What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-25 compared with 2024-03-28 · 374 added, 408 removed, 908 unchanged (46% of the section changed)

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Solely for convenience, the trademarks, service marks and trade names referred to in this Report may appear without the ®, TM, or SM symbols, but such references do not constitute a waiver of any rights that might be associated with the respective trademarks, service marks, or trade names.

We are a producer and marketer of innovative, plant-based food and beverage 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, has laid the foundation for our path forward.

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

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.

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 represents.

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.

Our Growth Strategy

We believe there are significant opportunities to grow our business by executing the following elements of our strategy:

• Accelerate the monetization of our GoodWheat wheat trait portfolio.

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.

We have launched GoodWheat into multiple categories where our wheat provides a compelling point-of-difference and we will continue to evaluate ways to extract value throughout the supply chain.

• Evaluate scale M&A opportunities.

We intend to evaluate potential mergers, acquisitions and other strategic opportunities that will allow us to scale the GoodWheat value proposition more quickly.

We believe there is a significant opportunity to integrate our wheat IP and GoodWheat brand into larger businesses and drive shareholder value.

• Scale Zola through retail expansion.

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 continue to invest in trial-driving activities and expand distribution of our Zola coconut water brand through mass market retailers and grocery store chains.

Arcadia Wellness, LLC

In May 2021, our wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola.

Since acquiring the assets of Zola in May 2021, Arcadia has provided consumers with a way to rehydrate, reset, and reenergize with Zola coconut water products.

Arcadia has leveraged its history as a leader in science-based approaches to develop high value products and drive innovation in the consumer goods industry.

Previously, Arcadia developed products primarily in wheat, which it commercialized through the sales of seed, grain and food ingredients and products, and through trait licensing and royalty agreements.

In May 2021, Arcadia’s wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness”) acquired the businesses of Eko Holdings, LLC, Lief, LLC, and Zola.

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

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.

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

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

(“Radiance Beauty”).

In July 2023, management made the decision to exit the remaining body care brands, Soul Spring and ProVault, as a result of continued pressure on the CBD market due to regulatory uncertainty.

Body care operations ceased as of September 30, 2023.

Our Product Portfolio

Most Americans suffer from a significant fiber deficiency.

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.

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

Our GoodWheat portfolio of better-for-you products addresses these needs as they are naturally higher in fiber and protein than traditional wheat without sacrificing on taste or texture.

GoodWheat Pasta

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.

GoodWheat Pancakes and Waffle Mixes

In August 2023, we launched our GoodWheat into the breakfast category with new, better-for-you pancake and waffle mixes as well as single-serve Quikcakes.

Our new mixes are made with simple ingredients and Arcadia’s proprietary wheat grain, which is naturally higher in fiber and protein than traditional wheat.

GoodWheat pancake and waffle mixes are sold in resealable, multi-serve pouches, with each serving delivering 8 times the fiber of traditional pancake mix and 5 grams of protein.

Our multi-serve mixes will be available in 3 classic varieties, including Buttermilk, Chocolate Chocolate Chip and Apple Cinnamon.

GoodWheat Quikcakes are an innovative, single-serve instant pancake that is a great option for busy mornings – you simply pour one packet into a bowl, add water and microwave for 90 seconds.

Quikcakes have 11 times the fiber of traditional single-serve pancake mixes and contain 7 grams of protein per serving.

Quikcakes are available in 3 flavors, including Buttermilk, Chocolate Chocolate Chip and Confetti.

GoodWheat Mac and Cheese

In November 2023, we announced the third GoodWheat category, Mac and Cheese.

Our Mac and Cheese is made with real cheese and contains no artificial flavors, dyes or preservatives and are available in three varieties:

Classic Cheddar, White Cheddar and Three Cheese.

GoodWheat Mac and Cheese packs in the most fiber of any brand in the category, 4 times more than the leading brand.

In fact, one serving of GoodWheat Mac and Cheese has the same fiber as two servings of oatmeal, or two and a half servings of broccoli!

And, just like our pasta and pancake mixes, GoodWheat Mac and Cheese is higher in protein than the leading brand, with 12 grams of protein per serving.

In July 2023, Arcadia’s management made the decision to exit the remaining body care brands, Soul Spring and ProVault, as a result of continued pressure on the CBD market due to regulatory uncertainty.

Body care operations ceased during the third quarter of 2023.

On May 14, 2024, Arcadia sold its non-GMO Resistant Starch (“RS”) durum wheat trait to longtime partner Corteva Agriscience (“Corteva”) for total cash consideration of $4.0 million.

Under the terms of the agreement, Arcadia retained certain rights to use the RS durum wheat trait.

Refer to Note 11 to the consolidated financial statements for further details of the transaction.

On May 16, 2024, Arcadia sold the GoodWheat brand to Above Food for net consideration of $3.7 million.

The strategic decision to sell GoodWheat enabled the Company to monetize its intellectual property early.

The assets sold consisted primarily of grain and finished goods inventories, formulations and trademarks.

The disposition of GoodWheat met the "held for sale" criteria per ASC 205-20-45-1B and represented a strategic shift that had a major effect on the Company's operations and financial results.

As a result, the financial statements and related notes as of December 31, 2024 and 2023 reflect the GoodWheat disposition as a discontinued operation.

The disposition of

GoodWheat resulted in a loss of $1,500 during the year ended December 31, 2024.

Refer to Notes 4 and 8 to the consolidated financial statements for further details of the transaction.

Zola Coconut Water

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.

Founded in 2002, Zola became part of the Arcadia family of brands in May 2021.

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

Naturally hydrating and rich in electrolytes, Zola is Non-GMO Project Verified and only contains 60 calories per serving.

In taste tests, Zola beat competitors 2 to 1, and the Company believes that it is a superior way to rehydrate, reset and reenergize.

Zola flavors include original, original with pulp, espresso, lime and pineapple.

Agronomic Wheat Traits

On average, Americans get approximately 20% of their daily calories from wheat.

As a result, Arcadia developed a portfolio of non-GMO specialty wheat traits to offer healthier, nutrient-rich wheat options while providing the same baking quality, taste, and texture as traditional wheat.

Arcadia’s non-GMO Reduced Gluten High Fiber Wheat has fewer allergenic glutens and higher fiber than traditional wheat while Arcadia’s non-GMO Extended Shelf-Life Wheat extends the shelf life of milled whole wheat flour.

Arcadia believes that its proprietary intellectual property with multiple non-GMO wheat traits offer functional benefits and a compelling point of differentiation.

We intend to seek to monetize our proprietary technology, including through possible asset sale transactions.

Recent Developments

As described elsewhere in this Report, on December 4, 2024, Arcadia, Roosevelt, and the LP Representatives entered into the Exchange Agreement.

Subject to the terms of the Exchange Agreement and to the satisfaction or waiver of the conditions set forth in the Exchange Agreement, at the Closing of the transactions contemplated by the Exchange Agreement, Arcadia agreed to issue shares of its common stock to the Limited Partners of Roosevelt in exchange for all of the Partner Interests in Roosevelt.

As a result of the Exchange, Arcadia will continue and Roosevelt will continue as a wholly owned subsidiary of Arcadia.

Upon completion of the Exchange, we estimate that the Limited Partners and the Arcadia stockholders as of immediately prior to the Closing will collectively own approximately 90% and 10%, respectively, of the shares of common stock of Arcadia outstanding immediately after the Closing.

These percentages are estimates, are subject to certain assumptions and are subject to potential adjustment prior to the Closing, including as a result of changes in the number of outstanding shares of Arcadia common stock.

As a result, Arcadia stockholders and the former Roosevelt Limited Partners could own a greater, or a lesser, percentage of the outstanding shares of Arcadia immediately after the Closing than the estimates set forth above.

Discontinued Operations

As mentioned above, the Company exited the body care brands and ceased its operations as of September 30, 2023.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets and the results of the discontinued operations as a separate component of loss on the consolidated statements of operations and comprehensive loss for all periods presented.

As mentioned above, Arcadia exited the GoodWheat and body care brands.

In accordance with the provisions of ASC 205-20, Arcadia has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets and the results of the discontinued operations as separate components on the consolidated statements of operations and comprehensive loss for all periods presented.

See Note 4 to the consolidated financial statements for further information on discontinued operations.

Components of Our Statements of Operations Data

We derive our revenues from product sales, royalties and license fees.

Product revenues

Product revenues consist primarily of sales of GoodWheat, Zola and GLA products.

Product revenues consist primarily of sales of Zola and GLA products.

We recognize revenue from product sales when control of the product is transferred to third-party distributors and manufacturers, collectively “our customers,” which generally occurs upon delivery.

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Royalty revenues consist of a minimum annual royalty, offset by amounts earned from the sale of products.

The Company recognizes the minimum annual royalty on a straight-line basis over the year, and recognizes royalty revenue resulting from the sale of products when the third parties transfer control of the product

to their customers, which generally occurs upon shipment.

Royalty revenues can fluctuate depending on the timing of shipments of product by the third parties to their customers.

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We recognize annual license fees when it is probable that a material reversal will not occur.

Milestone fees are variable consideration that is initially constrained and recognized only when it is probable that such amounts would not be reversed.

The Company assesses when achievement of milestones are probable in order to determine the timing of revenue recognition for milestone fees.

Milestones typically represent significant stages of development for our traits in a potential commercial product, such as achievement of specific technological targets, completion of field trials, filing with regulatory agencies, completion of the regulatory process, and commercial launch of a product containing our traits.

Given the seasonality of agriculture and time required to progress from one milestone to the next, achievement of milestones is inherently uneven, and license revenues are likely to fluctuate significantly from period to period.

