PR Newswire | Aug 16, 2021 04:06PM EDT

Financial Results and Business Highlights

08/16 15:05 CDT

Arcadia Biosciences Announces Strong Second-Quarter and First-Half 2021 Financial Results and Business HighlightsRevenues for quarter up five-fold, year-to-date up four-fold DAVIS, Calif., Aug. 16, 2021

DAVIS, Calif., Aug. 16, 2021 /PRNewswire/ -- Arcadia Biosciences, Inc.(r) (Nasdaq: RKDA), a producer and marketer of innovative, plant-based health and wellness products, today released its financial and business results for the second quarter and first half of 2021.

"In addition to being marked by five-fold revenue growth, our second quarter was the first time Arcadia recorded sales from our consumer brands, representing a key milestone in our transformation to a dynamic producer and marketer of innovative, plant-based health and wellness products," said Matt Plavan, CEO of Arcadia.

"The quarter was also highlighted by significant advancements in our strategic resource and capacity building, and the successful integration of operations following the Lief Brands acquisition," he added. "We strongly believe that these initiatives, along with the profitable sale of our Bioceres shares will enable us to accelerate our current momentum and strongly position the company to achieve meaningful top-line growth."

Q2 and Recent Operating and Business Highlights

* Arcadia Names Veteran CPG Leader Laura Pitlik as Chief Marketing Officer. Arcadia recently named Laura Pitlik its Chief Marketing Officer to expand brand awareness of its consumer goods following several key acquisitions. A veteran CPG strategist, Pitlik launched the first national line of all-natural breads, Nature's Pride(r), for Hostess Brands, and has deep expertise in the CPG industry, leading brands such as Dr Pepper(r), Wonder(r) Bread and On The Border(r) tortilla chips and salsas. * Arcadia Hires Lief Executives with Acquisition, Bringing Deep CPG Experience. As part of the Lief acquisition, Arcadia hired two senior CPG executives: Chris Cuvelier as Chief Growth Officer and Belinda Yao as Vice President of Operations. Cuvelier leads growth strategy and sales execution for the company's consumer goods business. As the founder and former CEO of plant-based beverage maker Zola, Cuvelier successfully extended the Zola brand to include coconut water and grew gross revenues to more than $20 million annually. Yao oversees supply chain manufacturing for the company, including demand planning, procurement and supplier relationships, order fulfillment, inventory management, logistics, customer service and data analytics. She is a former supply chain lead for The Dannon Company, Harmless Harvest and Zola. The company also expanded its roster of CPG talent beyond executive roles, having attracted key individuals in finance and procurement positions who bring tenured experience from leading CPG companies. * Arcadia Advances Successful Integration of Lief Brands. Immediately upon the close of the Lief acquisition, Arcadia began integrating the Lief manufacturing team, leveraging overhead synergies, and scaling manufacturing capacity to meet anticipated volume growth. * Arcadia Completes Sale of Bioceres Shares. Arcadia successfully sold the Bioceres shares previously acquired as partial consideration for the sale of its partnership interest in Verdeca. With this sale and the up-front payments received at the time of the transaction, the company successfully monetized more than $27 million in cash from the sale of its interest in the HB4 drought tolerant soybean technology. Arcadia still retains further royalty rights up to $10 million upon commercialization of HB4.

Arcadia Biosciences, Inc.

Financial Snapshot

(Unaudited)

($ in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Favorable / Favorable / 2021 2020 2021 2020 (Unfavorable) (Unfavorable)

$ % $ %

Total revenues 1,405 281 1,124 400 % 2,234 590 1,644 279 %

Total operating expenses 9,088 7,157 (1,931) (27) % 15,243 13,256 (1,987) (15) %

Loss from operations (7,682) (6,876) (806) (12) % (13,009) (12,666) (343) (3) %

Net loss attributable to common (5,261) (9,689) 4,428 46 % (3,202) (7,164) 3,962 55 %stockholders

RevenuesIn the second quarter of 2021, revenues were $1.4 million, compared to revenues of $281,000 in the second quarter of 2020, and first half 2021 revenues were $2.2 million, compared to $590,000 in the first half of 2020. The $1.1 million quarter-over-quarter increase was primarily driven by the sales related to the newly acquired portfolio of wellness brands, in addition to GoodHemp seed sales. The $1.6 million year-over-year increase was driven by the aforementioned, in addition to higher GoodWheat grain sales during the first quarter of 2021.

