Arcadia Biosciences(RKDA) - 2021 Q1 - Quarterly Report

Part I — Financial Information Item 1. Condensed Consolidated Financial Statements 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 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 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 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] - Total stockholders' equity increased by $17.15 million during the quarter, from $28.55 million to $45.70 million[14] Condensed Consolidated Statements of Cash Flows 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] Notes to Condensed Consolidated Financial Statements 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] - In January 2021, the company raised $25.1 million in a private placement of common stock and warrants[29][63] - A write-down of $210,000 was recorded for fixed assets related to CBD processing in Hawaii due to legislative delays[37] - 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][111] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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][125] - 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][129] Results of Operations 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] - The decrease in R&D expenses was primarily driven by the company pivoting its focus to commercialization and right-sizing research teams[154] Liquidity, Capital Resources, and Going Concern 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] - The company believes its existing cash and cash equivalents are sufficient to meet anticipated cash requirements for at least the next 12 months[164] 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 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] Quantitative and Qualitative Disclosures About Market Risk This section is not required for smaller reporting companies - Not Required[176] Controls and Procedures 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] - 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] Part II — Other Information Legal Proceedings 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - On January 15, 2021, a warrant to purchase 7,500 shares of common stock was issued to an independent contractor[183] Other Information 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] Exhibits This section lists the exhibits filed with the Form 10-Q, including forms of warrants, purchase agreements, and officer certifications