Full Press Release Details
ARCADIA BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On May 14, 2024 Arcadia Biosciences, Inc. ( Arcadia or the Company ) completed the sale of its GoodWheat business ( Disposition ) to Above Food Corp. ( Above Food or the Buyer ). Pursuant to the Asset Purchase Agreement ( Agreement ), the Company sold its GoodWheat business to Above Food for consideration of $4,000,000, consisting of a promissory note in the original principal amount of $6,000,000 ( Promissory Note ) from the Buyer to Arcadia and $2,000,000 in cash paid at closing by Arcadia to the Buyer.
The purpose of the following unaudited pro forma consolidated financial information is to reflect the closing of the Disposition. The unaudited pro forma consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 Amendments to Financial Disclosures about Acquired and Disposed Businesses and presents the historical financial statements of the Company adjusted to give effect to the Disposition.
The unaudited pro forma consolidated balance sheet as of March 31, 2024 presents the historical unaudited consolidated balance sheet of the Company on a pro forma basis as if the Disposition had been consummated on March 31, 2024. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2023 and 2022 and the three months ended March 31, 2024 present the historical unaudited consolidated statements of operations of the Company on a pro forma basis as if the Disposition, had been consummated on January 1, 2022. The unaudited pro forma consolidated financial information was derived from and should be read in conjunction with the historical consolidated financial statements of the Company for the years ended December 31, 2023 and 2022 included in the Company's annual report on Form 10-K filed with the SEC on March 28, 2024 and the historical consolidated financial statements of the Company for the three months ended March 31, 2024 included in the Company's quarterly report on Form 10-Q filed with the SEC on May 13, 2024.
The unaudited pro forma consolidated financial statements are for illustrative purposes only and do not necessarily reflect the Company's financial condition or results of operations as if the Disposition occurred on the dates indicated. Further, the unaudited pro forma consolidated financial information may not be indicative of the future financial condition and results of operations of the Company. The unaudited pro forma adjustments represent management's estimates based on information available as of the date of these unaudited pro forma consolidated financial statements and are subject to change as additional information becomes available and analyses are performed.
ARCADIA BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2024
| Reported March 31, 2024 | Disposition of Good Wheat (a) | Other Transaction Accounting Adjustments | Notes | Pro Forma | ||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 3,317 | $ | $ | (2,000) | (b) | $ | 1,317 | ||
| Short-term investments | 5,184 | 5,184 | ||||||||
| Promissory notes receivable | 6,000 | (c) | 6,000 | |||||||
| Accounts receivable and other receivables | 760 | 760 | ||||||||
| Assets held for sale | 15 | 15 | ||||||||
| Inventory - current | 1,831 | (1,049) | 782 | |||||||
| Prepaid expenses and other current assets | 535 | 535 | ||||||||
| Total current assets | 11,642 | (1,049) | 4,000 | 14,593 | ||||||
| Property and equipment, net | 328 | (314) | 14 | |||||||
| Right of use assets | 695 | 695 | ||||||||
| Inventories - noncurrent | 3,178 | (2,987) | 191 | |||||||
| Intangible assets, net | 39 | 39 | ||||||||
| Other noncurrent assets | 164 | 164 | ||||||||
| Total assets | $ | 16,046 | $ | (4,350) | $ | 4,000 | $ | 15,696 | ||
| Liabilities and stockholders' equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued expenses | $ | 1,732 | $ | (328) | $ | 155 | (d) | $ | 1,559 | |
| Amounts due to related parties | 75 | 75 | ||||||||
| Operating lease liabilities - current | 801 | 801 | ||||||||
| Other current liabilities | 270 | (78) | 192 | |||||||
| Total current liabilities | 2,878 | (406) | 155 | 2,627 | ||||||
| Operating lease liabilities - noncurrent | 21 | 21 | ||||||||
| Common stock warrant and option liabilities | 664 | 664 | ||||||||
| Other non-current liabilities | 2,000 | 2,000 | ||||||||
| Total liabilities | 5,563 | (406) | 155 | 5,312 |
| Stockholders' equity: | ||||||||||
| Common stock | 65 | 65 | ||||||||
| Additional paid-in capital | 284,658 | 284,658 | ||||||||
| Accumulated other comprehensive income | 161 | 161 | ||||||||
| Accumulated deficit | (274,263) | (3,944) | (155) 4,000 | (d) (e) | (274,362) | |||||
| Total Arcadia Biosciences stockholder's equity | 10,621 | (3,944) | 3,845 | 10,522 | ||||||
| Non-controlling interest | (138) | (138) | ||||||||
| Total stockholder's equity | 10,483 | (3,944) | 3,845 | 10,384 | ||||||
| Total liabilities and stockholders' equity | $ | 16,046 | $ | (4,350) | $ | 4,000 | $ | 15,696 |
See accompanying notes to the unaudited pro forma consolidated financial statements.
