UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37383 Arcadia Biosciences, Inc. (Exact Name of Registrant as Specified in its Charter) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 (I.R.S. Employer Identification No.) Regis ...

Financial Performance - Total revenues for the year ended December 31, 2021, were $6,780,000, a decrease from $8,034,000 in 2020, representing a decline of approximately 15.6%[240] - Product revenues increased significantly to $6,587,000 in 2021 from $1,044,000 in 2020, marking a growth of approximately 531%[240] - The net loss attributable to common stockholders for 2021 was $14,660,000, compared to a net loss of $4,655,000 in 2020, reflecting an increase in losses of approximately 214%[240] - The net loss for the year ended December 31, 2021, was $16,134,000, compared to a net loss of $6,026,000 for the year ended December 31, 2020, representing an increase in loss of approximately 168%[248] - The company reported a total stockholders' equity of $31,196,000 as of December 31, 2021, up from $28,552,000 at the end of 2020[244] Expenses and Liabilities - Operating expenses for 2021 totaled $42,306,000, up from $20,812,000 in 2020, indicating an increase of about 103%[240] - The company had total liabilities of $12,722,000 as of December 31, 2021, down from $18,796,000 in 2020, representing a decrease of approximately 32.4%[238] - The company incurred offering costs of $769,000 in 2021, compared to no offering costs in 2020[248] - The company recorded a loss of $497,000 from the sale of its subsidiary Arcadia Spain in November 2021[255] Cash and Cash Equivalents - Cash and cash equivalents as of December 31, 2021, were $28,685,000, an increase from $14,042,000 in 2020, representing a growth of about 104%[238] - Cash used in operating activities for the year ended December 31, 2021, was $25,868,000, a decrease from $30,218,000 in 2020[248] - Cash provided by financing activities for the year ended December 31, 2021, was $21,900,000, compared to $20,560,000 in 2020[248] - The company had cash, cash equivalents, and restricted cash of $28,685,000 at the end of 2021, an increase from $16,043,000 at the end of 2020[248] Assets and Deficits - The company reported an accumulated deficit of $226,485,000 as of December 31, 2021, compared to $211,825,000 in 2020, indicating a worsening of the deficit by approximately 6.9%[238] - Total assets decreased to $43,918,000 in 2021 from $47,348,000 in 2020, a decline of about 7.4%[238] - As of December 31, 2021, the net property and equipment decreased to $2,291,000 from $3,539,000 in 2020, reflecting a decline of approximately 35.2%[321] Acquisitions and Investments - The recent acquisitions of Lief, Eko, and Zola expanded the Company's portfolio to include CBD-infused products and coconut water[254] - The acquisition of Industrial Seed Innovations (ISI) was recorded with a total purchase price consideration of $1,212,000, including $500,000 in cash and $432,000 in common stock[340] - The total purchase price allocation for the acquisition of Arcadia Wellness was approximately $6.1 million, consisting of $4.0 million in cash and $2.1 million in stock[348] Impairments and Write-downs - The impairment of intangible assets was recorded at $3,302,000 in 2021, indicating significant challenges in asset valuation[240] - The Company recorded an impairment of intangible assets amounting to $3.3 million due to a decrease in sales forecasts for Arcadia Wellness products[360] - The Company recorded impairments of property and equipment totaling $1.5 million for the year ended December 31, 2021, primarily due to the winding down of cultivation activities related to Archipelago[323] Stock and Equity - The company’s common stock, $0.001 par value, increased in shares issued and outstanding from 13,450,861 in 2020 to 22,184,235 in 2021[238] - The total number of warrants outstanding at December 31, 2021, was 5,675,052, with various exercise prices ranging from $1.92 to $41.56[398] - The Company recognized $1.5 million and $2.0 million of compensation expense for stock options awards for the years ended December 31, 2021 and 2020, respectively[411] Revenue Recognition - The Company’s revenue recognition includes product sales, licensing agreements, and government grants, with revenues fluctuating based on shipment timing[299][306] - Significant customers representing over 10% of total revenues included Customer D at 11% and Customer B at 10% for the year ended December 31, 2021, compared to Customer A at 83% in 2020[295] Legal and Regulatory - There are no material legal proceedings currently involving the Company[414]

Company Overview - Arcadia Biosciences is transitioning to a vertically integrated producer of plant-based health and wellness products, including GoodWheat™, Zola® coconut water, Soul Spring™, ProVault™, and Saavy Naturals®[7] - The company aims to improve planetary health by sustainably formulating new plant-based food and wellness products using its proprietary platform crop and ingredient technologies[8] Growth Strategy - The company's growth strategy involves creating good-for-you foods and wellness products from proprietary ingredient platforms[16] - A key element is using GoodWheat's superior nutritional profile to disrupt consumer food categories and establish it as the global gold standard wheat ingredient[16] - The company plans to deploy omni-channel marketing and distribution to elevate brands and penetrate high-margin consumer health and wellness categories[16] Product Portfolio - Arcadia Biosciences offers a range of CPG products in food & beverage and body care, including GoodWheat, Zola Coconut Water, Soul Spring, ProVault, and Saavy Naturals[18, 19] - GoodWheat aims to set a gold standard for wheat nutrition, offering 30% less calories, 2x more protein and 6x more fiber compared to conventional wheat[28, 32] - Soul Spring is the 1 selling Hemp CBD Bath & Body brand in the Natural Channel based on total dollar sales (SPINS data)[45] Financial Highlights - As of September 30, 2021, Arcadia Biosciences had $355 million in cash and $01 million in debt[56] - The company has 222 million shares outstanding and 130 million warrants/options outstanding[56] - Analyst price targets for RKDA range from $450 to $700, implying a value of $100 million to $155 million[55]

Financial Position - As of September 30, 2021, the company had an accumulated deficit of $217.2 million and cash and cash equivalents of $35.5 million[30]. - For the nine months ended September 30, 2021, the company reported a net loss of $6.6 million and net cash used in operations of $19.2 million[30]. - As of September 30, 2021, total inventories amounted to $8.986 million, an increase from $7.297 million as of December 31, 2020[41]. - The company’s property and equipment, net decreased from $3.539 million as of December 31, 2020, to $2.634 million as of September 30, 2021[41]. - The Company’s lease liabilities totaled $3.696 million as of September 30, 2021, down from $6.106 million at December 31, 2020[84]. Liquidity and Financing - The company generated a one-time liquidity impact of $22.2 million from the sale of 1,875,000 shares of Bioceres stock in June 2021[33]. - The company may seek additional funds through debt or equity financings, which could result in dilution for stockholders[34]. - The Company raised total gross proceeds of $25.1 million from the January 2021 Private Placement, issuing 7,876,784 shares of common stock and warrants for 3,938,392 shares at an exercise price of $3.13[87]. - The Company raised a total of $8.0 million from the December 2020 Registered Direct Offering by selling 2,618,658 shares of common stock and unregistered warrants[97]. - The Company borrowed $1.1 million under the Paycheck Protection Program, which was fully forgiven in August 2021[116]. Acquisitions and Intangible Assets - The Company acquired Industrial Seed Innovations for a total estimated purchase price of $1,212,000, including $500,000 in cash and $432,000 in common stock[56]. - The acquisition of Arcadia Wellness on May 17, 2021, totaled approximately $6.1 million, with $4.0 million in cash and $2.1 million in common stock[64]. - The total intangible assets, net as of September 30, 2021, amounted to $4,146,000, reflecting an impairment of $120,000 due to decreased sales forecasts for ISI seeds[74]. - The Company recognized a deferred tax liability of $107,000 related to the acquisition of ISI, which will enable the realization of a portion of existing deferred tax assets[60]. - The weighted average amortization period for acquired intangible assets from the Arcadia Wellness acquisition is 12.9 years[70]. Revenue and Losses - For the period from May 17 to September 30, 2021, Arcadia Wellness generated approximately $2.6 million in revenue and incurred a net loss of $1.0 million[69]. - The net loss attributable to non-controlling interest for the three and nine months ended September 30, 2021, was $661,000 and $1.199 million, respectively[78]. - The effective tax rate for the three months ended September 30, 2021, was -0.04%, primarily due to a full valuation allowance on net deferred tax assets[121]. Stock and Compensation - As of September 30, 2021, there was $2.3 million of unrecognized compensation cost related to unvested stock-based compensation grants[110]. - The Company issued 248,000 inducement stock options on May 17, 2021, following the completion of the Arcadia Wellness transaction[108]. - The 2015 Omnibus Equity Incentive Plan had 1,595,876 shares reserved for issuance as of September 30, 2021, with 297,540 shares available for future grant[108]. - The Company recognized $0.4 million and $1.0 million of compensation expense for stock options awards for the three and nine months ended September 30, 2021, respectively[113]. Liabilities and Contingent Liabilities - The Company has a contingent liability related to acquisitions that could significantly affect fair value measurements based on future performance[50][51]. - The Company has a contingent liability of $2.0 million related to the Anawah acquisition, which remains on the balance sheet as an other noncurrent liability[127]. - The Company recorded a $140,000 decrease in the contingent consideration liability related to the ISI acquisition during the nine months ended September 30, 2021[128]. Research and Development - The Company has a collaborative arrangement with Corteva AgriScience for the research and development of improved wheat quality traits, sharing both costs and profits[80]. - The Company has entered into contract research agreements with initial terms ranging from one to three years, requiring certain funding commitments[129]. Lease Agreements - The Company leases 10 acres of land on Molokai, Hawaii, at a rate of $1,200 per acre per year, with the original lease executed in February 2019[136]. - Lease payments made by the Company for the nine months ended September 30, 2021, totaled $81,000, compared to $84,000 for the same period in 2020[136]. - Two lease amendments were made in March and April 2020 for two additional 10-acre parcels and two additional 15-acre parcels, maintaining the same lease rate[136].

SEPTEMBER 2021 ARCADIA BIOSCIENCES INVESTOR PRESENTATION FORWARD LOOKING STATEMENTS • "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements about the company and its products, including statements relating to components of the company's long-term financial success; the company's traits, commercial products, and collaborations; the company's ability to manage the regulatory processes for its traits and commercial products; th ...