Operating ExpensesIn the second quarter of 2021, operating expenses were $9.1 million compared to $7.2 million in the second quarter of 2020, and first half 2021 operating expenses were $15.2 million compared to $13.3 million in the first half of 2020.

Cost of product revenues in the second quarter of 2021 included costs associated with the newly acquired portfolio of wellness brands and $720,000 of write-downs of wheat inventories and hemp seed inventory to fair value, while the second quarter of 2020 included a $1.4 million write-off of hemp seeds that did not meet quality specifications. Cost of product revenues for the first half of 2021 were $2.4 million, or $821,000 higher than in the first half of 2020, primarily driven by sales of the newly acquired product lines.

Research and development (R&D) spending decreased by $862,000 and $1.9 million for the second quarter and six months ended June 30, 2021, respectively, primarily due to lower employee expenses as we right-sized our research teams, along with the absence of Verdeca related activity in 2021.

General and administrative (SG&A) costs for the quarter and six months ended June 30, 2021 were $2.7 million and $3.0 million higher than in the quarter and six months ended June 30, 2020, respectively, resulting in part from the acquisitions this quarter, including investment banker success fees, legal diligence and transaction fees, as well as additional salaries and benefits with the increased headcount. Marketing, advertising and consulting activities increased in 2021 as well.

Net Income Attributable to Common StockholdersNet loss attributable to common stockholders for the second quarter of 2021 was $5.3 million, or $0.24 per share, a $4.4 million decrease from the $9.7 million, or $1.04 per share, net loss for the second quarter of 2020. The second quarter of 2021 included $2.8 million of other income for the gain on the sale of Bioceres shares and $498,000 of non-cash expense recognized as a result of the increase in the fair value of common stock warrant liabilities. The first quarter of 2020 included $3.1 million of non-cash expense for the increase in the fair value of common stock warrant liabilities.

Net loss attributable to common stockholders for the first half of 2021 was $3.2 million, or $0.15 per share, a $4.0 million decrease from the $7.2 million, or $0.80 per share, net loss for the second half of 2020. A realized gain on the sale of Bioceres shares in the amount of $10.2 million was recognized in the first half of 2021. Non-cash expense of $176,000 was recorded in the first half of 2021 for the increase in the fair value of common stock warrant liabilities, while $5.1 million of non-cash income was recorded during the first half of 2020 for the decrease in the fair value of common stock warrant liabilities.

Conference Call and WebcastThe company has scheduled a conference call for 4:30 p.m. Eastern (1:30 p.m. Pacific) today, August 16, to discuss second-quarter financial results and key strategic achievements.

Interested participants can join the conference call using the following numbers:

U.S. Toll-Free Dial-In: +1-844-243-4690

International Dial-In: +1-225-283-0138

Passcode: 3389334

A live webcast of the conference call will be available on the "Investors" section of the Arcadia website at www.arcadiabio.com. Following completion of the call, a recorded replay will be available on the company's investor website.

About Arcadia Biosciences, Inc.With origins as a trailblazing developer of science-based approaches to enhancing the quality and nutritional value of crops and food ingredients, Arcadia Biosciences (Nasdaq: RKDA) is now a producer of innovative, plant-based health and wellness products, within the portfolios of GoodWheat(tm) and Lief(tm), which includes popular brands Soul Spring(tm), ProVault(tm), Saavy Naturals(r) and Zola(r) coconut water. The company's growing number of innovative offerings are designed to enhance quality and health benefits in an array of consumer product categories. For more information, visit https://arcadiabio.com/.