Operating Expenses

Cost of revenues

Cost of revenues primarily relates to the sale of GoodWheat and Zola products and consists of the cost of raw materials, including internal and third-party services costs related to procuring, processing, formulating, packaging and shipping our products, as well as in-licensing and royalty fees, any adjustments or write-downs to inventory or prepaid production costs.

Cost of revenues primarily relates to the sale of Zola products and consists primarily of product and freight costs.

Adjustments or write-downs to inventory are also included in cost of revenues.

Research and development expenses ("R&D")

Research and development expenses consist of costs incurred in the development and testing of our products and other products in development incorporating our traits.

Research and development expenses consist of costs incurred in the development and testing of our products.

These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred.

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The Company's research and development expenses may fluctuate from period to period.

Gain on sale of Verdeca

The gain on sale of Verdeca is the gain recognized for the sale of the Company's membership interests in the Verdeca joint venture to our partner Bioceres in November 2020.

Impairment of Intangible Assets

Impairments of intangible assets are recorded when the fair value of intangible assets drops below its carrying amount.

Change in fair value of contingent consideration

Change in the fair value of contingent consideration is comprised of the fair value remeasurement of the liabilities associated with the Company's contingent consideration.

Gain on sale of property and equipment, net

Gain on sale of intangible assets

Gain on sale of intangible assets consists of the gain on sale of our RS durum wheat trait to Corteva.

Gain on sale of property and equipment

Gain on sale of fixed assets includes gains from the sale of tangible assets sold above their net book value.

Impairment of property and equipment

Impairment of property and equipment, net includes losses from tangible assets due to impairment or recoverability test charges to write down fixed assets to their fair value or recoverability value.

Impairment of right-of-use ("ROU") assets

Impairment of property and equipment includes losses from tangible assets due to impairment or recoverability test charges to write down fixed assets to their fair value or recoverability value.

Impairment of right-of-use (“ROU”) asset

Impairment of ROU assets includes losses from right-of-use assets due to impairment or recoverability test charges to write down the ROU asset to their fair value or recoverability value.

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Our selling, general, and administrative expenses may fluctuate from period to period.

In connection with our commercialization activities for our consumer products, we expect to increase our investments in sales and marketing, including additional consulting fees.

Interest income

Interest income consists of interest income on our cash and cash equivalents and investments.

Interest income consists of interest income on our cash and cash equivalents, investments and note receivable.

Other income, net

Other income, net consists of miscellaneous income.

Other income, net consists of miscellaneous income net of miscellaneous losses.

Valuation loss on March 2023 PIPE

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Issuance and offering costs generally include placement agent, legal, advisory, accounting and filing fees related to financing transactions.

Income tax expense

Our income tax provision has not been historically significant, as we have incurred losses since our inception.

The provision for income taxes consists of state and foreign income taxes.

Due to cumulative losses, we maintain a valuation allowance against our U.S.

deferred tax assets as of December 31, 2023 and 2022.

We consider all available evidence, both positive and negative, including but not limited to:

earnings history, projected future outcomes, industry and market trends, and the nature of each of the deferred tax assets in assessing the extent to which a valuation allowance should be applied against our U.S.

deferred tax assets.

Net loss from discontinued operations

Net loss from discontinued operations represents results of operations related to the discontinued body care brands.

Net loss from discontinued operations represents results of operations related to the discontinued GoodWheat and body care brands.

See Note 4 to the consolidated financial statements for further information on discontinued operations.

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Research and development

Gain on sale of Verdeca

Impairment of intangible assets

Change in fair value of contingent consideration

Gain on sale of intangible assets

Gain on sale of property and equipment

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Net loss from continuing operations

Net loss from discontinued operations

Net loss from discontinued operations — Body Care

Net loss from discontinued operations — GoodWheat

Net loss attributable to non-controlling interest

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Product revenues accounted for 99% and 100% of our total revenues in 2024 and 2023, respectively.

The $1.1 million, or 17%, decrease in product revenues in 2023 compared to 2022 was primarily driven by 2022 GoodWheat grain sales.

License revenues accounted for 0% and 12% of our total revenues in 2023 and 2022, respectively.

During the year ended December 31, 2022, the Company recognized one-time license revenue of $862,000 related to the Verdeca-Bioceres licensing agreement discussed below.

Royalty revenues accounted for 0% and 2% of our total revenues in 2023 and 2022, respectively.

The $117,000 of royalty revenues for the year ended December 31, 2022 represents the proportionate share of contracted minimum annual royalty fees that expired in 2022.

The $575,000, or 13%, increase in product revenues in 2024 compared to 2023 was driven by an increase in coconut water revenue of $1.3 million, resulting from higher sales volume, partially offset by a decline in sales of GLA oil.

The Company did not implement any price increases in 2024.

License revenues were $7,000 and $17,000 in 2024 and 2023, respectively.

The decrease in license revenues resulted from fewer annual license fees.

Royalty revenues were $26,000 in 2024 related to HB4 soybeans.

There were no royalty revenues in 2023.

Operating expenses (income)

Cost of revenues

Cost of revenues decreased by $2.8 million, or 46%, in 2023 compared to 2022.

Cost of revenues during the year ended December 31, 2022 included GoodWheat grain sold at cost and higher inventory write-downs.

Gross profit, calculated as total revenues less cost of revenues, was $2.0 million and $1.3 million during the years ended December 31, 2023 and 2022, respectively.

The increase in gross profit in 2023 is primarily due to the absence of sales of GoodWheat grain sold at cost in 2022.

Cost of revenues increased by $789,000, or 36%, in 2024 compared to 2023.

This was driven by an increase in Zola units sales as product costs made up 84% of the total cost of revenues in 2024.

Refer to Note 19 to the consolidated financial statements for details of cost of revenues.

Research and development

Research and development expenses decreased by $0.1 million, or 8%, in 2023 compared to 2022.

The decrease was primarily driven by the Company's continued focus on commercialization, which has led to lower employee-related expenses and related activity costs.

Gain on sale of Verdeca

In February 2012, the Company partnered with Bioceres to form Verdeca, which we equally owned.

Verdeca was formed to develop and deregulate soybean varieties using both partners’ agricultural technologies.

In November 2020, Arcadia sold its membership interest in Verdeca to Bioceres in a transaction in which Arcadia received cash, shares of Bioceres stock and a royalty stream of up to $10.0 million on sales of Haab 4 ("HB4") soybean.

An additional $2.0 million in cash is to be paid to Arcadia upon Verdeca achieving commercial plantings of at least 200,000 hectares of HB4 or China approving the HB4 soybean trait for “food and feed”.

During the year ended December 31, 2022, the Company recognized a gain on sale of Verdeca of $1.1 million related to the regulatory approval of the Haab 4 soybeans.

Impairment of intangible assets

During the year ended December 31, 2022, the Company recognized impairments of intangible assets of $141,000 related to the Industrial Seed Innovations ("ISI") intangible assets.

See Note 13 to the consolidated financial statements.

There was no such impairment of intangible assets recognized during the year ended December 31, 2023.

Change in fair value of contingent consideration

During the year ended December 31, 2022, the Company recognized a decrease in the fair value of the ISI contingent consideration liability due to its remeasurement.

See Note 13 to the consolidated financial statements.

There was no such change in fair value recognized during the year ended December 31, 2023.

Research and development expenses decreased by $11,000, or 17%, in 2024 compared to 2023, reflecting our strategy to develop the Zola brand by leveraging our existing resources and minimizing new investment.

Gain on sale of intangible assets

During 2024, the Company realized a gain of $4.0 million related to the sale of its RS durum wheat trait to Corteva.

There was no such gain recorded during 2023.

Gain on sale of property and equipment

During the years ended December 31, 2023 and 2022, the Company sold property and equipment for net proceeds exceeding book value by $40,000 and $314,000, respectively.

Impairment of property and equipment, net

During the year ended December 31, 2022, the Company recognized $160,000 of impairments of property and equipment related to Archipelago.

There was no impairment of property and equipment recognized during the year ended December 31, 2023.

Impairment of ROU assets

During the year ended December 31, 2023, the Company recognized $113,000 of impairment related to ROU assets.

There was no impairment of ROU assets recognized during the year ended December 31, 2022.

During 2023, the Company sold property and equipment for net proceeds exceeding book value by $29,000.

There was no such gain from sale of property and equipment in 2024.

Impairment of property and equipment

During 2024, the Company recognized impairment of property and equipment held for sale related to Archipelago of $36,000 based on estimated market price.

There was no such impairment of property and equipment during 2023.

Impairment of ROU asset

During 2023, the Company recognized $113,000 of impairment related to ROU assets.

There was no impairment of ROU assets recognized during 2024.

Selling, General, and Administrative

Selling, general, and administrative expenses decreased by $0.5 million, or 4%, in 2023 compared to 2022 primarily driven by a decrease in employee compensation.

Selling, general, and administrative expenses increased by $1.4 million, or 17%, in 2024 compared to 2023.

This was driven by $1.4 million of transaction costs related to the sale of GoodWheat assets to Above Food as well as the

pending transaction with Roosevelt Resources, which included consulting and legal expenses.

In addition, there was employee related costs of $600,000 related to the restructuring of the business.

Interest income

During the year ended December 31, 2023, the Company recognized interest income of $695,000 from investments as compared to $289,000 in 2022.

During 2024, the Company recognized interest income of $782,000, of which $310,000 was related to discount amortization and accrued interest on the promissory note from Above Food.

The remaining difference was related to interest from investments.

During 2023, the Company recognized interest income of $695,000.

Other income, net

During the year ended December 31, 2023, the Company recognized other income of $48,000 as compared to $9,000 in 2022.

During 2024, the Company recognized other income of $31,000 as compared to $48,000 in 2023.

Valuation loss on March 2023 PIPE

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The valuation loss includes the fair value in excess of gross proceeds and the increase in fair value related to the re-pricing of existing warrants.

