ARCADIA BIOSCIENCES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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Special note regarding forward-looking statements

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and the related notes to those statements
included herein. In addition to historical financial information, this report
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those discussed in the
forward-looking statements. The statements contained in this report that are not
purely historical are forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended, or the Exchange Act. Forward-looking statements are often
identified by the use of words such as, but not limited to, "anticipate,"
"believe," "can," "continue," "could," "estimate," "expect," "intend," "may,"
"plan," "project," "seek," "should," "strategy," "target," "will," "would" and
similar expressions or variations intended to identify forward-looking
statements. These statements are based on the beliefs and assumptions of our
management based on information currently available to management. Such
forward-looking statements are subject to risks, uncertainties and other
important factors that could cause actual results and the timing of certain
events to differ materially from future results expressed or implied by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those identified below and those
discussed in the section titled "Risk Factors" included in the most recent
Annual Report on Form 10-K filed by the Company. Furthermore, such
forward-looking statements speak only as of the date of this report. Except as
required by law, we undertake no obligation to update any forward-looking
statements to reflect events or circumstances after the date of such statements.

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.

Insight

We are a producer and marketer of innovative, plant-based health and wellness
products. Our history as a leader in science-based approaches to developing high
value crop improvements, primarily in wheat, designed to enhance farm economics
by improving the performance of crops in the field, as well as their value as
food ingredients, health and wellness products, and their viability for
industrial applications, has laid the foundation for our path forward. We have
used non-genetically modified ("non-GMO") advanced breeding techniques to
develop these proprietary innovations which we are now commercializing through
the sales of seed and grain, food ingredients and products, hemp extracts, trait
licensing and royalty agreements. The acquisition of the assets of Lief
Holdings, LLC ("Lief"), EKO Holdings, LLC ("EKO") and Live Zola, LLC ("Zola")
added bath and body care products, CBD consumer products, as well as coconut
water, to our portfolio of products.

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

It is also estimated by the U.S. Department of Agriculture ("USDA"), that
approximately one-fifth of the FDA recommended calories consumed by people in
the US are from wheat. Therefore, the market opportunity for nutritional
improvements in wheat are significant not only because the wheat market itself
is vast, but also because of the "share of stomach" wheat 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 IP with multiple non-GMO wheat traits have clear functional
benefits, and we will continue to build partnerships across the wheat value
chain. We will continue to invest in acquisition, development and retention of
the requisite management and industry experience and production and logistics
capacity to fully participate in, and control, the route to market for our high
value food ingredients.

Commercialize and Scale our Arcadia Wellness consumer brands through retail and
e-commerce expansion. We plan to expand distribution of our consumer brands
through mass market retailers, grocery store chains, and other specialty
nutrition stores, as well as through e-commerce. These brands can penetrate
large and growing categories through high-value, differentiated benefits, with
the ability to scale and generate attractive margins. We will continue to build
our commercialization and scaling expertise, refine go-to-market strategies and
invest in effective brand-building.

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Assess growth opportunities through acquisition. We intend to evaluate potential acquisitions representing vertical integration opportunities with multiple benefits for Arcadia’s growth plans. These could include deeper integration into our supply chains to improve margin capture, as well as the speed to market of new product innovations and food formulations.

Arcadia Wellness, LLC

In May 2021, our wholly-owned subsidiary Arcadia Wellness, LLC, acquired the
assets of Eko, Lief, and Zola. We intend for Arcadia Wellness, LLC, to house all
of Arcadia Biosciences consumer goods businesses, including GoodWheat, Zola
Coconut Water and ProVault Topical Pain Relief, as well as SoulSpring Body Care.

Our product portfolio

GoodWheat™ Consumer Products

The GoodWheat brand is a portfolio of non-GMO wheat-based consumer products that
simplifies food ingredient formulations for consumers that are demanding "clean
labeling" in their foods, and that are willing to pay a higher retail price for
products made with ingredients they recognize. Because GoodWheat increases the
nutrient density directly in the primary grains and oils, it provides the
mechanism for food formulation simplification naturally and cost effectively to
meet evolving consumer demands.