ARCADIA BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(In thousands, except share and per share data)
| Reported March 31, 2024 | Disposition of Good Wheat (a) | Other Transaction Accounting Adjustments | Notes | Pro Forma | ||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||
| Revenues: | ||||||||||
| Product | $ | 1,255 | $ | (268) | $ | $ | 987 | |||
| Operating expenses: | ||||||||||
| Cost of revenues | 820 | (349) | 471 | |||||||
| Research and development | 272 | (267) | 5 | |||||||
| Loss on sale of property and equipment | 2 | 2 | ||||||||
| Impairment of property and equipment | 36 | 36 | ||||||||
| Selling, general and administrative | 3,189 | (1,127) | 2,062 | |||||||
| Total operating expenses | 4,319 | (1,743) | 2,576 | |||||||
| Loss from operations | (3,064) | 1,475 | (1,589) | |||||||
| Interest income | 45 | 45 | ||||||||
| Other income, net | 3 | 3 | ||||||||
| Change in fair value of common stock warrant and option liabilities | 593 | 593 | ||||||||
| Net loss from continuing operations | (2,423) | 1,475 | (948) | |||||||
| Net loss | (2,423) | 1,475 | (948) | |||||||
| Net loss attributable to non-controlling interest | ||||||||||
| Net loss attributable to common stockholders: | (2,423) | 1,475 | (948) | |||||||
| Basic and diluted from continuing operations | $ | (1.78) | $ | (0.70) | ||||||
| Weighted-average number of shares used in per share calculation: | ||||||||||
| Basic and diluted | 1,361,657 | 1,361,657 |
See accompanying notes to the unaudited pro forma consolidated financial statements.
ARCADIA BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2023
(In thousands, except share and per share data)
| Reported December 31, 2023 | Disposition of Good Wheat (a) | Other Transaction Accounting Adjustments | Notes | Pro Forma | ||||||
| Unaudited | Unaudited | Unaudited | ||||||||
| Revenues: | ||||||||||
| Product | $ | 5,313 | $ | (876) | $ | $ | 4,437 | |||
| License | 17 | 17 | ||||||||
| Total revenues | 5,330 | (876) | 4,454 | |||||||
| Operating expenses: | ||||||||||
| Cost of revenues | 3,300 | (1,126) | 2,174 | |||||||
| Research and development | 1,387 | (1,323) | 64 | |||||||
| Gain on sale of property and equipment | (40) | (40) | ||||||||
| Impairment of ROU asset | 113 | 113 | ||||||||
| Selling, general and administrative | 14,508 | (6,274) | 8,234 | |||||||
| Total operating expenses | 19,268 | (8,723) | 10,545 | |||||||
| Loss from operations | (13,938) | 7,847 | (6,091) | |||||||
| Interest income | 695 | 695 | ||||||||
| Other income, net | 48 | 48 | ||||||||
| Valuation loss on March 2023 PIPE | (6,076) | (6,076) | ||||||||
| Change in fair value of common stock warrant and option liabilities | 6,544 | 6,544 | ||||||||
| Issuance and offering costs allocated to liability classified options | (430) | (430) | ||||||||
| Net loss from continuing operations before income taxes | (13,157) | 7,847 | (5,310) | |||||||
| Income tax expense | (8) | (8) | ||||||||
| Net loss from continuing operations | (13,165) | 7,847 | (5,318) | |||||||
| Net loss from discontinued operations | (821) | (821) | ||||||||
| Net loss | (13,986) | 7,847 | (6,139 | |||||||
| Net loss attributable to non-controlling interest | (5) | (5) |
| Net loss attributable to common stockholders: | (13,981) | 7,847 | (6,134) | |||||||
| Basic and diluted from continuing operations | $ | (10.64) | $ | (4.30) | ||||||
| Basic and diluted from discontinued operations | $ | (0.66) | $ | (0.66) | ||||||
| Weighted-average number of shares used in per share calculation: | ||||||||||
| Basic and diluted | 1,236,934 | 1,236,934 |
See accompanying notes to the unaudited pro forma consolidated financial statements.