Change in the estimated fair value of common stock warrant and option liabilities

The change in the estimated fair value of common stock warrant and option liabilities was $6.5 million during the year ended December 31, 2023 related to the change in the estimated fair value of the liability classified preferred investment options issued in connection with the March 2023 PIPE and August 2022 Registered Direct Offering financing transactions.

The change in the estimated fair value of common stock warrant and option liabilities was $3.2 million during the year ended December 31, 2022 related to the change in the estimated fair value of the liability classified preferred investment options issued in connection with the August 2022 Registered Direct Offering financing transaction.

Issuance and offering costs

There was no such valuation loss in 2024.

Change in fair value of common stock warrant and option liabilities

The change in the estimated fair value of common stock warrant and option liabilities resulted in a loss of $1.5 million and a gain of $6.5 million during the year ended December 31, 2024 and 2023, respectively, related to the change in the estimated fair value of the liability classified preferred investment options issued in connection with the March 2023 PIPE and August 2022 Registered Direct Offering financing transactions.

Issuance and offering costs allocated to liability options

Issuance and offering costs were $430,000 during the year ended December 31, 2023 and were related to the liability classified options issued in the March 2023 PIPE financing transaction.

Issuance and offering costs were $314,000 during the year ended December 31, 2022 related to the August 2022 Registered Direct Offering financing transaction.

There were no such issuance and offering costs in 2024.

Income tax expense

The income tax provision resulted in an expense of $8,000 and $14,000 during the years ended December 31, 2023 and 2022, respectively.

The income tax provision resulted in an expense of $8,000 during each of the years ended December 31, 2024 and 2023.

Net loss from discontinued operations

Net loss from discontinued operations was $821,000 and $4.8 million during the years ended December 31, 2023 and 2022, respectively.

Net loss from discontinued operations for Body Care was $0 and $821,000 during 2024 and 2023, respectively.

Net loss from discontinued operations for GoodWheat was $2.7 million and $7.8 million during 2024 and 2023, respectively.

See Note 4 to the consolidated financial statements for further information on discontinued operations.

We and our commercial partners operate in different geographies around the world and conduct field trials used for data generation, which must be conducted during the appropriate growing seasons for particular crops and markets.

Demand for coconut water products is generally higher in the summer months.

The level of seasonality in our business overall is difficult to evaluate at this time due to our relatively limited number of commercialized products, our expansion into new geographical markets and our introduction of new products and traits.

The coconut water category, similar to other beverages, is seasonal.

Generally, sales volumes are highest during our second and third fiscal quarters when the weather is warmer.

Liquidity and Capital Resources

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Refer to Note 16 to the consolidated financial statements for details of our leasing arrangements.

As of December 31, 2023, we had cash and cash equivalents of $6.5 million and short-term investments of $5.1 million.

For the years ended December 31, 2023 and 2022, the Company had net losses of $14.0 million and $15.6 million, respectively, and net cash used in operations of $15.3 million and $14.0 million, respectively.

As of December 31, 2024, we had cash and cash equivalents of $4.2 million.

For the years ended December 31, 2024 and 2023, the Company had

net losses of $7.0 million and $14.0 million, respectively, and net cash used in operations of $9.6 million and $15.3 million, respectively.

Going Concern;

We believe that our existing cash and cash equivalents and short-term investments will not be sufficient to meet our anticipated cash requirements for at least the next 12 months from the issuance date of our 2023 financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.

Material Cash Requirements

We believe that our existing cash and cash equivalents will not be sufficient to meet our anticipated cash requirements for at least the next 12 months from the issuance date of our 2024 financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We will require additional funding in the near term to fund our business and the marketing and sale of our products and to provide working capital to fund other aspects of our business.

There are no assurances that required funding will be available at all or will be available in sufficient amounts or on reasonable terms.

We may seek to raise additional funds through debt or equity financings, if necessary.

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Our incurrence of debt would result in debt service obligations, and the instruments governing our debt could provide for additional operating and financing covenants that would restrict our operations.

If we require additional funds and are not able to secure adequate additional funding, we may be forced to reduce our spending,

extend payment terms with our suppliers, liquidate assets, or suspend or curtail planned product launches.

If we require additional funds and are not able to secure adequate additional funding, we may be forced to reduce our spending, extend payment terms with our suppliers, liquidate assets, or suspend or curtail planned product launches.

Any of these actions could materially harm our business, results of operations and financial condition.

As noted above, through December 31, 2024 , we have incurred substantial losses.

We will be required to obtain additional cash resources in the near term in order to support our operations and activities.

The availability of required additional funding cannot be assured.

In addition, an adverse outcome in legal or regulatory proceedings in which we are or could become involved could adversely affect our liquidity and financial position.

If we are not able to obtain additional required equity or debt funding, our cash resources would be significantly limited and could become depleted, and we could be required to materially reduce or suspend operations, or seek dissolution and liquidation, or bankruptcy protection.

No assurance can be given as to the timing or ultimate success of obtaining future funds.

The following table summarizes total current assets, current liabilities and working capital for the dates indicated (in thousands):

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Cash used in operating activities for the year ended December 31, 2024 was $9.6 million.

With respect to our net loss of $14.0 million, non-cash charges, including $430,000 of issuance and offering costs, $6.1 million of valuation loss recognized for the March 2023 PIPE, $717,000 of stock-based compensation, $697,000 of lease amortization, $287,000 of depreciation, $444,000 of write-downs of inventory and $113,000 of impairment of ROU assets, were offset by the change in fair value of common stock warrant and option liabilities of $6.5 million, adjustments in our working capital accounts of $2.7 million, a gain on disposal of property and equipment of $40,000, and operating lease payments of $764,000.

With respect to our net loss of $7.0 million, non-cash charges including the change in fair value of common stock warrant and option liabilities of $1.5 million, $113,000 of depreciation, $652,000 of lease amortization, $512,000 of stock-based compensation, $154,000 of write-downs of inventory, $36,000 of impairment of property and equipment, offset by $157,000 of amortization of note receivable discount, a gain on disposal of property and equipment of $65,000, a gain on sale of our RS durum wheat trait of $4.0 million, adjustments in our working capital accounts of $596,000, and operating lease payments of $850,000.

Cash used in operating activities for the year ended December 31, 2023 was $15.3 million.

With respect to our net loss of $15.6 million, non-cash charges including $1.1 million of stock-based compensation, $884,000 of lease amortization, $2.5 million of write-downs of inventory, $530,000 of impairment of property and equipment, $314,000 of issuance and offering costs, $404,000 of impairment of intangible assets, $439,000 of depreciation, and $1.0 million adjustments in our working capital accounts were offset by $3.2 million for the change in fair value of common stock warrant and option liabilities, gain on sale of Verdeca of $1.1 million, $314,000 of net gain on disposal of property and equipment, and operating lease payments of $932,000.

Cash flows from investing activities

Cash used in investing activities for the year ended December 31, 2024 consisted of proceeds of $334,000 from the sale of property and equipment, proceeds from the sale of investments of $5.0 million, proceeds from the sale of our RS durum wheat trait of $4.0 million, offset by cash paid related to the GoodWheat sale of $2.0 million and $16,000 of purchases of property and equipment.

Cash used in investing activities for the year ended December 31, 2023 consisted of proceeds of $115,000 from the sale of property and equipment, proceeds of $569,000 from the sale of Verdeca, and proceeds of $2.5 million from the sale of investments, offset by $5,000 of purchases of property and equipment and $7.5 million of purchases of investments.

Cash provided by investing activities for the year ended December 31, 2022 of $1.4 million primarily consisted of $920,000 of proceeds from sales of property and equipment, $569,000 proceeds from sale of Verdeca, partially offset by $72,000 of purchases of property and equipment.

Cash flows from financing activities

Cash provided by financing activities for the year ended December 31, 2024 consisted of proceeds from the purchase of ESPP shares of $9,000.

Cash provided by financing activities for the year ended December 31, 2023 consisted of gross proceeds of $6.0 million from the March 2023 PIPE financing transaction and proceeds from the purchase of ESPP shares of $12,000, which were offset by payments of transaction costs related to the March 2023 PIPE financing transaction of $497,000.

Cash provided by financing activities for the year ended December 31, 2022 of $4.5 million consisted of proceeds from the issuance of common stock relating to the August 2022 RDO financing transaction of $5.0 million gross proceeds and proceeds from the purchase of ESPP shares of $7,000, which were offset by payments of transaction costs related to the August 2022 RDO financing transaction of $488,000.

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities, other than Verdeca, a joint venture sold in November 2020.

Critical Accounting Polices and Estimates

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP.

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Actual results may differ from these estimates under different assumptions or conditions.

We consider our critical accounting policies and estimates to be revenue recognition, determination of the provision for income taxes, and net realizable value of inventory.

We consider our critical accounting estimates to be revenue recognition, determination of the provision for income taxes, and net realizable value of inventory.

Revenue recognition

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

GoodWheat Inventory Valuation – Refer to Note 4 to the consolidated financial statements

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Identification and recognition of contingent features within note receivable – Refer to Note 8 to the financial statements

Critical Audit Matter Description

GoodWheat inventories are recorded at the lower of cost or net realizable value.

Management periodically evaluates the carrying value of inventories in relation to the forecasts of product demand, which takes into consideration the estimated marketability and salability of products.

When quantities on hand exceed forecasted demand, regulatory changes occur, or quality specifications are not met, a write-down is recorded for such inventories.

Changes in assumptions of forecasted product demand could have a significant impact on the amount of inventory valuation, and any related write-downs.

Given the significant judgments made by management in forecasting product demand, including the impact of product marketability and salability, auditing the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased extent of effort.

