that’s lightly sweet and refreshing.
Removed
Similarly, regulatory trials may be needed to develop data for use in submissions for regulatory review and may involve plant varieties developed by our collaborators or our own oil quality and grain quality programs. Biological Materials Inventory and Tracking .
Added
High fiber resistant starch wheat can deliver fiber and other benefits to refined white flour products and also whole grain food products. We believe improving the fiber content of wheat can deliver improved health benefits to a wide population.
Added
We ensure all of our plant materials are accounted for, tracked and inventoried, which enables us to maintain direct control and proper documentation. Intellectual Property We rely on patents and other proprietary right protections, including trade secrets and contractual protection of our proprietary know-how and confidential information, to preserve our competitive position.
Added
Our competitors in the pasta market range from companies like Banza and Ancient Harvest who offer high-nutrition pasta alternatives to large, traditional pasta producers including Barilla and De Cecco. In pancakes, competitors include Kodiak, Birch Benders, and Pearl Milling Company.
Added
We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations. Available Information Our website address is www.arcadiabio.com.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
31 edited+8 added−20 removed93 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
31 edited+8 added−20 removed93 unchanged
2022 filing
2023 filing
Biggest changeThere were 22,456 options exercisable as of December 31, 2022 at a weighted-average exercise price of $215.20. Our stock price has been and may continue to be volatile, and you could lose all or part of your investment. The market price of our common stock since our initial public offering has been and may continue to be volatile.
Biggest changeIn the case of outstanding options and warrants that have exercise prices that are below the market price of our common stock from time to time, our stockholders would experience dilution upon the exercise of these options and warrants. Our stock price has been and may continue to be volatile, and you could lose all or part of your investment.
The market price of our 16 Table of Contents common stock is subject to wide fluctuations in response to various risk factors, some of which are beyond our control and may not be related to our operating performance, including: • addition or loss of significant customers, collaborators or distributors; • changes in laws or regulations applicable to our industry or traits; • additions or departures of key personnel; • the failure of securities analysts to cover our common stock after an offering; • actual or anticipated changes in expectations regarding our performance by investors or securities analysts; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • our ability to protect our intellectual property and other proprietary rights; • sales of our common stock by us or our stockholders; • the expiration of contractual lock-up agreements; • litigation involving us, our industry, or both; • major catastrophic events; and • general economic and market conditions and trends.
The market price of our common stock is subject to wide fluctuations in response to various risk factors, some of which are beyond our control and may not be related to our operating performance, including: • addition or loss of significant customers, collaborators or distributors; • changes in laws or regulations applicable to our industry or traits; • additions or departures of key personnel; • the failure of securities analysts to cover our common stock after an offering; • actual or anticipated changes in expectations regarding our performance by investors or securities analysts; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • our ability to protect our intellectual property and other proprietary rights; • sales of our common stock by us or our stockholders; • the expiration of contractual lock-up agreements; • litigation involving us, our industry, or both; • major catastrophic events; and • general economic and market conditions and trends.
In addition, we may find our development and commercialization efforts are more expensive than we anticipate or that they do not generate revenues in the time period we anticipate, which would further increase our losses.
In addition, we may find our development and commercialization efforts are more expensive than we anticipate or that they do not generate revenues in the amounts or in the time period we anticipate, which would further increase our losses.
Certain of our operations involve the storage and controlled use of hazardous materials, including laboratory chemicals, herbicides, and pesticides. This requires us to conduct our operations in compliance with applicable environmental and safety standards, and we cannot completely eliminate the risk of accidental contamination from hazardous materials.
Our use of hazardous materials exposes us to potential liabilities. Certain of our operations involve the storage and controlled use of hazardous materials, including laboratory chemicals, herbicides, and pesticides. This requires us to conduct our operations in compliance with applicable environmental and safety standards, and we cannot completely eliminate the risk of accidental contamination from hazardous materials.
We will estimate our exposure to any future legal proceedings and establish provisions for the estimated liabilities where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the outcome of these matters will involve substantial uncertainties.
We will estimate our exposure to any future legal proceedings and establish provisions for the estimated liabilities where it is reasonably possible to estimate and 14 Table of Contents where an adverse outcome is probable. Assessing and predicting the outcome of these matters will involve substantial uncertainties.
Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or 16 Table of Contents disproportionate to the operating performance of those companies.
Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering biotechnology inventions and the scope of claims made under these patents, our ability to obtain and enforce patents is uncertain and involves complex legal and factual questions.
Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering biotechnology inventions 12 Table of Contents and the scope of claims made under these patents, our ability to obtain and enforce patents is uncertain and involves complex legal and factual questions.
Proceedings involving our patents or patent applications could result in adverse decisions regarding: • ownership of patents and patent applications; • rights concerning licenses; 14 Table of Contents • the patentability of our inventions relating to our products; and/or • the enforceability, validity or scope of protection offered by our patents relating to our products.
Proceedings involving our patents or patent applications could result in adverse decisions regarding: • ownership of patents and patent applications; • rights concerning licenses; • the patentability of our inventions relating to our products; and/or • the enforceability, validity or scope of protection offered by our patents relating to our products.
Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. If we undergo an ownership change in the future, our ability to utilize NOLs could be further limited by Section 382 of the Code.
Changes in our stock ownership since 2021 or in the future, which could be outside of our control, could result in an ownership change under Section 382 of the Code. If we undergo an ownership change, our ability to utilize NOLs could be further limited by Section 382 of the Code.
Failure to effectively prevent, detect, and recover from the increasing number and sophistication of information security threats could result in theft, misuse, modification, and destruction of information, including trade secrets and confidential business information, and cause business disruptions, delays in research and development, and reputational damage, which could significantly affect our results of operations and financial condition. 12 Table of Contents Our use of hazardous materials exposes us to potential liabilities.
Failure to effectively prevent, detect, and recover from the increasing number and sophistication of information security threats could result in theft, misuse, modification, and destruction of information, including trade secrets and confidential business information, and cause business disruptions, delays in research and development, and reputational damage, which could significantly affect our results of operations and financial condition.
Net cash used in operations was $14.0 million and $25.9 million for the years ended December 31, 2022 and 2021, respectively. We expect to continue to incur losses.
Net cash used in operations was $15.3 million and $14.0 million for the years ended December 31, 2023 and 2022, respectively. We expect to continue to incur losses.
A significant portion of our existing NOLs are limited due to an ownership change under IRC Section 382 that we experienced as a result of the common shares issued in connection with the January 2021 and December 2020 Offering.
A significant portion of our existing NOLs are limited due to known ownership changes under IRC Section 382 that we experienced as a result of the common stock we issued in connection with equity financings in December 2020 and January 2021.
We have incurred significant net losses since our formation in 2002 and expect to continue to incur net losses for the foreseeable future. We incurred net losses of $15.6 million and $16.1 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $257.9 million.
We have incurred significant net losses since our formation in 2002 and expect to continue to incur net losses for the foreseeable future. We incurred net losses of $14.0 million and $15.6 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $271.8 million.
