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Item 1. Business

2023-03-30 compared with 2022-03-31 · 132 added, 173 removed, 329 unchanged (48% of the section changed)

We are a producer and marketer of innovative, plant-based health and wellness products.

Our history as a leader in science-based approaches to developing high value crop improvements, primarily in wheat, designed to enhance farm economics by improving the performance of crops in the field, as well as their value as food ingredients, health and wellness products, and their viability for industrial applications, has laid the foundation for our path forward.

We have used non-genetically modified (“non-GMO”) advanced breeding techniques to develop these proprietary innovations which we are now commercializing through the sales of seed and grain, food ingredients and products, hemp extracts, trait licensing and royalty agreements.

The recent acquisition of the assets of Lief Holdings, LLC (“Lief”), EKO Holdings, LLC (“EKO”) and Live Zola, LLC (“Zola”) adds bath and body care products, CBD consumer products, as well as coconut water, to our portfolio of products.

Our commercial strategy is to satisfy consumer nutrition, health and wellness demands with the superior functional benefits our crops deliver directly from the farm, enabling us to share premium economics throughout the ag-food supply chain and to build a world-class estate of high value traits and varieties.

The acquisition of the Lief, EKO and Zola brands allows us to broaden our reach within the health and wellness sector.

It is also estimated by the U.S.

Department of Agriculture (“USDA”), that approximately one-fifth of the FDA recommended calories consumed by people in the US are from wheat.

Therefore, the market opportunity for nutritional improvements in wheat are significant not only because the wheat market itself is vast, but also because of the “share of stomach”

wheat represen ts.

Considering that most people today are not getting enough fiber or protein in their daily diets, the superior nutrient density of our non-GMO GoodWheat (“GoodWheat”) technology can improve the dietary intake of average consumers, by increasing their fiber and protein consumption without changing the way they eat.

We believe this proprietary advantage gives GoodWheat the potential to become a global standard in wheat.

We are a producer and marketer of innovative, plant-based food and beverage products.

The acquisition of the assets of Live Zola, LLC (“Zola”) added coconut water to our portfolio of products.

Our commercial strategy is to satisfy consumer nutrition demands with the superior functional benefits our crops deliver directly from the farm, enabling us to share premium economics throughout the ag-food supply chain and to build a world-class estate of high value traits and varieties.

The acquisition of the Zola brand allows us to broaden our reach within the beverage sector.

Our Growth Strategy

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Accelerate the monetization of our GoodWheat wheat trait portfolio.

Our proprietary IP with multiple non-GMO wheat traits have clear functional benefits, and we will continue to build partnerships across the wheat value chain.

We will continue to invest in acquisition, development and retention of the requisite management and industry experience and production and logistics capacity to fully participate in, and control, the route to market for our high value food ingredients.

Commercialize and Scale our Arcadia Wellness consumer brands through retail and e-commerce expansion.

We plan to expand distribution of our core consumer brands through mass market retailers, grocery store chains, and other specialty nutrition stores, as well as through e-commerce.

These brands can penetrate large and growing categories through high-value, differentiated benefits, with the ability to scale and generate attractive margins.

We will continue to build our commercialization and scaling expertise, refine go-to-market strategies and invest in effective brand-building.

Our proprietary intellectual property ("IP") with multiple non-GMO wheat traits have clear functional benefits, and we will continue to build partnerships across the wheat value chain.

This will include launching GoodWheat into multiple categories where our wheat can provide a compelling point-of-difference at attractive margins.

We will continue to acquire, develop and retain the requisite management and industry experience to fully participate in, and control, the route to market for our high value food ingredients.

Evaluate acquisitive growth opportunities.

We intend to evaluate potential acquisitions representing vertical integration opportunities with multiple benefits to Arcadia’s growth plans.

These could include integrating further into our supply chains to enhance margin capture, as well as speed to market new product innovations and food formulations.

We intend to evaluate potential acquisitions that will allow us to bring the GoodWheat value proposition to an existing business.

We believe there is a significant opportunity to scale our business faster by purchasing an existing business in a new wheat-based category outside of pasta.

Scale Zola through retail expansion.

We plan to expand distribution of our Zola coconut water brand through mass market retailers and grocery store chains.

Based on our research, consumers prefer the clean, crisp taste of Zola to that of other leading coconut water brands.

As a result, we plan to refresh our packaging, launch new innovation and continue to invest in effective brand-building activities.

Arcadia Wellness, LLC

In May 2021, our wholly-owned subsidiary Arcadia Wellness, LLC, acquired the assets of Eko, Lief, and Zola.