The Company sold its GoodWheat brand to Above Food Ingredients Corp (“Above Food”).

As consideration for the sale, the Company received a promissory note during the year ended December 31, 2024.

The promissory note contains contingent features, including an option that requires Above Food to cause its parent entity, Above Food Ingredients Inc.

(“Parent Company”), to issue to the Company publicly traded stock of Parent Company in exchange for the cancellation of a portion of the principal of the promissory note, as well as default provisions.

The Company bifurcated the contingent features of the promissory note in accordance with ASC 815, “Derivatives and Hedging”, and separately recognized the contingent features.

We identified the accounting for the contingent features within the promissory note as a critical audit matter due to the significant judgement that were used by management in the initial identification and recognition of such contingent features.

This required a high degree of auditor judgment, subjectivity, and effort, including the need to involve professionals in our firm with expertise in ASC 815 in performing procedures and evaluating audit evidence relating to management's initial identification and recognition of such contingent features.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over GoodWheat inventory valuation included the following, among others:

• We evaluated the demand forecasts by obtaining documentation to support customer orders, contracts, historical and future sales that corroborate the reasonableness of amount estimated for demand.

• We evaluated management’s ability to accurately forecast product demand by comparing actual results to management’s historical estimates.

• We performed corroborative inquiries with the personnel responsible for sales forecasting to evaluate the reasonableness of the product salability and demand forecasts.

Our audit procedures over the promissory note recognition included the following, among others:

• We obtained and reviewed the terms of the promissory note which included reviewing management's identification of the contingent features.

• With the involvement of professionals in our firm with expertise in ASC 815, based on the terms of the promissory note, we evaluated the appropriateness of management's application of ASC 815, in the determination of the accounting and recognition of the promissory note’s contingent features.

/s/ Deloitte & Touche LLP

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Accounts receivable and other receivables, net of allowance for doubtful accounts

of $ 0 and $ 3 as of December 31, 2023 and 2022, respectively

of $ 0 as of December 31, 2024 and 2023

Inventories, net — current

Assets held for sale

Note receivable — current

Prepaid expenses and other current assets

Current assets of discontinued operations

Current assets of discontinued operations — GoodWheat

Total current assets

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Intangible assets, net

Note receivable — noncurrent

Other noncurrent assets

Noncurrent assets of discontinued operations

Noncurrent assets of discontinued operations — GoodWheat

Liabilities and stockholders’ equity

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Other current liabilities

Current liabilities of discontinued operations

Current liabilities of discontinued operations — GoodWheat

Total current liabilities

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Research and development

Gain on sale of Verdeca

Impairment of intangible assets

Change in fair value of contingent consideration

Gain on sale of intangible assets

Gain on sale of property and equipment

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Net loss from continuing operations

Net loss from discontinued operations

Net loss from discontinued operations — Body Care

Net loss from discontinued operations — GoodWheat

Net loss attributable to non-controlling interest

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Basic and diluted from discontinued operations

Net loss per basic and diluted share attributable to common stockholders

Weighted-average number of shares used in per share calculations:

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Unrealized gains on available-for-sale securities

Other comprehensive income

Comprehensive loss attributable to common stockholders

Reclassification adjustment for gains on available-for-sale securities included in net loss

Change in unrealized gains on available-for-sale securities

Comprehensive loss

The accompanying notes are an integral part of these consolidated financial statements.

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Balance at December 31, 2022

Reclassification upon adoption of ASU 2020-06

Issuance of shares related to August 2022 Offering

Offering costs related to August 2022 Offering

Issuance of shares related to employee stock

purchase plan

Stock-based compensation

Balance at December 31, 2022

Issuance of shares related to March 2023 PIPE

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Balance at December 31, 2023

Issuance of shares related to March 2023 pre-funded warrants exercise

Issuance of shares related to employee stock

purchase plan

Stock-based compensation

Change in unrealized gains on available-for-sale securities

Write-down of non-controlling interest

Balance at December 31, 2024

The accompanying notes are an integral part of these consolidated financial statements.

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Change in fair value of common stock warrant and option liabilities

Change in fair value of contingent consideration

Issuance and offering costs allocated to liability classified options

Valuation loss on March 2023 PIPE

Amortization of intangible assets

Lease amortization

Impairment of intangible assets

Gain on disposal of equipment

Amortization of note receivable discount

Gain on disposal of property and equipment

Gain on sale of RS durum wheat trait

Stock-based compensation

Bad debt expense

Gain on sale of Verdeca

Write-down of inventories

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Impairment of ROU asset

Write-down of non-controlling interest

Changes in operating assets and liabilities:

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Amounts due to related parties

Other current liabilities

Operating lease payments

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Proceeds from sale of investments

Proceeds from sale of RS durum wheat trait

Cash paid related to sale of GoodWheat

Purchases of property and equipment

Purchases of investments

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

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Payments of offering costs relating to March 2023 PIPE

Proceeds from issuance of common stock, pre-funded warrants and

preferred investment options from August 2022 Offering

Payments of offering costs relating to August 2022 Offering

Proceeds from ESPP purchases

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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for interest

NONCASH TRANSACTIONS:

Common stock warrant liabilities reclassified to equity upon adoption of ASU 2020-06

Common stock options issued to placement agent and included in offering

costs related to August 2022 RDO securities purchase agreement

Common stock options issued to placement agent and included in offering costs related to March 2023 PIPE

Right of use assets obtained in exchange for new operating lease liabilities

Proceeds from sale of property and equipment in accounts receivable and other receivables

Proceeds from sale of Verdeca in accounts receivable and other receivables

Warrant and option modifications included in Valuation loss on March 2023 PIPE

Proceeds from sale of property and equipment in accounts receivable and other receivables

Right of use assets obtained in exchange for new operating lease liabilities

Note receivable recognized from sale of GoodWheat

The accompanying notes are an integral part of these consolidated financial statements.

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Arcadia Biosciences, Inc.

(the "Company," "Arcadia" or "management"), was incorporated in Arizona in 2002 and maintains its headquarters in Dallas, Texas, with additional office space in Davis and Sacramento, California, and additional facilities in American Falls, Idaho.

(the "Company," "Arcadia" or "management"), was incorporated in Arizona in 2002 and maintains its headquarters in Dallas, Texas, with additional office space in Sacramento, California.

The Company was reincorporated in Delaware in March 2015.

The Company is a producer and marketer of innovative, plant-based food and beverage products.

Its history as a leader in science-based approaches to developing high-value crop improvements, as well as nutritionally enhanced food ingredients, has laid the foundation for its path forward.

The Company used advanced breeding techniques to develop these proprietary innovations which are now being commercialized through the sales of seed and grain, as well as food ingredients and products.

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

In May 2021, the Company's wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness” or “AW”), acquired the businesses of Eko, Lief, and Zola.

Since acquiring the assets of Zola in May 2021, Arcadia has provided consumers with a way to rehydrate, reset, and reenergize with Zola coconut water products.

Arcadia has leveraged its history as a leader in science-based approaches to develop high value products and drive innovation in the consumer goods industry.

On May 16, 2024, Arcadia sold the GoodWheat brand to Above Food for net consideration of $ 3.7 million.

The strategic decision to sell GoodWheat enabled the Company to monetize its intellectual property early.

The assets sold consisted primarily of grain and finished goods inventories, formulations and trademarks.

The disposition of GoodWheat met the "held for sale" criteria per ASC 205-20-45-1B and represented a strategic shift that had a major effect on the Company's operations and financial results.

As a result, the financial statements and related notes as of December 31, 2024 and 2023 reflect the GoodWheat disposition as a discontinued operation.

The disposition of GoodWheat resulted in a loss of $ 1,500 during the year ended December 31, 2024.

Refer to Notes 4 and 8 to the consolidated financial statements for further details of the transaction.

On May 14, 2024, Arcadia sold its non-GMO Resistant Starch (“RS”) durum wheat trait to longtime partner Corteva Agriscience (“Corteva”) for total cash consideration of $ 4.0 million.

Under the terms of the agreement, Arcadia retained certain rights to use the RS durum wheat trait.

Refer to Note 11 to the consolidated financial statements for further details of the transaction.

In May 2021, Arcadia’s wholly owned subsidiary Arcadia Wellness, LLC (“Arcadia Wellness”) acquired the businesses of Eko Holdings, LLC, Lief, LLC, and Zola.

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.

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

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

(“Radiance Beauty”).

In July 2023, management made the decision to exit the remaining body care brands, Soul Spring and ProVault, as a result of continued pressure on the CBD market due to regulatory uncertainty.

Body care operations ceased as of September 30, 2023.

Body care operations ceased during the third quarter of 2023.

In August 2019, the Company entered into a joint venture agreement with Legacy Ventures Hawaii, LLC (“Legacy,” see Note 9) to grow, extract, and sell hemp products.

The partnership Archipelago Ventures Hawaii, LLC (“Archipelago”), combines the Company’s extensive genetic expertise and resources with Legacy’s experience in hemp extraction and sales.

The partnership Archipelago Ventures Hawaii, LLC (“Archipelago”), combined the Company’s genetic expertise and resources with Legacy’s experience in hemp extraction and sales.

In October 2021, Arcadia and Legacy mutually agreed to wind down the cultivation activities of Archipelago, due to regulatory challenges and a saturated hemp market.

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Since inception, the Company has financed its operations primarily through equity and debt financings.

As of December 31, 2023, the Company had an accumulated deficit of $ 271.8 million, cash and cash equivalents of $ 6.5 million and short-term investments of $ 5.1 million.

As of December 31, 2024, the Company had an accumulated deficit of $ 278.9 million and cash and cash equivalents of $ 4.2 million.

For the years ended December 31, 2024 and 2023, the Company had net losses of $ 7.0 million and $ 14.0 million, respectively, and net cash used in operations of $ 9.6 million and $ 15.3 million, respectively.