Our gross profit margins on the products we’ve recently introduced containing our GoodWheat as an ingredient may be impacted by a variety of factors, including but not limited to, variations in raw materials and packaging pricing, customer requirements, market acceptance rate and promotional support costs.
Our gross profit margins on our consumer products may be impacted by a variety of factors, including but not limited to variations in raw materials and packaging, freight costs, pricing, customer requirements, market acceptance rate and promotional support costs.
We may be required to pay substantial damages as a result of product liability claims for which insurance coverage is not available. We are subject to product liability claims with respect to our products, and as additional products integrating our traits reach commercialization, product liability claims may increasingly be a commercial risk for our business.
We may be required to pay substantial damages as a result of product liability claims for which insurance coverage is not available. We are subject to product liability claims with respect to our products.
Product liability claims against us or our collaborators selling products that contain our traits, or allegations of product liability relating to seeds containing traits developed by us, could damage our reputation, harm our relationships with our collaborators, and materially and adversely affect our business, results of operations, financial condition, and prospects.
Product liability claims against us or our collaborators selling our products could damage our reputation, harm our relationships with our collaborators, and materially and adversely affect our business, results of operations, financial condition, and prospects.
We may be unable to compete successfully against our current and future competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance for products containing our traits.
At the same time, the expiration of patents covering existing products reduces the barriers to entry for competitors. We may be unable to compete successfully against our current and future competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance for products containing our traits.
Furthermore, while our collaboration agreements typically require that our collaborators indemnify us for the cost of product liability claims brought against us as a result of our collaborator’s misconduct, such indemnification provisions may not always be enforced, and we may receive no indemnification if our own misconduct contributed to the claims. 15 Table of Contents As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting.
Furthermore, while our collaboration agreements typically require that our collaborators indemnify us for the cost of product liability claims brought against us as a result of our collaborator’s misconduct, such indemnification provisions may not always be enforced, and we may receive no indemnification if our own misconduct contributed to the claims.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A global financial crisis or a global or regional political disruption could cause extreme volatility in the capital and credit markets. For example, outbreaks of epidemic, pandemic, or contagious diseases, such as the COVID-19 pandemic, could disrupt our business.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A global financial crisis or a global or regional political disruption could cause extreme volatility in the capital and credit markets.
Since shares of our common stock were sold in our initial public offering in May 2015 at a price of $6,400.00 per share, our stock price has ranged from $10.48 to $6,984.00, through December 31, 2022.
After making adjustments for the impact of reverse stock splits, since shares of our common stock were sold in our initial public offering in May 2015 at a price of $6,400.00 per share, our stock price has ranged from $2.65 to $6,984.00, through December 31, 2023.
The markets for pasta and coconut water products are intensely competitive and rapidly changing. In most segments of the seed and agricultural biotechnology market, the number of products available to consumers is steadily increasing as new products are introduced. At the same time, the expiration of patents covering existing products reduces the barriers to entry for competitors.
The markets for pasta, pancake mix, mac and cheese, and coconut water products are intensely competitive and rapidly changing. In most segments of the seed and agricultural biotechnology market, the number of products available to consumers is steadily increasing as new products are introduced.
We expect our quarterly operating results to fluctuate widely and unpredictably for the following reasons, among others: • our significant customer concentration; • the variable timing, stage, and results of our and our collaborators’ development, and regulatory activities; • the effectiveness of our marketing and advertising efforts; • the impact of seasonality in agricultural operations on our sales of hemp seeds and products that incorporate our wheat traits; • adjustments to inventory due to excess or slow-moving; • supplier, manufacturing, or quality problems; and • variance in the timing of customer and distributor orders for our products. 17 Table of Contents Any unanticipated change in revenues or operating results is likely to cause our stock price to fluctuate since such changes reflect new information available to investors and analysts.
We expect our quarterly operating results to fluctuate widely and unpredictably for the following reasons, among others: • our significant customer concentration; • the variable timing, stage, and results of our and our collaborators’ development, and regulatory activities; • the effectiveness of our marketing and advertising efforts; • the impact of seasonality in agricultural operations on our sales of products; • adjustments to inventory due to excess or slow-moving; • supplier, manufacturing, or quality problems; and • variance in the timing of customer and distributor orders for our products.
This new legislation affects U.S. patent law in a manner that may impact our ability to obtain or maintain patent protection for current or future inventions in the U.S. or otherwise cause uncertainty as to our patent protection. 13 Table of Contents We may not have identified all patents, published applications or published literature that may affect our business, either by blocking our ability to commercialize our traits, by preventing the patentability of our traits by us, our licensors or co-owners, or by covering the same or similar technologies that may invalidate our patents, limiting the scope of our future patent claims or adversely affecting our ability to market our products.
We may not have identified all patents, published applications or published literature that may affect our business, either by blocking our ability to commercialize our traits, by preventing the patentability of our traits by us, our licensors or co-owners, or by covering the same or similar technologies that may invalidate our patents, limiting the scope of our future patent claims or adversely affecting our ability to market our products.
Because we do not expect to pay any dividends for the foreseeable future, investors may be forced to sell their stock to realize a return on their investment. We do not anticipate that we will pay any dividends to holders of our common stock for the foreseeable future.
We do not anticipate that we will pay any dividends to holders of our common stock for the foreseeable future.
All of our current employees are at-will employees, and the failure to retain or hire skilled and highly educated personnel could limit our growth and hinder our research and development efforts.
All of our current employees are at-will employees, and the failure to retain or hire skilled and highly educated personnel could limit our growth and hinder our research and development efforts. Our business is subject to the risks of earthquakes, fire, flood, crop losses, epidemics, and other catastrophic natural events, and security breaches, including cybersecurity incidents.
In addition, the US financial markets have been negatively impacted by the rise of inflation and interest rates, and in March 2023, the government closure of Silicon Valley Bank, increasing the potential for a local and/or global economic recession that could disrupt our business.
Outbreaks of epidemic, pandemic, or contagious diseases, such as the COVID-19 pandemic, could disrupt our business resulting in a loss of productivity from our employees working remotely. In addition, the US financial markets have been negatively impacted by the rise of inflation and interest rates, increasing the potential for a local and/or global economic recession that could disrupt our business.
As the agricultural biotechnology industry continues to develop, we may become party to, or threatened with, litigation or other adverse proceedings regarding intellectual property or proprietary rights in our technology, processes, or developed traits.
If any third-party patent or patent application covers our intellectual property or proprietary rights and we are not able to obtain a license to it, we and our collaborators may be prevented from commercializing products containing our traits. 13 Table of Contents As the agricultural biotechnology industry continues to develop, we may become party to, or threatened with, litigation or other adverse proceedings regarding intellectual property or proprietary rights in our technology, processes, or developed traits.
For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, whether or not we obtain profitability.
For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, whether or not we experience profitability. 15 Table of Contents Risks Related to Ownership of Our Common Stock Future sales of substantial amounts of our common stock, or the possibility that such sales could occur, could adversely affect the market price of our common stock.