Safe Harbor Statement"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about the company and its products, including statements relating to projected revenue growth as a result of the asset acquisition. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risks and uncertainties include, but are not limited to: the price and demand for the company's products are lower than expected; the company's and its partners' and affiliates' ability to develop and sell commercial products incorporating its traits, and complete the regulatory review process for such products; the company's compliance with laws and regulations that impact the company's business, including the sale of products containing CBD, and changes to such laws and regulations; the growth of the global wheat and hemp markets; the successful integration of the acquired brands and assets into Arcadia's business; the potential impact of COVID-19 on the company's business; and the company's future capital requirements and ability to satisfy its capital needs. Further information regarding these and other factors that could affect the company's financial results is included in filings the company makes with the Securities and Exchange Commission from time to time, including the section entitled "Risk Factors" and additional information set forth in its Form 10-K for the year ended December 31, 2020, and other filings. These forward-looking statements speak only as of the date hereof, and Arcadia Biosciences, Inc. undertakes no duty to update these forward-looking statements.

LinkedIn: Arcadia BiosciencesTwitter: @ArcadiaAg

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

June 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $ 43,977 $ 14,042

Short-term investments - 11,625

Accounts receivable 1,147 1,406

Inventories, net - current 3,897 3,812

Prepaid expenses and other current assets 1,895 811

Total current assets 50,916 31,696

Restricted cash - 2,001

Property and equipment, net 3,740 3,539

Right of use asset 6,360 5,826

Inventories, net - noncurrent 3,890 3,485

Goodwill 1,648 408

Intangible assets, net 4,068 370

Other noncurrent assets 176 23

Total assets $ 70,798 $ 47,348

Liabilities and stockholders' equity

Current liabilities:

Accounts payable and accrued expenses $ 5,189 $ 4,105

Amounts due to related parties 33 80

Debt - current 1,140 1,141

Unearned revenue - current 63 8

Operating lease liability - current 962 717

Other current liabilities 264 263

Total current liabilities 7,651 6,314

Debt - noncurrent 87 2,105

Operating lease liability - noncurrent 5,727 5,389

Common stock warrant liabilities 12,514 2,708

Other noncurrent liabilities 2,140 2,280

Total liabilities 28,119 18,796

Commitments and contingencies

Stockholders' equity:

Common stock, $0.001 par value-150,000,000 sharesauthorized as of June 30, 2021 and December 31,2020; 22,163,650 and 13,450,861 shares issued and 63 54outstanding as of June 30, 2021 and December 31,2020, respectively

Additional paid-in capital 256,616 239,496

Accumulated other comprehensive income (12) -

Accumulated deficit (215,027) (211,825)

Total Arcadia Biosciences stockholders' equity 41,640 27,725

Non-controlling interest 1,039 827

Total stockholders' equity 42,679 28,552

Total liabilities and stockholders' equity $ 70,798 $ 47,348

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Revenues:

Product $ 1,379 $ 231 $ 2,183 $ 385

License - - - 100

Royalty 26 12 51 42

Contract research and government grants - 38 - 63

Total revenues 1,405 281 2,234 590

Operating expenses:

Cost of product revenues 1,587 1,490 2,443 1,622

Research and development 1,131 1,993 2,290 4,237

Change in fair value of contingent consideration - - (140) -

Write-down of fixed assets - - 210 -

Selling, general and administrative 6,370 3,674 10,439 7,397

Total operating expenses 9,088 7,157 15,243 13,256

Loss from operations (7,682) (6,876) (13,009) (12,666)

Interest expense (1) (6) (8) (9)

Other income, net 2,759 10 10,222 82

Change in fair value of common stock warrant liabilities (498) (3,079) (176) 5,082

Gain on extinguishment of warrant liability - 47 - 47

Issuance and offering costs - - (769) -

Net loss before income taxes (5,422) (9,904) (3,740) (7,464)

