Arcadia Biosciences(RKDA) - 2025 Q2 - Quarterly Report

FORM 10-Q - Filing Type: Quarterly Report (10-Q) for the period ended June 30, 2025[2] - Registrant: Arcadia Biosciences, Inc[2] - Trading Symbol: RKDA (NASDAQ CAPITAL MARKET)[3] - Filer Status: Non-accelerated filer and Smaller reporting company[4] - Shares Outstanding: 1,367,040 shares of common stock as of August 7, 2025[4] INDEX Part I — Financial Information (Unaudited) Item 1. Condensed Consolidated Financial Statements This section presents Arcadia Biosciences, Inc.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations and comprehensive income (loss), statements of stockholders' equity, and statements of cash flows, along with their accompanying notes, for the period ended June 30, 2025 Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Assets | | | | | Cash and cash equivalents | $1,376 | $4,242 | $(2,866) | | Short-term investments | $3,067 | — | $3,067 | | Total current assets | $7,579 | $9,242 | $(1,663) | | Total assets | $7,788 | $13,517 | $(5,729) | | Liabilities | | | | | Total current liabilities | $1,839 | $2,563 | $(724) | | Common stock warrant and option liabilities | $1,416 | $2,731 | $(1,315) | | Total liabilities | $3,255 | $7,294 | $(4,039) | | Stockholders' Equity | | | | | Total stockholders' equity | $4,533 | $6,223 | $(1,690) | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product Revenues | $1,455 | $1,306 | $2,655 | $2,293 |\n| Cost of Revenues | $824 | $633 | $1,506 | $1,104 |\n| Research and development | $9 | $10 | $9 | $16 |\n| Gain on sale of intangible assets | — | $(4,000) | $(750) | $(4,000) |\n| Change in fair value of contingent consideration | $(1,000) | — | $(2,000) | — |\n| Selling, general and administrative | $2,123 | $2,683 | $3,861 | $4,745 |\n| (Loss) income from operations | $(501) | $1,980 | $29 | $392 |\n| Interest income | $9 | $150 | $216 | $195 |\n| Credit loss | $(4,489) | — | $(4,489) | — |\n| Other income | $1,071 | $150 | $1,071 | $153 |\n| Change in fair value of common stock warrant and option liabilities | $(548) | $(430) | $1,314 | $163 |\n| Net (loss) income from continuing operations | $(4,458) | $1,850 | $(1,859) | $903 |\n| Net loss from discontinued operations | — | $(789) | — | $(2,265) |\n| Net (loss) income attributable to common stockholders | $(4,458) | $1,061 | $(1,859) | $(1,362) |\n| Basic and diluted EPS from continuing operations | $(3.26) | $1.36 | $(1.36) | $0.66 |\n| Basic and diluted EPS from discontinued operations | — | $(0.58) | — | $(1.66) |\n| Net (loss) income per basic share | $(3.26) | $0.78 | $(1.36) | $(1.00) | Condensed Consolidated Statements of Stockholders' Equity | Metric (in thousands) | Balance at December 31, 2024 | Balance at June 30, 2025 | | :-------------------- | :--------------------------- | :----------------------- | | Common Stock (Amount) | $65 | $65 |\n| Additional Paid-In Capital | $285,036 | $285,205 |\n| Accumulated Deficit | $(278,878) | $(280,737) |\n| Total Stockholders' Equity | $6,223 | $4,533 | - Net loss of $4,458 thousand for the three months ended June 30, 2025, contributing to an increased accumulated deficit[16] - Stock-based compensation for the six months ended June 30, 2025, totaled $164 thousand[16] Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(3,621) | $(5,666) |\n| Net cash provided by investing activities | $750 | $4,647 |\n| Net cash provided by financing activities | $5 | $5 |\n| Net decrease in cash and cash equivalents | $(2,866) | $(1,014) |\n| Cash and cash equivalents — end of period | $1,376 | $5,504 | - Noncash investing activity included the fair value of Above Food Ingredients, Inc. common stock received, totaling $3,067 thousand in 2025[19] Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations and breakdowns of the figures presented in the condensed consolidated financial statements, covering business operations, significant transactions, accounting policies, and financial instrument valuations Note 1. Description of Business and Basis of Presentation Arcadia Biosciences, Inc. (the "Company") was incorporated in Arizona in 2002 and reincorporated in Delaware in 2015, with headquarters in Dallas, Texas. The Company has transitioned from developing wheat products to focusing on consumer goods, primarily Zola coconut water, since acquiring Zola assets in May 2021. Recent significant transactions include the termination of a license agreement with Bioseed, an agreement with Bioceres Crop Solutions Corp. for soy traits and patent transfers, and a business combination agreement with Roosevelt Resources LP. The Company also sold its GoodWheat brand