Our business is subject to the risks of earthquakes, fire, flood, crop losses, epidemics, and other catastrophic natural events, and security breaches, including cybersecurity incidents. Our seed and grain crops are vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are common but difficult to predict.
Our crops are vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are common but difficult to predict.
Sales of a substantial number of our common stock in the public market, or the perception that these sales might occur, could cause the market price of our common stock to decline and could impair our ability to raise capital through the sale of additional equity securities.
Future sales in the public market of our common stock, or shares issued upon exercise of our outstanding stock options or warrants, or the perception by the market that these issuances or sales could occur, could lower the market price of our common stock or make it difficult for us to raise additional capital.
We may not be able to obtain such a license on commercially reasonable terms. If any third-party patent or patent application covers our intellectual property or proprietary rights and we are not able to obtain a license to it, we and our collaborators may be prevented from commercializing products containing our traits.
We may not be able to obtain such a license on commercially reasonable terms.
Removed
Business disruptions could include disruptions to the productivity of our employees working remotely and restrictions on their travel may hinder their ability to meet with potential customers and close transactions, as well as temporary closures of the facilities of suppliers or contract growers in our supply chain.
Added
This new legislation affects U.S. patent law in a manner that may impact our ability to obtain or maintain patent protection for current or future inventions in the U.S. or otherwise cause uncertainty as to our patent protection.
Removed
While we’ve seen signs of improvement, wheat consumer packaged goods companies have been heavily focused on production over R&D evaluation as demand for staples like pasta and flour have increased.
Added
As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting.
Removed
Because we have incurred and expect to continue to incur significant costs and expenses for these efforts before we obtain any incremental revenues from the sale of products incorporating our traits, our losses in future periods could be even more significant.
Added
Our stockholders may experience substantial dilution and a reduction in the price that they are able to obtain upon the sale of their shares.
Removed
We will be subject to a myriad of different laws and regulations governing hemp and our inability to comply with such laws in a cost-effective manner may have an adverse effect on our business and result of operations.
Added
As of December 31, 2023, we had 1,285,337 shares of common stock outstanding, substantially all of which we believe may be sold publicly, subject in some cases to volume and other limitations, provisions or limitations in registration rights agreements, or prospectus-delivery or other requirements relating to the effectiveness and use of registration statements registering the resale of such shares.
Removed
Laws and regulations governing the use of hemp in the United States are broad in scope, subject to evolving interpretations, and subject to enforcement by a myriad of regulatory agencies and law enforcement entities.
Added
As of December 31, 2023, we had 41,735 shares of our common stock issuable upon the exercise of outstanding stock options under our equity incentive plans at a weighted-average exercise price of $139.82 per share and we had outstanding warrants and preferred investment options to purchase 1,831,909 shares of common stock at a weighted-average exercise price of $24.63 per share.
Removed
Federal and state laws and regulations on hemp may address production, monitoring, manufacturing, distribution, and laboratory testing to ensure that that the hemp has a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis. Federal laws and regulations may also address the transportation or shipment of hemp or hemp products.
Added
Subject to applicable vesting requirements, upon exercise of these options or warrants, the underlying shares may be resold into the public market, subject in some cases to volume and other limitations or prospectus delivery requirements pursuant to registration statements registering the resale of such shares.
Removed
We may be subject to many different state-based regulations for hemp, all of which could require us to incur substantial costs associated with compliance requirements. The Drug Enforcement Administration ("DEA") issued an interim final rule to codify statutory amendments to the controlled substances act made by the 2018 farm bill.
Added
The market price of our common stock has been and may continue to be volatile.
Removed
It is possible that the DEA will make additional changes in a final rule that may have a material impact on our hemp business and our ability to operate. The FDA has published guidance related to the CBD and hemp-extract business but has not formally released a regulatory framework for the industry.
Added
Any unanticipated change in revenues or operating results is likely to cause our stock price to fluctuate since such changes reflect new information available to investors and analysts. Because we do not expect to pay any dividends for the foreseeable future, investors may be forced to sell their stock to realize a return on their investment.
Removed
It is possible that the FDA will provide additional guidance or implement future regulations that may have a material impact on our hemp business. In addition, it is possible that additional regulations may be enacted in the future in the United States and globally that will be directly applicable to our research and development operations.
Removed
We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.
Removed
Risks Related to Ownership of Our Common Stock Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could cause our stock price to decline.
Removed
As of December 31, 2022, there were 616,079 shares of our common stock outstanding, of which approximately 587,028 shares were held by non-affiliates. All of our common stock is freely transferable, except shares held by our “affiliates,” as defined in Rule 144 under the Securities Act.
Removed
We may also issue common stock or options to purchase shares of our common stock that under our 2015 Omnibus Equity Incentive Plan and our 2015 Employee Stock Purchase Plan. Securities issued under these plans will be registered under a Form S-8 and are freely tradable upon issuance.
Removed
In addition, the stock prices of many seed and agricultural biotechnology companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies.
Removed
On September 27, 2022, we received a notice from the Nasdaq Listing Qualifications Department of Nasdaq informing us that because the closing bid price of our common stock had been below $1.00 per share for 30 consecutive business days, we no longer complied with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.
Removed
Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
Removed
The notice had no immediate effect on the listing or the trading of our common stock on The Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the notice letter stated that we had an initial compliance period of 180 calendar days, or until March 27, 2023, to regain compliance with the minimum bid price requirement.
Removed
To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period.
Removed
On March 15, 2023, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that as a result of the closing bid price of our common stock having been at $1.00 per share or greater for at least ten consecutive business days, we had regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq’s Marketplace Rule 5550(a)(2) for continued listing on The NASDAQ Capital Market, and the matter was now closed.
Removed
Item 1B. Unresolve d Staff Comments. Not applicable.
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
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2022 filing
2023 filing
Biggest changeItem 2. Pr operties. Our corporate headquarters are located in Dallas, Texas with additional office space in Davis, California and additional facilities in American Falls, Idaho. We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations. 18 Table of Contents
Biggest changeItem 2. Pr operties. Our corporate headquarters are located in Dallas, Texas with additional office space in Davis and Sacramento, California and additional facilities in American Falls, Idaho. We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
2022 filing
2023 filing
Biggest changeItem 3. Legal Proceedings. We currently are not a party to any material litigation or other material legal proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. Item 4. Mine Saf ety Disclosures. Not applicable. 19 Table of Contents PAR T II
Biggest changeItem 3. Legal Proceedings. We currently are not a party to any material litigation or other material legal proceedings. From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. Item 4. Mine Saf ety Disclosures. Not applicable. 18 Table of Contents PAR T II
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
2022 filing
2023 filing
Biggest changeItem 4. Mine Safety Disclosures 19 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. [Reserved] 20 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 32 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 18 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6. [Reserved] 19 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 31 Item 8.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+0 added−0 removed3 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+0 added−0 removed3 unchanged
2022 filing
2023 filing
Biggest changeHolders of Record As of March 23, 2023, we had 40 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Biggest changeHolders of Record As of March 21, 2024, we had 38 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.