Financial Data and Key Metrics Changes - Total revenues for Q2 2021 were $1.4 million, a significant increase from $281,000 in Q2 2020, primarily driven by the acquisition of Lief Brands and Zola coconut water [28] - Year-to-date revenues increased by $1.6 million, with $837,000 generated from the newly acquired brands [28] - Net loss attributable to common stockholders was $5.3 million in Q2 2021, compared to $9.7 million in Q2 2020 [34] Business Line Data and Key Metrics Changes - The acquisition of Lief Brands contributed significantly to revenue growth, with the brands generating $1.1 million in Q2 2021 [28] - Cost of product revenues for Q2 2021 was $1.6 million, an increase of $97,000 from Q2 2020, mainly due to the new product sales [29] - R&D expenses decreased to $1.1 million in Q2 2021 from $2 million in Q2 2020, reflecting a shift towards commercialization of consumer products [31] Market Data and Key Metrics Changes - The company is focusing on the health and wellness market, with plans to launch GoodWheat products that address fiber deficiencies in consumer diets [12] - The GoodWheat brand aims to disrupt the wheat industry by offering superior nutrition without additives [11] Company Strategy and Development Direction - The company is transitioning to a consumer-focused enterprise, emphasizing health and wellness brands [4] - Plans include launching multiple GoodWheat pasta products in late Q4 2021, followed by a significant marketing campaign in January 2022 [17][19] - The company is enhancing its management capacity by recruiting experienced professionals in key roles [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration of Lief Brands and the potential for meaningful top-line growth [5][8] - The company is well-positioned with sufficient inventory to meet production needs for the next two years, despite challenging crop conditions in the wheat market [45] - Future operating expenses will be evaluated as the company streamlines operations post-acquisition [46][47] Other Important Information - The company successfully sold Bioceres shares, generating over $27 million in cash, which bolsters its financial resources [24][25] - The balance of cash and cash equivalents was $44 million at the end of Q2 2021, up $11.2 million from Q1 2021 [37] Q&A Session Summary Question: Performance of acquired brands - Management noted that the acquired brands performed consistently, with Zola coconut water showing strong performance [40] Question: Supply issues with Three Farm Daughters - Management clarified that Three Farm Daughters opted to license Arcadia's technology, leading to a halt in their activities as they evaluate their future direction [42][44] Question: Impact of crop conditions on raw ingredient supply - Management stated that they have sufficient inventory for the next two years and do not foresee production concerns [45] Question: Operating expense run rate - Management indicated that operating expenses are subject to change as they evaluate the integration of new brands and streamline operations [46][47]

Financial Position - As of June 30, 2021, the company had an accumulated deficit of $215.0 million and cash and cash equivalents of $44.0 million, with a net loss of $3.7 million for the six months ended June 30, 2021[29]. - The company believes its existing cash and cash equivalents will be sufficient to meet anticipated cash requirements through at least August 2022[30]. - The Company’s net income attributable to common stockholders for Q2 2021 was $(5,248,000), compared to $(9,607,000) for Q2 2020[69]. - The Company recorded a net loss attributable to common stockholders of $161,000 and $538,000 for the three and six months ended June 30, 2021, respectively[73]. Liquidity and Financing - The company generated a one-time liquidity impact of $22.2 million from the sale of 1,875,000 shares of Bioceres stock in June 2021[32]. - The company may seek additional funds through debt or equity financings, which could lead to dilution for stockholders or increased debt service obligations[33]. - The Company raised total gross proceeds of $25.1 million from a private placement in January 2021, issuing 7,876,784 shares of common stock and warrants[82]. - The Company borrowed $1.1 million under the Paycheck Protection Program, with an outstanding balance of $1.1 million as of June 30, 2021[110]. Inventory and Assets - The company recorded inventory write-downs of $823,000 for wheat and $983,000 for hemp seed during the three and six months ended June 30, 2021[38]. - As of June 30, 2021, total inventories amounted to $7.787 million, an increase from $7.297 million as of December 31, 2020[39]. - Property and equipment, net increased to $3.740 million as of June 30, 2021, compared to $3.539 million as of December 31, 2020[40]. - As of June 30, 2021, the Company's net intangible assets totaled $4,068,000, with $1,118,000 in future amortization scheduled[70]. Acquisitions - The acquisition of Industrial Seed Innovations (ISI) in August 2020 was valued at approximately $1,212,000, with $500,000 paid in cash and $432,000 in stock[53]. - The acquisition of Arcadia Wellness on May 17, 2021, totaled approximately $6.1 million, with $4.0 million in cash and $2.1 million in stock[59]. - For the period from May 17 to June 30, 2021, Arcadia Wellness generated approximately $837,000 in revenue and incurred a net loss of $144,000[65]. - The preliminary allocation of the purchase price for Arcadia Wellness included $2.9 million for trade names and trademarks, $360,000 for customer lists, and $1.24 million in goodwill[64]. Liabilities - The Company recorded a total of $14,654,000 in Level 3 liabilities as of June 30, 2021, reflecting a balance increase from $4,987,000 as of December 31, 2020[51]. - Total leased liabilities amounted to $6.69 million as of June 30, 2021, compared to $6.11 million at the end of 2020[79]. - The Company has a contingent liability of $2.0 million related to the Anawah acquisition, reflecting amounts to be paid to previous stockholders[120]. - The contingent consideration related to the ISI acquisition amounts to $280,000, with a $140,000 decrease recorded during the six months ended June 30, 2021[121]. Research and Development - The Company has a collaborative arrangement with Corteva AgriScience for the research and development of improved wheat quality traits in North America[74]. - The Company’s research and development costs are expensed as incurred, in accordance with ASC 730[75]. Stock Options and Compensation - The company had $2.5 million of unrecognized compensation cost related to unvested stock-based compensation grants as of June 30, 2021[104]. - The fair value of stock option awards was estimated using a Black-Scholes model, with expected volatility of 122% for the three months ended June 30, 2021[107]. - The company recognized $0.3 million and $0.7 million of compensation expense for stock options awards for the three and six months ended June 30, 2021, respectively[107]. - The intrinsic value of options outstanding as of June 30, 2021, was $138,915,000[103]. Lease Obligations - As of June 30, 2021, the Company had operating lease assets valued at $6.36 million, an increase from $5.83 million as of December 31, 2020[79]. - The weighted-average remaining lease term was 4.6 years as of June 30, 2021, down from 5.0 years at the end of 2020[81]. - The Company reported a net lease cost of $648,000 for the six months ended June 30, 2021, compared to $659,000 for the same period in 2020[79]. - The Company made lease payments of $42,000 and $48,000 for the six months ended June 30, 2021 and 2020, respectively[129].

Business Strategy - Arcadia Biosciences aims to create good-for-you foods and wellness products from proprietary wheat and hemp platforms[9] - The company intends to position GoodWheat as a global gold standard and leverage GoodHemp's first-mover advantage in the seed and CBD market[9] - Arcadia Biosciences plans to acquire complementary brands and supply chain verticality to increase value capture[9] Acquisition and Synergies - Arcadia Biosciences acquired SoulSpring, a CBD-infused botanical therapy brand, for $4 million in cash and 827,400 shares of common stock[13] - SoulSpring has $6 million in annual recurring revenues and potential for growth and synergy revenues[13] - The acquisition provides Arcadia Consumer Products with a channel network of 5,000+ doors and an opportunity to increase online presence from 5-15% to 25-35% of total revenue[17, 18] CBD Market Overview - The total Hemp CBD market in the US is projected to reach $20 billion[21] - Drinks are poised to show the strongest growth in the CBD category, with a compound annual growth rate (CAGR) of 65% from 2020-2025[22] Financial Results (Q1 2021) - Total revenues increased by 168% from $309,000 in Q1 2020 to $828,000 in Q1 2021[30] - Net income to common stockholders decreased by 19% from $2,525,000 in Q1 2020 to $2,058,000 in Q1 2021[30]

[Part I — Financial Information](index=3&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Q1 2021 financials show total assets at **$70.8 million**, revenues at **$0.83 million**, and net income of **$1.7 million**, boosted by financing and an unrealized gain [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets reached **$70.8 million** by March 31, 2021, driven by increased cash and investments, with equity growing from stock issuances Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $32,848 | $14,042 | | Short-term investments | $19,088 | $11,625 | | Total current assets | $56,613 | $31,696 | | Total assets | $70,800 | $47,348 | | **Liabilities & Equity** | | | | Total current liabilities | $5,617 | $6,314 | | Common stock warrant liabilities | $12,016 | $2,708 | | Total liabilities | $25,097 | $18,796 | | Total stockholders' equity | $45,703 | $28,552 | | Total liabilities and stockholders' equity | $70,800 | $47,348 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q1 2021 revenues rose to **$828,000**, but net income fell to **$1.7 million**, impacted by a **$7.5 million** unrealized gain on securities Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Total revenues | $828 | $309 | | Loss from operations | $(5,326) | $(5,790) | | Other income, net | $7,463 | $72 | | Change in fair value of common stock warrant liabilities | $322 | $8,161 | | Net income | $1,681 | $2,423 | | Net income attributable to common stockholders | $2,058 | $2,525 | | Basic EPS | $0.11 | $0.29 | | Diluted EPS | $0.11 | $0.29 | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity rose to **$45.7 million** by March 31, 2021, mainly from **$15.5 million** in PIPE financing and net income - In January 2021, the company issued **7,876,784 shares** in a PIPE financing, raising **$15.5 million** in capital[14](index=14&type=chunk) - Total stockholders' equity increased by **$17.15 million** during the quarter, from **$28.55 million** to **$45.70 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2021 cash flows show **$4.7 million** used in operations, offset by **$22.0 million** from financing, boosting cash by **$16.8 million** Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,707) | $(9,270) | | Net cash (used in) provided by investing activities | $(485) | $13,130 | | Net cash provided by financing activities | $21,997 | $696 | | Net increase in cash, cash equivalents and restricted cash | $16,805 | $4,556 | - The company received **$25.1 million** in gross proceeds from the January 2021 PIPE securities purchase agreement[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes confirm sufficient cash through May 2022, detail a **$25.1 million** private placement, a **$210,000** asset write-down, a **$7.5 million** unrealized gain, and recent acquisitions - The company believes its existing cash, cash equivalents, and investments of **$32.8 million** and **$19.1 million** respectively, will be sufficient to meet cash requirements at least through May 2022[28](index=28&type=chunk) - In January 2021, the company raised **$25.1 million** in a private placement of common stock and warrants[29](index=29&type=chunk)[63](index=63&type=chunk) - A write-down of **$210,000** was recorded for fixed assets related to CBD processing in Hawaii due to legislative delays[37](index=37&type=chunk) - Subsequent to the quarter, the company acquired Agrasys S.A. in Spain and the assets of Lief Holdings (Soul Spring, Saavy Naturals, Provault, Zola brands) for **$4.0 million** in cash and **827,400 shares** of common stock[110](index=110&type=chunk)[111](index=111&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses GoodWheat™ and GoodHemp™ commercialization; Q1 2021 revenues rose **168%** to **$0.8 million**, net income was **$1.7 million** due to a **$7.4 million** unrealized gain, with **$25.1 million** raised ensuring liquidity [Overview](index=24&type=section&id=Overview) Arcadia is a science-based company developing high-value crop improvements in wheat, hemp, and soy, focusing on commercializing innovations through sales and licensing - The company's commercial strategy is to monetize its innovations through sales of seed, grain food ingredients, hemp extracts, trait licensing, and royalty agreements[115](index=115&type=chunk) - Key product lines include GoodWheat™, a non-GM portfolio of wheat products with enhanced nutrition, and GoodHemp™, a brand for hemp seeds, transplants, flower, and extracts[121](index=121&type=chunk)[125](index=125&type=chunk) - The Archipelago Ventures Hawaii joint venture aims to create a vertically integrated supply chain for hemp, from seed to sale, serving Hawaiian, North American, and Asian markets[128](index=128&type=chunk)[129](index=129&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q1 2021 revenues rose **168%** to **$828,000**, product sales increased **421%**, R&D fell **48%**, and net income decreased to **$1.7 million** despite a **$7.4 million** unrealized gain Results of Operations Comparison (in thousands) | Metric | Q1 2021 | Q1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $828 | $309 | $519 | 168% | | Cost of product revenues | $856 | $132 | $724 | 548% | | Research and development | $1,159 | $2,244 | $(1,085) | (48)% | | Selling, general and administrative | $4,069 | $3,723 | $346 | 9% | | Loss from operations | $(5,326) | $(5,790) | $464 | (8)% | | Other income, net | $7,463 | $72 | $7,391 | 10265% | | Net income | $1,681 | $2,423 | $(742) | (31)% | - The increase in product revenues was driven by sales of GoodWheat and additional volume of SONOVA pet food orders[149](index=149&type=chunk) - The decrease in R&D expenses was primarily driven by the company pivoting its focus to commercialization and right-sizing research teams[154](index=154&type=chunk) [Liquidity, Capital Resources, and Going Concern](index=31&type=section&id=Liquidity%20C%2C%20Capital%20Resources%2C%20and%20Going%20Concern) As of March 31, 2021, the company had **$32.8 million** in cash, sufficient to fund operations for at least 12 months, largely due to a **$25.1 million** private placement - As of March 31, 2021, the company had cash and cash equivalents of **$32.8 million**[163](index=163&type=chunk) - The company believes its existing cash and cash equivalents are sufficient to meet anticipated cash requirements for at least the next 12 months[164](index=164&type=chunk) Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Operating activities | $(4,707) | $(9,270) | | Investing activities | $(485) | $13,130 | | Financing activities | $21,997 | $696 | [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company identifies critical accounting policies and estimates related to revenue recognition, income taxes, stock-based compensation, fair value of equity instruments, and inventory valuation - Critical accounting policies include revenue recognition, income taxes, stock-based compensation, fair value of certain equity instruments, and net realizable value of inventory[175](index=175&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required for smaller reporting companies - Not Required[176](index=176&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls identified - The President and Chief Executive Officer and the Chief Financial Officer concluded that as of March 31, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[178](index=178&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[179](index=179&type=chunk) [Part II — Other Information](index=33&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material litigation or other material legal proceedings - The company is not currently a party to any material litigation or other material legal proceedings[180](index=180&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section refers the reader to the detailed risk factors discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The report directs readers to the 'Risk Factors' section in the Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of factors that could materially affect the business[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, the company issued unregistered securities in a private placement on January 25, 2021, including common stock and warrants, plus a warrant to an independent contractor - On January 25, 2021, the company entered into a securities purchase agreement for a private placement of **7,876,784 shares** of common stock and warrants for an aggregate of **3,938,392 shares** of common stock[184](index=184&type=chunk) - On January 15, 2021, a warrant to purchase **7,500 shares** of common stock was issued to an independent contractor[183](index=183&type=chunk) [Other Information](index=33&type=section&id=Item%205.%20Other%20Information) On May 16, 2021, the company eliminated the position of chief technology officer, with the employee's final day of employment being May 21, 2021 - The company eliminated the chief technology officer position, with the employee's last day being May 21, 2021[187](index=187&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including forms of warrants, purchase agreements, and officer certifications

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Arcadia Biosciences, Inc. leads in science-based crop improvements for wheat, soy, and hemp, commercializing innovations like GoodWheat™ and GoodHemp™ through sales, licensing, and royalties to enhance farm economics and product value [Overview](index=4&type=section&id=Overview) - Arcadia Biosciences specializes in developing high-value crop improvements for wheat, soy, and hemp, aiming to enhance farm economics and product value in food, health, and industrial applications[19](index=19&type=chunk) - The company's commercial strategy focuses on meeting consumer nutrition, health, and wellness demands by delivering superior functional benefits directly from the farm, building a portfolio of high-value traits and varieties[20](index=20&type=chunk) - The global wheat flour market was valued at **$181 billion** in 2019 and is projected to reach **$220 billion** by 2027, with wheat accounting for approximately one-quarter of FDA recommended calories in the U.S., indicating significant market opportunity for nutritional improvements[21](index=21&type=chunk) - The legalization of hemp in the U.S. (**2018** Farm Bill) has created a substantial agricultural and financial opportunity, with U.S. consumer spending on CBD projected to grow from **$14 billion** in **2020** to **$26 billion** by **2025**[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) [Arcadia GoodWheat™](index=5&type=section&id=Arcadia%20GoodWheat%E2%84%A2) - Arcadia launched its GoodWheat brand in **2018**, offering a non-genetically modified (non-GM) portfolio of wheat products designed to provide superior functional benefits and meet consumer demand for healthier, 'clean label' ingredients[26](index=26&type=chunk) - The GoodWheat brand includes high fiber Resistant Starch (RS) and Reduced Gluten wheat varieties, with new patents granted in **2019** for extended shelf life wheat, and over **15 global patents** protecting its high fiber Resistant Starch wheat portfolio by **2020**[27](index=27&type=chunk)[28](index=28&type=chunk) - An agreement with Bay State Milling Company and Arista Cereal Technologies was announced in August **2019** to commercialize resistant starch GoodWheat in North America and other key markets, starting in late **2019**[29](index=29&type=chunk) [Arcadia GoodHemp™](index=5&type=section&id=Arcadia%20GoodHemp%E2%84%A2) - Arcadia launched GoodHemp in December **2019** as its commercial brand for hemp seeds, transplants, flower, and extracts, aiming to provide genetically superior, federally compliant hemp varieties[30](index=30&type=chunk) - The acquisition of Industrial Seed Innovations (ISI) in August **2020** added strong-performing hemp varieties like Umpqua and Rogue to Arcadia's GoodHemp catalog, with new commercial varieties expected annually[30](index=30&type=chunk) - The U.S. hemp-based CBD market is projected to reach **$16.8 billion** by **2025**, and the non-cannabinoid industrial hemp global market is estimated to exceed **$26 billion** by **2025**, indicating significant growth potential for GoodHemp[31](index=31&type=chunk)[32](index=32&type=chunk) [Verdeca HB4® Soybean](index=5&type=section&id=Verdeca%20HB4%C2%AE%20Soybean) - Arcadia formed Verdeca LLC in **2012** with Bioceres, Inc. to develop next-generation soybean traits, including HB4® varieties that offer drought and herbicide tolerance[33](index=33&type=chunk) - In November **2020**, Arcadia sold its membership interest in Verdeca to Bioceres, receiving cash, shares of Bioceres stock, and a royalty stream of up to **$10 million** on HB4 soybean sales, plus an additional **$2 million** upon specific regulatory or commercial milestones[34](index=34&type=chunk) [Our Growth Strategy](index=6&type=section&id=Our%20Growth%20Strategy) - Arcadia's growth strategy includes scaling GoodHemp seed sales and developing novel genetics, accelerating the commercialization of its health and nutrition trait portfolio (GoodWheat), and evaluating acquisitive growth opportunities for vertical integration[35](index=35&type=chunk) - The company aims to invest in human resources and commercialization capabilities to become more consumer-facing and aligned with consumer food companies, refining its go-to-market and branding strategies[35](index=35&type=chunk) [Our Products and Product Development Pipeline](index=7&type=section&id=Our%20Products%20and%20Product%20Development%20Pipeline) - Arcadia leverages advanced plant breeding technologies and a research and development team with over **100 years** of combined experience to improve plant-based ingredients' quality and nutritional value[36](index=36&type=chunk) [GoodWheat](index=7&type=section&id=GoodWheat) - GoodWheat