We intend for Arcadia Wellness, LLC, to house all of Arcadia Biosciences consumer goods businesses, including core brands GoodWheat, Zola Coconut Water and ProVault Topical Pain Relief, as well as non-core brands SoulSpring and Saavy Naturals Body Care.

The core brands will be the focus for investment and expansion.

In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness”

or “AW”), acquired the businesses of Eko, Lief, and Zola.

The acquisition included consumer CBD brands like Soul Spring, a CBD-infused botanical therapy brand in the natural category, Saavy Naturals, a line of natural body care products and ProVault, a CBD-infused sports performance formula made with natural ingredients, providing effective support and recovery for athletes.

Also included in the purchase is Zola, a coconut water sourced exclusively with sustainably grown coconuts from Thailand.

On July 8, 2022, the Company entered into an agreement to license Saavy Naturals to Radiance Beauty and Wellness, Inc.

("Radiance Beauty").

Our Product Portfolio

GoodWheat Consumer Products

The GoodWheat brand is a portfolio of non-GMO wheat-based consumer products that simplifies food ingredient formulations for consumers that are demanding “clean labeling”

in their foods, and that are willing to pay a higher retail price for products made with ingredients they recognize.

Because GoodWheat increases the nutrient density directly in the primary grains and oils, it provides the mechanism for food formulation simplification naturally and cost effectively to meet evolving consumer demands.

The brand launch is a key element of the company’s go-to-market strategy to achieve greater value for its innovations by participating in downstream consumer revenue opportunities.

We designed the brand to make an immediate connection with consumers that products made with GoodWheat meet their demands for healthier wheat options that also taste great.

We are preparing for the launch of a line of food products under our GoodWheat brand, with pasta as the initial category to be introduced in the second quarter of 2022.

Our pasta products will utilize our GoodWheat grain as the sole ingredient, providing 4X the fiber of traditional pasta and 9g protein per serving without sacrificing taste.

In fact, our research shows taste parity to leading pasta brands, which is unique in the growing better-for-you pasta segment.

In addition, GoodWheat is the only better-for-you pasta brand made from one simple ingredient, matching consumers’

preference for cleaner labels.

Additional categories of products are slated for launch in 2023.

In June 2022, we launched our GoodWheat pasta in five varieties –

penne, spaghetti, fettuccine, elbows and rotini –

in select retailers nationwide and on Amazon.

Our pasta delivers 4 times the fiber of traditional wheat pasta with 9g

of protein per serving and no sacrifice on taste.

In fact, our research shows that GoodWheat pasta scores at parity on taste with leading wheat pasta competitors and significantly outscores market leading vegetable-based pastas.

Made with only our USA farm grown wheat, GoodWheat pasta meets consumers’

preference for clean labels and transparent sourcing.

And, in December of 2022, GoodWheat received the American Heart Association’s Heart-Check mark on all of our pasta products.

With its high fiber, lower sodium and zero saturated fat, GoodWheat meets the criteria for a heart-healthy pasta and provides consumers with a better-for-you option that delivers superior nutrition with the taste and texture of traditional pasta.

Most Americans suffer from a significant fiber deficiency.

Less than 10 percent of women and less than 3 percent of men get enough fiber in their daily diets.

The recommended daily value of fiber is 25g for women and children, and 38g for men according to the May 2021 Food and Health Survey by the International Food Information Council.

One serving of GoodWheat Pasta gets your fiber closer to your daily need, delivering 8g of fiber, which accounts for 32 percent of the daily value of fiber needs for women and children, and 20 percent for men.

In 2023, we plan to expand the GoodWheat portfolio with the launch of innovative, new wheat-based products in additional categories, offering consumers more options to improve their fiber intake at multiple mealtimes throughout the day.

Zola Coconut Water

We believe that natural hydration and the power of plant-based ingredients are the keys to unlock your inspiration from within, and we are proud to make delicious plant-powered beverages that provide the energy and focus you need to crush your day.

From the coconut groves of Thailand, we bring you great tasting coconut water and are proud of our long-lasting relationships with partners around the world who are essential to the quality of our products.

ProVault Topical Pain Relief

ProVault’s proprietary THC-Free, CBD-infused blend of natural ingredients and fast-acting cooling agents are designed to safely and effectively relieve muscle and joint pain and soothe your skin.

Our products are third-party tested for potency and purity from pesticides, fungicides, microbials and heavy metals.

Our topical pain relievers are formulated to address performance concerns from everyday pain to skin protection.

