Arcadia Biosciences(RKDA) - 2022 Q4 - Annual Report

Part I Item 1. Business Arcadia Biosciences produces and markets innovative plant-based food and beverage products, including GoodWheat™ and Zola® coconut water, leveraging non-GMO crop improvement and strategic partnerships - The company produces and markets innovative, plant-based food and beverage products, including GoodWheat™ and Zola® coconut water, using non-GMO advanced breeding techniques[19] - Growth strategy includes accelerating the monetization of the GoodWheat™ portfolio, evaluating acquisitive growth opportunities, and scaling the Zola brand through retail expansion[22] - In June 2022, the company launched its GoodWheat™ pasta, which offers four times the fiber of traditional pasta, and received the American Heart Association's Heart-Check mark in December 2022[22][23] - The company is exploring strategic alternatives for its CBD body care brands (ProVault™ and SoulSpring™) to focus on its core food and beverage products[28] - As of December 31, 2022, Arcadia owned or exclusively controlled 70 issued patents and 38 pending patent applications worldwide, with a significant portion related to its GoodWheat® portfolio[43] Item 1A. Risk Factors The company faces significant financial risks, including a history of substantial losses and going concern doubts, alongside operational challenges from intense competition and regulatory complexities - The company has a history of significant losses, incurring net losses of $15.6 million in 2022 and $16.1 million in 2021, with an accumulated deficit of $257.9 million as of December 31, 2022[62] - The company may require additional financing to fund operations and commercialization, and failure to obtain it on favorable terms could force delays or elimination of R&D activities[63] - The markets for pasta and coconut water are intensely competitive, and the company faces competition from large, established manufacturers as well as smaller, innovative producers[66] - The company's ability to use its net operating loss (NOL) carryforwards of approximately $81.1 million (federal) and $47.5 million (state) is subject to limitations under IRC Section 382 due to past ownership changes[100][428] - The company received a notice of non-compliance with Nasdaq's minimum bid price requirement in September 2022 but regained compliance in March 2023, with future failure potentially resulting in delisting[111][112] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments Item 2. Properties The company's corporate headquarters are in Dallas, Texas, with additional leased facilities in Davis, California, and American Falls, Idaho, deemed adequate for current needs - Corporate headquarters are located in Dallas, Texas, with additional facilities in Davis, California, and American Falls, Idaho[114] Item 3. Legal Proceedings The company is not currently a party to any material litigation or legal proceedings Item 4. Mine Safety Disclosures Not applicable Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Arcadia's common stock is listed on NASDAQ, and the company has never paid cash dividends nor repurchased equity securities in the year ended December 31, 2022 - The company's common stock is listed on the NASDAQ Stock Market under the symbol "RKDA"[120] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[122] - The company did not repurchase any of its equity securities during the year ended December 31, 2022[125] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Total revenues increased significantly in 2022, but the company continues to incur net losses and faces substantial doubt about its ability to continue as a going concern due to insufficient cash resources Comparison of the Years Ended December 31, 2022 and 2021 (in thousands) | Financial Metric | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $9,956 | $6,780 | $3,176 | 47% | | Product Revenues | $8,960 | $6,587 | $2,373 | 36% | | License Revenues | $879 | $17 | $862 | 5071% | | Total Operating Expenses | $28,771 | $42,306 | ($13,535) | -32% | | Cost of Revenues | $9,802 | $8,708 | $1,094 | 13% | | Research and Development | $1,509 | $3,889 | ($2,380) | -61% | | Selling, General and Administrative | $18,048 | $22,938 | ($4,890) | -21% | | Loss from Operations | ($18,815) | ($35,526) | $16,711 | -47% | | Net Loss | ($15,612) | ($16,134) | $522 | -3% | | Net Loss Attributable to Common Stockholders | ($15,376) | ($14,660) | ($716) | 5% | - The $2.4 million increase in product revenues was primarily driven by higher sales of Zola coconut water and body care products, which were brands acquired in May 2021[157] - The company has raised substantial doubt about its ability to continue as a going concern, stating that existing cash and cash equivalents of $20.6 million will not be sufficient to meet anticipated cash requirements for the next 12-18 months[180][249] Cash Flow Summary (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating Activities | ($13,977) | ($25,868) | | Investing Activities | $1,417 | $16,608 | | Financing Activities | $4,519 | $21,900 | | Net (Decrease) Increase in Cash | ($8,041) | $12,642 | Item 8. Financial Statements and Supplementary Data The consolidated financial statements highlight a 'Going Concern' uncertainty from the auditor, driven by recurring losses and insufficient cash, alongside a critical audit matter regarding GoodWheat inventory valuation - The independent auditor's report expresses substantial doubt about the Company's ability to continue as a going concern due to recurring net losses, net cash used in operations, and insufficient resources to meet anticipated cash requirements[216] - The auditor identified GoodWheat inventory valuation as a Critical Audit Matter, citing the significant judgments made by management in forecasting product demand and marketability[222][223] Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $25,398 | $35,388 | | Cash and cash equivalents | $20,644 | $28,685 | | Total Assets | $28,922 | $43,918 | | Total Current Liabilities | $4,209 | $5,040 | | Total Liabilities | $8,022 | $12,722 | | Total Stockholders' Equity | $20,900 | $31,196 | Consolidated Statements of Operations Data (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $9,956 | $6,780 | | Cost of Revenues | $9,802 | $8,708 | | Loss from Operations | ($18,815) | ($35,526) | | Net Loss | ($15,612) | ($16,134) | | Net Loss per Share (Basic & Diluted) | ($25.65) | ($27.56) | - Subsequent to year-end, in March 2023, the company raised gross proceeds of $6.0 million through a private placement (PIPE) of common stock, pre-funded warrants, and preferred investment options[445] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reported no disagreements with its accountants regarding accounting principles, financial disclosure, or auditing procedures Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[448] - Based on an evaluation using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[449] Item 9B. Other Information None Part III Items 10-14 Information for Items 10 through 14, covering governance, compensation, and related matters, is incorporated by reference from the company's definitive proxy statement - Information for Part III (Items 10-14) is incorporated by reference from the Registrant's Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders[9][455][457] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements, schedules, and an extensive exhibit index filed as part of the Form 10-K report - This part includes the financial statements from Item 8, notes that other schedules are omitted, and provides a detailed index of all exhibits filed with the report[462][463][464] Item 16. Form 10-K Summary Not applicable