aims to redesign wheat as a functional food, offering health benefits like increased dietary fiber and reduced glycemic index through high amylose content, important for diabetes management and healthy blood glucose levels[37](index=37&type=chunk) - The company has programs to improve whole wheat flavor and shelf-life (in collaboration with Ardent Mills) and to reduce gluten while improving protein quality and amino acid profiles, all using non-GM TILLING platform[38](index=38&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) - High fiber resistant starch (RS) wheat flour has **12 to 20 times higher** resistant starch and over **eight times higher** total dietary fiber than control wheat, performing comparably in bread and receiving high consumer preference in pasta[40](index=40&type=chunk) - Arcadia's reduced gluten (RG) wheat variety also delivers impressively high fiber content (approx. **14 grams** per serving) compared to traditional wheat (**2-3 grams**), providing additional value to health-conscious consumers[45](index=45&type=chunk) [Innovative hemp varieties](index=9&type=section&id=Innovative%20hemp%20varieties) - GoodHemp offers superior non-GMO hemp seed varieties like Umpqua (early maturing, CBD dominant) and Rogue (later maturing, ultra-high yielding) that improve plant quality and productivity while complying with federal low THC guidelines[46](index=46&type=chunk)[47](index=47&type=chunk) - In February **2021**, four GoodHemp varieties (Umpqua, Rogue, Santiam, Potomac) received AOSCA approval, validating their distinct, uniform, and genetically stable characteristics, enabling export to Canada[48](index=48&type=chunk) [Nutritional Oils](index=9&type=section&id=Nutritional%20Oils) - Arcadia developed a GLA safflower oil product with **65% GLA**, the highest concentration in any plant oil, which is sold to manufacturers of dietary supplements, nutritional supplements, medical foods, and dog food in the U.S. and Canada[49](index=49&type=chunk) - In November **2020**, Arcadia extended an exclusive license for future GLA production and sales to Bioceres as part of a series of transactions[49](index=49&type=chunk) [Joint Ventures](index=9&type=section&id=Joint%20Ventures) - Arcadia formed Verdeca LLC in **2012** with Bioceres to develop next-generation soybean traits, but sold its **50%** membership interest to Bioceres in November **2020** for cash, stock, and a royalty stream[51](index=51&type=chunk) - In August **2019**, Arcadia formed Archipelago Ventures Hawaii, LLC with Legacy Ventures Hawaii to serve the Hawaiian, North American, and Asian hemp markets, creating a vertically integrated supply chain from seed to sale[52](index=52&type=chunk)[54](index=54&type=chunk) [Research and Development](index=10&type=section&id=Research%20and%20Development) - Arcadia is shifting its R&D focus from new trait discovery to food-science innovation to leverage its existing superior wheat and hemp genetics for new food and wellness ingredients[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The company's R&D capabilities include controlled plant growth facilities for precise conditions, molecular analysis for rapid trait deployment, and extensive field trial operations across multiple U.S. states and globally[58](index=58&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) - The Analytical Services and Regulatory Science group provides data for product selection, validation, certification, and regulatory submissions, supporting both internal and collaborator products[63](index=63&type=chunk) [Intellectual Property](index=11&type=section&id=Intellectual%20Property) - As of December **31**, **2020**, Arcadia owned or exclusively controlled **109 issued patents** and **61 pending patent applications** worldwide, including **24 U.S. issued patents** and **10 U.S. patent applications**[66](index=66&type=chunk) - The company also held **eight registered trademarks** in the United States and **six in other countries**[67](index=67&type=chunk) [Key Collaborations](index=12&type=section&id=Key%20Collaborations) - Arcadia collaborates with industry leaders like Ardent Mills to develop and commercialize wheat innovations, focusing on extending shelf life and improving the flavor of whole wheat products using non-GM trait technology[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - A strategic collaboration with Corteva Agriscience aims to jointly develop and commercialize an improved wheat quality trait in North America, leveraging Arcadia's TILLING platform and Corteva's germplasm and commercial channels[73](index=73&type=chunk)[74](index=74&type=chunk) - Bay State Milling Company became the exclusive commercial partner for Arcadia's high fiber wheat in North America under its HealthSense™ brand portfolio, while Arista Cereal Technologies received exclusive rights in Australia and Europe[75](index=75&type=chunk) [Competition](index=12&type=section&id=Competition) - Arcadia faces intense competition in seed traits and agricultural biotechnology from specialty health and nutrition ingredient companies (e.g., Calyxt), large agricultural biotechnology, seed, and chemical companies (e.g., Corteva, Syngenta, Bayer), and other trait research and development companies[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - In the hemp market, competitors include producers of feminized hemp seed such as Oregon CBD and Front Range Biosciences. For GoodWheat products, the company competes with consumer-packaged goods companies like Barilla and Banza in pasta and flour markets[84](index=84&type=chunk) [Employees](index=14&type=section&id=Employees) - As of December **31**, **2020**, Arcadia had **58 full-time employees**, including **11 dedicated to research and development**, with **four holding doctorate degrees**[80](index=80&type=chunk)[81](index=81&type=chunk) - Research and development expenses were **$8.0 million** in **2020** and **$7.1 million** in **2019**, reflecting substantial investments in R&D[80](index=80&type=chunk) [Facilities](index=14&type=section&id=Facilities) - Arcadia's corporate headquarters in Davis, California, comprises **21,480 square feet** for R&D, operations, commercial activities, and administration, under a lease expiring March **31**, **2030**[82](index=82&type=chunk) - Additional facilities include administrative offices in Phoenix, Arizona, and leased greenhouse space and farmland in Northern California, Oregon, Southern California, Idaho, and Hawaii for agricultural use[82](index=82&type=chunk) - Arcadia Biosciences focuses on science-based crop improvements in wheat, soy, and hemp to enhance farm economics and product value, commercializing through various sales and licensing models[19](index=19&type=chunk)[31](index=31&type=chunk)[35](index=35&type=chunk) - The global wheat flour market was **$181 billion** in **2019**, projected to reach **$220 billion** by **2027**, presenting a significant opportunity for nutritional improvements like Arcadia's GoodWheat™[21](index=21&type=chunk) - The U.S. consumer spending on CBD is projected to grow from **$14 billion** in **2020** to **$26 billion** in **2025**, with the non-cannabinoid industrial hemp global market estimated to exceed **$26 billion** by **2025**, highlighting the market opportunity for GoodHemp™[24](index=24&type=chunk)[31](index=31&type=chunk) - In November **2020**, Arcadia sold its membership interest in Verdeca to Bioceres, receiving cash, Bioceres stock, and a royalty stream of up to **$10 million** on HB4 soybean sales, plus an additional **$2 million** upon specific milestones[34](index=34&type=chunk)[51](index=51&type=chunk) - Arcadia's growth strategy includes scaling GoodHemp seed sales and introducing novel genetics, accelerating the commercialization of its health and nutrition trait portfolio (GoodWheat), and evaluating acquisitive growth opportunities for vertical integration[35](index=35&type=chunk) - The company holds over **15 global patents** on its high fiber Resistant Starch wheat and has **eight registered trademarks** in the U.S. and **six internationally**, protecting its intellectual property[28](index=28&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - As of December **31**, **2020**, Arcadia had **58 full-time employees**, with **11 dedicated to research and development**, and incurred R&D expenses of **$8.0 million** in **2020**, up from **$7.1 million** in **2019**[80](index=80&type=chunk)[81](index=81&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Arcadia Biosciences faces significant risks across its hemp business, general operations, and common stock ownership, including complex regulations, a history of losses, intense competition, reliance on third parties, intellectual property uncertainties, and stock price volatility [Risks Related to Our Hemp Business](index=15&type=section&id=Risks%20Related%20to%20Our%20Hemp%20Business) - Arcadia's hemp business is subject to a complex and evolving regulatory landscape, including federal and state laws governing production, monitoring, manufacturing, distribution, and testing for THC levels[86](index=86&type=chunk)[87](index=87&type=chunk) - The USDA's Final Rule for hemp cultivation mandates disposal of 'hot' crops exceeding **0.3% THC**, for which Arcadia would be responsible for disposal costs, potentially significant if many acres test positive[91](index=91&type=chunk) - The legal hemp and cannabis industry has limited operating history, making it difficult to accurately assess future growth prospects due to factors like competition, market price fluctuations, and regulatory changes[92](index=92&type=chunk)[96](index=96&type=chunk) - Negative public perception or confusion between legal hemp and federally illegal cannabis could adversely affect Arcadia's business, financial condition, and relationships with partners[95](index=95&type=chunk) [Risks Related to Our Business and Our Other Industries](index=17&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Other%20Industries) - Unfavorable global economic or political conditions, such as the COVID-19 pandemic, could disrupt business operations, hinder customer engagement, and impact the ability to raise capital[97](index=97&type=chunk) - Arcadia has a history of significant net losses (**$6.0 million** in **2020**, **$28.9 million** in **2019**) and expects to continue incurring losses, with an accumulated deficit of **$211.8 million** as of December **31**, **2020**[100](index=100&type=chunk) - The company may require additional financing and may not obtain it on favorable terms, potentially forcing delays or reductions in R&D activities and commercialization efforts[102](index=102&type=chunk) - Competition in traits and seeds is intense and requires continuous technological development; failure to compete effectively could lead to price reductions, reduced margins, and inability to achieve market acceptance[104](index=104&type=chunk) - Reliance on third parties for field trials and commercial production, as well as potential disagreements with collaborators, could lead to delays, increased costs, or rejection of data by regulatory agencies[106](index=106&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - The regulatory environment outside the United States for gene-editing and TILLING technology is uncertain and varies greatly, potentially limiting global market