Income tax benefit (provision) - 10 - (7)

Net loss (5,422) (9,894) (3,740) (7,471)

Net loss attributable to non-controlling interest (161) (205) (538) (307)

Net loss attributable to common stockholders $ (5,261) $ (9,689) $ (3,202) $ (7,164)

Net loss per share attributable to common stockholders:

Basic and diluted $ (0.24) $ (1.04) $ (0.15) $ (0.80)

Weighted-average number of shares used in per share

calculations:

Basic and diluted 21,745,403 9,327,317 21,271,960 8,989,265

Other comprehensive loss, net of tax

Unrealized losses on investment securities - - - (1)

Foreign currency translation adjustment (12) - (12) -

Other comprehensive loss (12) - (12) (1)

Comprehensive loss attributable to common stockholders $ (5,273) $ (9,689) $ (3,214) $ (7,165)

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Six Months Ended June 30,

2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (3,740) $ (7,471)

Adjustments to reconcile net loss to cash used in operating activities:

Change in fair value of common stock warrant liabilities 176 (5,082)

Gain on extinguishment of warrant liability - (47)

Change in fair value of contingent consideration (140) -

Issuance and offering costs 769 -

Depreciation 484 182

Amortization of intangible assets 48 -

Lease amortization 639 484

Loss on disposal of fixed assets 135 -

Net amortization of investment premium - (44)

Stock-based compensation 681 1,367

Realized gain on corporate securities (10,222) -

Write-down of fixed assets 210 -

Write-down of inventory and prepaid production costs 983 1,421

Changes in operating assets and liabilities:

Accounts receivable 259 199

Inventories (633) (8,031)

Prepaid expenses and other current assets (938) (1,276)

Other noncurrent assets (153) (15)

Accounts payable and accrued expenses 1,083 2,252

Amounts due to related parties (47) (18)

Unearned revenue 56 (42)

Other current liabilities 1 -

Other noncurrent liabilities (1) (43)

Operating lease payments (590) (384)

Net cash used in operating activities (10,940) (16,548)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment (713) (1,749)

Purchases of investments - (1,292)

Acquisitions, net of cash acquired (4,250) -

Proceeds from sales and maturities of investments 21,845 17,650

Net cash (used in) provided by investing activities 16,882 14,609

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock and warrants from January 2021 PIPE 25,147 -securities purchase agreement

Payments of offering costs relating to January 2021 PIPE securities purchase (1,912) -agreement

Proceeds from warrant exercises from June 2018 Offering - 6,822

Proceeds from borrowings - 3,108

Payment of transaction costs relating to extinguishment of warrant liability - (594)

Principal payments on debt (2,019) (15)

Proceeds from ESPP purchases 27 14

Capital contributions received from non-controlling interest 750 1,182

Net cash provided by financing activities 21,993 10,517

Effects of foreign currency translation on cash and cash equivalents (1) -

Net increase in cash, cash equivalents and restricted cash 27,934 8,578

Cash, cash equivalents and restricted cash - beginning of period 16,043 8,417

Cash, cash equivalents and restricted cash - end of period $ 43,977 $ 16,995

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for income taxes $ 1 $ -

Cash paid for interest $ 21 $ 6

NONCASH INVESTING AND FINANCING ACTIVITIES:

Fixed assets acquired with notes payable $ - $ 37

Common stock warrants issued to placement agent and included in offering $ - $ 215costs related to May 2020 Warrant Transaction

Shares of common stock issued at closing of Arcadia Wellness transaction $ 2,053 $ -

Common stock warrants issued to placement agent and included in offering $ 942 $ -costs related to January 2021 PIPE securities purchase agreement

Right of use assets obtained in exchange for new operating lease liabilities $ 913 $ 3,947

Purchases of fixed assets included in accounts payable and accrued expenses $ 58 $ -

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SOURCE Arcadia Biosciences, Inc.