The Company believes that its existing cash and cash equivalents and short-term investments will not be sufficient to meet its anticipated cash requirements for at least the next 12 months from the issuance date of these financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.

The Company believes that its existing cash and cash equivalents will not be sufficient to meet its anticipated cash requirements for at least the next 12 months from the issuance date of these financial statements, and thus raises substantial doubt about the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Any of these actions could materially harm the business, results of operations and financial condition.

Discontinued Operations

In July 2023, management made the decision to exit its body care brands as a result of continued pressure on the CBD market due to regulatory uncertainty.

Body care operations ceased as of September 30, 2023.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Major classes of line items constituting the balance sheet of discontinued operations:

(In thousands)

December 31, 2023

December 31, 2022

Accounts receivable and other receivables

Inventories, net — current

Prepaid expenses and other current assets

Property and equipment, net

Accounts payable and accrued expenses

Total liabilities

Major classes of line items constituting net loss from discontinued operations:

Year Ended December 31,

(In thousands)

Product revenue

Cost of revenues

Impairment of intangible assets

Impairment of property and equipment

Selling, general and administrative

Other income, net

Net loss from discontinued operations

The following table presents significant non-cash items of discontinued operations:

Year Ended December 31,

(In thousands)

Impairment of intangible assets

Write-down of inventories

Impairment of property and equipment

Accounts receivable and other receivables

Prepaid expenses and other current assets

Accounts payable and accrued expenses

There were no other significant operating or investing non-cash items for the years ended December 31, 2023 and 2022.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Summary of Significant Accounting Policies

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Accordingly, the Company consolidates Archipelago in the consolidated financial statements after eliminating intercompany transactions.

For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of the joint venture is included in non-controlling interests as equity of the Company.

For consolidated joint ventures, the non-controlling partner’s share of the assets, liabilities and operations of the joint venture is included in non-controlling interest as equity of the Company.

The non-controlling partner’s interest is generally computed as the joint venture partner’s ownership percentage of Archipelago.

Net loss attributable to non-controlling interest of $ 0 and $ 5,000 is recorded as an adjustment to net loss to arrive at net loss attributable to common stockholders for the years ended December 31, 2024 and 2023, respectively.

The non-controlling partner’s equity interests are presented as non-controlling interests on the consolidated balance sheets as of December 31, 2023 and 2022.

The non-controlling partner’s equity interest is presented as non-controlling interest on the consolidated balance sheets as of December 31, 2024 and 2023.

Non-controlling interest on the consolidated balance sheet was fully written-off as of December 31, 2024.

Reclassifications

Certain previously reported financial information has been reclassified to conform to the current year presentation.

For a discussion of the reclassification of the financial presentation of our former body care brands reported as discontinued operations, see “Discontinued Operations” section above.

See Note 4 to the consolidated financial statements for a discussion of the reclassification of the financial presentation of our former GoodWheat and body care brands reported as discontinued operations.

Unless otherwise noted, amounts and disclosures throughout these notes to consolidated financial statements relate solely to continuing operations and exclude all discontinued operations.

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Past-due receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due.

The Company had $ 0 and $ 3,000 amounts reserved for doubtful accounts at December 31, 2023 and 2022, respectively, and the allowance activity during each of the years ended December 31, 2023 and 2022, was immaterial.

The Company had $ 0 amounts reserved for doubtful accounts at December 31, 2024 and 2023, and the allowance activity during each of the years ended December 31, 2024 and 2023, was immaterial.

Inventory costs are tracked on a lot-identified basis and are included as cost of revenues when sold.

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Additional adjustments to inventory are made for excess and slow-moving inventory on hand that is not expected to be sold within a reasonable timeframe to reduce the carrying amount to its estimated net realizable value .

Proprietary wheat plants are grown, producing seed and grain with a variety of improved nutritional qualities, including high levels of amylose, improved shelf life, and reduced gluten.

The seed is used for subsequent plantings and the grain is either sold or used as an ingredient in the production of food products, which the Company refers to collectively as GoodWheat products.

Amounts inventoried consist primarily of fees paid to contracted cooperators to grow the crops, costs to process harvested seed and grain, and costs to mill the grain into flour.

Zola Coconut water :

Inventories mainly consist of coconut water imported from Thailand, freight-in, supplies, and labor.

Inventories mainly consist of coconut water imported from Thailand and freight costs.

The inventories—current line item on the balance sheet represents inventory forecasted to be sold or used in production in the next 12 months, as of the balance sheet date, and consist primarily of Zola Coconut water.

Raw materials inventories consists of in-transit Zola Coconut Water.

Finished goods inventories consist of Zola Coconut Water that are available for sale.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The inventories—noncurrent line item on the balance sheet represents inventory expected to be used in production or sold beyond the next 12 months, as of the balance sheet date, and consists primarily of GoodWheat products, seed and grain.

Raw materials inventories consist primarily of GoodWheat seeds and in-transit Zola Coconut Water.

Finished goods inventories consist primarily of GoodWheat products and Zola Coconut Water that are available for sale, as well as GoodWheat grain.

Note receivable

In connection with the sale of GoodWheat to Above Food, the Company received a $ 6.0 million promissory note dated May 14, 2024.

The promissory note has a term of three years and accrues interest at the Wall Street Journal prime rate .

On each of the first, second and third anniversaries of the promissory note, accrued interest and $ 2.0 million of principal are payable to Arcadia.

The first installment payment due in 2025 is classified as current and the remaining installment payments due in 2026 and 2027 are classified as noncurrent on the consolidated balance sheet.

The promissory note was assessed using the current expected credit loss (“CECL”) model under ASC 326-20.

Based on the information available, the Company determined that no allowance for credit loss was needed regarding the promissory note as of December 31, 2024.

Refer to Note 8 for more information on the note receivable.

Property and equipment

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Provisions for depreciation are calculated using the straight-line method over the following average estimated useful lives of the assets:

Laboratory equipment

Software and computer equipment

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• Level 3 inputs are unobservable inputs for the asset or liability.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Concentration of risk

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Deposits held with banks may exceed the amount of insurance provided on such deposits.

Generally, these deposits may be redeemed upon demand and

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

are maintained with financial institutions with reputable credit and therefore bear minimal credit risk.

Generally, these deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore bear minimal credit risk.

The Company seeks to mitigate its credit risks by spreading such risks across multiple counterparties and monitoring the risk profiles of these counterparties.

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The Company uses the asset and liability method of accounting for income taxes.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

are expected to reverse.

A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

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Basic net loss per share, which excludes dilution, is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, convertible promissory notes, convertible preferred stock, redeemable convertible preferred

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

stock and warrants, result in the issuance of common stock which share in the losses of the Company.

Certain potential shares of common stock have been excluded from the computation of diluted net loss per share as their effect would be anti-dilutive.

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Product revenues

Product revenues consist primarily of GoodWheat, Zola and GLA products.

Product revenues consist primarily of Zola and GLA products.

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The Company defers revenue to the extent that cash received in conjunction with a license agreement is not yet earned in accordance with the Company policies.

The opening and closing accounts and other receivables balances for the year ended December 31, 2024 were $ 506,000 and $ 1.2 million, respectively.

The opening and closing accounts and other receivables balances for the year ended December 31, 2023 were $ 1.2 million and $ 506,000 , respectively.

Cost of revenues

Cost of revenues primarily relates to the sale of Zola products and consists primarily of product and freight costs.

Adjustments or write-downs to inventory are also included in cost of revenues.

Research and development expenses

Research and development expenses consist of costs incurred in the development and testing of the Company's products and other products in development incorporating the Company's traits.

Research and development expenses consist of costs incurred in the development and testing of the Company's products.

These expenses currently consist primarily of fees paid to product formulation consultants and are expensed as incurred.

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Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

Additionally, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326 in April 2019 and ASU 2019-05, Financial Instruments — Credit Losses (Topic 326) — Targeted Transition Relief in May 2019.

The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

In November 2019, the FASB issued ASU No.

2019-10, which defers the effective date of ASU No.

2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company adopted A SU No.

2016-13 on January 1, 2023 with an immaterial impact on the Company’s disclosures.

In November 2023, the FASB issued ASU No.

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No.

2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures.

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The new guidance is effective retrospectively for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of this update on our segment disclosures in Note 17.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The Company adopted ASU No.

2023-07 on January 1, 2024 with an immaterial impact on the Company’s disclosures.

In December 2023, the FASB issued ASU No.

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The new guidance is effective either prospectively or retrospectively, for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of this update on our income tax disclosures.

The Company is currently evaluating the impact of this update on our income tax disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40).

The amendments in this update, among other things, requires quantitative disclosures for employee compensation, selling expenses and purchases of inventory.

The new guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of this update on our financial statements and disclosures.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Discontinued Operations

On May 16, 2024, the Company sold the GoodWheat brand to Above Food.

GoodWheat operations ceased during the second quarter of 2024.

In July 2023, management made the decision to exit its body care brands as a result of continued pressure on the CBD market due to regulatory uncertainty.

Body care operations ceased during the third quarter of 2023.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets and the results of the discontinued operations as separate components on the consolidated statements of operations and comprehensive loss for all periods presented.

Major classes of line items constituting the balance sheet of discontinued operations:

(In thousands)

December 31, 2024

December 31, 2023

Accounts receivable and other receivables

Inventories, net — current

Property and equipment, net

Inventories, net — noncurrent

Accounts payable and accrued expenses

Total liabilities

Major classes of line items constituting net loss from discontinued operations:

Year Ended December 31,

(In thousands)

Product revenue

Cost of revenues

Research and development

Gain on sale of property and equipment

Selling, general and administrative

Net loss from discontinued operations

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The following table presents significant cash and non-cash items of discontinued operations:

Year Ended December 31,

(In thousands)

Write-down of inventories

Gain on disposal of property and equipment

Accounts receivable and other receivables

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Proceeds from sale of property and equipment

There were no other significant operating or investing cash or non-cash items for the years ended December 31, 2024 and 2023.