Brand launch is a key part of the company’s go-to-market strategy to achieve greater value for its innovations by participating in downstream consumer revenue opportunities. We designed the brand to make an immediate connection with consumers that products made with GoodWheat meet their demands for healthier wheat options that also taste great.

In June 2022, we launched our GoodWheat pasta available in five varieties
including penne, spaghetti, fettuccine, elbows and rotini, in select retailers
nationwide. Our pasta products utilizes our GoodWheat grain as the sole
ingredient, providing 4X the fiber of traditional pasta and 9g protein per
serving without sacrificing taste. In fact, our research shows taste parity to
leading pasta brands, which is unique in the growing better-for-you pasta
segment. In addition, GoodWheat is the only better-for-you pasta brand made from
one simple ingredient, matching consumers' preference for cleaner labels.
Additional categories of products are slated for launch in 2023.

Coconut Zola Water

We believe that natural hydration and the power of plant-based ingredients are
the keys to unlock your inspiration from within, and we are proud to make
delicious plant-powered beverages that provide the energy and focus you need to
crush your day. From the coconut groves of Thailand, we bring you great tasting
coconut water and are proud of our long-lasting relationships with partners
around the world who are essential to the quality of our products.

ProVault Topical Pain Relief

ProVault's proprietary THC-Free, CBD-infused blend of natural ingredients and
fast-acting cooling agents are designed to safely and effectively relieve muscle
and joint pain and soothe your skin. Our products are third-party tested for
potency and purity from pesticides, fungicides, microbials and heavy metals. Our
topical pain relievers are formulated to address performance concerns from
everyday pain to skin protection. So whether you're a true competitor, a weekend
warrior or simply maintaining an active lifestyle, you can count on ProVault to
help keep you in the game. We believe what you put on your body is just as
important as what you put in your body.

SoulSpring Body Care

Inspired by nature's ancient remedies and crafted with care, our SoulSpring
products strive to help rejuvenate and renew your mind, body, and soul. Our
CBD-infused blends of natural ingredients provide a more thoughtful, holistic
approach to internal balance and overall well-being. SoulSpring premium, broad
spectrum CBD is extracted from naturally-grown hemp and blended with nourishing
botanicals and minerals. Our CBD is purity-tested, non-pshychoactive and
non-intoxicating. Our passion for wellness means thoughtfully choosing honest,
natural ingredients - inspired by ancient remedies and carefully selected for
their healing properties. We then mindfully blend these ingredients to retain
their inner essence and natural properties.

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Data components of our income statements

Revenue

We derive our revenue primarily from product sales and royalties.

Product revenue

Our product revenues consist primarily of sales of Arcadia Wellness products,
GoodWheat grain and pasta, 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. Our revenues fluctuate depending on the timing of shipments of product
to our customers and are reported net of estimated chargebacks, returns and
losses.

Royalty income

Our royalty revenues consist of amounts earned from the sale of commercial
products that incorporate our traits by third parties. Our royalty revenues
consist of a minimum annual royalty, offset by amounts earned from the sale of
products. We recognize the minimum annual royalty on a straight-line basis over
the year, and we recognize 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. Our royalty revenues can fluctuate depending on
the timing of shipments of product by the third parties to their customers.

Licensing revenue

Our license revenues consist of up-front, nonrefundable license fees, annual
license fees, and subsequent milestone payments that we receive under our
license agreements. Revenue generated from up-front license fees are recognized
upon execution of the agreement. 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
our license revenues are likely to fluctuate significantly from period to
period.


Operating Expenses

Cost of revenues

Cost of revenues relates to the sale of Arcadia Wellness, GoodWheat, and GLA
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.

Research and development (“R&D”) expenses

Research and development expenses consist of costs incurred in the development
and testing of our products and other products in development incorporating our
traits. These expenses currently consist primarily of fees paid to product
formulation consultants and are expensed as incurred. Additionally, we are
required from time to time to make certain milestone payments in connection with
the development of technologies in-licensed from third parties. Our research and
development expenses may fluctuate from period to period.

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Gain on sale of Verdeca

Gain on sale of Verdeca is the gain recognized on the sale of our 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. See Note 7 to the Condensed Consolidated
Financial Statements.