Securities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12, for a description of securities authorized for issuance under equity compensation plans. Recent Sales of Unregistered Securities Information concerning our sales of unregistered securities during the year ended December 31, 2022, has previously been reported in Current Reports on Form 8-K that we filed during that year.
Securities Authorized for Issuance under Equity Compensation Plans See Part III, Item 12, for a description of securities authorized for issuance under equity compensation plans. Recent Sales of Unregistered Securities Information concerning our sales of unregistered securities during the year ended December 31, 2023, has previously been reported in Current Reports on Form 8-K that we filed during that year.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the year ended December 31, 2022.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the year ended December 31, 2023.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
35 edited+42 added−31 removed31 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
35 edited+42 added−31 removed31 unchanged
2022 filing
2023 filing
Biggest changeWe consider all available evidence, both positive and negative, including but not limited to: earnings history, projected future outcomes, industry and market trends, and the nature of each of the deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S. deferred tax assets. 24 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 Year Ended December 31, $ Change % Change 2022 2021 (in thousands) Revenues: Product $ 8,960 $ 6,587 $ 2,373 36 % License 879 17 862 5071 % Royalty 117 176 (59 ) -34 % Total revenues 9,956 6,780 3,176 47 % Operating expenses (income): Cost of revenues 9,802 8,708 1,094 13 % Research and development 1,509 3,889 (2,380 ) -61 % (Gain) on sale of Verdeca (1,138 ) — (1,138 ) 100 % Loss on sale of Arcadia Spain — 497 (497 ) -100 % Impairment of intangible assets 404 3,302 (2,898 ) -88 % Impairment of goodwill — 1,648 (1,648 ) -100 % Change in fair value of contingent consideration (70 ) (210 ) 140 -67 % (Gain) on sale of property and equipment (314 ) — (314 ) 100 % Impairment of property and equipment, net 530 1,534 (1,004 ) -65 % Selling, general and administrative 18,048 22,938 (4,890 ) -21 % Total operating expenses 28,771 42,306 (13,535 ) -32 % Loss from operations (18,815 ) (35,526 ) 16,711 -47 % Interest income (expense) 289 (20 ) 309 -1545 % Other income, net 33 10,114 (10,081 ) -100 % Change in fair value of common stock warrant and option liabilities 3,209 8,946 (5,737 ) -64 % Gain on extinguishment of PPP loan — 1,123 (1,123 ) -100 % Issuance and offering costs (314 ) (769 ) 455 -59 % Net loss before income taxes (15,598 ) (16,132 ) 534 -3 % Income tax (provision) (14 ) (2 ) (12 ) 600 % Net loss (15,612 ) (16,134 ) 522 -3 % Net loss attributable to non-controlling interest (236 ) (1,474 ) 1,238 -84 % Net loss attributable to common stockholders $ (15,376 ) $ (14,660 ) $ (716 ) 5 % 25 Table of Contents Revenues Product revenues accounted for 90% and 97% of our total revenues in 2022 and 2021, respectively.
Biggest changeSee Note 1 to the consolidated financial statements for further information on discontinued operations. 24 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 Year Ended December 31, $ Change % Change 2023 2022 (in thousands) Revenues: Product $ 5,313 $ 6,422 $ (1,109 ) -17 % License 17 879 (862 ) -98 % Royalty — 117 (117 ) -100 % Total revenues 5,330 7,418 (2,088 ) -28 % Operating expenses (income): Cost of revenues 3,300 6,101 (2,801 ) -46 % Research and development 1,387 1,509 (122 ) -8 % Gain on sale of Verdeca — (1,138 ) 1,138 100 % Impairment of intangible assets — 141 (141 ) -100 % Change in fair value of contingent consideration — (70 ) 70 -100 % Gain on sale of property and equipment (40 ) (314 ) 274 -87 % Impairment of property and equipment — 160 (160 ) -100 % Impairment of ROU asset 113 — 113 100 % Selling, general and administrative 14,508 15,036 (528 ) -4 % Total operating expenses 19,268 21,425 (2,157 ) -10 % Loss from operations (13,938 ) (14,007 ) 69 0 % Interest income 695 289 406 140 % Other income, net 48 9 39 433 % Valuation loss on March 2023 PIPE (6,076 ) — (6,076 ) -100 % Change in fair value of common stock warrant and option liabilities 6,544 3,209 3,335 104 % Issuance and offering costs allocated to liability classified options (430 ) (314 ) (116 ) 37 % Net loss from continuing operations before income taxes (13,157 ) (10,814 ) (2,343 ) 22 % Income tax expense (8 ) (14 ) 6 -43 % Net loss from continuing operations (13,165 ) (10,828 ) (2,337 ) 22 % Net loss from discontinued operations (821 ) (4,784 ) 3,963 -83 % Net loss (13,986 ) (15,612 ) 1,626 -10 % Net loss attributable to non-controlling interest (5 ) (236 ) 231 -98 % Net loss attributable to common stockholders $ (13,981 ) $ (15,376 ) $ 1,395 -9 % 25 Table of Contents Revenues Product revenues accounted for 100% and 87% of our total revenues in 2023 and 2022, respectively.
If we do 28 Table of Contents require additional funds and are not able to secure adequate additional funding, we may be forced to reduce our spending, extend payment terms with our suppliers, liquidate assets, or suspend or curtail planned product launches. Any of these actions could materially harm our business, results of operations and financial condition.
If we require additional funds and are not able to secure adequate additional funding, we may be forced to reduce our spending, 28 Table of Contents extend payment terms with our suppliers, liquidate assets, or suspend or curtail planned product launches. Any of these actions could materially harm our business, results of operations and financial condition.
Cash flows from financing activities Cash provided by financing activities for the year ended December 31, 2022 of $4.5 million consisted of proceeds from the issuance of common stock relating to the August 2022 RDO financing transaction of $5.0 million gross proceeds and proceeds from the purchase of ESPP shares of $7,000, which were offset by payments of transaction costs related to the August 2022 RDO financing transaction of $488,000.
Cash provided by financing activities for the year ended December 31, 2022 of $4.5 million consisted of proceeds from the issuance of common stock relating to the August 2022 RDO financing transaction of $5.0 million gross proceeds and proceeds from the purchase of ESPP shares of $7,000, which were offset by payments of transaction costs related to the August 2022 RDO financing transaction of $488,000.
Research and development expenses ("R&D") Research and development expenses consist of costs incurred in the development and testing of the Company's products and other products in development incorporating the Company's traits. These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred.
Research and development expenses ("R&D") Research and development expenses consist of costs incurred in the development and testing of our products and other products in development incorporating our traits. These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred.
Due to cumulative losses, we maintain a valuation allowance against our U.S. deferred tax assets as of December 31, 2022 and 2021.
Due to cumulative losses, we maintain a valuation allowance against our U.S. deferred tax assets as of December 31, 2023 and 2022.
