Phoenix, May 12 - NutraCea, a world leader in stabilized rice bran (SRB), nutrient research and technology, today announced financial results for its first quarter ended March 31, 2008. Consolidated net revenues rose 155% to $5.1 million for the first quarter of 2008, compared to consolidated net revenues of $2.0 million for the first quarter of 2007. The $3.1 million increase was primarily due to a $860,000 increase in sales of products produced in the United States, an increase of $17,000 in royalty revenues and $2.2 million in sales from the Company's Irgovel subsidiary in Brazil for the period February 19, 2008 through March 31, 2008.
The Company reported a net loss of $(6.8) million, or $(0.05) per share, compared to a net loss of $(247,000), or $0.00 per share for first quarter 2007. The loss was primarily due to a $4.5 million increase in operating expenses and a net decrease in Other Income and Expenses (net) of $1.4 million.
Sales, General and Administrative (SG&A) expenses were $5.2 million, compared to SG&A of $2.3 million for the first quarter of 2007. This increase was primarily due to expanded investment in personnel, infrastructure and sales and marketing activities to meet anticipated future demands. In the quarter we wrote down $390,000 in connection with a doubtful note receivable. The Company's professional fees were $2.0 million compared to $459,000 for the same quarter last year. These expenses were primarily due to consulting and legal fees of approximately $621,000 in connection with marketing and business development, SOX 404 activities, the acquisition of Irgovel and our investment in PT Panganmas Inti Nusantara, an Indonesian Company (PIN), made through our Medan LLC subsidiary. We also incurred a $750,000 broker fee which included the estimated value of an option to be issued related to our investment PIN. Of the $5.2 million in SG&A during the quarter, approximately $1.5 million were non-cash charges.
Brad Edson, president and CEO of NutraCea, commented, "The revenues that we reported for our first quarter were significantly higher year-over-year and slightly lower than we anticipated over Q4 of 2007 as we purposely began to build inventory for product roll outs for new and existing customers that are expected to occur late in our third quarter and build into our fourth quarter. Currently, on a cost basis, we have approximately $2.8 million in domestic inventory, which is a large number for us but necessary in order for the Company to have sufficient quantities of supply to be able to meet anticipated sales demands later this year. We will continue to build our inventory from current levels and are in fact adding further temporary warehousing space to accommodate our inventory needs. When our expected new sales come in during the second half of the year, our inventory will decrease significantly.
"Our production capability will meaningfully increase this quarter and even though we will be adding to inventory during the quarter, we should see our revenue grow from our reported $5.2 million in sales in the first quarter to between $9.0 and $10.0 million in our second quarter."
Mr. Edson added, "We expect to see continued top line growth quarter over quarter for the balance of the year as additional production comes on line, and we later begin to pull down on our inventory. This should be accompanied by continued decreases in operating costs over the next few quarters. Furthermore, the Company anticipates it will be able to contractually secure additional international supply and production agreements for raw bran this calendar year that should increase our ability to satisfy the new and anticipated demand for NutraCea's products for future years."
About NutraCea
NutraCea is a leader in stabilized rice bran nutrient research and dietary supplement development. Through its wholly owned subsidiary RiceX, the company manufactures and distributes products and food ingredients made from rice bran through its proprietary technology and processes. The company has developed intellectual properties to create a range of proprietary product formulations, delivery systems and whole food nutrition products. NutraCea's proprietary technology enables the creation of food and nutrition products from rice bran, normally a wasted by-product of standard rice processing. In addition to its whole foods products, NutraCea develops families of health-promoting "nutraceuticals," including natural arthritis relief and cholesterol-lowering products.
NUTRACEA AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, December 31,
2008 2007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $5,816,000 $41,298,000
Restricted cash 5,281,000 758,000
Trade accounts receivable,
net of allowance for doubtful
accounts of $3,168,000 and
$2,999,000, respectively 3,066,000 2,346,000
Inventories 3,831,000 1,808,000
Notes receivable, current portion,
net of allowance for doubtful notes
receivable of $543,000 and $250,000,
respectively 7,145,000 2,936,000
Deposits and other current assets 2,480,000 2,545,000
Total current assets 27,619,000 51,691,000
Restricted cash 1,791,000 1,791,000
Notes receivable, net of current portion 44,000 5,039,000
Property and equipment, net 38,939,000 19,328,000
Investment in joint venture 9,348,000 1,191,000
Patents and trademarks, net of
accumulated amortization 5,534,000 5,743,000
Other non-current 50,000 -
Goodwill 52,765,000 39,510,000
Total assets $136,090,000 $124,293,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $13,646,000 $7,506,000
Deferred revenue 291,000 90,000
Note payable, current portion 4,424,000 23,00
Total current liabilities 18,361,000 7,619,000
Long-term liabilities:
Long-term liabilities 6,278,000 -
Notes payable, net of current portion 71,000 77,000
Total liabilities 24,710,000 7,696,000
Commitments and contingencies
Shareholders' equity:
Common stock, no par value,
350,000,000 shares authorized,
145,525,000 and 144,108,000 shares
issued and outstanding 179,237,000 177,813,000
Accumulated deficit (67,968,000) (61,216,000)
Foreign currency cumulative
translation gain 111,000 -
Total shareholders' equity 111,380,000 116,597,000
Total liabilities and shareholders'
equity $136,090,000 $124,293,000
NUTRACEA AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarters ended
March 31, 2008 March 31, 2007
Revenues
Net product sales $5,084,000 $1,987,000
Royalty 27,000 10,000
Total revenue 5,111,000 1,997,000
Cost of goods sold 4,279,000 1,113,000
Product warranty cost 515,000 -
Total cost of sales 4,794,000 1,113,000
Gross Margin 317,000 884,000
Operating expenses
Research and development expenses 264,000 121,000
Selling, general and administrative expenses 5,178,000 2,293,000
Professional fees 1,958,000 459,000
Total operating expenses 7,400,000 2,873,000
Loss from operations (7,083,000) (1,989,000)
Other income (expense)
Interest and other income 260,000 512,000
Interest expense (120,000) -
Other income 245,000 -
Equity (loss) in joint venture (17,000) -
Gain on settlement - 1,250,000
Net loss before taxes (6,715,000) (227,000)
Provision for income taxes (37,000) (20,000)
Net loss $(6,752,000) $(247,000)
Basic and diluted earnings per share:
Basic loss per share $(0.05) $(0.00)
Weighted average basic number of shares
outstanding 144,779,000 111,959,000