Inventory costs are tracked on a lot-identified basis and are included as cost of revenues when sold.

3 unchanged sentences

The write-downs to inventory are included in cost of revenues and are based upon estimates about future demand from the Company’s customers and distributors and market conditions.

The Company recorded a write-down of $ 154,000 related to hemp and GoodWheat seed during the year ended December 31, 2024.

The Company recorded inventory write-downs of $ 444,000 related to packaging materials, hemp seed and GoodWheat during the year ended December 31, 2023.

The Company recorded write-downs of wheat, hemp seed and CBD oil inventories, as well as body care products of $ 2.5 million for the year ended December 31, 2022.

Of inventory write-downs during the year ended December 31, 2022, $ 394,000 was related to the Radiance Beauty licensing agreement.

If there are significant changes in demand and market conditions, substantial future write-downs of inventory may be required, which would materially increase the Company’s expenses in the period the write down is taken and materially affect the Company’s operating results.

1 unchanged sentence

Raw materials

Goods in process

Finished goods

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Property and Equipment, Net

1 unchanged sentence

As of December 31,

Laboratory equipment

Software and computer equipment

6 unchanged sentences

Depreciation expense was $ 58,000 and $ 111,000 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2022, there was $ 10,000 of construction in progress included in property and equipment that had not been placed into service and was not subject to depreciation.

As of December 31, 2023, there was no construction in progress included in property and equipment.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Property and equipment are considered assets held for sale when management approves and commits to a plan to dispose of a property or group of properties.

The property and equipment held for sale prior to the sale date is separately presented, within current assets, on the consolidated balance sheet as assets held for sale.

Property and equipment related to Archipelago, in the amount of $ 51,000 and $ 87,000 have been classified as assets held for sale, and are recorded at fair value as of December 31, 2023 and 2022, respectively.

The fair value has been estimated using publicly available prices for some of the assets, and business partners' estimates for assets with prices not readily available, due to the relatively small size of the industry in which they can be used.

During the year ended December 31, 2023, the Company sold property and equipment and realized a gain on sale of $ 40,000 recorded on the consolidated statements of operations and comprehensive loss, with proceed s of $ 115,000 .

During the year ended December 31, 2022, management initiated the sale of property and equipment related to the Davis laboratory, Archipelago and Body Care.

During the year ended December 31, 2023, management initiated the sale of property and equipment related to Archipelago.

The Company completed the sale of such property and equipment with a net gain on sale of property and equipment in the amount of $ 29,000 recorded on the consolidated statements of operations and comprehensive loss during the year ended December 31, 2023.

The proceeds related to the sale of property and equipment during the year ended December 31, 2023 were $ 65,000 .

During the year ended December 31, 2022, the Company recorded write-downs of property and equipment of $ 530,000 , of which $ 320,000 was related to the Radiance Beauty licensing agreement.

There were no such write-downs of property and equipment during the year ended December 31, 2023.

Property and equipment related to Archipelago of $ 51,000 were classified as assets held for sale as of December 31, 2023.

During the first quarter of 2024, the Company recorded an impairment of $ 36,000 related to these assets.

During the second quarter of 2024, all Archipelago property and equipment previously held for sale were sold.

Investments and Fair Value Instruments

7 unchanged sentences

Money market funds

Short-term investments:

Treasury bills

Total Assets at Fair Value

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

(Dollars in thousands)

2 unchanged sentences

Money market funds

Short-term investments:

Treasury bills

Total Assets at Fair Value

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The Company did no t have any investment categories that were in a continuous unrealized loss position for more than twelve months as of December 31, 2024 and 2023.

6 unchanged sentences

Money market funds

Short-term investments:

Treasury bills

Total Assets at Fair Value

5 unchanged sentences

Money market funds

Short-term investments:

Treasury bills

Total Assets at Fair Value

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2024 or 2023.

The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable and other receivables, accounts payable and accrued liabilities.

The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable and other receivables, note receivable, accounts payable and accrued liabilities.

For short-term investments, accounts receivable and other receivables, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of December 31, 2024 and December 31, 2023 were considered representative of their fair values due to their short term to maturity or repayment.

Cash equivalents are carried at cost, which approximates their fair value.

The note receivable is recorded at amortized cost.

The amortized cost of the note receivable is considered approximate fair value due to its variable interest rate.

The Company’s Level 3 liabilities consist of a contingent liability resulting from the Anawah, Inc.

("Anawah") acquisition as described in Note 13, as well as preferred investment options related to the March 2023 Private Placement and August 2022 Registered Direct offerings discussed in Note 10.

("Anawah") acquisition as described in Note 15, as well as preferred investment options related to the March 2023 Private Placement offering discussed in Note 12.

The contingent liability related to the Anawah acquisition was measured and recorded on a recurring basis as of December 31, 2024 and 2023, using unobservable inputs, namely the Company’s ability and intent to pursue certain specific products developed using technology acquired in the purchase.

A significant deviation in the Company’s ability and/or intent to pursue the technology acquired in the purchase could result in a significantly lower (higher) fair value measurement.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The preferred investment option liabilities were measured and recorded on a recurring basis using the Black-Scholes Model with the following assumptions at December 31, 2024 and 2023:

7 unchanged sentences

Expected dividend yield

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The significant unobservable input used in the fair value measurement of the Company’s Level 3 warrant liabilities is volatility.

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Placement Agent Options

Note Receivable Bifurcated Derivatives

Balance as of December 31, 2023

3 unchanged sentences

Balance as of December 31, 2024

Assets classified as held for sale are recorded at fair value as of December 31, 2023 and 2022.

Assets classified as held for sale were recorded at fair value as of December 31, 2023.

The Company has classified the fair value measurements as a Level 3 measurement in the fair value hierarchy as the fair value has been estimated using publicly available prices for some of the assets, and business partners' estimates for assets with prices not readily available, due to the relatively small size of the industry in which they can be used.

Note Receivable and Embedded Derivatives

On May 16, 2024, the Company sold the GoodWheat brand to Above Food for net consideration of $ 3.7 million.

The assets sold consisted primarily of grain and finished goods inventories, formulations and trademarks.

A loss of $ 1,500 was recognized in the consolidated statements of operations and comprehensive loss during the year ended December 31, 2024, related to the sale.

In connection with the transaction, Arcadia paid to Above Food $ 2.0 million and received a $ 6.0 million promissory note dated May 14, 2024.

The promissory note has a term of three years and accrues interest at the Wall Street Journal prime rate .

On each of the first, second and third anniversaries of the promissory note, accrued interest and $ 2.0 million of principal are payable to Arcadia.

The promissory note contains contingent features, including an option that requires Above Food to cause its parent entity, Above Food Ingredients Inc.

The Company accounted for the promissory note as a note receivable in accordance with ASC 310.

The Company did not elect the fair value option and since the Company intends to and has the ability to hold the promissory note to maturity, it has been classified as held for investment and is reported on the consolidated balance sheet at amortized cost.

The first installment payment due in 2025 is classified as current and the remaining installment payments due in 2026 and 2027 are classified as noncurrent on the consolidated balance sheet.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The promissory note was recorded at a discount of $ 545,000, which is being amortized over the term of the promissory note using the effective interest method.

The Company recognized discount amortization and accrued interest of $ 157,000 and $ 310,000 in the consolidated statements of operations and comprehensive loss during the year ended December 31, 2024, respectively.

Embedded Derivatives

The contingent features of the promissory note were evaluated for bifurcation in accordance with ASC 815.

The contingent features requiring bifurcation had an estimated fair value of $ 250,000 as of the transaction date and as of December 31, 2024.

The estimated fair value of the contingent features is reported in note receivable – noncurrent on the consolidated balance sheet as of December 31, 2024.

Consolidated Joint Venture

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Royalty fees due to unrelated parties

Rent and utilities

Audit and tax fees

Total accounts payable and accrued expenses

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Collaborative Arrangements

In August 2017 , the Company entered into a collaborative arrangement for the research, development and commercialization of an improved wheat quality trait in North America.

This collaborative arrangement is a contractual agreement with Corteva AgriScience (“Corteva”) and involves a joint operating activity where both Arcadia and Corteva are active participants in the activities of the collaboration.

This collaborative arrangement is a contractual agreement with Corteva and involves a joint operating activity where both Arcadia and Corteva are active participants in the activities of the collaboration.

Arcadia and Corteva participate in the research and development, and Arcadia has the primary responsibility for the intellectual property strategy while Corteva will generally lead the marketing and commercialization efforts.

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Third-party R&D costs are expensed when the contracted work has been performed or as milestone results are achieved.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

On May 14, 2024, the Company sold its RS durum wheat trait to Corteva.

Under the terms of the agreement, Arcadia retained certain rights to use the RS durum wheat trait.

The Company received $ 4.0 million in cash payment from Corteva during the year ended December 31, 2024 and recorded a gain of the same amount as the trait had no carrying value on the consolidated statement of operations and comprehensive loss related to the transaction.

Equity Financing

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The March 2023 Private Placement closed on March 6, 2023.

The March 2023 Pre-Funded Warrants became exercisable upon issuance and are exercisable until exercised in full.

The March 2023 Pre-Funded Warrants became exercisable upon issuance and were fully exercised as of December 31, 2024.

The March 2023 Options - Series A are exercisable at any time at the option of the holder and expire 5 years from the date of issuance.