Operating Expenses Cost of revenues Cost of revenues relates to the sale of Arcadia Wellness, GoodWheat, and GLA products and consists of the cost of raw materials, including internal and third-party services costs related to procuring, processing, formulating, packaging and shipping our products, as well as in-licensing and royalty fees, any adjustments or write-downs to inventory or prepaid production costs.
Operating Expenses Cost of revenues Cost of revenues primarily relates to the sale of GoodWheat and Zola products and consists of the cost of raw materials, including internal and third-party services costs related to procuring, processing, formulating, packaging and shipping our products, as well as in-licensing and royalty fees, any adjustments or write-downs to inventory or prepaid production costs.
Issuance and offering costs Issuance and offering costs generally include placement agent, legal, advisory, accounting and filing fees related to financing transactions. Income tax provision Our income tax provision has not been historically significant, as we have incurred losses since our inception. The provision for income taxes consists of state and foreign income taxes.
Issuance and offering costs allocated to liability classified options Issuance and offering costs generally include placement agent, legal, advisory, accounting and filing fees related to financing transactions. Income tax expense Our income tax provision has not been historically significant, as we have incurred losses since our inception. The provision for income taxes consists of state and foreign income taxes.
Going Concern We believe that our existing cash and cash equivalents will not be sufficient to meet our anticipated cash requirements for at least the next 12-18 months from the issuance date of our 2022 financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.
Going Concern We believe that our existing cash and cash equivalents and short-term investments will not be sufficient to meet our anticipated cash requirements for at least the next 12 months from the issuance date of our 2023 financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.
Milestone fees are variable consideration that is initially constrained and recognized only when it is probable that such amounts would not be reversed. The Company assesses when achievement of milestones are probable in order to determine the timing of revenue recognition for milestone fees.
We recognize annual license fees when it is probable that a material reversal will not occur. Milestone fees are variable consideration that is initially constrained and recognized only when it is probable that such amounts would not be reversed. The Company assesses when achievement of milestones are probable in order to determine the timing of revenue recognition for milestone fees.
We consider our critical accounting policies and estimates to be revenue recognition, determination of the provision for income taxes, stock-based compensation, impairments of property and equipment, and net realizable value of inventory.
We consider our critical accounting policies and estimates to be revenue recognition, determination of the provision for income taxes, and net realizable value of inventory.
Royalty revenues consist of a minimum annual royalty, offset by amounts earned from the sale of products. The Company recognizes the minimum annual royalty on a straight-line basis over the year, and the Company recognizes royalty revenue resulting from the sale of products when the third parties transfer control of the product to their customers, which generally occurs upon shipment.
The Company recognizes the minimum annual royalty on a straight-line basis over the year, and recognizes royalty revenue resulting from the sale of products when the third parties transfer control of the product 22 Table of Contents to their customers, which generally occurs upon shipment.
Our contractual obligations are primarily related to our operating leases for facilities, land and equipment. Refer to Note 17 to the consolidated financial statements for details of our leasing arrangements. As of December 31, 2022, we had cash and cash equivalents of $20.6 million.
Our contractual obligations are primarily related to our operating leases for facilities, land and equipment. Refer to Note 14 to the consolidated financial statements for details of our leasing arrangements. As of December 31, 2023, we had cash and cash equivalents of $6.5 million and short-term investments of $5.1 million.
For the years ended December 31, 2022 and 2021, the Company had net losses of $15.6 million and $16.1 million, respectively, and net cash used in operations of $14.0 million and $25.9 million, respectively.
For the years ended December 31, 2023 and 2022, the Company had net losses of $14.0 million and $15.6 million, respectively, and net cash used in operations of $15.3 million and $14.0 million, respectively.
Cash used in operating activities for the year ended December 31, 2021 was $25.9 million.
Cash used in operating activities for the year ended December 31, 2022 was $14.0 million.
Impairment of property and equipment, net Impairment of property and equipment, net includes losses from tangible assets due to impairment or recoverability test charges to write down fixed assets to their fair value or recoverability value.
Gain on sale of property and equipment, net Gain on sale of fixed assets includes gains from the sale of tangible assets sold above their net book value. 23 Table of Contents Impairment of property and equipment Impairment of property and equipment, net includes losses from tangible assets due to impairment or recoverability test charges to write down fixed assets to their fair value or recoverability value.
Liquidity The following table summarizes total current assets, current liabilities and working capital for the dates indicated: As of December 31, 2022 2021 Current assets $ 25,398 $ 35,388 Current liabilities 4,209 5,040 Working capital surplus 21,189 30,348 Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Year Ended December 31, 2022 2021 Net cash (used in) provided by: Operating activities $ (13,977 ) $ (25,868 ) Investing activities 1,417 16,608 Financing activities 4,519 21,900 Effects of foreign currency translation on cash and cash equivalents — 2 Net decrease in cash and cash equivalents $ (8,041 ) $ 12,642 Cash flows from operating activities Cash used in operating activities for the year ended December 31, 2022 was $14.0 million.
Liquidity The following table summarizes total current assets, current liabilities and working capital for the dates indicated (in thousands): As of December 31, 2023 2022 Current assets $ 14,972 $ 25,398 Current liabilities 3,590 4,209 Working capital surplus $ 11,382 $ 21,189 Cash Flows The following table summarizes our cash flows for the periods indicated (in thousands): Year Ended December 31, 2023 2022 Net cash (used in) provided by: Operating activities $ (15,294 ) $ (13,977 ) Investing activities (4,344 ) 1,417 Financing activities 5,512 4,519 Net decrease in cash and cash equivalents $ (14,126 ) $ (8,041 ) Cash flows from operating activities Cash used in operating activities for the year ended December 31, 2023 was $15.3 million.
Given the seasonality of agriculture and time required to progress from one milestone to the next, achievement of milestones is inherently uneven, and license revenues are likely to fluctuate significantly from period to period. Royalty revenues Royalty revenues consist of amounts earned from the sale of commercial products that incorporate the Company's traits by third parties.
Given the seasonality of agriculture and time required to progress from one milestone to the next, achievement of milestones is inherently uneven, and license revenues are likely to fluctuate significantly from period to period.
Cash flows from investing activities Cash provided by investing activities for the year ended December 31, 2022 of $1.4 million primarily consisted of $920,000 of proceeds from sales of property and equipment, $569,000 proceeds from sale of Verdeca, partially offset by $72,000 of purchases of property and equipment. 29 Table of Contents Cash provided by investing activities for the year ended December 31, 2021 of $16.6 million primarily consisted of $21.8 million of proceeds from sales of investments, partially offset by $4.3 million of acquisitions, and $1.0 million in purchases of property and equipment.
Cash provided by investing activities for the year ended December 31, 2022 of $1.4 million primarily consisted of $920,000 of proceeds from sales of property and equipment, $569,000 proceeds from sale of Verdeca, partially offset by $72,000 of purchases of property and equipment. 29 Table of Contents Cash flows from financing activities Cash provided by financing activities for the year ended December 31, 2023 consisted of gross proceeds of $6.0 million from the March 2023 PIPE financing transaction and proceeds from the purchase of ESPP shares of $12,000, which were offset by payments of transaction costs related to the March 2023 PIPE financing transaction of $497,000.