So whether you’re a true competitor, a weekend warrior or simply maintaining an active lifestyle, you can count on ProVault to help keep you in the game.

We believe what you put on your body is just as important as what you put in your body.

SoulSpring Body Care

Inspired by nature’s ancient remedies and crafted with care, our SoulSpring products strive to help rejuvenate and renew your mind, body, and soul.

Our CBD-infused blends of natural ingredients provide a more thoughtful, holistic approach to internal balance and overall well-being.

SoulSpring premium, broad spectrum CBD is extracted from naturally-grown hemp and blended with nourishing botanicals and minerals.

Our CBD is purity-tested, non-pshychoactive and non-intoxicating.

Our passion for wellness means thoughtfully choosing honest, natural ingredients - inspired by ancient remedies and carefully selected for their healing properties.

We then mindfully blend these ingredients to retain their inner essence and natural properties.

Saavy Naturals Body Care

Saavy Naturals products are plant-based, simple and natural.

Saavy Naturals products never contain parabens, silicones, sulfates, phenoxyethanol, propylene glycol PEGs, petroleum products, artificial colors or fragrances.

Rigorous third-party testing ensures adherence to our strict standards.

We're that daily feel-good little luxury that can make all the difference.

Zola is a pure, natural, 100% coconut water with a crisp, clean taste that’s lightly sweet and refreshing.

Naturally hydrating and never from concentrate, Zola is Non-GMO Project Verified and only contains 60 calories per serving.

In taste tests, Zola beats competitors 2 to 1 and is the best-tasting way to rehydrate, reset and reenergize.

CBD Body Care ProVault Topical Pain Relief

Our portfolio currently consists of two body care brands that both contain CBD.

The first brand is ProVault, a muscle and joint pain relief product that is formulated with THC-free CBD isolate along with a proprietary blend of natural ingredients and fast-acting cooling agents.

The second brand is SoulSpring, a CBD-infused line of bath and body products that includes nourishing botanicals and minerals.

The market for CBD products has been under pressure primarily due to regulatory uncertainty.

Given our strategic focus on food and beverage products, we are currently in the process of exploring strategic alternatives for our body care brands.

GoodWheat Wheat Traits

Enhanced Quality Grains

The GoodWheat brand also encompasses our current and future non-GMO wheat portfolio of high fiber Resistant Starch (RS), Reduced Gluten wheat varieties, and extended shelf life wheat, as well as future wheat innovations.

We now hold more than 15 global patents on our high fiber Resistant Starch wheat, protecting both bread wheat and durum (pasta) wheat.

Claims granted recently strengthen our intellectual property for our Resistant Starch portfolio of products.

The GoodWheat brand also encompasses our current and future non-GMO wheat portfolio of high fiber Resistant Starch ("RS"), Reduced Gluten ("RG") wheat varieties, and extended shelf life wheat, as well as future wheat innovations.

We now hold more than 15 global patents on our high fiber RS wheat, protecting both bread wheat and durum (pasta) wheat.

Claims granted recently strengthen our IP for our RS portfolio of products.

Our GoodWheat wheat traits redesign wheat as a functional food adding value to the wheat supply chain by enabling a wider range of choices to meet consumer demands.

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High fiber resistant starch wheat can deliver fiber and other benefits to refined white flour products and also whole grain food products.

According to the American Heart Association, o n average, Americans consume only approximately 50% of the daily recommended levels of fiber.

We believe improving the fiber content of wheat can deliver improved health benefits to a wide population.

High Fiber Resistant Starch Wheat

Our high fiber resistant starch (RS) wheat provides a source of wheat with inherently high levels of resistant starch, increasing the total dietary fiber content of food products without the need for fiber additives from other sources.

High Fiber RS Wheat

Our high fiber RS wheat provides a source of wheat with inherently high levels of resistant starch, increasing the total dietary fiber content of food products without the need for fiber additives from other sources.

Currently, corn resistant starch is a product in two market segments:

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We have many RS wheat lines that are being evaluated for optimal quality and agronomic characteristics.

Reduced Gluten (RG) Wheat

Many consumers are interested in reducing levels of gluten in their diet.

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Improved Shelf Life of Whole Grain Flour

The USDA recommends that “at least one serving of grains per day must be whole grain-rich”

The United States Department of Agriculture recommends that “at least one serving of grains per day must be whole grain-rich”

due to evidence that a diet containing whole grains provides a multitude of benefits, including lower risk of obesity, cardiovascular disease, and type-2 diabetes.