Change in fair value of contingent consideration

The change in fair value of contingent consideration includes the remeasurement to fair value of the liabilities associated with our contingent consideration. See note 15 to the condensed consolidated financial statements.

Gain on sale of property, plant and equipment, net

Gains on disposal of fixed assets include capital gains on the disposal of property, plant and equipment sold above their net book value.

Impairment of property, plant and equipment, net

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.

Selling, general and administrative expenses

Selling, general and administrative expenses consist primarily of employee
costs, professional service fees, broker and sales commission fees, and overhead
costs. 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.

Other income, net

Other income, net, includes realized gains on corporate securities and interest income on our cash and cash equivalents and investments.

Issuance and offering costs

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

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

The change in estimated fair value of common share purchase warrant and option liabilities includes the revaluation to fair value of liabilities associated with our financing transactions.

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Provision for income tax

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 September 30,
2022 and December 31, 2021. 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.

Operating results

Comparison of the three months ended September 30, 2022 and 2021

                                      Three Months Ended September 30,         $ Change         % Change
                                         2022                  2021
                                                       (In thousands except percentage)
Revenues:
Product                             $         1,851       $         2,324     $      (473 )            (20 )%
Royalty                                          17                    35             (18 )            (51 )%
License                                          10                    17              (7 )            (41 )%
Total revenues                                1,878                 2,376            (498 )            (21 )%
Operating expenses (income):
Cost of revenues                              1,344                 2,511          (1,167 )            (46 )%
Research and development                        255                 1,038            (783 )            (75 )%
Impairment of intangible assets                   -                   120            (120 )           (100 )%
Impairment of property and
equipment                                        24                 1,108          (1,084 )            (98 )%
Selling, general and
administrative                                4,835                 6,312          (1,477 )            (23 )%
Total operating expenses                      6,458                11,089          (4,631 )            (42 )%
Loss from operations                         (4,580 )              (8,713 )         4,133               47 %
Interest income (expense)                        95                   (15 )           110             (733 )%
Other income (expense), net                      43                    (7 )            50             (714 )%
Change in fair value of common
stock warrant and option
liabilities                                   1,880                 4,777          (2,897 )            (61 )%
Gain on extinguishment of PPP
loan                                              -                 1,123          (1,123 )           (100 )%
Issuance and offering costs                    (314 )                   -            (314 )            100 %
Net loss before income taxes                 (2,876 )              (2,835 )           (41 )              1 %
Income tax provision                             (1 )                  (1 )             -                0 %
Net loss                                     (2,877 )              (2,836 )           (41 )              1 %
Net loss attributable to
non-controlling interest                        (10 )                (661 )           651              (98 )%
Net loss attributable to common
stockholders                        $        (2,867 )     $        (2,175 )   $      (692 )             32 %




Revenues

Product revenues accounted for 99% and 98% of total revenues during the three
months ended September 30, 2022 and 2021, respectively. The $473,000, or 20%,
decrease in product revenues for the three months ended September 30, 2022
compared to the same period in 2021 was driven by a decrease in sales of body
care products primarily due to the focus on higher-margin products, and the
licensing agreement with Radiance Beauty and Wellness, Inc ("Radiance Beauty")
executed in July 2022, in addition to the timing of GLA orders. See Note 6 to
the Condensed Consolidated Financial Statements for details of the licensing
agreement.

Royalty revenues accounted for 1% of total revenues during each of the three
months ended September 30, 2022 and 2021. The $17,000 of royalty revenues for
the three months ended September 30, 2022 represents the proportionate share of
contracted minimum annual royalty fees.

Revenue cost

Cost of revenues decreased by $1.2 million, or 46%, during the three months
ended September 30, 2022 compared to the same period in 2021 primarily due to
lower revenues and lower inventory write-downs in 2022. Gross profit, calculated
as total revenues less cost of revenues, was $534,000 during the three months
ended September 30, 2022 compared to gross loss of $135,000 during the three
months ended September 30, 2021. The increase in the gross profit was primarily
due to lower inventory write-downs during the three months ended September 30,
2022.