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The increase in fair value related to the re-pricing of Existing Warrants was recognized in Valuation Loss on March 2023 PIPE on the consolidated statements of operations and comprehensive loss.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The March 2023 Options and March 2023 Placement Agent Options are classified as liabilities within Level 3 due to certain early settlement provisions that preclude them from equity classification.

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A total of $ 430,000 was allocated to the common stock option liabilities and expensed while the remaining $ 330,000 was allocated to the common stock and March 2023 Pre-Funded Warrants and offset to additional paid in capital.

August 2022 Registered Direct Offering

On May 11, 2018, the Company filed a shelf Registration Statement on Form S-3 with the SEC which was declared effective on June 8, 2018 (“2018 Shelf Registration Statement”).

On April 21, 2022, the Company filed a shelf

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Registration Statement on Form S-3 with the SEC which was declared effective on May 12, 2022 (“2022 Shelf Registration Statement”).

Each of the 2018 Shelf Registration Statement and the 2022 Shelf Registration Statement allows the Company to sell any combination of common stock, preferred stock, warrants and units consisting of such securities in one or more offerings from time to time having aggregate offering prices of up to $ 50.0 million.

The Company ceased being able to use the 2018 Shelf Registration Statement after June 8, 2021, the three-year anniversary of its effective date.

The 2022 Shelf Registration Statement may no longer be used after May 12, 2025, the three-year anniversary of its effective date.

In August 2022, the Company entered into a securities purchase agreement (the “August 2022 Purchase Agreement”) pursuant to which it sold (i) 61,250 registered shares of its common stock, pursuant to the 2022 Shelf Registration Statement, (ii) pre-funded common stock purchase warrants (the “August 2022 Pre-Funded Warrants”) to purchase up to 56,813 shares of common stock, at an exercise price of $ 0.004 per share, which the August 2022 Pre-Funded Warrants were registered under the 2022 Shelf Registration Statement, and (iii) unregistered preferred investment options (the "August 2022 Options") to purchase up to 118,063 shares of common stock, at an exercise price of $ 37.35 per share, for total gross proceeds of $ 5.0 million (the “August 2022 Registered Direct Offering”).

The August 2022 Registered Direct Offering closed on August 16, 2022 .

The August 2022 Pre-Funded Warrants became exercisable upon issuance and were fully exercised during the year ended December 31, 2023.

The August 2022 Options became exercisable upon issuance and expire 5 years after the date of issuance.

In connection with the August 2022 Registered Direct Offering, the Company granted to a placement agent preferred investment options ("August 2022 Placement Agent Options") to purchase a total of 5,904 shares of common stock that have an exercise price per share equal to $ 52.80 and a term of five years .

The August 2022 Options and August 2022 Placement Agent Options are classified as liabilities within Level 3 due to certain early settlement provisions that preclude them from equity classification.

The Company utilized the Black-Scholes Model on August 16, 2022 with the following assumptions:

volatility of 128.46 %, stock price of $ 37.60 , risk-free rate of 2.97 % and a term of 5 years.

The estimated fair value of the common stock option liabilities was subsequently remeasured at December 31, 2023 with the changes recorded on the Company’s consolidated statements of operations and comprehensive loss.

The August 2022 Placement Agent Options were issued for services performed by the placement agent as part of the August 2022 Registered Direct Offering and were treated as offering costs.

The value of the August 2022 Placement Agent Options was determined to be $ 191,000 , calculated using the Black-Scholes Model.

The Company incurred additional offering costs totaling $ 488,000 that consist of direct incremental legal, advisory, accounting and filing fees relating to the August 2022 Registered Direct Offering.

The offering costs, inclusive of the August 2022 Placement Agent Options, totaled $ 679,000 and were allocated to the common stock option liabilities, the common stock and August 2022 Pre-Funded Warrants using their relative fair values.

A total of $ 314,000 was allocated to the common stock option liabilities and expensed while the remaining $ 365,000 was allocated to the common stock and August 2022 Pre-Funded Warrants and offset to additional paid in capital.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Warrants and Options

7 unchanged sentences

December 2022 Service and Performance Warrants (1)

December 2022

October 2022 Service and Performance Warrants (1)

1 unchanged sentence

January 2021 Placement Agent Warrants

January 2021 Service and Performance Warrants (1)(3)

December 2020 Warrants (2)

December 2020

December 2020 Warrants

December 2020

December 2020 Placement Agent Warrants

December 2020

July 2020 Warrants (2)

3 unchanged sentences

May 2020 Placement Agent Warrants

March 2020 Service and Performance Warrants (1)(3)

September 2019 Placement Agent Warrants (3)

September 2019

June 2019 Placement Agent Warrants (3)

April 2019 Service and Performance Warrants (1)(3)

June 2018 Placement Agent Warrants (3)

March 2018 Placement Agent Warrants (3)

January 2021 Warrants (2)

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September 2019 Warrants (2)

September 2019

September 2019 Warrants

September 2019

June 2019 Warrants

March 2018 Warrants (2)(3)

(1) The Company issued service and performance warrants (“Service and Performance Warrants”) in connection with professional services agreements with non-affiliated third party entities.

(2) Certain warrants contain a contingent cash payment feature and therefore were accounted for as a liability at the date of issuance and were adjusted to fair value at each balance sheet date.

Upon adoption of ASU No.

2020-06 on January 1, 2022, all of the common stock warrant liabilities have been reclassified to equity classified common stock warrants, due to the elimination of the contingent cash payments as criteria for liability classification.

(3) These warrants expired in the during the year ended December 31, 2023 .

(2) These warrants were repriced as part of the March 2023 Private Placement offering.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

(3) These warrants expired during the year ended December 31, 2024.

Liability Classified Preferred Investment Options

The preferred investment options issued in connection with the March 2023 Private Placement and August 2022 Registered Direct offerings contain certain early settlement provisions that preclude them from equity classification and therefore were accounted for as liabilities at the date of issuance and are adjusted to fair value at each balance sheet date.

The change in fair value of the options liabilities is recorded as change in fair value of common stock warrant and option liabilities in the consolidated statements of operations and comprehensive loss.

The change in fair value of the options liabilities is recorded as change in fair value of common stock

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

warrant and option liabilities in the consolidated statements of operations and comprehensive loss.

The key terms and activity of the liability classified preferred investment options are summarized as follows:

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In addition, shares subject to awards under the 2006 Plan that are forfeited or canceled will be added to the 2015 Plan.

The maximum number of shares that may be awarded to any individual employee, including our directors and officers, during any calendar year was 9,375 shares.

The 2015 Plan provides for the grant of incentive stock options (“ISOs”), NSOs, restricted stock awards, stock units, stock appreciation rights, and other forms of equity compensation, all of which may be granted to employees, officers, non-employee directors, and consultants.

3 unchanged sentences

Options granted, once vested, are generally exercisable for up to 10 years, after grant to the extent vested.

In June 2019, the shareholders approved an amendment to the Company’s 2015 Plan for a one-time increase to the number of shares of common stock that may be issued under the 2015 Plan by 3,000 shares.

On February 2, 2022, Stanley Jacot, Jr.

was hired as the new president and chief executive officer of the Company.

On June 25, 2024, the shareholders approved an amendment to the Company’s 2015 Plan that increased the number of shares of common stock that may be issued under the 2015 Plan by 200,000 shares and increased the maximum number of shares of common stock issuable to employees, including our officers and directors, in any fiscal year from 9,375 shares to 50,000 shares.

On February 2, 2022, former president and chief executive officer of the Company, Stanley Jacot Jr.

The Company granted Mr.

Jacot an inducement stock option to purchase 7,902 shares of the Company’s common stock pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.

The Company has filed a registration statement on Form S-8 to register the

The Company filed a registration statement on Form S-8 to register the issuance of shares upon exercise of this inducement stock option.

The inducement options grants were issued outside of the 2015 Plan, but are subject to the terms and conditions of the 2015 Plan.

As of December 31, 2024, a total of 338,310 shares of common stock were

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

issuance of shares upon exercise of this inducement stock option.

The inducement options grants have been issued outside of the 2015 Plan, but are subject to the terms and conditions of the 2015 Plan.

As of December 31, 2023, a total of 86,835 shares of common stock were reserved for issuance under the 2015 Plan, of which 15,226 shares of common stock are available for future grant.

reserved for issuance under the 2015 Plan, of which 133,074 shares of common stock are available for future grant.

As of December 31, 2024, a total of 40 and 205,236 options were outstanding under the 2006 and 2015 Plans, respectively.

33 unchanged sentences

The weighted-average, estimated grant date fair value of employee stock options granted during the years ended December 31, 2024 and 2023 was $ 2.33 and $ 5.72 , respectively.

The Company recognized $ 717,000 and $ 1.1 million of compensation expense for stock options awards for the years ended December 31, 2023 and 2022, respectively.

The Company recognized $ 512,000 and $ 717,000 of compensation expense for stock options awards for the years ended December 31, 2024 and 2023, respectively.

Employee Stock Purchase Plan

9 unchanged sentences

Commitments and Contingencies

The Company leases office and laboratory space, grain storage bins, warehouse space, farmland, and equipment under operating lease agreements having initial lease terms ranging from one to five years , including certain renewal options available to the Company at market rates.

The Company leases office and laboratory space, warehouse space, and equipment under operating lease agreements having initial lease terms ranging from one to five years , including certain renewal options available to the Company at market rates.

Legal Matters

1 unchanged sentence

The Company currently is not a party to any material litigation or other material legal proceedings.

Refer to Note 22 for more information.

Contingent Liability Related to the Anawah Acquisition

In June 2005 , the Company completed its agreement and plan of merger and reorganization with Anawah to purchase the Anawah’s food and agricultural research company through a non-cash stock purchase.

Pursuant to the merger with Anawah, and in accordance with the ASC 805 - Business Combinations, the Company incurred a contingent liability not to exceed $ 5.0 million.

