Cibus, Inc. 10-K/A

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Prior to the Company’s shift in business strategy which began in 2020, the Company’s primary exposure to market risk was commodity price sensitivity under its former soybean go-to-market strategy. The Company was susceptible to changes in commodity market prices that could impact the selling price for grain inventories, which were carried at historical cost. Prior to the purchase, the Company also had market exposure associated with fixed price grain production agreements. Under this former strategy, the Company managed its exposure to changes in market prices by entering commodity hedges to convert fixed price grain inventories and fixed price grain production agreements to floating market prices. By executing these hedging strategies, the Company could closely match the expected economic terms of the grain sale with the market. In a rising market these positions resulted in losses, and in a falling market these positions resulted in gains once any losses, if any, are recaptured. At time of sale, the gains or losses on the commodity derivatives were realized and fully offset by gains or losses on the grain inventories. As a result of the completed wind-down of the soybean product line in 2021, the Company’s market risk related to commodity price sensitivity has been eliminated and the Company no longer holds commodity derivative contracts. The Company is exposed to potential losses related to the price of its common stock. At each balance sheet date, the fair value of the Company’s Common Warrants liability is remeasured using current fair value inputs, one of which is the price of its common stock. During any period, if the price of the Company’s common stock increases, there will likely be an increase in the fair value of the associated liability. These potential increases in fair value will result in losses in the Company’s consolidated statements of operations from the change in fair value of the Common Warrants liability. Conversely, a decrease in the price of the Company’s common stock during any period will likely result in decreases in the fair value of the associated liability. These potential decreases in fair value will result in gains in the Company’s consolidated statements of operations from the change in the value of the Common Warrants liability. Given the significant current and historical volatility of the Company’s common stock price, any changes period-over-period have and could in the future result in a significant change in the fair value of its Common Warrants liability and significantly impact its net loss during the period of change. Item 8. Consolidated Financial Statements and Supplementary Data The consolidated financial statements and related financial statement schedules required to be filed are listed in the Index to Consolidated Financial Statements on page F-1 hereto and are incorporated herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.