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Research and development

Research and development costs decreased by $783,000i.e. 75%, during the three months ended September 30, 2022 compared to the same period in 2021, primarily due to the Company’s recent focus on commercialization, which has resulted in lower employee-related expenses and related business costs as we right-size our teams of research.

Impairment of property, plant and equipment

During the three months ended September 30, 2022, we recognized $24,000 of
impairments of property and equipment related to Arcadia Wellness. During the
three months ended September 30, 2021, we recognized $1.1 million of impairments
of Archipelago property and equipment related to CBD processing.

Selling, general and administrative expenses

Selling, general, and administrative expenses decreased by $1.5 million, or 23%,
during the three months ended September 30, 2022, compared to the same period in
2021. The decrease was primarily driven by lower salaries, lease expense and
consulting fees.

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

Change in the estimated fair value of common stock warrant and option
liabilities decreased by $2.9 million during the three months ended September
30, 2022 compared to the same period in 2021. The decrease was driven by the
adoption of ASU 2020-06 in January 2022, which resulted in the reclassification
of common stock warrants from liability to equity, partially offset by the
change in the estimated fair value of the liability classified preferred
investment options issued in connection with the August 2022 Registered Direct
Offering ("RDO") financing transaction.

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Issuance and offering costs

Issuance and offering costs increased by $314,000 during the three months ended
September 30, 2022 compared to the same period in 2021 due to the August 2022
RDO financing transaction.



Comparison of the nine months ended September 30, 2022 and 2021

                                        Nine Months Ended September 30,          $ Change        % Change
                                          2022                   2021
                                                       (In thousands except percentage)
Revenues:
Product                             $          7,967       $          4,506     $    3,461               77 %
Royalty                                          117                     86             31               36 %
License                                          872                     17            855             5029 %
Total revenues                                 8,956                  4,609          4,347               94 %
Operating expenses (income):
Cost of revenues                               8,250                  4,954          3,296               67 %
Research and development                       1,009                  3,328         (2,319 )            (70 )%
Gain on sale of Verdeca                       (1,138 )                    -         (1,138 )           (100 )%
Impairment of intangible assets                   72                    120            (48 )            (40 )%
Change in fair value of
contingent consideration                         (70 )                 (140 )           70              (50 )%
Impairment of property and
equipment                                        370                  1,319           (949 )            (72 )%
(Gain) loss on sale of property
and equipment                                   (386 )                   17           (403 )          (2371 )%
Selling, general and
administrative                                13,834                 16,733         (2,899 )            (17 )%
Total operating expenses                      21,941                 26,331         (4,390 )            (17 )%
Loss from operations                         (12,985 )              (21,722 )        8,737              (40 )%
Interest income (expense)                        123                    (23 )          146             (635 )%
Other income (expense), net                       13                 10,214        (10,201 )           (100 )%
Change in fair value of common
stock warrant and option
liabilities                                    1,880                  4,601         (2,721 )            (59 )%
Gain on extinguishment of PPP
loan                                               -                  1,123         (1,123 )           (100 )%
Issuance and offering costs                     (314 )                 (769 )          455              (59 )%
Net loss before income taxes                 (11,283 )               (6,576 )       (4,707 )             72 %
Income tax provision                              (1 )                   (1 )            -                0 %
Net loss                                     (11,284 )               (6,577 )       (4,707 )             72 %
Net loss attributable to
non-controlling interest                        (152 )               (1,199 )        1,047              (87 )%
Net loss attributable to common
stockholders                        $        (11,132 )     $         (5,378 )   $   (5,754 )            107 %


Revenues

Product revenues accounted for 89% and 98% of total revenues during the nine
months ended September 30, 2022 and 2021, respectively. The $3.5 million, or
77%, increase in product revenues during the nine months ended September 30,
2022 compared to the same period in 2021 was primarily driven by higher sales of
the Zola coconut water and body care products, the brands acquired in May 2021,
along with $2.1 million of GoodWheat grain and pasta sales this year that
weren't present in 2021.