With respect to our net loss of $16.1 million, non-cash charges including $1.5 million of stock-based compensation, $1.3 million of lease amortization, $3.6 million of write-downs of inventory, $1.5 million of impairment of property and equipment, $769,000 of issuance and offering costs, $1.6 million of impairment of goodwill, $3.3 million of impairment of intangible assets, and $929,000 of depreciation were offset by $1.7 million adjustments in our working capital accounts, $10.2 million of realized gain on corporate securities, $8.9 million for the change in fair value of common stock warrant liabilities, $210,000 of other non-cash income from the change in fair value of contingent consideration, and $1.3 million of operating lease payments.
With respect to our net loss of $14.0 million, non-cash charges, including $430,000 of issuance and offering costs, $6.1 million of valuation loss recognized for the March 2023 PIPE, $717,000 of stock-based compensation, $697,000 of lease amortization, $287,000 of depreciation, $444,000 of write-downs of inventory and $113,000 of impairment of ROU assets, were offset by the change in fair value of common stock warrant and option liabilities of $6.5 million, adjustments in our working capital accounts of $2.7 million, a gain on disposal of property and equipment of $40,000, and operating lease payments of $764,000.
Income tax (provision) The income tax provision resulted in expense of $14,000 in 2022 as compared to expense of $2,000 in 2021. Seasonality We and our commercial partners operate in different geographies around the world and conduct field trials used for data generation, which must be conducted during the appropriate growing seasons for particular crops and markets.
Seasonality We and our commercial partners operate in different geographies around the world and conduct field trials used for data generation, which must be conducted during the appropriate growing seasons for particular crops and markets. Demand for coconut water products is generally higher in the summer months.
In connection with our commercialization activities for our consumer products, we expect to increase our investments in sales and marketing, including additional consulting fees. Interest income (expense) Interest income consists primarily of interest earned on investments. Interest expense consists primarily of contractual interest on notes payable relating to the purchase of company vehicles.
Our selling, general, and administrative expenses may fluctuate from period to period. In connection with our commercialization activities for our consumer products, we expect to increase our investments in sales and marketing, including additional consulting fees. Interest income Interest income consists of interest income on our cash and cash equivalents and investments.
License revenues License revenues consist of up-front, nonrefundable license fees, annual license fees, and subsequent milestone payments that we receive under our license agreements. Revenue generated from up-front license fees are recognized upon execution of the agreement. We recognize annual license fees when it is probable that a material reversal will not occur.
Royalty revenues can fluctuate depending on the timing of shipments of product by the third parties to their customers. License revenues License revenues consist of up-front, nonrefundable license fees, annual license fees, and subsequent milestone payments that we receive under our license agreements. Revenue generated from up-front license fees are recognized upon execution of the agreement.
Gain on sale of Verdeca The gain on sale of Verdeca is the gain recognized for the sale our membership interests in the Verdeca joint venture to our partner Bioceres in November 2020. 22 Table of Contents Loss on sale of Arcadia Spain The loss on sale of Arcadia Spain is the loss recognized for the sale of the assets of our subsidiary Arcadia Spain.
Gain on sale of Verdeca The gain on sale of Verdeca is the gain recognized for the sale of the Company's membership interests in the Verdeca joint venture to our partner Bioceres in November 2020. Impairment of Intangible Assets Impairments of intangible assets are recorded when the fair value of intangible assets drops below its carrying amount.
The $2.4 million, or 36%, increase in product revenues in 2022 compared to 2021 was primarily driven by higher sales of Zola coconut water and body care products, the brands acquired in May 2021. License revenues accounted for 9% and 0% of our total revenues in 2022 and 2021, respectively.
The $1.1 million, or 17%, decrease in product revenues in 2023 compared to 2022 was primarily driven by 2022 GoodWheat grain sales. License revenues accounted for 0% and 12% of our total revenues in 2023 and 2022, respectively.
Change in the estimated fair value of common stock warrant and option liabilities Change in the estimated fair value of common stock warrant and option liabilities is comprised of the fair value remeasurement of the liabilities associated with our financing transactions. 23 Table of Contents Gain on extinguishment of Paycheck Protection Program ("PPP") loan The PPP loan amount forgiven has been recorded as gain on extinguishment of PPP loan, as the Company has been legally released from being the primary obligor.
Change in the estimated fair value of common stock warrant and option liabilities Change in the estimated fair value of common stock warrant and option liabilities is comprised of the fair value remeasurement of the liabilities associated with our financing transactions.
Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of employee costs, professional service fees, broker and sales commission fees, and overhead costs. Our selling, general, and administrative expenses may fluctuate from period to period.
Impairment of right-of-use ("ROU") assets Impairment of ROU assets includes losses from right-of-use assets due to impairment or recoverability test charges to write down the ROU asset to their fair value or recoverability value. Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of employee costs, professional service fees, broker and sales commission fees, and overhead costs.
A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Stock-based compensation We recognize compensation expense related to the employee stock purchase plan and stock options based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures.
A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Net realizable value of inventory Inventory costs are tracked on a lot-identified basis, valued at the lower of cost or net realizable value and are included as cost of revenues when sold.
The $59,000 decrease in royalty revenues in 2022 compared to 2021 represents fewer annual royalty fees earned. Operating expenses (income) Cost of revenues Cost of revenues increased by $1.1 million, or 13%, in 2022 compared to 2021.
The $117,000 of royalty revenues for the year ended December 31, 2022 represents the proportionate share of contracted minimum annual royalty fees that expired in 2022. Operating expenses (income) Cost of revenues Cost of revenues decreased by $2.8 million, or 46%, in 2023 compared to 2022.
The $0.9 million increase in license revenues in 2022 compared to 2021 is related to the Verdeca-Bioceres licensing agreement discussed in Note 10 to the consolidated financial statements. Royalty revenues accounted for 1% and 3% of our total revenues in 2022 and 2021, respectively.
During the year ended December 31, 2022, the Company recognized one-time license revenue of $862,000 related to the Verdeca-Bioceres licensing agreement discussed below. Royalty revenues accounted for 0% and 2% of our total revenues in 2023 and 2022, respectively.
The increase in cost of revenues is the result of the increase in revenues as well as inventory write-downs of $2.3 million during 2022. Gross profit, calculated as total revenues less cost of revenues, was $154,000 in 2022 compared to gross loss of $1.9 million in 2021.
Cost of revenues during the year ended December 31, 2022 included GoodWheat grain sold at cost and higher inventory write-downs. Gross profit, calculated as total revenues less cost of revenues, was $2.0 million and $1.3 million during the years ended December 31, 2023 and 2022, respectively.
The decrease was primarily driven by the Company's recent focus on commercialization, which has led to lower employee-related expenses, and related activity costs as we right-sized our research teams. Gain on sale of Verdeca In 2022, we recognized a gain on sale of Verdeca of $1.1 million related to the regulatory approval of the Haab 4 soybeans.