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Product Development

With our food and wellness products now entering the market, we are firmly in the commercialization phase of our corporate lifecycle.

With our food, beverage and wellness products now entering the market, we are firmly in the commercialization phase of our corporate lifecycle.

We are de-emphasizing new trait discovery research and development (“R&D”) and are increasing our focus on food-science innovation to fully leverage the value in our existing superior wheat genetics.

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We rely on patents and other proprietary right protections, including trade secrets and contractual protection of our proprietary know-how and confidential information, to preserve our competitive position.

As of December 31, 2021, we owned or exclusively controlled 73 issued patents, 58 pending patent applications worldwide, and 6 pending plant variety protection applications.

As of December 31, 2022, we owned or exclusively controlled 70 issued patents, 38 pending patent applications worldwide, and 6 plant variety protection certificates.

These totals reflect the following:

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issued patents, and we owned 6 U.S.

patent applications and 6 pending plant variety protection applications relating to our plants, trait technologies, and business methods;

patent applications and 6 plant variety protection certificates relating to our plants, trait technologies, and business methods;

and (ii) in connection with foreign territories, we owned 26 and exclusively in-licensed 19 foreign issued patents, and owned 32 pending foreign patent applications.

As of December 31, 2022, our GoodWheat® portfolio included 12 U.S.

issued patents, 6 U.S.

patent applications, 1 plant variety certificate, 23 foreign issued patents and 25 foreign patent applications.

With respect to all of the foregoing patent and plant protection assets, our exclusive licenses afford us control over the prosecution and maintenance of the licensed patents and patent applications.

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As of December 31, 2022, Arcadia Biosciences, Inc.

and Arcadia Wellness, LLC each had five registered trademarks in the United States.

We also have three registered trademarks in various other countries.

and Arcadia Wellness, LLC had nine and eight registered trademarks in the United States, respectively.

We also have eleven registered trademarks in various other countries.

Key Collaborations

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In 2017, we entered into a strategic collaboration with Corteva Agriscience to jointly develop and commercialize a breakthrough improved wheat quality trait in North America.

The collaboration leverages our TILLING platform with Corteva Agriscience’s enabling technology platforms, high-quality elite germplasm and global commercial channels.

The collaboration leverages our TILLING platform

with Corteva Agriscience’s enabling technology platforms, high-quality elite germplasm and global commercial channels.

Under the collaboration, the companies will further develop and commercialize an improved wheat quality trait, which has completed initial field trials and is advancing to next-stage field trials.

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The markets for consumer goods are highly competitive, and we face significant direct and indirect competition in several aspects of our business.

We compete with both large, established manufacturers, as well as small, innovative producers of pasta and wellness products.

We compete with both large, established manufacturers, as well as small, innovative producers of pasta and beverage products.

There are several companies working to improve genetics in crops, such as wheat, that may compete with the trait used in our GoodWheat products.

In general, we believe that our competitors generally fall into the following categories:

Companies Selling Wheat Products:

Companies Selling Pasta Products:

As we enter the direct to consumer and retail markets with our GoodWheat products, we believe we face significant competition from a variety of consumer-packaged goods companies.

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Competitors in this space include Vita Coco, ZICO, C20 and Harmless Harvest.

CBD-based wellness products:

The market for the sale of CBD-based products is fragmented and intensely competitive.

Currently, we do not believe that there are any businesses that can demonstrate or claim a dominant market share of the growing CBD bath and body care products market.

Our competitors of CBD-based products include a combination of public and private companies who operate a combination of e-commerce and wholesale brands as well as brick and mortar retail operations like cbdMD and Charlotte’s Web.

As of December 31, 2021, we had 11 full-time employees dedicated to research and product development.

Our team possesses technical expertise in a number of fields and activities have been conducted principally at our Davis and Chatsworth, California facilities, with occasional field trials conducted in American Falls, Idaho.

In prior years, we have made substantial investments in research and development, and have turned our current focus to developing commercial products, anticipating future research and development expenses to decrease substantially.

Our research and development expenses were $3.9 million and $8.0 million in the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we had 58 full-time employees.

As mentioned above, 11 employees were engaged in research and product development and 47 in management, operations, commercial production, accounting/finance, legal and administration.

As of December 31, 2022, we had 30 employees with 17 in management, operations, commercial production, accounting/finance, legal and administration.

We believe our employee relations to be good.

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This spirit of inclusive collaboration can be felt throughout our Company.

Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 50% of our Board of Directors are female.

From a management perspective, 60% of our CEO's direct reports are female, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company.