Royalty revenue represented 1% and 2% of total revenue in the nine months ended September 30, 2022 and 2021, respectively. The $117,000 royalty income for the nine months ended September 30, 2022 represents the proportionate share of the contractual minimum annual fees.

License revenue accounted for 10% of total revenue during the nine months ended
September 30, 2022 and is related to the Verdeca-Bioceres licensing agreement
discussed below.

Cost of revenues

Cost of revenues increased by $3.3 million, or 67%, during the nine months ended
September 30, 2022 compared to the same period in 2021. The increase in cost of
revenues is the result of the increase in revenues. Gross profit, calculated as
total revenues less cost of revenues, was $706,000 during the nine months ended
September 30, 2022 compared to gross loss of $345,000 during the nine months

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ended September 30, 2021. The increase in the gross profit was primarily driven
by the increase in license revenue related to the Verdeca-Bioceres licensing
agreement during the nine months ended September 30, 2022.

Research and development

Research and development expenses decreased by $2.3 million, or 70%, during the
nine months ended September 30, 2022 compared to the same period in 2021. The
decrease was primarily driven by the Company's recent focus on
commercialization, which has led to lower employee-related expenses, and related
activity costs as we right-sized our research teams.

Gain on sale of Verdeca

In February 2012, we 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 upon achievement by Verdeca reaching commercial plantings of at
least 200,000 hectares of HB4 or China approving the HB4 soybean trait for "food
and feed". During the nine months ended September 30, 2022, we recognized a gain
on sale of Verdeca of $1.1 million related to the regulatory approval of the HB4
soybeans.

Impairment of intangible assets

During the nine months ended September 30, 2022, we recognized $72,000 of
impairments of intangible assets related to the Radiance Beauty licensing
agreement. During the nine months ended September 30, 2021, we recognized an
impairment of intangible assets in the amount of $120,000 primarily as a result
of a decline in the hemp seed market forecasted sales.

Change in fair value of contingent consideration

The Industrial Seed Innovations contingent consideration remeasurement resulted
in a decrease of the liability in the amount of $70,000 and $140,000 during the
nine months ended September 30, 2022 and 2021, respectively. See Note 15 to the
Condensed Consolidated Financial Statements.

Impairment of property, plant and equipment

In the nine months ended September 30, 2022we recognized $370,000 depreciation of property, plant and equipment, including $320,000 is bound by the Radiance Beauty License Agreement. In the nine months ended September 30, 2021we recognized $1.3 million depreciation of Archipelago’s property, plant and equipment related to CBD processing.

Gain on sale of property, plant and equipment

In the nine months ended September 30, 2022we sold certain property, plant and equipment related to Davis Laboratory and Archipelago for net proceeds exceeding the carrying value of $386,000. In the nine months ended September 30, 2021we sold equipment for a book value greater than the net proceeds of $17,000.

Selling, general and administrative expenses

Selling, general, and administrative expenses decreased by $2.9 million, or 17%,
during the nine months ended September 30, 2022 compared to the same period in
2021. The decrease was primarily driven by lower salaries, lease expense and
consulting fees.

Other income, net

Other income, net less $10.2 million in the nine months ended
September 30, 2022 compared to the same period in 2021 due to the realized gain from the sale of BIOX shares in 2021.

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

Change in the estimated fair value of common stock warrant and option
liabilities decreased by $2.7 million during the nine months ended September 30,
2022 compared to the same period in 2021. The decrease was driven by the
adoption of ASU 2020-06 in January 2022, which resulted in the reclassification
of common stock warrants from liability to equity, partially offset by the
change in the

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estimated fair value of preferred investment options classified as liabilities issued under the August 2022 RDO financing operation.

Paycheck Protection Program (“PPP”) Loan Extinction Gain

During the nine months ended September 30, 2021, we were notified by the lender
that the Small Business Administration had forgiven the original PPP loan amount
in full, and this resulted in a $1.1 million gain for nine months ended
September 30, 2021.


Issuance and offering costs

In the nine months ended September 30, 2022we recognized $314,000 issue and offering costs related to the August 2022 RDO financing operation. In the nine months ended September 30, 2021we recognized
$769,000 issue and offering costs related to the January 2021 PIPE financing operation.