The decrease was primarily driven by the Company's continued focus on commercialization, which has led to lower employee-related expenses and related activity costs. Gain on sale of Verdeca In February 2012, the Company partnered with Bioceres to form Verdeca, which we equally owned. Verdeca was formed to develop and deregulate soybean varieties using both partners’ agricultural technologies.
Impairment of goodwill Impairments of goodwill are recorded when the fair value of the reporting unit drops below its carrying amount. See Note 2 to the consolidated financial statements. Change in fair value of contingent consideration Change in the fair value of contingent consideration is comprised of the fair value remeasurement of the liabilities associated with our contingent consideration.
Change in fair value of contingent consideration Change in the fair value of contingent consideration is comprised of the fair value remeasurement of the liabilities associated with the Company's contingent consideration.
Components of Our Statements of Operations Data Revenues The Company derives its revenues from product sales, licensing agreements and royalty fees. 21 Table of Contents Product revenues Product revenues consist primarily of sales of Arcadia Wellness products, GoodWheat grain and pasta, and GLA products.
See Note 1 to the consolidated financial statements for further information on discontinued operations. Components of Our Statements of Operations Data Revenues We derive our revenues from product sales, royalties and license fees. Product revenues Product revenues consist primarily of sales of GoodWheat, Zola and GLA products.
Gain on sale of property and equipment In 2022, we sold property and equipment related to the Davis laboratory, Archipelago and Body Care for net proceeds exceeding book value by $314,000. Impairment of property and equipment, net In 2022, we recognized $530,000 of impairments of property and equipment, of which $320,000 is related to the Radiance Beauty licensing agreement.
See Note 13 to the consolidated financial statements. There was no such change in fair value recognized during the year ended December 31, 2023. Gain on sale of property and equipment During the years ended December 31, 2023 and 2022, the Company sold property and equipment for net proceeds exceeding book value by $40,000 and $314,000, respectively.
In 2021, we recognized $1.5 million of impairments of Archipelago property and equipment related to CBD processing. Selling, General, and Administrative Selling, general, and administrative expenses decreased by $4.9 million, or 21%, in 2022 compared to 2021. The decrease was primarily driven by lower salaries, lease expense and consulting fees in 2022.
Selling, General, and Administrative Selling, general, and administrative expenses decreased by $0.5 million, or 4%, in 2023 compared to 2022 primarily driven by a decrease in employee compensation. Interest income During the year ended December 31, 2023, the Company recognized interest income of $695,000 from investments as compared to $289,000 in 2022.
Removed
"Arcadia Biosciences,” “GoodWheat,” “GoodHemp,” “Zola coconut water,” “Soul Spring,” “ProVault” and “Saavy Naturals” are our registered trademarks in the United States and, in some cases, in certain other countries. This report may also contain trademarks, service marks, and trade names of other companies.
Added
It is also estimated by the U.S. Department of Agriculture (“USDA”), that approximately one-fifth of the FDA recommended calories consumed by people in the US are from wheat. Therefore, the market opportunity for nutritional improvements in wheat are significant not only because the wheat market itself is vast, but also because of the “share of stomach” wheat represents.
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Royalty revenues can fluctuate depending on the timing of shipments of product by the third parties to their customers.
Added
Considering that most people today are not getting enough fiber or protein in their daily diets, the superior nutrient density of our non-GMO GoodWheat (“GoodWheat”) technology can improve the dietary intake of average consumers, by increasing their fiber and protein consumption without changing the way they eat.
Removed
See Note 1 to the consolidated financial statements. Impairment of intangible assets Impairments of intangible assets are recorded when the fair value of intangible assets drops below its carrying amount. See Note 2 and 8 to the consolidated financial statements.
Added
We believe this proprietary advantage gives GoodWheat the potential to become a global standard in wheat. Our Growth Strategy We believe there are significant opportunities to grow our business by executing the following elements of our strategy: 20 Table of Contents • Accelerate the monetization of our GoodWheat wheat trait portfolio.
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Gain on sale of property and equipment, net Gain on sale of fixed assets includes gains from the sale of tangible assets sold above their net book value.
Added
Our proprietary intellectual property ("IP") with multiple non-GMO wheat traits have clear functional benefits, and we will continue to build partnerships across the wheat value chain. We have launched GoodWheat into multiple categories where our wheat provides a compelling point-of-difference and we will continue to evaluate ways to extract value throughout the supply chain. • Evaluate scale M&A opportunities.
Removed
Other income, net Other income, net, consists of realized gains on corporate securities, interest income and the amortization of investment premium and discount on our cash and cash equivalents and investments.
Added
We intend to evaluate potential mergers, acquisitions and other strategic opportunities that will allow us to scale the GoodWheat value proposition more quickly. We believe there is a significant opportunity to integrate our wheat IP and GoodWheat brand into larger businesses and drive shareholder value. • Scale Zola through retail expansion.
Removed
The decrease in gross loss was primarily driven by the increase in product revenues as well as the increase in license revenue related to the Verdeca-Bioceres licensing agreement in 2022. Research and development Research and development expenses decreased by $2.4 million, or 61%, in 2022 compared to 2021.
Added
Based on our research, consumers prefer the clean, crisp taste of Zola to that of other leading coconut water brands. As a result, we plan to continue to invest in trial-driving activities and expand distribution of our Zola coconut water brand through mass market retailers and grocery store chains.
Removed
See Note 10 to the consolidated financial statements. Loss on sale of Arcadia Spain In 2021, we recognized a loss of $497,000 on the sale of Arcadia Spain, our wholly owned subsidiary, which we sold to a European partner. See Note 1 to the consolidated financial statements.
Added
Arcadia Wellness, LLC In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola.
Removed
Impairment of intangible assets Impairment of intangible assets decreased by $2.9 million in 2022 compared to 2021.
Added
The acquisition included Saavy Naturals, a line of natural body care products, Soul Spring, a CBD-infused botanical therapy brand in the natural category, and ProVault, a THC-free CBD sports performance formula made with natural ingredients, providing effective support and recovery for athletes (collectively "body care brands").
Removed
We recognized impairments of intangible assets of $404,000 and $3.3 million in 2022 and 2021, respectively, primarily as a result of lower margins in our wellness products due to unfavorable product mix and higher freight costs that have a significant impact in the 26 Table of Contents near-term.
Added
Also included in the purchase is Zola, a coconut water sourced exclusively with sustainably grown coconuts from Thailand. On July 8, 2022, the Company entered into an agreement to license Saavy Naturals to Radiance Beauty and Wellness, Inc. ("Radiance Beauty").
Removed
A volatile economic climate and higher than normal inflation were also contributing factors, in addition to a decline in the hemp seed market forecasted sales. See Note 2 and 8 to the consolidated financial statements. Impairment of goodwill We did not recognize any impairment of goodwill in 2022.
Added
In July 2023, management made the decision to exit the remaining body care brands, Soul Spring and ProVault, as a result of continued pressure on the CBD market due to regulatory uncertainty. Body care operations ceased as of September 30, 2023. Our Product Portfolio Most Americans suffer from a significant fiber deficiency.
