10-Q 1 rkda-10q_20200930.htm 10-Q rkda-10q_20200930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

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 September 30, 2020

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)

 

 

Delaware

81-0571538

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

202 Cousteau Place, Suite 105

Davis, CA

95618

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (530) 756-7077

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common

RKDA

NASDAQ CAPITAL MARKET

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

  

Accelerated filer

 

 

 

 

 

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

 

As of November 11, 2020, the registrant had 10,832,203 shares of common stock outstanding, $0.001 par value per share.

 

 

 


 

Arcadia Biosciences, Inc.

FORM 10-Q FOR THE QUARTER ENDED September 30, 2020

INDEX

 

 

 

 

 

 

 

Page

Part I —

 

Financial Information

 

1

 

 

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements:

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

2

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

3

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

5

 

 

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

24

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

35

 

 

 

 

Part II —

 

Other Information

 

36

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

36

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

36

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

36

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

36

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

37

 

 

 

 

 

 

 

SIGNATURES

 

38

 

 

 

 


 

ITEM 1.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Arcadia Biosciences, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,201

 

 

$

8,417

 

Short-term investments

 

 

 

 

 

16,915

 

Accounts receivable

 

 

373

 

 

 

602

 

Inventories, net — current

 

 

9,416

 

 

 

1,794

 

Prepaid expenses and other current assets

 

 

1,204

 

 

 

712

 

Total current assets

 

 

21,194

 

 

 

28,440

 

Restricted cash

 

 

2,001

 

 

 

 

Property and equipment, net

 

 

3,484

 

 

 

1,799

 

Right of use asset

 

 

6,013

 

 

 

1,963

 

Inventories, net — noncurrent

 

 

461

 

 

 

364

 

Goodwill

 

 

301

 

 

 

-

 

Intangible assets, net

 

 

400

 

 

 

-

 

Other noncurrent assets

 

 

23

 

 

 

8

 

Total assets

 

$

33,877

 

 

$

32,574

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

6,711

 

 

$

4,685

 

Amounts due to related parties

 

 

29

 

 

 

40

 

Debt — current

 

 

705

 

 

 

24

 

Unearned revenue — current

 

 

 

 

 

42

 

Operating lease liability — current

 

 

700

 

 

 

611

 

Other current liabilities

 

 

263

 

 

 

306

 

Total current liabilities

 

 

8,408

 

 

 

5,708

 

Debt — noncurrent

 

 

2,548

 

 

 

107

 

Operating lease liability — noncurrent

 

 

5,574

 

 

 

1,497

 

Common stock warrant liabilities

 

 

3,065

 

 

 

14,936

 

Other noncurrent liabilities

 

 

2,280

 

 

 

2,000

 

Total liabilities

 

 

21,875

 

 

 

24,248

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value—150,000,000 shares authorized as

   of September 30, 2020 and December 31, 2019; 10,832,203

   and 8,646,149 shares issued and outstanding as of September 30,

   2020 and December 31, 2019, respectively

 

 

51

 

 

 

49

 

Additional paid-in capital

 

 

231,954

 

 

 

214,826

 

Accumulated other comprehensive income

 

 

 

 

 

1

 

Accumulated deficit

 

 

(220,725

)

 

 

(207,171

)

Total Arcadia Biosciences stockholders’ equity

 

 

11,280

 

 

 

7,705

 

Non-controlling interest

 

 

722

 

 

 

621

 

Total stockholders' equity

 

 

12,002

 

 

 

8,326

 

Total liabilities and stockholders’ equity

 

$

33,877

 

 

$

32,574

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

1


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

2020

 

 

 

2019

 

 

2020

 

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

245

 

 

$

216

 

$

630

 

 

$

485

 

License

 

 

10

 

 

 

17

 

 

110

 

 

 

17

 

Royalty

 

 

16

 

 

 

 

 

58

 

 

 

 

Contract research and government grants

 

 

43

 

 

 

159

 

 

106

 

 

 

251

 

Total revenues

 

 

314

 

 

 

392

 

 

904

 

 

 

753

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product revenues

 

 

1,841

 

 

 

177

 

 

3,463

 

 

 

324

 

Research and development

 

 

1,762

 

 

 

1,931

 

 

5,999

 

 

 

5,387

 

Selling, general and administrative

 

 

4,292

 

 

 

4,477

 

 

11,689

 

 

 

10,434

 

Total operating expenses

 

 

7,895

 

 

 

6,585

 

 

21,151

 

 

 

16,145

 

Loss from operations

 

 

(7,581

)

 

 

(6,193

)

 

(20,247

)

 

 

(15,392

)

Interest expense

 

 

(23

)

 

 

(3

)

 

(32

)

 

 

(3

)

Other income, net

 

 

 

 

 

119

 

 

83

 

 