expansion[118](index=118&type=chunk) - Ownership of Bioceres Crop Solutions Corp. (BIOX) shares could subject Arcadia to regulation under the Investment Company Act of **1940** if the value of these shares exceeds **40%** of total assets, potentially forcing unfavorable disposal of shares[130](index=130&type=chunk)[131](index=131&type=chunk) [Risks Related to Ownership of Our Common Stock](index=23&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - Sales of a substantial number of Arcadia's common stock in the public market, or the perception of such sales, could cause the stock price to decline and impair the ability to raise capital[151](index=151&type=chunk) - The market price of Arcadia's common stock has been volatile, ranging from **$2.30** to **$176.00** since its IPO in May **2015**, and is subject to wide fluctuations due to various factors beyond operating performance[154](index=154&type=chunk)[155](index=155&type=chunk) - Quarterly operating results are expected to vary significantly and unpredictably due to factors like customer concentration, timing of development activities, seasonality, and fixed costs, leading to potential stock price fluctuations[156](index=156&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - Arcadia does not anticipate paying any dividends for the foreseeable future, meaning investors may need to sell their stock to realize a return on investment[161](index=161&type=chunk) - Arcadia's hemp business is subject to broad and evolving federal and state laws, including USDA mandates for testing and disposal of 'hot' crops exceeding **0.3% THC**, which could incur significant costs[86](index=86&type=chunk)[87](index=87&type=chunk)[91](index=91&type=chunk) - The legal hemp and cannabis industry has limited operating history, making future growth prospects difficult to assess due to factors like competition, market price fluctuations, regulatory changes, and consumer behavior[92](index=92&type=chunk)[96](index=96&type=chunk) - Arcadia has a history of significant net losses (**$6.0 million** in **2020**, **$28.9 million** in **2019**) and expects this to continue, potentially requiring additional financing which could dilute existing stockholders or impose restrictive debt covenants[100](index=100&type=chunk)[102](index=102&type=chunk) - The company faces intense competition in seed traits and agricultural biotechnology, with larger competitors having substantially greater financial, marketing, R&D, and regulatory resources[104](index=104&type=chunk) - Reliance on third parties for field trials and commercial production, as well as potential disagreements with collaborators over intellectual property and payments, could delay or prevent product commercialization[106](index=106&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - The value of Arcadia's common stock has been volatile, ranging from **$2.30** to **$176.00** through December **31**, **2020**, and is subject to fluctuations based on various internal and external factors[154](index=154&type=chunk)[155](index=155&type=chunk) [Item 1B. Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This item is not applicable to the company - Not applicable[162](index=162&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) Arcadia's corporate headquarters in Davis, California, encompasses **21,480 square feet** for R&D, operations, and administration, leased until March **31**, **2030**. Additional administrative offices are in Phoenix, Arizona, and the company leases greenhouse space and farmland in various locations for agricultural use. Management believes current leased facilities are adequate and suitable alternatives would be available if needed - Corporate headquarters in Davis, California, consists of approximately **21,480 square feet** of office, laboratory, and growth chamber space, leased until March **31**, **2030**[163](index=163&type=chunk) - Additional administrative offices are in Phoenix, Arizona (**2,976 sq ft**, lease expires Dec **31**, **2021**), and the company leases greenhouse space and farmland in Northern California, Southern California, Idaho, and Hawaii for agricultural use[163](index=163&type=chunk) - Management believes current leased facilities are adequate for present needs and that additional or alternative space would be available if required[164](index=164&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) Arcadia Biosciences is not currently a party to any material litigation or other material legal proceedings, though it may be subject to routine legal proceedings and claims in the ordinary course of business - Arcadia Biosciences is not currently involved in any material litigation or other material legal proceedings[165](index=165&type=chunk) - The company may be subject to legal proceedings and claims in the ordinary course of business from time to time[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[166](index=166&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Arcadia Biosciences' common stock has been listed on the NASDAQ Stock Market under the symbol "RKDA" since May **15**, **2015**. As of March **19**, **2021**, there were **40 holders of record**. The company has never declared or paid cash dividends and intends to retain all future earnings for business operations. Information on equity compensation plans is incorporated by reference to Part III, Item **12**, and details on unregistered securities sales were previously reported. The company did not repurchase any equity securities in **2020** - Arcadia's common stock (RKDA) has been listed on the NASDAQ Stock Market since May **15**, **2015**[169](index=169&type=chunk) - As of March **19**, **2021**, there were **40 holders of record** for the company's common stock[170](index=170&type=chunk) - The company has never declared or paid cash dividends on its capital stock and intends to retain all available funds and future earnings for business operations[171](index=171&type=chunk) - Arcadia did not repurchase any of its equity securities during the year ended December **31**, **2020**[174](index=174&type=chunk) [Item 6. Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company - Not applicable[175](index=175&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Arcadia Biosciences leads in science-based crop productivity traits for hemp and wheat, monetizing innovations through sales, extracts, and licensing, with a strategic focus on GoodHemp and GoodWheat [Special Note Regarding Forward-Looking Statements](index=31&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) - This section contains forward-looking statements about future events, financial performance, growth strategies, industry trends, and the impact of COVID-19, which involve substantial risks and uncertainties[177](index=177&type=chunk) - Readers are cautioned not to rely on these statements as predictions of future events, as actual results could differ materially due to factors discussed in the 'Risk Factors' section[177](index=177&type=chunk) [Overview](index=31&type=section&id=Overview) - Arcadia Biosciences is a leader in science-based approaches to developing high-value crop productivity traits, primarily in hemp and wheat, to enhance farm economics and product value[179](index=179&type=chunk) - The company's commercial strategy links consumer health demands with crop benefits, aiming to build a portfolio of high-value traits and varieties, particularly in the newly legalized hemp market[180](index=180&type=chunk) - The **2018** Farm Bill federally legalized hemp, creating significant agricultural and financial opportunities, but also mandates testing and disposal of non-compliant 'hot' crops (over **0.3% THC**), which resulted in over **$2 billion** in losses for growers in **2019**[181](index=181&type=chunk)[183](index=183&type=chunk) [Arcadia GoodHemp](index=32&type=section&id=Arcadia%20GoodHemp) - Arcadia launched GoodHemp in December **2019** as its commercial brand for genetically superior hemp seeds, transplants, flower, and extracts[184](index=184&type=chunk) - The acquisition of Industrial Seed Innovations (ISI) in August **2020** significantly broadened Arcadia's hemp breeding platform, adding varieties like Rogue and Umpqua[184](index=184&type=chunk) - The U.S. hemp CBD market is projected to reach **$16.8 billion** by **2025**, and the non-cannabinoid industrial hemp global market is estimated to exceed **$26 billion** by **2025**[185](index=185&type=chunk) [Archipelago Ventures Hawaii, LLC](index=32&type=section&id=Archipelago%20Ventures%20Hawaii,%20LLC) - In August **2019**, Arcadia formed Archipelago Ventures Hawaii, LLC, a joint venture with Legacy Ventures Hawaii, to serve the Hawaiian, North American, and Asian hemp markets[186](index=186&type=chunk) - Archipelago aims to create a vertically integrated seed-to-sale supply chain in Hawaii, focusing on reliable supply, high quality, and addressing the unique needs of the Hawaiian market[187](index=187&type=chunk) [Arcadia GoodWheat](index=32&type=section&id=Arcadia%20GoodWheat) - Arcadia launched its non-GM GoodWheat brand in **2018** to enable food manufacturers to differentiate products with healthier, 'clean label' ingredients, leveraging increased nutrient density in grains[188](index=188&type=chunk) - The GoodWheat portfolio includes high fiber Resistant Starch (RS) and Reduced Gluten wheat varieties, with over **15 global patents** on high fiber RS wheat by **2020**[189](index=189&type=chunk)[190](index=190&type=chunk) - An agreement with Bay State Milling Company and Arista Cereal Technologies was announced in August **2020** to bring resistant starch GoodWheat to market in North America and other key regions starting in early **2021**[191](index=191&type=chunk) [Verdeca HB4® Soybean](index=33&type=section&id=Verdeca%20HB4%C2%AE%20Soybean) - Verdeca, a joint venture with Bioceres formed in **2012**, developed HB4® soybean varieties offering drought and herbicide tolerance, with **30 international patents** and approvals in major soybean-producing countries[193](index=193&type=chunk) - In November **2020**, Arcadia sold its Verdeca membership interests to Bioceres and entered a license agreement for HB4® soybean trait and GoodWheat intellectual property rights in South/Central America, including milestone payments and royalties[194](index=194&type=chunk) [Impact of COVID-19](index=33&type=section&id=Impact%20of%20COVID-19) - The COVID-19 pandemic has adversely impacted Arcadia's targeted revenues, as hemp growers delayed seed purchases due to economic uncertainty and wheat consumer packaged goods companies focused on production over R&D[195](index=195&type=chunk) - The company has preparedness plans to protect employees and continue operations, but the duration and broader economic effects of COVID-19 remain uncertain[195](index=195&type=chunk) [Components of Our Statements of Operations Data](index=33&type=section&id=Components%20of%20Our%20Statements%20of%20Operations%20Data) - Arcadia derives revenues from product sales (SONOVA, GoodWheat, GoodHemp), licensing agreements (up-front, annual, milestone fees), and royalties. The company is de-emphasizing contract research and government grant projects[196](index=196&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Operating expenses include cost of product revenues (in-licensing, royalties, raw materials, inventory adjustments), research and