Removed
We recognized an impairment of goodwill in the amount of $1.6 million in 2021 primarily as a result of weakness in the acquired consumer product margins, combined with a volatile economic climate and higher than normal inflation.
Added
The recommended daily value of fiber is 25g for women and children, and 38g for men according to the May 2021 Food and Health Survey by the International Food Information Council. However, less than 10 percent of women and less than 3 percent of men get enough fiber in their daily diets.
Removed
Change in fair value of contingent consideration Change in fair value of contingent consideration in 2022 was a decrease of $70,000 compared to a decrease of $210,000 in 2021 both due to the remeasurement of the Anawah and Industrial Seed Innovations contingent consideration liabilities. See Note 6 and 16 to the consolidated financial statements.
Added
Our GoodWheat portfolio of better-for-you products addresses these needs as they are naturally higher in fiber and protein than traditional wheat without sacrificing on taste or texture. GoodWheat Pasta In June 2022, we launched our GoodWheat pasta in five varieties – penne, spaghetti, fettuccine, elbows and rotini – in select retailers nationwide and on Amazon.
Removed
Interest income (expense) In 2022, the Company had interest income of $289,000 from investments as compared to interest expense of $20,000 in 2021. Other income, net Other income, net, decreased by $10.1 million, or 100%, in 2022 compared to 2021 due to $10.2 million of realized gain from the sale of corporate securities of Bioceres in June 2021.
Added
Our pasta delivers 4 times the fiber of traditional wheat pasta with 9g of protein per serving and no sacrifice on taste. In fact, our research shows that GoodWheat pasta scores at parity on taste with leading wheat pasta competitors and significantly outscores market leading vegetable-based pastas.
Removed
See Note 6 and Note 10 to the consolidated financial statements. Change in the estimated fair value of common stock warrant and option liabilities Change in the estimated fair value of common stock warrant and option liabilities decreased by $5.7 million in 2022 compared to 2021.
Added
Made with only our USA farm grown wheat, GoodWheat pasta meets consumers’ preference for clean labels and transparent sourcing. And, in December of 2022, GoodWheat received the American Heart Association’s Heart-Check mark on all of our pasta products.
Removed
The decrease was driven by the adoption of ASU 2020-06 in January 2022, which resulted in the reclassification of common stock warrants from liability to equity, partially offset by the change in the estimated fair value of the liability classified preferred investment options issued in connection with the August 2022 RDO financing transaction. 27 Table of Contents Gain on extinguishment of PPP loan In 2021, we were notified by our lender that the Small Business Administration had forgiven the original PPP loan amount in full, resulting in a $1.1 million gain on the extinguishment of the PPP loan.
Added
With its high fiber, lower sodium and zero saturated fat, GoodWheat meets the criteria for a heart-healthy pasta and provides consumers with a better-for-you option that delivers superior nutrition with the taste and texture of traditional pasta. 21 Table of Contents GoodWheat Pancakes and Waffle Mixes In August 2023, we launched our GoodWheat into the breakfast category with new, better-for-you pancake and waffle mixes as well as single-serve Quikcakes.
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See Note 18 to the consolidated financial statements. Issuance and offering costs In 2022, we recognized $314,000 in issuance and offering costs related to the August 2022 RDO financing transaction. In 2021, we recognized $769,000 in issuance and offering costs related to the January 2021 PIPE financing transaction.
Added
Our new mixes are made with simple ingredients and Arcadia’s proprietary wheat grain, which is naturally higher in fiber and protein than traditional wheat. GoodWheat pancake and waffle mixes are sold in resealable, multi-serve pouches, with each serving delivering 8 times the fiber of traditional pancake mix and 5 grams of protein.
Removed
Often, there is only one crop-growing season per year for certain crops and markets. Similarly, climate conditions and other factors that may influence the sales of our products may vary from season to season and year to year.
Added
Our multi-serve mixes will be available in 3 classic varieties, including Buttermilk, Chocolate Chocolate Chip and Apple Cinnamon. GoodWheat Quikcakes are an innovative, single-serve instant pancake that is a great option for busy mornings – you simply pour one packet into a bowl, add water and microwave for 90 seconds.
Removed
In particular, weather conditions, including natural disasters such as heavy rains, hurricanes, hail, floods, tornadoes, freezing conditions, drought or fire, may affect the timing and outcome of field trials, which may delay milestone payments and the commercialization of products incorporating our seed traits.
Added
Quikcakes have 11 times the fiber of traditional single-serve pancake mixes and contain 7 grams of protein per serving. Quikcakes are available in 3 flavors, including Buttermilk, Chocolate Chocolate Chip and Confetti. GoodWheat Mac and Cheese In November 2023, we announced the third GoodWheat category, Mac and Cheese.
Removed
In the future, sales of commercial products that incorporate our seed traits will vary based on crop growing seasons and weather patterns within particular regions. Demand for our consumer body care products tends to vary with major holidays and demand for coconut water products is generally higher in the summer months.
Added
Our Mac and Cheese is made with real cheese and contains no artificial flavors, dyes or preservatives and are available in three varieties: Classic Cheddar, White Cheddar and Three Cheese. GoodWheat Mac and Cheese packs in the most fiber of any brand in the category, 4 times more than the leading brand.
Removed
Cash provided by financing activities for the year ended December 31, 2021 of $21.9 million consisted of proceeds from the issuance of common stock relating to the January 2021 private placement financing transaction of $25.1 million of gross proceeds, capital contributions from the non-controlling interest in our joint venture of $750,000, and proceeds from the purchase of ESPP shares of $39,000, which were offset by payments of transaction costs related to the January 2021 private placement of $1.9 million and principal payments on debt of $2.1 million.
Added
In fact, one serving of GoodWheat Mac and Cheese has the same fiber as two servings of oatmeal, or two and a half servings of broccoli! And, just like our pasta and pancake mixes, GoodWheat Mac and Cheese is higher in protein than the leading brand, with 12 grams of protein per serving.
Removed
We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.
Added
Zola Coconut Water Zola is a pure, natural, 100% coconut water with a crisp, clean taste that’s lightly sweet and refreshing. Naturally hydrating and never from concentrate, Zola is Non-GMO Project Verified and only contains 60 calories per serving. In taste tests, Zola beats competitors 2 to 1 and is the best-tasting way to rehydrate, reset and reenergize.
Removed
We recorded stock-based compensation expense related to equity awards of $1.1 million and $1.5 million for the years ended December 31, 2022 and 2021, respectively. In determining the fair value of stock-based awards, we use the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Added
Discontinued Operations As mentioned above, the Company exited the body care brands and ceased its operations as of September 30, 2023.
Removed
Expected Term —The expected term is the estimated period of time outstanding for stock options granted and was estimated based on a simplified method allowed by the SEC due to insufficient historical data, and defines the term as the average of the contractual term of the options and the weighted-average vesting period for all open employee awards.
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