Pursuant to the merger with Anawah, the Company incurred a contingent liability not to exceed $ 5.0 million.

This liability represents amounts to be paid to Anawah’s previous stockholders for cash collected on revenue recognized by the Company upon commercial sale of certain specific products developed using technology acquired in the purchase.

4 unchanged sentences

As a result, $ 2.0 million remains on the consolidated balance sheet as an other noncurrent liability.

Contingent Liability Related to the ISI Acquisition

In August 2020, the Company acquired by merger ISI.

A portion of the purchase price consideration for the acquisition in the amount of $ 280,000 was to be recognized in two annual installments, each of up to 3,316 shares of the Company’s common stock, subject to the achievement of revenue milestones in 2021 and 2022.

The contingent consideration was measured and recorded at fair value.

The contingent consideration liability was remeasured quarterly with changes in fair value recorded in the consolidated statements of operations and comprehensive loss.

During 2022, the contingent consideration liability was fully written down as the probability of achievement of the 2022 revenue milestone was remote.

The Company has entered into contract research agreements with unrelated parties that require the Company to pay certain funding commitments.

3 unchanged sentences

In addition, certain royalty payments ranging from 2 % to 15 % of net revenue amounts as defined in the In-Licensing Agreements are or will be due.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The Company could be adversely affected by certain actions by the government as it relates to government contract revenue received in prior years.

8 unchanged sentences

There currently are routine audits in process relating to government grant revenues.

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Operating Leases

As of December 31, 2023, the Company leases office space in Dallas, Texas, Davis and Sacramento, California, as well as additional buildings, land and equipment.

As of December 31, 2024, the Company leases office space in Dallas, TX, Davis and Sacramento, CA, as well as additional buildings, land and equipment.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

1 unchanged sentence

The Company subleases the Davis office to third parties.

In 2022, the Company terminated its lease for office space in Chesterfield, MO effective September 30, 2022.

The original lease term was scheduled to expire in May 2024 .

As a result, the Company paid $ 47,000 in early termination fees.

In addition, the Company subleased the facility in Chatsworth, CA to Radiance Beauty as part of the licensing agreement beginning November 1, 2022 for the remainder of the lease term.

During 2022, the Company entered into an agreement to lease office space in Dallas, Texas.

The new lease commenced in July 2022.

Some leases (the Dallas and Davis offices and a warehouse) include one or more options to renew , with renewal terms that can extend the lease term from one to six years .

Some leases (the Dallas and Davis offices, a warehouse, and a copy machine) include one or more options to renew , with renewal terms that can extend the lease term from one to six years .

The exercise of lease renewal options is at the Company’s sole discretion.

In January 2024, the Company exercised it's option to renew the facility lease in American Falls, Idaho for one year through December 31, 2024.

The lease renewal resulted in recognition of additional right-of-use asset and lease liability of $ 86,000 on the consolidated balance sheet.

The Company subsequently terminated the facility lease in American Falls, Idaho effective July 2024.

The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or material restrictive covenants.

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Total leased liabilities

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Classification

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Years Ending December 31,

Total operating lease payments

imputed interest

Total current and noncurrent operating lease liabilities

Total current operating lease payments

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The components of loss before income taxes are as follows (in thousands):

1 unchanged sentence

Loss before income taxes

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

The total income tax provision for the years ended December 31, 2023 and 2022 was expense of $ 8,000 and $ 14,000 , respectively, and is comprised of current state taxes and foreign taxes withheld by governmental agencies outside of the United States, as follows (in thousands):

The total income tax provision for each of the years ended December 31, 2024 and 2023 was expense of $ 8,000 and is comprised of current state taxes and current foreign taxes withheld by governmental agencies outside of the United States, as follows (in thousands):

Year Ended December 31,

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PIPE Transactions

Contingent Consideration Release

Non-controlling interest

Income tax provision

28 unchanged sentences

At December 31, 2024, the utilization of a portion of the federal NOLs is subject to an annual limitation under Section 382 of the Internal Revenue Code (IRC).

Of the $ 230.5 million of federal NOLs available, approximately $ 136.4 million are expected to expire unutilized due to ownership changes as defined in IRC Section 382.

If not utilized, the federal and state NOLs will begin to expire in 2024.

Of the $ 235.6 million of federal NOLs available, approximately $ 134.1 million are unavailable due to ownership changes as defined in IRC Section 382.

If not utilized, the federal and state NOLs will continue to expire in 2025.

IRC Section 382 may also limit NOLs generated after 2022 and in future years.

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The Company will continue to maintain a full valuation allowance against the entire amount of its net deferred tax asset, until such time as the Company has determined that the weight of the objectively verifiable positive evidence exceeds that of the negative evidence.

Although the Company has established a full valuation allowance on its net deferred tax asset, for Federal tax losses before 2018 and for all state tax losses, it has not forfeited the right to carryforward tax losses up to 20 years and apply such tax losses against taxable income in such years, thereby reducing its future tax obligations.

Federal tax losses generated in 2018 and later do not expire.

The Company is

Although the Company has established a full valuation allowance on its net deferred tax asset, for Federal tax losses before 2018 and for all state tax losses, it has not forfeited the right to carryforward tax losses and apply such tax losses against future taxable income, thereby reducing its future tax

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

subject to taxation in the United States and various state jurisdictions.

Federal tax losses generated in 2018 and later do not expire.

The Company is subject to taxation in the United States and various state jurisdictions.

As of December 31, 2024 , the Company’s tax years for 2005 through 2023 are generally subject to examination by the tax authorities.

12 unchanged sentences

In February 2023, the Company received notification from the Internal Revenue Service that our Archipelago joint venture was selected for audit for the 2021 tax year.

The Company received a preliminary summary of examination changes during November 2023, is currently awaiting the Notice of Proposed Partnership Adjustment, and plans to accept the adjustments.

Accordingly, the Company has adjusted the tax disclosures to capture the anticipated impact of the proposed adjustments.

The Company received the IRS Notice of Proposed Partnership Adjustment during the third quarter of 2024, accepted the adjustments, and submitted the push out election forms during the first quarter of 2025, to push the audit adjustments to the partners.

Arcadia will adjust their balance of available tax net operating losses with the filing of their 2024 income tax returns, which have already been adjusted for financial statements purposes, and expects to incur no penalties or interest due.

The Company is currently not under audit for state purposes.

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The Company did no t make discretionary matching contributions during the years ended December 31, 2024 and 2023 .

Segment and Geographic Information

Management has determined that it has one business activity and operates in one segment as it only reports financial information on an aggregate and consolidated basis to its Chief Executive Officer, who is the Company’s chief operating decision maker.

Segment Reporting

The Company has one operating and reportable segment, which derives revenue primarily from the sale of Zola coconut water.

The Company's Chief Executive Officer is the Company’s chief operating decision maker ("CODM").

T he CODM uses net loss for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.

The CODM evaluates segment business performance based primarily on consolidated net loss (from continuing operations) as reported on the consolidated statements of operations and comprehensive loss .

The CODM considers budget-to-actual variances on a monthly basis for net loss when making decisions.

Segment assets provided to the CODM are consistent with those reported on the consolidated balance sheets.

Information about the Company’s segment operations as of and for the years ended December 31, 2024 and 2023, are as follows (in thousands):

Year Ended December 31,

Total revenues

Other Adjustments

Human capital & technology

Corporate expenses

Advertising & marketing

Outside services

Interest income

Income tax expense

Change in fair value of common stock warrant and option liabilities

Other segment items

Net loss from continuing operations

Arcadia Biosciences, Inc.

Notes to Consolidated Financial Statements.

Other segment items consist of research and development expenses, gain on sale of intangible assets, gain on sale of property and equipment, impairment of property and equipment, impairment of ROU asset, other income, valuation loss on March 2023 PIPE and issuance and offering costs allocated to liability classified options.

Geographic Data

Revenues based on the location of the customers, are as follows (in thousands):

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Subsequent Events

Management has evaluated subsequent events through March 28, 2024, the date that the financial statements were available to be issued.

As disclosed in Item 3, "Legal Proceedings," on December 4, 2024, the Company entered into the Exchange Agreement with Roosevelt providing for the Exchange transaction, and on February 14, 2025, the Company filed a registration statement on Form S-4 with the SEC, including a preliminary proxy statement/prospectus, relating to shares to be issued in the transaction and a special meeting of stockholders of the Company to be held to approve the issuance of shares in the transaction and related proposals.

Since the date of filing of the registration statement, the Company has received several letters (the "Demand Letters") from counsel to purported stockholders of the Company.

Each letter asserts that the preliminary proxy statement included in the registration statement was deficient and demanded that the alleged deficiencies be rectified.

The Demand Letters allege, among other matters, that corrective disclosures are required to be included in the registration statement to address alleged material misstatements and omissions in the registration statement and that the proxy statement/prospectus contains materially incomplete and misleading information concerning, among other matters, financial projections, financial analysis performed by the entity that provided a fairness opinion to the Company's board of directors in connection with the transaction, potential conflicts of interest involving the Company's financial advisor in connection with the transaction and the Company's insiders, and possible breach of fiduciary duties by the directors of executive officers of the Company in connection with the transaction.

Certain of the Demand Letter include a request for inspection of certain books and records of the Company pursuant to Delaware corporate law.

It is possible that additional, similar letters may be received, or complaints filed.

If this occurs, except as may be required by law, the Company does not intend to announce the filing of any such additional demand letter or any such complaint.

The Company believes that the allegations in the Demand Letters are without merit and intends to vigorously defend itself against any complaint that may be filed.

Changes in and Disagreements With Accou ntants on Accounting and Financial Disclosure.

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 7. Management’s Discussion and Analysis