 

339

 

Change in fair value of common stock warrant liabilities

 

 

1,130

 

 

 

(7,777

)

 

6,212

 

 

 

(6,790

)

Loss on extinguishment of warrant liability

 

 

(682

)

 

 

 

 

(635

)

 

 

 

Offering costs

 

 

 

 

 

(336

)

 

 

 

 

(702

)

Net loss before income taxes

 

 

(7,156

)

 

 

(14,190

)

 

(14,619

)

 

 

(22,548

)

Income tax benefit (provision)

 

 

(9

)

 

 

3

 

 

(15

)

 

 

(14

)

Net loss

 

 

(7,165

)

 

 

(14,187

)

 

(14,634

)

 

 

(22,562

)

Net loss attributable to non-controlling interest

 

 

(774

)

 

 

 

 

(1,081

)

 

 

 

Net loss attributable to common stockholders

 

$

(6,391

)

 

$

(14,187

)

$

(13,553

)

 

$

(22,562

)

Net loss per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.60

)

 

$

(2.04

)

$

(1.42

)

 

$

(4.03

)

Weighted-average number of shares used in per share

   calculations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

10,719,618

 

 

 

6,942,612

 

 

9,570,259

 

 

 

5,596,545

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses on available-for-sale

   securities

 

 

 

 

 

(1

)

 

(1

)

 

 

 

Other comprehensive loss

 

 

 

 

 

(1

)

 

(1

)

 

 

 

Comprehensive loss attributable to common stockholders

 

$

(6,391

)

 

$

(14,188

)

$

(13,554

)

 

$

(22,562

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.


2


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Non-

Controlling

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Loss) Income

 

 

Interest

 

 

Equity

 

Balance at December 31, 2019

 

 

8,646,149

 

 

$

49

 

 

$

214,826

 

 

$

(207,171

)

 

$

1

 

 

$

621

 

 

$

8,326

 

Issuance of shares related to employee stock

   purchase plan

 

 

7,946

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

 

 

 

14

 

Stock-based compensation

 

 

 

 

 

 

 

 

772

 

 

 

 

 

 

 

 

 

 

 

 

772

 

Unrealized losses on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Non-controlling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

689

 

 

 

689

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

2,525

 

 

 

 

 

 

(102

)

 

 

2,423

 

Balance at March 31, 2020

 

 

8,654,095

 

 

$

49

 

 

$

215,612

 

 

$

(204,646

)

 

$

 

 

$

1,208

 

 

$

12,223

 

Issuance of shares related to exercise of

   June 2018 Warrants

 

 

1,392,345

 

 

 

1

 

 

 

5,568

 

 

 

 

 

 

 

 

 

 

 

 

5,569

 

Issuance of investor warrants related to

   May 2020 Warrant Transaction

 

 

 

 

 

 

 

 

4,415

 

 

 

 

 

 

 

 

 

 

 

 

4,415

 

Issuance of placement agent warrants related to

   issuance of May 2020 Warrants

 

 

 

 

 

 

 

 

215

 

 

 

 

 

 

 

 

 

 

 

 

215

 

Stock-based compensation

 

 

 

 

 

 

 

 

595

 

 

 

 

 

 

 

 

 

 

 

 

595

 

Non-controlling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

493

 

 

 

493

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(9,688

)

 

 

 

 

 

(205

)

 

 

(9,893

)

Balance at June 30, 2020

 

 

10,046,440

 

 

$

50

 

 

$

226,405

 

 

$

(214,334

)

 

$

 

 

$

1,496

 

 

$

13,617

 

Issuance of shares related to exercise of

   March 2018 PIPE

 

 

641,416

 

 

 

1

 

 

 

2,443

 

 

 

 

 

 

 

 

 

 

 

 

2,444

 

Issuance of investor warrants related to

   July 2020 Warrant Transaction

 

 

 

 

 

 

 

 

2,059

 

 

 

 

 

 

 

 

 

 

 

 

2,059

 

Issuance of placement agent warrants related to

   issuance of July 2020 Warrants

 

 

 

 

 

 

 

 

101

 

 

 

 

 

 

 

 

 

 

 

 

101

 

Issuance of shares related to employee stock

   purchase plan

 

 

11,721

 

 

 

 

 

 

37

 

 

 

 

 

 

 

 

 

 

 

 

37

 

Stock-based compensation

 

 

 

 

 

 

 

 

477

 

 

 

 

 

 

 

 

 

 

 

 

477

 

Shares of common stock issued at closing of ISI

   transaction

 

 

132,626

 

 

 

 

 

 

432

 

 

 

 

 

 

 

 

 

 

 

 

432

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(6,391

)

 

 

 

 

 

(774

)

 

 

(7,165

)

Balance at September 30, 2020

 

 

10,832,203

 

 