development (employee costs, subcontracted research, field trials), gain on sale of Verdeca, and selling, general and administrative expenses[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk)[209](index=209&type=chunk) - Other income/expenses include interest expense, other income (net), changes in fair value of common stock warrant liabilities, loss on extinguishment of warrant liability, offering costs, and income tax benefit/provision[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Comparison of Key Financial Data (2020 vs 2019) | Metric | Year Ended Dec 31, 2020 (in thousands) | Year Ended Dec 31, 2019 (in thousands) | Change (2020 vs 2019) | Percentage Change | | :----------------------------------- | :------------------------------------- | :------------------------------------- | :-------------------- | :------------------ | | **Revenues:** | | | | | | Product | $1,044 | $814 | $230 | 28% | | License | $6,801 | $67 | $6,734 | 10049% | | Royalty | $83 | $0 | $83 | N/A | | Contract research and government grants | $106 | $288 | $(182) | -63% | | **Total Revenues** | **$8,034** | **$1,169** | **$6,865** | **587%** | | **Operating Expenses (Income):** | | | | | | Cost of product revenues | $5,199 | $885 | $4,314 | 487% | | Research and development | $7,960 | $7,098 | $862 | 12% | | Gain on sale of Verdeca | $(8,814) | $0 | $(8,814) | N/A | | Change in fair value of contingent consideration | $0 | $(1,000) | $1,000 | -100% | | Selling, general and administrative | $16,467 | $13,567 | $2,900 | 21% | | **Total Operating Expenses** | **$20,812** | **$20,550** | **$262** | **1%** | | **Loss from operations** | **$(12,778)** | **$(19,381)** | **$6,603** | **-34%** | | Interest expense | $(47) | $(5) | $(42) | 840% | | Other income, net | $740 | $466 | $274 | 59% | | Change in fair value of common stock warrant liabilities | $6,570 | $(9,243) | $15,813 | -171% | | Loss on extinguishment of warrant liability | $(635) | $0 | $(635) | N/A | | Offering costs | $0 | $(708) | $708 | -100% | | **Net loss before income taxes** | **$(6,150)** | **$(28,871)** | **$22,721** | **-79%** | | Income tax benefit (provision) | $124 | $(2) | $126 | -6300% | | **Net loss** | **$(6,026)** | **$(28,873)** | **$22,847** | **-79%** | | Net loss attributable to common stockholders | $(4,655) | $(28,805) | $24,150 | -84% | | Basic and diluted net loss per share | $(0.47) | $(4.53) | $4.06 | -90% | - Product revenues increased by **28%** (**$230,000**) in **2020**, primarily from additional pet food orders for SONOVA products[218](index=218&type=chunk) - License revenues surged by **$6.734 million** in **2020**, mainly due to licenses granted to Bioceres for intellectual property rights in connection with the November **2020** transaction[219](index=219&type=chunk) - Cost of product revenues increased by **$4.314 million** (**487%**) in **2020**, largely due to inventory write-downs for contracted hemp seed production (**$1.6 million**), Archipelago inventory (**$1.3 million**), third-party seeds (**$850,000**), and wheat inventory (**$397,000**)[222](index=222&type=chunk) - Research and development expenses increased by **$900,000** (**12%**) in **2020**, driven by higher employee-related and external hemp-related costs, partially offset by reduced soybean activity[223](index=223&type=chunk) - A gain of **$8.814 million** was recognized in **2020** from the sale of Arcadia's membership interests in the Verdeca joint venture to Bioceres[224](index=224&type=chunk) - Selling, general, and administrative expenses rose by **$2.9 million** (**21%**) in **2020**, mainly due to increased consulting fees, stock compensation, employee-related expenses, insurance premiums, rent, and marketing activities[226](index=226&type=chunk) - Other income, net, increased by **$274,000** (**59%**) in **2020**, primarily due to an unrealized gain on corporate securities[228](index=228&type=chunk) - A **$6.6 million** income was recorded from the change in fair value of common stock warrant liabilities in **2020**, driven by a decrease in stock price and risk-free rates, and fewer warrants outstanding[229](index=229&type=chunk) [Seasonality](index=38&type=section&id=Seasonality) - Arcadia's operations and commercial partners conduct field trials globally, which are seasonal and depend on crop growing seasons, potentially influencing milestone payments and product commercialization[233](index=233&type=chunk) - Weather conditions and natural disasters can affect the timing and outcome of field trials, delaying payments and commercialization. Future sales of commercial products will also vary based on crop growing seasons and weather patterns[233](index=233&type=chunk) - The overall level of seasonality is difficult to evaluate due to the company's early stage of development, limited commercialized products, and expansion into new markets[234](index=234&type=chunk) [Liquidity, Capital Resources and Going Concern](index=38&type=section&id=Liquidity,%20Capital%20Resources%20and%20Going%20Concern) - Arcadia has funded operations through IPO proceeds, private equity/debt placements, product sales, and license agreements, with a primary focus on developing and commercializing seed traits[235](index=235&type=chunk) Liquidity and Capital Resources (in thousands) | Metric | Dec 31, 2020 | Dec 31, 2019 | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $14,042 | $8,417 | | Restricted cash | $2,001 | $0 | | Short-term investments | $11,625 | $16,915 | | Net loss | $(6,026) | $(28,873) | | Net cash used in operations | $(30,218) | $(17,198) | | Accumulated deficit | $(211,825) | $(207,171) | - The company believes existing cash, restricted cash, cash equivalents, and short-term investments will be sufficient to meet anticipated cash requirements for at least the next **12 months**[239](index=239&type=chunk) - Arcadia may seek additional funds through debt or equity financings or partner arrangements; failure to secure adequate funding could force spending reductions, asset liquidation, or suspension of development programs[240](index=240&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--------------------------------- | :---------------------- | :---------------------- | | Net cash (used in) provided by: | | | | Operating activities | $(30,218) | $(17,198) | | Investing activities | $17,284 | $(8,369) | | Financing activities | $20,560 | $21,986 | | Net (decrease) increase in cash and cash equivalents | $7,626 | $(3,581) | - Cash used in operating activities increased to **$30.2 million** in **2020**, driven by net loss, working capital adjustments, gain on Verdeca sale, and inventory write-downs, partially offset by non-cash charges[242](index=242&type=chunk) - Cash provided by investing activities was **$17.3 million** in **2020**, primarily from proceeds from sales/maturities of investments (**$18.3 million**) and Verdeca sale (**$3.2 million**), offset by property/equipment purchases and acquisitions[244](index=244&type=chunk) - Cash provided by financing activities was **$20.6 million** in **2020**, including proceeds from warrant exercises (**$9.4 million**), stock/warrant issuance (**$8.0 million**), borrowings (**$3.1 million**), and non-controlling interest contributions (**$1.6 million**)[246](index=246&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) - Since its inception, Arcadia has not engaged in any off-balance sheet arrangements, including structured finance, special purpose entities, or variable interest entities, other than Verdeca (prior to its sale)[248](index=248&type=chunk) [Critical Accounting Polices and Estimates](index=40&type=section&id=Critical%20Accounting%20Polices%20and%20Estimates) - Critical accounting policies and estimates include revenue recognition, determination of income tax provision, stock-based compensation, fair value of certain equity instruments, and net realizable value of inventory[250](index=250&type=chunk) - Revenue from product sales is recognized upon shipment, license fees upon agreement execution or when probable of no reversal, and royalty revenue when amounts earned can be reasonably determined[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - Inventories are valued at the lower of cost or net realizable value, with write-downs based on estimates of future demand and market conditions. Stock-based compensation is recognized using the Black-Scholes option-pricing model[258](index=258&type=chunk)[259](index=259&type=chunk) - Income taxes are accounted for using the asset and liability method, with a valuation allowance provided when deferred tax assets are not likely to be realized[267](index=267&type=chunk) - Arcadia Biosciences focuses on developing high-value crop productivity traits in hemp and wheat, aiming to monetize these through various sales and licensing methods[179](index=179&type=chunk) - The company's total revenues increased significantly from **$1.169 million** in **2019** to **$8.034 million** in **2020**, primarily due to a substantial increase in license revenues[217](index=217&type=chunk) - Net loss improved from **$28.873 million** in **2019** to **$6.026 million** in **2020**, driven by a gain on the sale of Verdeca and a favorable change in the fair value of common stock warrant liabilities[217](index=217&type=chunk) - Cash used in operating activities increased to **$30.2 million** in **2020** from **$17.2 million** in **2019**, partly due to inventory write-downs and increased operating expenses[235](index=235&type=chunk)[242](index=242&type=chunk) - The company believes its existing cash, restricted cash, cash equivalents, and short-term investments are sufficient for at least the next **12 months**, supplemented by recent financings[239](index=239&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[269](index=269&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Arcadia Biosciences' audited consolidated financial statements for **2020** and **2019**, prepared under U.S. GAAP, including balance sheets, statements of operations, equity, cash flows, and detailed notes [Report of Independent Registered Public Accounting Firm](index=44&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Deloitte & Touche LLP issued an unqualified opinion on Arcadia Biosciences' consolidated financial statements for the years ended December **31**, **2020** and **2019**, stating they present fairly the financial position and results of operations in conformity with U.S. GAAP[275](index=275&type=chunk) - The critical audit matter identified was the GoodWheat and GoodHemp inventory valuation, due to significant judgments required in forecasting product demand, marketability, and salability, which could impact write-downs[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) [Consolidated Balance Sheets](index=46&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Metric | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--------------------------------- | :----------------- | :----------------- | | **Assets:** | | | | Cash and cash equivalents | $14,042 | $8,417 | | Short-term investments | $11,625 | $16,915 | | Total current assets | $31,696 | $28,440 | | Total assets | $47,348 | $32,574 | | **Liabilities:** | | | | Total current liabilities | $6,314 | $5,708 | | Common stock warrant liabilities | $2,708 | $14,936 | | Total liabilities | $18,796 | $24,248 | | **Stockholders' Equity:** | | | | Total Arcadia