More broadly, 52% of our employees are female.

Environmental, Social and Governance ("ESG")

Since our founding, Arcadia has been on a mission to enhance crop yields by enabling plants to more efficiently manage environmental and nutrient stresses, and to enhance the quality and value of agricultural and food products.

Now that Arcadia has evolved to its commercial stage, the goal is still to lead in a safe, scalable, efficient, and sustainable way.

Our Board of Directors oversees ESG matters, and is committed to advancing a sustainable development through our products, working to systematically grow our business to meet the challenges of the global energy transition and combat the global climate crisis.

Our corporate headquarters are located in Davis, California, in a facility consisting of approximately 9,224 square feet of office, laboratory and growth chamber space under a lease which expires on March 31, 2025.

This facility accommodates research and development, finance and accounting, investor relations, and administrative activities.

Our manufacturing plant is located in Chatsworth, California, in a facility consisting of approximately 14,720 square feet of office, warehouse and production lines.

We lease greenhouse space and farmland for agricultural use in Northern California, Idaho, and Hawaii.

Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 43% of our Board of Directors are women.

From a management perspective, 63% of our CEO's direct reports are women, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company.

More broadly, 59% of our employees are women.

Our corporate headquarters are located in Dallas, Texas with additional office space in Davis, California and additional facilities in American Falls, Idaho.

We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations.

Available Information

Our website address is www.arcadiabio.com.

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports, proxy and registration statements filed or furnished with the Securities and Exchange Commission, or SEC, are available free of charge through our website.

We make these materials available through our website as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the SEC.

The information contained in, or that can be accessed through, our website is not part of this Report.

Ris k Factors.

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Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

Risks Related to Our Hemp Business

We will be subject to a myriad of different laws and regulations governing hemp and our inability to comply with such laws in a cost-effective manner may have an adverse effect on our business and result of operations.

Laws and regulations governing the use of hemp in the United States are broad in scope, subject to evolving interpretations, and subject to enforcement by a myriad of regulatory agencies and law enforcement entities.

Under the Agriculture Improvement Act of 2018, also known as the 2018 Farm Bill, a state or Indian tribe that desires to have primary regulatory authority over the production of hemp in the state or territory of the Indian tribe must submit a plan to monitor and regulate hemp production to the Secretary of the USDA.

The Secretary must then approve the state or tribal plan after determining if the plan complies with the requirements set forth in the Agriculture Improvement Act of 2018.

The Secretary may also audit the state or Indian tribe’s compliance with the federally-approved plan.

If the Secretary does not approve the state or Indian tribe’s plan, then the production of hemp in that state or territory of that Indian tribe will be subject to a plan established by USDA.

USDA published a final rule on January 19, 2021, that provided regulations for the production of hemp in the USA that went into effect on March 22, 2021.

We anticipate that some states will seek to have primary regulatory authority over the production of hemp.

States that seek such authority may create new laws and regulations that limit or restrict the use of hemp.

Federal and state laws and regulations on hemp may address production, monitoring, manufacturing, distribution, and laboratory testing to ensure that that the hemp has a delta-9 tetrahydrocannabinol concentration of not more than 0.3% on a dry weight basis.

Federal laws and regulations may also address the transportation or shipment of hemp or hemp products, as the Agriculture Improvement Act of 2018 prohibits states and Indian tribes from prohibiting the transportation or shipment of hemp or hemp products produced in accordance with that law through the state or territory of the Indian tribe, as applicable.

We may be subject to many different state-based regulatory regimens for hemp, all of which could require us to incur substantial costs associated with compliance requirements.

Our research and development operations will be restricted to only where such operations are legal on the local, state and federal levels.

The DEA issued an interim final rule to codify statutory amendments to the controlled substances act made by the 2018 farm bill.

It is possible that the DEA will make additional changes in a final rule that may have a material impact on our hemp business and our ability to operate.

The Food and Drug Administration has published guidance related to the CBD and hemp-extract business but has not formally released a regulatory framework for the industry.

It is possible that the FDA will provide additional guidance or implement future regulations that may have a material impact on our hemp business.

In addition, it is possible that additional regulations may be enacted in the future in the United States and globally that will be directly applicable to our research and development operations.

We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.

There is limited operating history in the legal hemp or cannabis industry, which makes it difficult to accurately assess our future growth prospects.

The legal hemp and cannabis industry is an evolving industry that may not develop as expected.

Furthermore, our operations continue to evolve as we continually assess new strategic opportunities for our business within this industry.