and RS durum wheat trait in 2024. The financial statements are prepared on a going concern basis, but the Company faces substantial doubt about its ability to continue as a going concern due to an accumulated deficit and insufficient cash - Company's primary focus shifted to Zola coconut water products after acquiring Zola assets in May 2021[23][108] - Entered into a License Termination and Patent Non-Assert Agreement with Bioseed on May 26, 2025, eliminating a $1.0 million contingent liability[24] - Entered an agreement with Bioceres Crop Solutions Corp. on March 28, 2025, transferring soy traits to the Company and reduced gluten/oxidative stability patents to BIOX, resulting in a $750,000 gain for Arcadia[25] - Entered a Securities Exchange Agreement with Roosevelt Resources LP on December 4, 2024, amended on April 30, 2025, where Roosevelt's limited partners will own 90% of Arcadia's common stock post-closing[26][27] - Sold the GoodWheat™ brand to Above Food Corp. on May 16, 2024, for $3.7 million, resulting in a $1,500 loss in Q2 2024 and reclassification as discontinued operations[28] - Sold non-GMO Resistant Starch (RS) durum wheat trait to Corteva Agriscience on May 14, 2024, for $4.0 million cash, recognizing a gain[29] - As of June 30, 2025, the Company had an accumulated deficit of $280.7 million and cash and cash equivalents of $1.4 million, raising substantial doubt about its ability to continue as a going concern for at least the next 12 months[36][37][38] Note 2. Recent Accounting Pronouncements The Company is evaluating the impact of recently issued accounting standards updates (ASUs) from the FASB. ASU No. 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, and ASU No. 2024-03 (Expense Disaggregation Disclosures) is effective for annual reporting periods beginning after December 15, 2026 - Evaluating ASU No. 2023-09 (Income Taxes) for additional income tax disclosures, effective for fiscal years beginning after December 15, 2024[40] - Evaluating ASU No. 2024-03 (Expense Disaggregation Disclosures) for quantitative disclosures on employee compensation, selling expenses, and inventory purchases, effective for annual reporting periods beginning after December 15, 2026[41] Note 3. Discontinued Operations Arcadia sold the GoodWheat brand to Above Food on May 16, 2024, ceasing its operations. The financial results of GoodWheat are reported as discontinued operations for all periods presented, reflecting a strategic shift - GoodWheat brand sold to Above Food on May 16, 2024, and operations ceased in Q2 2024[42] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenue | $— | $179 | $— | $447 |\n| Net loss from discontinued operations | $— | $(789) | $— | $(2,265) | - As of June 30, 2025, there were no assets from discontinued operations, down from $96 thousand at December 31, 2024[44] Note 4. Inventory Inventories are valued at the lower of cost or net realizable value, with adjustments made for deterioration, obsolescence, or slow-moving items. The Company's inventory primarily consists of raw materials and finished goods | Inventory (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Raw materials | $333 | $289 |\n| Finished goods | $1,156 | $615 |\n| Total Inventories | $1,489 | $904 | - Total inventories increased by $585 thousand from December 31, 2024, to June 30, 2025[47] Note 5. Property and Equipment, Net Property and equipment, net, primarily includes software, computer equipment, furniture, fixtures, and leasehold improvements, reported net of accumulated depreciation. The Company recorded an impairment related to Archipelago property and equipment in Q1 2024, which was subsequently sold | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Property and equipment, gross | $1,907 | $1,907 |\n| Less: accumulated depreciation and amortization | $(1,895) | $(1,866) |\n| Property and equipment, net | $12 | $41 | - Depreciation expense was $28 thousand for the six months ended June 30, 2025, down from $48 thousand in the same period of 2024[48] - An impairment of $36 thousand related to Archipelago property and equipment was recorded in Q1 2024, with all such assets sold in Q2 2024[49] Note 6. Investments and Fair Value Instruments The Company classifies investments in corporate securities of Above Food Ingredients, Inc. (AFII) as short-term investments, carried at fair value. As of June 30, 2025, the fair value of AFII common stock was $3.1 million. The Company also measures Level 3 liabilities, such as preferred investment options, using the Black-Scholes Model, with volatility being a significant input - Fair value of AFII common stock (short-term investment) was $3.1 million as of June 30, 2025[50][52] | Level 3 Liabilities (in thousands) | Balance as of December 31, 2024 | Change in fair value | Balance as of June 30, 2025 | | :--------------------------------- | :------------------------------ | :------------------- | :-------------------------- | | March 2023 Options - Series A | $2,285 | $(1,100) | $1,185 |\n| March 2023 Placement Agent Options | $90 | $(38) | $52 |\n| August 2022 Options | $349 | $(172) | $177 |\n| August 2022 Placement Agent Options | $7 | $(5) | $2 |\n| Note Receivable Bifurcated Derivatives | $250 | $(250) | $— |\n| Contingent Liabilities | $2,000 | $(2,000) | $— |\n| Total | $4,981 | $(3,565) | $1,416 | - The change in fair value of Level 3 liabilities resulted in a decrease of $3,565 thousand for the six months ended June 30, 2025[54] Note 7. Note Receivable and Embedded Derivatives In May 2024, Arcadia sold the GoodWheat brand to Above Food for $3.7 million, receiving a $6.0 million promissory note. Above Food defaulted on the first principal payment due May 14, 2025, leading Arcadia to record a full reserve of $4.0 million principal plus accrued interest ($421,000) as of June 30, 2025, due to uncertainties regarding recovery. The contingent features of the promissory note were bifurcated as embedded derivatives, with an estimated fair value of $0 as of June 30, 2025 - Above Food defaulted on the first $2.0 million principal payment and accrued interest (approx. $421,000) on the $6.0 million promissory note due May 14, 2025[60] - Company recorded a full reserve of $4.0 million principal plus accrued interest ($421,000) for the Above Food note receivable as of June 30, 2025, due to unlikelihood of cash payments[61] - Approximately 2.7 million Prepayment Shares of AFII common stock were issued to Arcadia, with an additional 800,000 shares believed to be issuable[59] - Embedded derivatives related to the promissory note had an estimated fair value of $0 as of June 30, 2025, down from $250,000 at the transaction date[62] Note 8. Consolidated Joint Venture Arcadia formed Archipelago Ventures Hawaii, LLC with Legacy Ventures Hawaii, LLC in 2019 to develop hemp-derived products. Due to regulatory challenges and market saturation, the cultivation activities of Archipelago were mutually agreed to be wound down in October 2021 - Archipelago Ventures Hawaii, LLC, a joint venture for hemp-derived products, was wound down in October 2021 due to regulatory challenges and market saturation[64] Note 9. Collaborative Arrangements The Company previously had a collaborative arrangement with Corteva Agriscience for the research, development, and commercialization of its non-GMO RS durum wheat trait. This trait was sold to Corteva on May 14, 2024, for $4.0 million cash, with Arcadia retaining certain usage rights and recognizing a gain - Sold non-GMO RS durum wheat trait to Corteva on May 14, 2024, for $4.0 million cash, recognizing a gain[67] - Arcadia retained certain rights to use the RS durum wheat trait after the sale[67] Note 10. Leases The Company leases office space in Dallas, TX, and Sacramento, CA, and previously leased a facility in American Falls, Idaho, which was terminated in July 2024. Lease liabilities and right-of-use assets are recognized for leases with terms over 12 months | Leases (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Right of use asset | $10 | $137 |\n| Operating lease liability — current | $11 | $155 | - Operating lease cost decreased from $507 thousand (six months ended June 30, 2024) to $129 thousand (six months ended June 30, 2025)[70] - The facility lease in American Falls, Idaho, was terminated effective July 2024[69] Note 11. Warrants and Options The Company has both equity-classified common stock warrants and liability-classified preferred investment options outstanding. Equity warrants are exercisable at the holder's option until expiration, while liability options are adjusted to fair value at each balance sheet date due to early settlement provisions | Warrants/Options | Outstanding at December 31, 2024 | Outstanding at June 30, 2025 | | :--------------- | :------------------------------- | :--------------------------- | | Equity Classified Common Stock Warrants | 259,817 | 195,885 |\n| Liability Classified Preferred Investment Options | 823,618 | 823,618 | - Certain May 2020 and September 2019 equity warrants expired during the six months ended June 30, 2025[73] - The change in fair value of liability-classified preferred investment options resulted in a loss of $548 thousand for the three months ended June 30, 2025, and a gain of $1.3 million for the six months ended June 30, 2025[13][141][155] Note 12. Stock-Based Compensation and Employee Stock Purchase Program The Company operates under the 2015 Omnibus Equity Incentive Plan and an Employee Stock Purchase Plan (ESPP). The 2015 Plan terminated for future awards in May 2025, but 338,341 shares were reserved for issuance. Stock-based compensation is valued using the Black-Scholes model - The 2015 Omnibus Equity Incentive Plan terminated for future awards in May 2025, with 338,341 shares reserved for issuance[77] - Unrecognized compensation cost related to unvested stock-based compensation grants was $249 thousand as of June 30, 2025, to be recognized over 0.9 years[79] | Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Stock options awards | $86 | $102 | $164 | $240 |\n| ESPP related compensation | $4 | $2 | $7 | $4 | Note 13. Income Taxes The Company's effective tax rate was 0.00% for the three and six months ended June 30, 2025 and 2024, primarily due to a full valuation allowance on net deferred tax assets. The Archipelago joint venture underwent an IRS audit for the 2021 tax year, with adjustments pushed out to partners - Effective tax rate was 0.00% for the three and six months ended June 30, 2025 and 2024, due to a full valuation allowance on net deferred tax assets[86] - IRS audit adjustments for the Archipelago joint venture's 2021 tax year were accepted and pushed out to partners in Q1 2025, with no expected penalties or interest for Arcadia[88] Note 14. Commitments and Contingencies The Company is subject to legal proceedings, including a Proposition 65 complaint regarding BPA in coconut water containers, which it intends to vigorously defend. It also faces demand letters from purported stockholders concerning the Roosevelt Exchange Agreement. A contingent liability related to the 2005 Anawah acquisition, initially $5.0 million, was eliminated as of June 30, 2025, due to abandonment and transfer of remaining programs - Facing a Proposition 65 complaint alleging BPA exposure in coconut water containers, which the Company intends to vigorously defend[92] - Received demand letters from purported stockholders alleging deficiencies in the preliminary proxy statement for the Roosevelt Exchange Agreement[93] - The remaining $2.0 million contingent liability from the 2005 Anawah acquisition was eliminated as of June 30, 2025, following the abandonment and transfer of the last two programs[95] Note 15. Segment Reporting The Company operates as one reportable segment, deriving revenue primarily from Zola coconut water sales. The Chief Executive Officer, as CODM, evaluates performance based on consolidated net (loss) income from continuing operations - Operates as a single reportable segment, with revenue primarily from Zola coconut water sales[98] - Net (loss) income from continuing operations was $(4,458) thousand for the three months ended June 30, 2025, compared to $1,850 thousand for the same period in 2024[99] Note 16. Net (Loss) Income per Share Basic and diluted net (loss) income per share are calculated based on net (loss) income attributable to common stockholders and weighted-average common shares outstanding, considering potentially dilutive securities | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic and diluted from continuing operations | $(3.26) | $1.36 | $(1.36) | $0.66 |\n| Net (loss) income per basic share | $(3.26) | $0.78 | $(1.36) | $(1.00) | | Potentially Dilutive Securities | June 30, 2025 | June 30, 2024 | | :------------------------------ | :------------ | :------------ | | Options to purchase common stock | 213,950 | 64,174 |\n| Warrants to purchase common stock | 195,885 | 261,466 |\n| Preferred investment options | 823,618 | 1,489,952 |\n| Total | 1,233,453 | 1,815,592 | Note 17. Related-Party Transactions The Company has related-party transactions with the John Sperling Foundation (JSF), which receives royalties from product sales or license payments involving intellectual property developed under research funding from Blue Horse Labs, Inc. Royalty fees due to JSF were $0 as of June 30, 2025, as product sales related to this IP ceased by December 31, 2024 - Royalty fees due to John Sperling Foundation (JSF) were $0 as of June 30, 2025, down from $30,000 at December 31, 2024[103] - Product sales related to intellectual property funded by Blue Horse Labs, Inc. ceased as of December 31, 2024, with no future royalty fees expected for JSF[104] Note 18. Subsequent Events Management has evaluated subsequent events through August 14, 2025, the date the financial statements were available for issuance, and