ARCADIA BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
(In thousands, except share and per share data)
| Reported December 31, 2022 | Disposition of Good Wheat (a) | Other Transaction Accounting Adjustments | Notes | Pro Forma | ||||||
| Unaudited | Unaudited | Unaudited | ||||||||
| Revenues: | ||||||||||
| Product | $ | 6,422 | $ | (2,421) | $ | $ | 4,001 | |||
| License | 879 | 879 | ||||||||
| Royalty | 117 | 117 | ||||||||
| Total revenues | 7,418 | (2,421) | 4,997 | |||||||
| Operating expenses: | ||||||||||
| Cost of revenues | 6,101 | (2,132) | 3,969 | |||||||
| Research and development | 1,509 | (1,494) | 15 | |||||||
| Gain on sale of Verdeca | (1,138) | (1,138) | ||||||||
| Impairment of intangible assts | 141 | 141 | ||||||||
| Change in fair value of contingent consideration | (70) | (70) | ||||||||
| Gain on sale of property and equipment | (314) | (314) | ||||||||
| Impairment of property and equipment | 160 | 160 | ||||||||
| Loss on disposal | 36 | (e) | 36 | |||||||
| Selling, general and administrative | 15,036 | (5,815) | 155 | (d) | 9,376 | |||||
| Total operating expenses | 21,425 | (9,441) | 191 | 12,175 | ||||||
| Loss from operations | (14,007) | 7,020 | (191) | (7,178) | ||||||
| Interest income | 289 | 289 | ||||||||
| Other income, net | 9 | 9 | ||||||||
| Change in fair value of common stock warrant and option liabilities | 3,209 | 3,209 | ||||||||
| Issuance and offering costs allocated to liability classified options | (314) | (314) |
| Net loss from continuing operations before income taxes | (10,814) | 7,020 | (191) | (3,985) | ||||||
| Income tax expense | (14) | (14) | ||||||||
| Net loss from continuing operations | (10,828) | 7,020 | (191) | (3,999) | ||||||
| Net loss from discontinued operations | (4,784) | (4,784) | ||||||||
| Net loss | (15,612) | 7,020 | (191) | (8,783) | ||||||
| Net loss attributable to non-controlling interest | (236) | (236) | ||||||||
| Net loss attributable to common stockholders: | (15,376) | 7,020 | (191) | (8,547) | ||||||
| Basic and diluted from continuing operations | $ | (17.67) | $ | (6.67) | ||||||
| Basic and diluted from discontinued operations | $ | (7.98) | $ | (7.98) | ||||||
| Weighted-average number of shares used in per share calculation: | ||||||||||
| Basic and diluted | 599,389 | 599,389 |
See accompanying notes to the unaudited pro forma consolidated financial statements.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Description of Transaction
On May 14, 2024 Arcadia Biosciences, Inc. ( Arcadia or the Company ) completed the sale of its GoodWheat business ( Disposition ) to Above Food Corp. ( Above Food or the Buyer ). Pursuant to the Asset Purchase Agreement ( Agreement ), the Company sold its GoodWheat business to Above Food for consideration of $4,000,000, consisting of a promissory note in the original principal amount of $6,000,000 ( Promissory Note ) from the Buyer to Arcadia and $2,000,000 in cash paid at closing by Arcadia to the Buyer.