Assessing the future prospects of this industry is challenging in light of both known and unknown risks and difficulties we may encounter.

Growth prospects in the legal hemp and cannabis industry can be affected by a wide variety of factors including:

Competition from other similar companies;

Fluctuations in the market price of hemp seeds and CBD oil;

Regulatory limitations on the types of research and development with respect to cannabis;

Other changes in the regulation of cannabis and legal hemp use;

Changes in underlying consumer behavior, which may affect the demand of our legal hemp and cannabis traits.

We may not be able to successfully address the above factors, which could negatively impact our intended business plans and financial statements.

Negative press from being in the hemp/cannabis space could have a material adverse effect on our business, financial condition, and results of operations.

The hemp plant and the cannabis/marijuana plant are both part of the same cannabis sativa genus/species of plant, except that hemp, by definition, has less than 0.3% THC content, but the same plant with a higher THC content is cannabis/marijuana, which is legal under certain state laws, but which is not legal under federal law.

The similarities between these plants can cause confusion, and our activities with legal hemp may be incorrectly perceived as us being involved in federally illegal cannabis.

Also, despite growing support for the cannabis industry and legalization of cannabis in certain U.S.

states, many individuals and businesses remain opposed to the cannabis industry.

Any negative press resulting from any incorrect perception that we have entered into the cannabis space could result in a loss of current or future business.

It could also adversely affect the public’s perception of us and lead to reluctance by new parties to do business with us or to own our common stock.

We cannot assure you that additional business partners, including but not limited to financial institutions and customers, will not attempt to end or curtail their relationships with us.

Any such negative press or cessation of business could have a material adverse effect on our business, financial condition, and results of operations.

Risks Related to Our Business and Our Other Industries

Risks Related to Our Business

Unfavorable global economic or political conditions could adversely affect our business, financial condition or results of operations.

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A global financial crisis or a global or regional political disruption could cause extreme volatility in the capital and credit markets.

For example, outbreaks of epidemic, pandemic, or contagious diseases, such as the current COVID-19 pandemic, could disrupt our business.

For example, outbreaks of epidemic, pandemic, or contagious diseases, such as the COVID-19 pandemic, could disrupt our business.

Business disruptions could include disruptions to the productivity of our employees working remotely and restrictions on their travel may hinder their ability to meet with potential customers and close transactions, as well as temporary closures of the facilities of suppliers or contract growers in our supply chain.

While we’ve seen very recent signs of improvement, hemp growers have been slower to make decisions to purchase hemp seeds due to economic uncertainty and wheat consumer packaged goods companies have been heavily focused on production over R&D evaluation as demand for staples like pasta and flour have increased.

A weak or declining economy or political disruption could also strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.

While we’ve seen signs of improvement, wheat consumer packaged goods companies have been heavily focused on production over R&D evaluation as demand for staples like pasta and flour have increased.

In addition, the US financial markets have been negatively impacted by the rise of inflation and interest rates, and in March 2023, the government closure of Silicon Valley Bank, increasing the potential for a local and/or global economic recession that could disrupt our business.

A political disruption could also strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the political or economic climate and financial market conditions could adversely impact our business.

We or our partners may not be successful in developing commercial products that incorporate our traits and for which there is consumer demand.

Our future growth depends on our ability to monetize the trait assets we’ve created by bringing products to market that incorporate our technology, as well as licensing these traits to our collaborators to develop and

commercialize seeds and products that contain our traits.

The development process could take longer than we anticipate or could ultimately fail to achieve commercial success for any of the following reasons, including but not limited to:

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We expect to continue to incur losses.

Because we have incurred and will continue to incur significant costs and expenses for these efforts before we obtain any incremental revenues from the sale of seeds or products incorporating our traits, our losses in future periods could be even more significant.

Because we have incurred and expect to continue to incur significant costs and expenses for these efforts before we obtain any incremental revenues from the sale of products incorporating our traits, our losses in future periods could be even more significant.

In addition, we may find our development and commercialization efforts are more expensive than we anticipate or that they do not generate revenues in the time period we anticipate, which would further increase our losses.

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We face significant competition in the markets in which we operate.

The markets for pasta, body care and coconut water products are intensely competitive and rapidly changing.

In most segments of the seed and agricultural biotechnology market, the number of products available to consumers is steadily increasing as new

products are introduced.

The markets for pasta and coconut water products are intensely competitive and rapidly changing.

In most segments of the seed and agricultural biotechnology market, the number of products available to consumers is steadily increasing as new products are introduced.