Biosciences stockholders' equity | $27,725 | $7,705 | | Total stockholders' equity | $28,552 | $8,326 | - Total assets increased by **$14.774 million** (**45.4%**) from **$32.574 million** in **2019** to **$47.348 million** in **2020**[285](index=285&type=chunk) - Total liabilities decreased by **$5.452 million** (**22.5%**) from **$24.248 million** in **2019** to **$18.796 million** in **2020**, largely due to a significant reduction in common stock warrant liabilities[285](index=285&type=chunk) - Total stockholders' equity increased by **$20.226 million** (**243%**) from **$8.326 million** in **2019** to **$28.552 million** in **2020**[285](index=285&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=47&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) | Metric | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :----------------------------------- | :---------------------- | :---------------------- | | Total revenues | $8,034 | $1,169 | | Total operating expenses | $20,812 | $20,550 | | Loss from operations | $(12,778) | $(19,381) | | Net loss before income taxes | $(6,150) | $(28,871) | | Net loss | $(6,026) | $(28,873) | | Net loss attributable to common stockholders | $(4,655) | $(28,805) | | Basic and diluted net loss per share | $(0.47) | $(4.53) | | Weighted-average shares outstanding | 9,959,018 | 6,363,112 | - Total revenues increased by **587%** to **$8.034 million** in **2020** from **$1.169 million** in **2019**, primarily driven by license revenues[287](index=287&type=chunk) - Net loss significantly improved to **$(6.026) million** in **2020** from **$(28.873) million** in **2019**, largely due to a gain on the sale of Verdeca and a favorable change in warrant liabilities[287](index=287&type=chunk) - Basic and diluted net loss per share improved to **$(0.47)** in **2020** from **$(4.53)** in **2019**[287](index=287&type=chunk) [Consolidated Statement of Stockholders' Equity](index=48&type=section&id=Consolidated%20Statement%20of%20Stockholders'%20Equity) Consolidated Statement of Stockholders' Equity Highlights (in thousands, except share data) | Metric | As of Dec 31, 2020 | As of Dec 31, 2019 | | :--------------------------------- | :----------------- | :----------------- | | Common Stock Shares | 13,450,861 | 8,646,149 | | Common Stock Amount | $54 | $49 | | Additional Paid-In Capital | $239,496 | $214,826 | | Accumulated Deficit | $(211,825) | $(207,171) | | Total Stockholders' Equity | $28,552 | $8,326 | - Total stockholders' equity increased from **$8.326 million** in **2019** to **$28.552 million** in **2020**, driven by equity issuances and warrant exercises[290](index=290&type=chunk) - Issuances of common stock and warrants related to the December **2020** Offering contributed **$8.0 million** to additional paid-in capital[290](index=290&type=chunk) - Stock-based compensation recognized was **$2.042 million** in **2020** and **$2.287 million** in **2019**[290](index=290&type=chunk)[292](index=292&type=chunk) - Net loss attributable to common stockholders was **$(4.655) million** in **2020**, an improvement from **$(28.805) million** in **2019**[290](index=290&type=chunk)[292](index=292&type=chunk) [Consolidated Statements of Cash Flows](index=50&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(30,218) | $(17,198) | | Net cash provided by (used in) investing activities | $17,284 | $(8,369) | | Net cash provided by financing activities | $20,560 | $21,986 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $7,626 | $(3,581) | | Cash, cash equivalents and restricted cash — end of period | $16,043 | $8,417 | - Net cash used in operating activities increased to **$30.2 million** in **2020**, primarily due to net loss, working capital adjustments, and inventory write-downs, partially offset by non-cash adjustments like the gain on Verdeca sale[294](index=294&type=chunk)[242](index=242&type=chunk) - Net cash provided by investing activities was **$17.3 million** in **2020**, a significant shift from **$8.4 million** used in **2019**, mainly driven by proceeds from sales/maturities of investments and the sale of Verdeca[294](index=294&type=chunk)[244](index=244&type=chunk) - Net cash provided by financing activities was **$20.6 million** in **2020**, including proceeds from warrant exercises (**$9.4 million**), issuance of stock and warrants (**$8.0 million**), and borrowings (**$3.1 million**)[294](index=294&type=chunk)[246](index=246&type=chunk) [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Description of Business](index=52&type=section&id=Note%201.%20Description%20of%20Business) - Arcadia Biosciences, Inc. was incorporated in Arizona in **2002**, reincorporated in Delaware in **2015**, and is headquartered in Davis, California, with additional facilities in other states[298](index=298&type=chunk) - The company develops high-value crop productivity traits in hemp, wheat, and soybean using gene-editing and advanced breeding, monetizing through seed/grain sales, extracts, licensing, and royalties[299](index=299&type=chunk) - Arcadia formed Verdeca LLC in **2012** with Bioceres, Inc. but sold its membership interest in November **2020**. It also formed Archipelago Ventures Hawaii, LLC in August **2019** with Legacy Ventures Hawaii to grow, extract, and sell hemp products[300](index=300&type=chunk)[301](index=301&type=chunk) - As of December **31**, **2020**, the company had an accumulated deficit of **$211.8 million** and net cash used in operations of **$30.2 million**, but believes existing cash and investments are sufficient for at least through March **2022**[302](index=302&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=53&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The consolidated financial statements include the accounts of Arcadia, Verdeca (until sale), and Archipelago, prepared in conformity with U.S. GAAP, with intercompany transactions eliminated[307](index=307&type=chunk) - Significant estimates and assumptions include income tax provision, stock-based compensation, fair value of equity instruments, and net realizable value of inventory, which could be impacted by COVID-19[311](index=311&type=chunk)[312](index=312&type=chunk) - Revenue recognition policies vary by type: product revenues upon shipment, license fees upon execution or when probable of no reversal, royalty revenues when amounts earned are determinable, and contract research/government grants over time using the input method[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk) - Inventory is valued at the lower of cost or net realizable value, with write-downs for deterioration, obsolescence, or excess/slow-moving items. Stock-based compensation is recognized using the Black-Scholes option-pricing model[364](index=364&type=chunk)[365](index=365&type=chunk)[337](index=337&type=chunk) - Customer concentration: In **2020**, **three customers** represented **57%**, **21%**, and **12%** of accounts receivable, and **one customer** represented **83%** of total revenues[336](index=336&type=chunk) [Note 3. Recent Accounting Pronouncements](index=59&type=section&id=Note%203.%20Recent%20Accounting%20Pronouncements) - Arcadia adopted ASU No. **2016-02** (Leases) on January **1**, **2019**, requiring recognition of right-of-use assets and lease liabilities for operating leases[354](index=354&type=chunk) - The company adopted ASU No. **2016-15** (Statement of Cash Flows) on January **1**, **2019**, with no material impact, and ASU No. **2018-13** (Fair Value Measurement) on January **1**, **2020**, expanding disclosures for Level **3** fair value measurements[357](index=357&type=chunk)[358](index=358&type=chunk) - Arcadia is currently evaluating the impact of ASU No. **2016-13** (Credit Losses) and ASU No. **2019-12** (Income Taxes), effective for fiscal years beginning after December **15**, **2022**, and December **15**, **2020**, respectively[356](index=356&type=chunk)[360](index=360&type=chunk) [Note 4. Inventory](index=60&type=section&id=Note%204.%20Inventory) - Inventories are tracked on a lot-identified basis and stated at the lower of cost or net realizable value, with adjustments made for physical deterioration, obsolescence, or excess/slow-moving items[364](index=364&type=chunk) - Arcadia recorded inventory write-downs of **$4.3 million** in **2020** (vs. **$304,000** in **2019**) for wheat inventories, hemp seed inventories, and prepaid production costs, based on estimates of future demand and market conditions[364](index=364&type=chunk) Inventories, Net (in thousands) | Category | Dec 31, 2020 | Dec 31, 2019 | | :--------------- | :----------- | :----------- | | Raw materials | $966 | $67 | | Goods in process | $1,921 | $188 | | Finished goods | $4,410 | $1,903 | | **Total Inventories** | **$7,297** | **$2,158** | [Note 5. Property and Equipment, Net](index=60&type=section&id=Note%205.%20Property%20and%20Equipment,%20Net) Property and Equipment, Net (in thousands) | Category | As of Dec 31, 2020 | As of Dec 31, 2019 | | :-------------------------- | :----------------- | :----------------- | | Laboratory equipment | $2,951 | $2,443 | | Software and computer equipment | $591 | $502 | | Machinery and equipment | $2,046 | $989 | | Furniture and fixtures | $181 | $90 | | Vehicles | $428 | $395 | | Leasehold improvements | $2,229 | $2,023 | | Property and equipment, gross | $8,426 | $6,442 | | Less accumulated depreciation and amortization | $(4,887) | $(4,643) | | **Property and equipment, net** | **$3,539** | **$1,799** | - Property and equipment, net, increased by **$1.740 million** (**96.7%**) from **$1.799 million** in **2019** to **$3.539 million** in **2020**[366](index=366&type=chunk) - Depreciation expense was **$632,000** in **2020**, up from **$194,000** in **2019**[366](index=366&type=chunk) - Construction in progress, not yet depreciated, was **$239,000** in **2020** and **$1.014 million** in **2019**[367](index=367&type=chunk) [Note 6. Investments and Fair Value Instruments](index=61&type=section&id=Note%206.%20Investments%20and%20Fair%20Value%20Instruments) - Arcadia classifies investments in corporate securities of Bioceres Crop Solutions Corp. (BIOX) as short-term investments, carried at fair value based on market prices, with realized and unrealized gains/losses recognized in other income[370](index=370&type=chunk)[317](index=317&type=chunk) Investment Securities Portfolio (in thousands) | Category | Amortized Cost (2020) | Fair Value (2020) | Amortized Cost (2019) | Fair Value (2019) | | :---------------------- | :-------------------- | :---------------- | :-------------------- | :---------------- | | Money market funds | $12,082 | $12,082 | $6,864 | $6,864 | | Corporate securities | $10,969 | $11,625 | $3,300 | $3,300 | | Commercial paper | $0 | $0 | $13,019 | $13,019 | | Treasury bills | $0 | $0 | $1,495 | $1,496 | | **Total Assets at Fair Value** | **$23,051** | **$23,707** | **$24,678** | **$24,679** | - The fair value of investments is categorized into Level **1** (quoted prices in active markets) and Level **2** (observable inputs other than Level **1**). In **2020**, all investments were Level **1**, while in **2019**, **$16.319 million** were Level **2**[372](index=372&type=chunk)[374](index=374&type=chunk) - Level **3** liabilities include contingent liabilities from the Anawah and Industrial Seed Innovations acquisitions, and warrant liabilities, measured using unobservable inputs like the company's intent to pursue specific products and volatility[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk) [Note 7. Industrial Seed Innovations Acquisition](index=63&type=section&id=Note%207.