no material subsequent events were disclosed beyond those already incorporated - Subsequent events evaluated through August 14, 2025, the financial statement issuance date[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key business developments, financial performance drivers, liquidity, and critical accounting estimates for the periods presented Special Note Regarding Forward-Looking Statements - Report contains forward-looking statements identified by words like "anticipate," "believe," "expect," etc., subject to risks and uncertainties[106] Overview Arcadia Biosciences, Inc. has transitioned its focus from wheat product development to consumer goods, primarily Zola coconut water, since 2021. Recent strategic activities include the sale of the GoodWheat brand and RS durum wheat trait in 2024, an agreement with Bioceres Crop Solutions Corp. for soy traits, and a significant business combination agreement with Roosevelt Resources LP, which will result in Roosevelt's limited partners owning 90% of Arcadia's common stock - Company's core business shifted to Zola coconut water products after acquiring Zola assets in May 2021[108] - Sold non-GMO Resistant Starch (RS) durum wheat trait to Corteva for $4.0 million cash on May 14, 2024[109] - Sold GoodWheat™ brand to Above Food Corp. for $3.7 million on May 16, 2024, reclassifying it as discontinued operations[110] - Entered a Securities Exchange Agreement with Roosevelt Resources LP on December 4, 2024, amended on April 30, 2025, where Roosevelt's limited partners will own 90% of Arcadia's common stock post-closing[111] - Entered an agreement with Bioceres Crop Solutions Corp. on March 28, 2025, transferring soy traits to the Company and reduced gluten/oxidative stability patents to BIOX, resulting in a $750,000 gain[112] - Terminated a license agreement with Bioseed on May 26, 2025, eliminating a $1.0 million contingent liability[113] Tariffs Baseline tariffs imposed by the U.S. government went into effect on April 9, 2025, with additional country-specific tariffs delayed until August 2025. The Company is monitoring the situation and discussing mitigation strategies with partners due to the uncertain impact on its business - U.S. government baseline tariffs effective April 9, 2025; country-specific tariffs delayed until August 2025[114] - Company is monitoring tariff landscape and exploring mitigation strategies with business partners due to uncertain impact[114] Our Products The Company's current product focus is Zola coconut water. It no longer retains effective commercialization rights or expects future royalties from its wheat-based intellectual property, including reduced gluten, oxidative stability, and resistant starch patents, following various agreements and transactions Zola Coconut Water - Zola coconut water is the Company's primary product, acquired in May 2021[115] - Zola is Non-GMO Project Verified, naturally hydrating, rich in electrolytes, and available in multiple flavors[115] Agronomic Wheat Traits - Arcadia no longer retains effective commercialization rights or expects future license/royalty fees from its wheat-based intellectual property (reduced gluten, oxidative stability, resistant starch patents)[116] Discontinued Operations The GoodWheat brand was exited and sold to Above Food, with its financial results now reported separately as discontinued operations in accordance with ASC 205-20 - GoodWheat brand exited and sold, with financial results reported as discontinued operations[117] Components of Our Statements of Operations Data This section defines the key revenue and expense categories reported in the Company's statements of operations, including product revenues, various operating expenses, interest income, credit loss, other income, and changes in fair value of financial instruments Revenues - Product revenues primarily from Zola coconut water sales; GLA oil sales ceased end of 2024[118] Operating Expenses Cost of revenues - Primarily consists of Zola product and freight costs, and inventory adjustments[119] Research and development expenses ("R&D") - Consists of fees to product formulation consultants and milestone payments for in-licensed technologies, expensed as incurred[120] Gain on sale of intangible assets - Represents gain from the sale of reduced gluten and oxidative stability patent portfolios in March 2025[121] Impairment of property and equipment - Includes losses from tangible assets due to impairment or recoverability test charges[122] Change in fair value of contingent consideration - Gain from reduction of contingent liability due to abandonment, assignment, or