Seasonality

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 our consumer body care products tends to vary with major holidays and 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.

Liquidity, capital resources and going concern

We have funded our operations primarily with the net proceeds from our private
and public offerings of our equity securities and debt, as well as proceeds from
the sale of our products and payments under license agreements, contract
research agreements and government grants. Our principal use of cash is to fund
our operations, which are primarily focused on commercializing our products. As
of September 30, 2022, we had cash and cash equivalents of $22.7 million. For
the nine months ended September 30, 2022, the Company had a net loss of $11.3
million and net cash used in operations of $11.6 million. For the twelve months
ended December 31, 2021, the Company had net losses of $16.1 million and net
cash used in operations of $25.9 million.

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 condensed consolidated financial statements, and thus
raises substantial doubt about the Company's ability to continue as a going
concern. The condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

We may seek to raise additional funds through debt or equity financings, if
necessary. We may also consider entering into additional partner arrangements.
Any sale of additional equity would result in dilution to our stockholders. 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 do 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 development programs. Any of these actions could
materially harm our business, results of operations and financial condition.

Cash flow

The following table summarizes our cash flows for the periods indicated (in thousands):

                                      Nine Months Ended September 30,
                                        2022                   2021
Net cash (used in) provided by:
Operating activities              $        (11,621 )     $        (19,208 )
Investing activities                         1,136                 16,678
Financing activities                         4,519                 22,014

(decrease) net increase in cash $ (5,966) $19,483

Cash flow from operating activities

Cash flows used in operating activities for the nine months ended September 30, 2022has been $11.6 million. With respect to our net loss of $11.3 millionnon-monetary expenses of which $897,000 stock-based compensation, $686,000 amortization of the lease, $1.5 million of

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write-downs of inventories, $370,000 of write-downs of property and equipment,
$72,000 of write-downs of intangible assets, $314,000 of issuance and offering
costs, and $354,000 of depreciation, were offset by adjustments in our working
capital accounts of $439,000, the change in fair value of common stock warrant
and option liabilities of $1.9 million, gain on sale of Verdeca of $1.1 million,
$386,000 of gain on disposal of property and equipment, other non-cash income
from the change in fair value of contingent consideration of $70,000, and
operating lease payments of $718,000.

Cash used in operating activities for the nine months ended September 30, 2021,
was $19.2 million. With respect to our net loss of $6.6 million, non-cash
charges including $1.0 million of stock-based compensation, $914,000 of lease
amortization, $1.8 million of write-downs of inventory, $1.3 million of
write-down of fixed assets, $769,000 of issuance and offering costs, and
$737,000 of depreciation were offset by adjustments in our working capital
accounts of $2.4 million, $10.2 million of realized gain on corporate
securities, the change in fair value of common stock warrant and option
liabilities of $4.6 million, other non-cash income from the change in fair value
of contingent consideration of $140,000, and operating lease payments of
$984,000.


Cash flow from investing activities

Cash provided by investing activities for the nine months ended September 30,
2022 consisted of $897,000 of proceeds from sales of property and equipment,
$285,000 proceeds from sale of Verdeca, partially offset by $46,000 of purchases
of property and equipment.

Cash provided by investing activities for the nine months ended September 30,
2021 consisted of $21.8 million of proceeds from sales of investments, partially
offset by $4.3 million of acquisitions, and $919,000 in purchases of property
and equipment.

Cash flow from financing activities

Cash provided by financing activities for the nine months ended September 30,
2022 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.

Cash provided by financing activities for the nine months ended September 30,
2021 consisted of proceeds from the issuance of common stock relating to the
January 2021 PIPE financing transaction of $25.1 million gross proceeds, capital
contributions from the non-controlling interest in our joint venture of
$750,000, and proceeds from the purchase of ESPP shares of $39,000, which were
offset by payments of transaction costs related to the January 2021 PIPE of $1.9
million and principal payments on debt of $2.0 million.


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, which was disposed of in November 2020.

Significant Accounting Policies and 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. The preparation of these financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the reported revenue generated, and
expenses incurred during the reporting periods. Our estimates are based on our
historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

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

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