%20Industrial%20Seed%20Innovations%20Acquisition) - On August **21**, **2020**, Arcadia acquired Industrial Seed Innovations (ISI), an Oregon-based hemp breeding and seed company, gaining commercial and genetic assets including seed varieties, germplasm library, and intellectual property[381](index=381&type=chunk) - The purchase price was an estimated **$1.212 million**, consisting of **$500,000** cash, **$432,000** in common stock, and a **$280,000** contingent liability for future revenue milestones[382](index=382&type=chunk) ISI Purchase Price Allocation (in thousands) | Asset | Allocation | | :-------------------------- | :----------- | | Inventory | $511 | | Intangible assets, net | $400 | | Goodwill | $408 | | Deferred tax liability | $(107) | | **Total consideration allocated** | **$1,212** | - The acquisition established a breeding R&D facility in the Pacific Northwest and enabled a **$107,000** reduction in the valuation allowance for deferred tax assets[381](index=381&type=chunk)[387](index=387&type=chunk) [Note 8. Consolidated Joint Venture](index=64&type=section&id=Note%208.%20Consolidated%20Joint%20Venture) - On August **9**, **2019**, Arcadia formed Archipelago Ventures Hawaii, LLC with Legacy Ventures Hawaii to develop, extract, and commercialize hemp-derived products in Hawaii[390](index=390&type=chunk) - As of December **31**, **2020**, Arcadia held a **50.75%** interest in Archipelago, with capital contributions of **$2.336 million**, and consolidates Archipelago in its financial statements[391](index=391&type=chunk)[392](index=392&type=chunk) - Net loss attributable to non-controlling interest was **$1.371 million** in **2020** and **$68,000** in **2019**[392](index=392&type=chunk) [Note 9. Verdeca-BIOX Transactions](index=64&type=section&id=Note%209.%20Verdeca-BIOX%20Transactions) - In November **2020**, Arcadia sold its membership interests in Verdeca to Bioceres Crop Solutions Corp. (BIOX) and entered a license agreement for HB4® soybean trait and GoodWheat intellectual property rights in South/Central America[394](index=394&type=chunk)[396](index=396&type=chunk) - Consideration included **$5.0 million** cash, **1,875,000 shares** of BIOX common stock, and future payments of **$1.0 million** for transaction expenses and **$2.0 million** upon specific regulatory/commercial milestones[396](index=396&type=chunk) - Arcadia recognized an **$8.814 million** gain on the sale of Verdeca and **$6.680 million** in license revenues from the intellectual property rights sale in **2020**[396](index=396&type=chunk) - BIOX will also pay quarterly royalties of **6%** on HB4 soybean sales (up to **$10 million**) and **25%** on licensed wheat product sales[396](index=396&type=chunk) [Note 10. Accounts Payable and Accrued Expenses](index=65&type=section&id=Note%2010.%20Accounts%20Payable%20and%20Accrued%20Expenses) Accounts Payable and Accrued Expenses (in thousands) | Category | As of Dec 31, 2020 | As of Dec 31, 2019 | | :-------------------------- | :----------------- | :----------------- | | Accounts payable - trade | $726 | $492 | | Payroll and benefits | $1,489 | $1,290 | | Inventory | $965 | $1,143 | | Research and development | $45 | $629 | | Royalty fees due to unrelated parties | $276 | $226 | | Consulting | $153 | $397 | | Rent and utilities | $78 | $23 | | Audit and tax fees | $57 | $113 | | Legal | $152 | $138 | | Other | $164 | $234 | | **Total** | **$4,105** | **$4,685** | - Total accounts payable and accrued expenses decreased by **$580,000** (**12.4%**) from **$4.685 million** in **2019** to **$4.105 million** in **2020**[398](index=398&type=chunk) - Notable changes include an increase in payroll and benefits (**$199,000**) and a decrease in research and development accruals (**$584,000**) and consulting fees (**$244,000**)[398](index=398&type=chunk) [Note 11. Collaborative Arrangements](index=65&type=section&id=Note%2011.%20Collaborative%20Arrangements) - In August **2017**, Arcadia entered a collaborative arrangement with Corteva Agriscience for research, development, and commercialization of an improved wheat quality trait in North America[401](index=401&type=chunk) - Both companies are active participants, sharing R&D costs and profits, with Arcadia responsible for intellectual property strategy and Corteva leading marketing and commercialization[401](index=401&type=chunk) - R&D costs are expensed as incurred, with internal costs expensed immediately and third-party costs expensed upon performance or milestone achievement[402](index=402&type=chunk) [Note 12. Equity Financing](index=66&type=section&id=Note%2012.%20Equity%20Financing) - In March **2018**, Arcadia raised **$10.0 million** gross proceeds through a private placement of common stock and warrants (March **2018** Warrants), which were later adjusted[403](index=403&type=chunk)[404](index=404&type=chunk) - The company conducted registered direct offerings in June **2018** (**$14.0 million**), June **2019** (**$7.5 million**), September **2019** (**$10.0 million**), and December **2020** (**$8.0 million**), issuing common stock and unregistered warrants[406](index=406&type=chunk)[407](index=407&type=chunk)[410](index=410&type=chunk)[411](index=411&type=chunk) - Placement agent warrants were also issued in connection with these offerings, with varying exercise prices and terms[406](index=406&type=chunk)[409](index=409&type=chunk)[410](index=410&type=chunk)[411](index=411&type=chunk) [Note 13. Warrants](index=67&type=section&id=Note%2013.%20Warrants) - In May **2020**, investors exercised June **2018** Warrants for **$6.8 million**, and Arcadia issued new May **2020** Warrants (valued at **$4.4 million**) and placement agent warrants, resulting in a **$47,000** gain on extinguishment of warrant liability[412](index=412&type=chunk) - In July **2020**, an investor exercised March **2018** Warrants for **$2.6 million**, leading to the issuance of new July **2020** Warrants (valued at **$2.1 million**) and placement agent warrants, and a **$682,000** loss on extinguishment of warrant liability[413](index=413&type=chunk) Equity Classified Common Stock Warrants Outstanding (Dec 31, 2020) | Warrant Type | Exercise Price Per Share | Warrants Outstanding | | :--------------------------------- | :----------------------- | :------------------- | | December 2020 Warrants | $3.00 | 2,618,658 | | December 2020 Placement Agent Warrants | $3.82 | 130,933 | | July 2020 Warrants | $3.85 | 641,416 | | July 2020 Placement Agent Warrants | $4.97 | 32,071 | | May 2020 Warrants | $4.78 | 1,392,345 | | May 2020 Placement Agent Warrants | $6.13 | 69,617 | | March 2020 Service and Performance Warrants | $2.50 | 18,350 | | February 12, 2020 Service and Performance Warrants | $4.71 | 150,000 | | February 3, 2020 Service and Performance Warrants | $4.91 | 10,000 | | September 2019 Placement Agent Warrants | $9.48 | 65,942 | | August 2019 Service and Performance Warrants | $1.92 | 20,000 | | July 2019 Service and Performance Warrants | $2.19 | 10,000 | | June 2019 Placement Agent Warrants | $6.29 | 74,479 | | April 2019 Service and Performance Warrants | $6.18 | 145,154 | | June 2018 Placement Agent Warrants | $12.57 | 69,617 | | March 2018 Placement Agent Warrants | $41.56 | 15,038 | | **Total** | | **5,463,620** | Liability Classified Common Stock Warrants Outstanding (Dec 31, 2020) | Warrant Type | Exercise Price Per Share | Warrants Outstanding | | :-------------------------- | :----------------------- | :------------------- | | September 2019 Warrants | $7.52 | 659,414 | | June 2019 Warrants | $5.00 | 435,830 | | March 2018 Warrants | $10.73 | 641,416 | | **Total** | | **1,736,660** | - The change in fair value of common stock warrant liabilities resulted in income of **$6.570 million** in **2020**, compared to a loss of **$9.243 million** in **2019**[287](index=287&type=chunk) [Note 14. Stock-Based Compensation and Employee Stock Purchase Program](index=70&type=section&id=Note%2014.%20Stock-Based%20Compensation%20and%20Employee%20Stock%20Purchase%20Program) - Arcadia has two equity incentive plans: the **2006** Stock Plan (terminated for future awards in **2015**) and the **2015** Omnibus Equity Incentive Plan (effective May **2015**), which allows for various equity compensation grants[421](index=421&type=chunk)[422](index=422&type=chunk) - As of December **31**, **2020**, **1,047,243 shares** were reserved under the **2015** Plan, with **157,484 shares** available for future grant. A total of **889,759 options** were outstanding[423](index=423&type=chunk)[426](index=426&type=chunk) Stock Option Activity (shares) | Activity | 2020 | 2019 | | :-------------------------- | :----------- | :----------- | | Outstanding — Balance at Dec 31 | 889,759 | 661,701 | | Options granted | 502,494 | 208,571 | | Options forfeited | (174,508) | (30,132) | | Options expired | (99,928) | (46,236) | | Exercisable — Dec 31 | 502,973 | N/A | | Weighted-average exercise price (outstanding) | $14.46 | $21.60 | | Weighted-average exercise price (exercisable) | $22.20 | N/A | - Unrecognized compensation cost related to unvested stock-based grants was **$0.7 million** as of December **31**, **2020**, to be recognized over a weighted-average period of **2.77 years**[427](index=427&type=chunk) - The **2015** Employee Stock Purchase Plan (ESPP) allows eligible employees to purchase common stock at a discount, with **35,056 shares** issued under the plan as of December **31**, **2020**[435](index=435&type=chunk) [Note 15. Commitments and Contingencies](index=73&type=section&id=Note%2015.%20Commitments%20and%20Contingencies) - Arcadia leases office, laboratory, greenhouse, warehouse space, farmland, and equipment under operating lease agreements[438](index=438&type=chunk) - A contingent liability of **$2.0 million** remains on the balance sheet as of December **31**, **2020**, related to the **2005** Anawah acquisition, for specific product development programs[440](index=440&type=chunk) - A contingent liability of **$280,000** from the August **2020** ISI acquisition is recorded as other noncurrent liabilities, payable in **two annual installments** subject to revenue milestones[441](index=441&type=chunk) - The company has in-licensing agreements requiring license fees, royalties (accrued **$356,000** in **2020**), and milestone fees (**$2.0 million** unachieved as of Dec **31**, **2020**)[443](index=443&type=chunk)[446](index=446&type=chunk)[447](index=447&type=chunk) - Arcadia is subject to routine audits by government agencies for contract revenue; improper allocation of costs could lead to penalties or reputational harm[448](index=448&type=chunk) [Note 16. Leases](index=74&type=section&id=Note%2016.%20Leases) - Arcadia leases various properties including office, laboratory, greenhouse, and farmland. Leases with terms of **12 months** or less are not recorded on the balance sheet[449](index=449&type=chunk) - In **2020**, the company entered into several lease amendments and new agreements, resulting in an additional **$3.8 million** operating lease liability and right-of-use asset for office space, and other increases for land, greenhouses, and equipment[449](index=449&type=chunk) Lease Liabilitie