At the same time, the expiration of patents covering existing products reduces the barriers to entry for competitors.

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Our technologies may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors, which will prevent or limit our ability to generate revenues from the commercialization of our traits being developed.

We may seek to expand through acquisitions of and investments in other brands, businesses, and assets.

These acquisition activities may be unsuccessful or divert management’s attention.

We may consider strategic and complementary acquisitions of and investments in other agricultural biotechnology and consumer brands, businesses or other assets, and such acquisitions or investments are subject to risks that could affect our business, including risks related to:

the necessity of coordinating geographically disparate organizations;

implementing common systems and controls;

integrating personnel with diverse business and cultural backgrounds;

integrating acquired manufacturing and production facilities, technology and products;

combining different corporate cultures and legal systems;

unanticipated expenses related to integration, including technical and operational integration;

increased costs and unanticipated liabilities, including with respect to registration, environmental, health and safety matters, that may affect sales and operating results;

retaining key employees;

obtaining required government and third-party approvals;

legal limitations in new jurisdictions;

installing effective internal controls and audit procedures;

issuing common stock that could dilute the interests of our existing stockholders;

spending cash and incurring debt;

assuming contingent liabilities;

creating additional expenses.

We may not be able to identify opportunities or complete transactions on commercially reasonable terms, or at all, or actually realize any anticipated benefits from such acquisitions or investments.

Similarly, we may not be able to obtain financing for acquisitions or investments on attractive terms.

In addition, the success of any acquisitions or investments also will depend, in part, on our ability to integrate the acquisition or investment with our existing operations.

We rely on third parties to conduct, monitor, support, and oversee field trials and commercial production and, in some cases, to maintain regulatory files for those products in development, and any performance issues by third parties, or our inability to engage third parties on acceptable terms, may impact our or our collaborators’

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In addition, there is no guarantee that these third parties will devote adequate time and resources to our activities or perform as required by our contract or in accordance with regulatory requirements, including maintenance of field trial or production information.

If these third parties fail to meet expected deadlines, fail to transfer to us any regulatory or other information in a timely manner, fail to adhere to protocols, or fail to act in accordance with regulatory requirements or our agreements with them, or if they otherwise perform in a substandard manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, then field trials and commercial production of our products in development may be extended or delayed with additional costs incurred, or our data may be rejected by the USDA or FDA, the U.S.

Environmental Protection Agency, or EPA, or other regulatory agencies.

Environmental Protection Agency or other regulatory agencies.

Ultimately, we are responsible for ensuring that each of our field trials and commercial production is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our responsibilities.

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All of our current employees are at-will employees, and the failure to retain or hire skilled and highly educated personnel could limit our growth and hinder our research and development efforts.

Federal laws and regulations may also address the transportation or shipment of hemp or hemp products.

We may be subject to many different state-based regulations for hemp, all of which could require us to incur substantial costs associated with compliance requirements.

The Drug Enforcement Administration ("DEA") issued an interim final rule to codify statutory amendments to the controlled substances act made by the 2018 farm bill.

It is possible that the DEA will make additional changes in a final rule that may have a material impact on our hemp business and our ability to operate.

The FDA has published guidance related to the CBD and hemp-extract business but has not formally released a regulatory framework for the industry.

It is possible that the FDA will provide additional guidance or implement future regulations that may have a material impact on our hemp business.

In addition, it is possible that additional regulations may be enacted in the future in the United States and globally that will be directly applicable to our research and development operations.

Our business is subject to the risks of earthquakes, fire, flood, crop losses, epidemics, and other catastrophic natural events, and security breaches, including cybersecurity incidents.

Our seed, grain and hemp crops are vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are common but difficult to predict.

Our seed and grain crops are vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are common but difficult to predict.

In addition, the crops are vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions.

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Most of the licenses we grant our collaborators to use our proprietary genes in certain crops are exclusive within specified jurisdictions, so long as our collaborators comply with certain diligence requirements.

That means that once genes are licensed to a collaborator in a specified crop or crops, we are generally prohibited from licensing those genes to any third party.

This means that once genes are licensed to a collaborator in a specified crop or crops, we are generally prohibited from licensing those genes to any third party.

The limitations imposed by these exclusive licenses could prevent us from expanding our business and increasing our product development initiatives with new collaborators, both of which could adversely affect our business and results of operations.

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Furthermore, while our collaboration agreements typically require that our collaborators indemnify us for the cost of product liability claims brought against us as a result of our collaborator’s misconduct, such indemnification provisions may not always be enforced, and we may receive no indemnification if our own misconduct contributed to the claims.