transfer of previously accrued programs[123] Selling, general and administrative expenses - Primarily includes employee costs, professional service fees, broker/sales commissions, and overhead costs[124] Interest income - Derived from cash, cash equivalents, investments, and note receivable[125] Credit loss - Reserve established for the Above Food note receivable[126] Other income - Primarily gain from receipt of AFII common stock[127] Change in the estimated fair value of common stock warrant and option liabilities - Fair value remeasurement of liability-classified preferred investment options from financing transactions[128] Net loss from discontinued operations - Results of operations for the discontinued GoodWheat brand[129] Results of Operations This section provides a detailed comparison of the Company's financial performance for the three and six months ended June 30, 2025, versus the same periods in 2024, explaining the drivers behind changes in revenues, operating expenses, and net income/loss Comparison of the Three Months Ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Product Revenues | $1,455 | $1,306 | $149 | 11% |\n| Cost of Revenues | $824 | $633 | $191 | 30% |\n| Gain on sale of intangible assets | — | $(4,000) | $4,000 | (100)% |\n| Change in fair value of contingent consideration | $(1,000) | — | $(1,000) | 100% |\n| Selling, general and administrative | $2,123 | $2,683 | $(560) | (21)% |\n| Credit loss | $(4,489) | — | $(4,489) | (100)% |\n| Net (loss) income from continuing operations | $(4,458) | $1,850 | $(6,308) | (341)% |\n| Net (loss) income attributable to common stockholders | $(4,458) | $1,061 | $(5,519) | (520)% | - Zola revenues increased by $280 thousand (24%) due to increased distribution and sales volume[132] - Credit loss of $4.5 million recognized due to a reserve for the Above Food note receivable[139] - Other income increased by $921 thousand (614%) primarily from a gain on receipt of AFII common stock[140] Comparison of the Six Months Ended June 30, 2025 and 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Product Revenues | $2,655 | $2,293 | $362 | 16% |\n| Cost of Revenues | $1,506 | $1,104 | $402 | 36% |\n| Gain on sale of intangible assets | $(750) | $(4,000) | $3,250 | (81)% |\n| Change in fair value of contingent consideration | $(2,000) | — | $(2,000) | 100% |\n| Selling, general and administrative | $3,861 | $4,745 | $(884) | (19)% |\n| Credit loss | $(4,489) | — | $(4,489) | (100)% |\n| Net (loss) income from continuing operations | $(1,859) | $903 | $(2,762) | (306)% |\n| Net (loss) income attributable to common stockholders | $(1,859) | $(1,362) | $(497) | 36% | - Zola revenues increased by $846 thousand (47%) due to increased distribution and sales volume[145] - Gain on sale of intangible assets was $750 thousand in 2025 (reduced gluten/oxidative stability patents) compared to $4.0 million in 2024 (RS durum wheat trait)[148] - Change in fair value of common stock warrant and option liabilities resulted in a gain of $1.3 million in 2025, up from $163 thousand in 2024[155] Seasonality The coconut water category, like other beverages, experiences seasonality, with sales volumes typically peaking during the second and third fiscal quarters due to warmer weather - Coconut water sales are seasonal, with highest volumes in Q2 and Q3 due to warmer weather[157] Liquidity & Capital Resources The Company primarily funds operations through equity financings, product sales, and license agreements. As of June 30, 2025, cash and cash equivalents were $1.4 million. The default on the Above Food promissory note has materially impacted near-term cash resources, and substantial doubt exists regarding the Company's ability to continue as a going concern - Cash and cash equivalents were $1.4 million as of June 30, 2025[158] - Net cash used in operations was $3.6 million for the six months ended June 30, 2025, and $9.6 million for the twelve months ended December 31, 2024[158] - Above Food's default on the $2.0 million principal payment of the promissory note has materially impacted the Company's near-term cash resources[159] Going Concern; Material Cash Requirements The Company's existing cash and cash equivalents are insufficient to meet anticipated cash requirements for the next 12 months, raising substantial doubt about its ability to continue as a going concern. Additional funding is required, which may involve debt or equity financings, asset sales, or partner arrangements, with potential risks of dilution or operational restrictions. Failure to secure funding could lead to reduced spending, asset liquidation, or bankruptcy - Existing cash is insufficient for the next 12 months, raising substantial doubt about the Company's ability to continue as a going concern[160] - Company will require additional funding in the near term; potential options include debt/equity financings, asset sales, or partner arrangements[161] - Failure to secure adequate funding could force reduced spending, asset liquidation, or dissolution/bankruptcy proceedings, potentially rendering common stock valueless[161][162] Liquidity The Company's working capital surplus decreased from $6.68 million at December 31, 2024, to $5.74 million at June 30, 2025, reflecting a decrease in current assets and liabilities | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Current assets | $7,579 | $9,242 |\n| Current liabilities | $1,839 | $2,563 |\n| Working capital surplus | $5,740 | $6,679 | Cash Flows The Company experienced a net decrease in cash and cash equivalents of $2.87 million for the six months ended June 30, 2025, primarily due to cash used in operating activities, partially offset by investing activities Cash flows from operating activities - Net cash used in operating activities decreased to $3.62 million for the six months ended June 30, 2025, from $5.67 million in the same period of 2024[164][165][166] - Non-cash charges in 2025 included a $1.3 million change in fair value of common stock warrant and option liabilities, a $2.0 million change in fair value of contingent consideration, and a $4.5 million credit loss[165] Cash flows from investing activities - Cash provided by investing activities was $750 thousand in 2025, solely from the sale of intangible assets[167] - In 2024, investing activities provided $4.65 million, including $2.5 million from investment sales and $4.0 million from the sale of the RS durum wheat trait[168] Cash flows from financing activities - Cash provided by financing activities was $5 thousand for both six-month periods, entirely from ESPP purchases[169] Off-Balance Sheet Arrangements The Company has not engaged in any off-balance sheet arrangements since its inception, other than Verdeca, which was disposed of in November 2020 - No off-balance sheet arrangements, except for Verdeca (disposed of in November 2020)[170] Critical Accounting Estimates Management's discussion and analysis relies on critical accounting estimates, including revenue recognition, determination of the provision for income taxes, and net realizable value of inventory, which involve significant judgment and assumptions - Critical accounting estimates include revenue recognition, income tax provision, and net realizable value of inventory[172] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is marked as "Not Required" in the report, indicating that the Company does not have material market risk disclosures to provide in this quarterly filing - Not required for this filing[173] Item 4. Controls and Procedures This section details the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - Disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[175] Changes in Internal Control over Financial Reporting - No material changes in internal control over financial reporting during the quarter ended June 30, 2025[176] Part II — Other Information Item 1. Legal Proceedings The Company is subject to various legal proceedings in the ordinary course of business. For specific details, refer to Note 14 of the Condensed Consolidated Financial Statements - Refer to Note 14 for details on legal proceedings[177] Item 1A. Risk Factors Readers should carefully consider the risk factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as well as additional unknown or immaterial risks, which could materially affect the business, financial condition, liquidity, or future results - Refer to Part I, "Item 1A. Risk Factors" in the Annual Report on Form 10-K for December 31, 2024, for a comprehensive discussion of risks[178] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the quarter ended June 30, 2025 - None reported[179] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the quarter ended June 30, 2025 - None reported[180] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[181] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025[182] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to agreements, certifications, and XBRL documents - Includes First Amendment to Securities Exchange Agreement, Principal Executive/Financial Officer's Certifications (Sections 302 and 906), and Inline XBRL documents[184] SIGNATURES - Report signed by President and CEO Thomas J. Schaefer and CFO Mark Kawakami on August 14, 2025[188]