$

51

 

 

$

231,954

 

 

$

(220,725

)

 

$

 

 

$

722

 

 

$

12,002

 

 

 

 

 

3


 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Non-

Controlling

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Interest

 

 

Equity

 

Balance at December 31, 2018

 

 

4,774,919

 

 

$

45

 

 

$

191,136

 

 

$

(178,366

)

 

$

 

 

$

12,815

 

Issuance of shares related to employee stock

   purchase plan

 

 

2,500

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Stock-based compensation

 

 

 

 

 

 

 

 

422

 

 

 

 

 

 

 

 

 

422

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,612

)

 

 

 

 

 

(12,612

)

Balance at March 31, 2019

 

 

4,777,419

 

 

$

45

 

 

$

191,566

 

 

$

(190,978

)

 

$

 

 

$

633

 

Issuance of shares related to June 2019 Offering

 

 

1,489,575

 

 

 

2

 

 

 

3,301

 

 

 

 

 

 

 

 

 

3,303

 

Issuance of placement agent warrants related to

   June 2019 Offering

 

 

 

 

 

 

 

 

198

 

 

 

 

 

 

 

 

 

198

 

Issuance of shares related to the exercise of warrants

   issued with the June 2019 offering

 

 

1,053,745

 

 

 

1

 

 

 

5,268

 

 

 

 

 

 

 

 

 

5,269

 

Offering costs related to June 2019 Offering

 

 

 

 

 

 

 

 

(487

)

 

 

 

 

 

 

 

 

(487

)

Stock-based compensation

 

 

 

 

 

 

 

 

389

 

 

 

 

 

 

 

 

 

389

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

4,237

 

 

 

 

 

 

4,237

 

Balance at June 30, 2019

 

 

7,320,739

 

 

$

48

 

 

$

200,235

 

 

$

(186,741

)

 

$

 

 

$

13,542

 

Issuance of shares related to employee stock

   purchase plan

 

 

6,036

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

10

 

Issuance of shares related to employee stock option

   exercises

 

 

546

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Reclassification of common stock warrant liability

   balance with exercise

 

 

 

 

 

 

 

 

7,016

 

 

 

 

 

 

 

 

 

7,016

 

Issuance of shares related to September 2019 Offering

 

 

1,318,828

 

 

 

1

 

 

 

6,570

 

 

 

 

 

 

 

 

 

6,571

 

Issuance of placement agent warrants related to

   September 2019 Offering

 

 

 

 

 

 

 

 

326

 

 

 

 

 

 

 

 

 

326

 

Offering costs related to September 2019 Offering

 

 

 

 

 

 

 

 

(796

)

 

 

 

 

 

 

 

 

(796

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,059

 

 

 

 

 

 

 

 

 

1,059

 

Non-controlling interest contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

689

 

 

 

689

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,187

)

 

 

 

 

 

(14,187

)

Balance at September 30, 2019

 

 

8,646,149

 

 

$

49

 

 

$

214,423

 

 

$

(200,928

)

 

$

689

 

 

$

14,233

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.


4


 

Arcadia Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

 

2020

 

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(14,634

)

 

$

(22,562

)

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

 

 

 

 

 

 

 

 

Change in fair value of common stock warrant liabilities

 

 

(6,212

)

 

 

6,790

 

Loss on extinguishment of warrant liability

 

 

635

 

 

 

 

Offering costs

 

 

 

 

 

702

 

Depreciation

 

 

395

 

 

 

133

 

Lease amortization

 

 

745

 

 

 

530

 

(Gain) Loss on disposal of equipment

 

 

(8

)

 

 

1

 

Net amortization of investment premium

 

 

(44

)

 

 

(121

)

Stock-based compensation

 

 

1,844

 

 

 

1,870

 

Write-down of inventory and prepaid production costs

 

 

3,063

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

229

 

 

 

38

 

Unbilled revenue

 

 

-

 

 

 

3

 

Inventories

 

 

(9,609

)

 

 

(1,411

)

Prepaid expenses and other current assets

 

 

(1,157

)

 

 

(36

)

Other noncurrent assets

 

 

(15

)

 

 

 

Accounts payable and accrued expenses

 

 

2,026

 

 

 

2,425

 

Amounts due to related parties

 

 

(11

)

 

 

(1

)

Other current liabilities

 

 

(43

)

 

 

3

 

Unearned revenue

 

 

(42

)

 

 

(16

)

Operating lease payments

 

 

(629

)

 

 

(534

)

Net cash used in operating activities

 

 

(23,467

)

 

 

(12,186

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sale of property and equipment

 

 

8

 

 

 

1

 

Purchases of property and equipment

 

 

(2,038

)

 

 

(878

)

Acquisitions, net of cash acquired

 

 

(500

)

 

 

 

Purchases of investments