We may seek to expand through acquisitions of and investments in other brands, businesses, and assets.

These acquisition activities may be unsuccessful or divert management’s attention.

the necessity of coordinating geographically disparate organizations;

implementing common systems and controls;

integrating personnel with diverse business and cultural backgrounds;

integrating acquired manufacturing and production facilities, technology and products;

combining different corporate cultures and legal systems;

unanticipated expenses related to integration, including technical and operational integration;

increased costs and unanticipated liabilities, including with respect to registration, environmental, health and safety matters, that may affect sales and operating results;

retaining key employees;

obtaining required government and third-party approvals;

legal limitations in new jurisdictions;

installing effective internal controls and audit procedures;

issuing common stock that could dilute the interests of our existing stockholders;

spending cash and incurring debt;

assuming contingent liabilities;

creating additional expenses.

We may not be able to identify opportunities or complete transactions on commercially reasonable terms, or at all, or actually realize any anticipated benefits from such acquisitions or investments.

Similarly, we may not be able to obtain financing for acquisitions or investments on attractive terms.

In addition, the success of any acquisitions or investments also will depend, in part, on our ability to integrate the acquisition or investment with our existing operations.

As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting.

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Section 404(b) of the Act requires that our independent registered public accounting firm will also need to attest to the effectiveness of our internal control over financial reporting if we qualify as an accelerated filer or a large accelerated filer.

In connection with the preparation of our financial statements for the years ended December 31, 2021 and 2020, we identified certain internal control deficiencies that did not rise to the level of a significant deficiency or material weakness, on an individual basis or in the aggregate.

We are continuously improving our internal control environment.

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Since shares of our common stock were sold in our initial public offering in May 2015 at a price of $6,400.00 per share, our stock price has ranged from $10.48 to $6,984.00, through December 31, 2022.

The market price of our common stock is subject to wide fluctuations in response to various risk factors, some of which are beyond our control and may not be related to our operating performance, including:

The market price of our

common stock is subject to wide fluctuations in response to various risk factors, some of which are beyond our control and may not be related to our operating performance, including:

addition or loss of significant customers, collaborators or distributors;

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Consequently, you should not rely on dividends to receive a return on your investment.

Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock, which could negatively impact the market price and liquidity of our common shares and our ability to access the capital markets.

Our common stock is listed on The Nasdaq Capital Market.

If we fail to satisfy the continued listing requirements of the Nasdaq Stock Market ("Nasdaq"), such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our common stock.

Such a delisting would have a negative effect on the price of our common stock, impair the ability to sell or purchase our common stock when persons wish to do so, and any delisting materially adversely affect our ability to raise capital or pursue strategic restructuring, refinancing or other transactions on acceptable terms, or at all.

Delisting from The Nasdaq Capital Market could also have other negative results, including the potential loss of institutional investor interest and fewer business development opportunities.

On September 27, 2022, we received a notice from the Nasdaq Listing Qualifications Department of Nasdaq informing us that because the closing bid price of our common stock had been below $1.00 per share for 30 consecutive business days, we no longer complied with the minimum bid price requirement for continued listing on The Nasdaq Capital Market.

Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

The notice had no immediate effect on the listing or the trading of our common stock on The Nasdaq Capital Market.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the notice letter stated that we had an initial compliance period of 180 calendar days, or until March 27, 2023, to regain compliance with the minimum bid price requirement.

To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days during the 180 calendar day grace period.

On March 15, 2023, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that as a result of the closing bid price of our common stock having been at $1.00 per share or greater for at least ten consecutive business days, we had regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq’s Marketplace Rule 5550(a)(2) for continued listing on The NASDAQ Capital Market, and the matter was now closed.

Unresolve d Staff Comments.

Not applicable.

Our corporate headquarters are located in Davis, California, in a facility consisting of approximately 9,224 square feet of office and laboratory space under a lease which expires on March 31, 2025.

This facility accommodates research and development, accounting and other administrative activities.

Our manufacturing facility in Chatsworth, California, consists of 14,720 square feet under a lease expires on May 1, 2024.

We lease greenhouse space and farmland for agricultural use in Idaho, Northern California, and Hawaii.

We also lease office and warehouse space in Idaho under a lease that expires on December 31, 2023.

Our corporate headquarters are located in Dallas, Texas with additional office space in Davis, California and additional facilities in American Falls, Idaho.

We believe that our leased facilities are adequate to meet our current needs and that, if needed, suitable additional or alternative space will be available to accommodate our operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business