The Promissory Note has a variable interest equal to the Wall Street Journal prime rate. Principal payments of $2,000,000 are due on each of the first, second and third anniversaries of the execution date of the Promissory Note, along with any accrued and unpaid interest. Prior to the second anniversary, Arcadia has the option to elect to settle $2,000,000 of the principal amount of the Promissory Note in exchange for publicly traded common stock shares of Above Food. The number of shares shall be calculated based on 90% of the daily volume weighted average price of Above Food's publicly traded common stock for the twenty trading days prior to the option election.
Note 2 Basis of the Pro Forma Presentation
The unaudited pro forma consolidated financial information has been prepared by management under U.S. generally accepted accounting principles ( U.S. GAAP ) in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 Amendments to Financial Disclosures about Acquired and Disposed Businesses. The adjustments presented in the unaudited pro forma consolidated financial information have been identified and presented to provide relevant information necessary for an understanding of the Company after the Disposition.
The pro forma adjustments related to the Disposition are preliminary and based upon available information and certain assumptions which management believes are reasonable under the circumstances and which are described in the accompanying notes to the unaudited pro forma consolidated financial information. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma consolidated financial information.
The information in the Disposition of GoodWheat columns in the unaudited pro forma consolidated financial statements reflects the elimination of the net assets and historical financial performance of GoodWheat. The information in the Other Transaction Accounting Adjustments are additional transaction accounting adjustments that are further described in Note 3 below. The Company has elected to not present any adjustments for reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur ( Management's Adjustments ) in the following unaudited pro forma condensed consolidated financial information.
The unaudited pro forma consolidated balance sheet as of March 31, 2024 assumes that the Disposition occurred on March 31, 2024. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2023 and 2022, and the three months ended March 31, 2024 present pro forma effect of the Disposition, as if it had been completed on January 1, 2022. The unaudited pro forma consolidated financial information was derived from and should be read in conjunction with the historical consolidated financial statements of the Company for the years ended December 31, 2023 and 2022 included in the Company's Annual report on Form 10-K filed with the SEC on March 28, 2024 and the historical consolidated financial statements of the Company for the three months ended March 31, 2024 included in the Company's quarterly report on Form 10-Q filed with the SEC on May 13, 2024.
Note 3 Pro Forma Adjustments
The unaudited pro forma consolidated financial information has been prepared to illustrate the effect of the Disposition and has been prepared for informational purposes only. The following transaction accounting adjustments have been reflected in the unaudited pro forma consolidated financial statements:
(a)Represents the discontinued operations, including associated assets, and liabilities, and results of operations attributable to GoodWheat which were included in the Company's historical financial
statements. The amounts exclude general corporate overhead costs which were historically allocated to GoodWheat that do not meet the requirements to be presented in discontinued operations.
(b)Reflects cash of $2,000,000 delivered by Arcadia to Above Food on the closing date.
(c)Reflects the estimated fair value of the Promissory Note, inclusive of the expected immaterial value of any bifurcated embedded derivatives.
(d)Represents the accrual of estimated transaction costs of $155,000 related to the Disposition incurred by Arcadia subsequent to March 31, 2024. Transaction costs related to the Disposition are considered one-time nonrecurring costs. The historical and pro forma consolidated financial statements for the three months ended March 31, 2024 include transaction costs related to the Disposition of $262,000. The Company did not incur any transaction costs related to the Disposition prior to December 31, 2023.
(e)Represents the pro forma loss on disposal of $36,000 calculated as the difference between the net consideration of $4,000,000 and the historical carrying value of the GoodWheat inventory totaling $4,036,000 as of March 31, 2024. Property and equipment, accounts payable and other current liabilities related to GoodWheat but not sold to or assumed by the Buyer are not included in the pro forma loss calculation. The pro forma loss on disposal is considered a one-time nonrecurring loss and has been included in the pro forma consolidated statement of operations for the year ended December 31, 2022, the earliest period presented. The actual gain/loss on disposal will be based on Arcadia's historical balance sheet information as of the closing date as well as the fair value of consideration received from the Buyer and may differ significantly.